Is Satoshi Nakamoto Still Relevant In 2023?

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On October 31, 2008, the mysterious figure Satoshi Nakamoto released an unprecedented paper titled "Bitcoin: A Peer-to-Peer Electronic Cash System.” The timing was uncanny. The US and the world were still reeling from the worst financial crisis in a long time—since the Great Depression. 

Today, fifteen years since the Bitcoin white paper was published and fourteen since the first Bitcoin block was mined, the pioneering cryptocurrency is still going strong. It's been through many challenging cycles. Through it all, it continues to threaten the dominance of the same institutions that brought about the 2008 recession. 

However, the Bitcoin of the present is arguably different from when it started. It is now the world's largest digital currency, thriving with millions of users globally and a newly-reclaimed $800 billion market cap. Bitcoin's ecosystem is robust, with a reliable mining network in multiple countries, extensive wallet support, and numerous dynamic exchanges where you can buy and sell it.

Bitcoin's development ecosystem is also dynamic, with engineers working on their interpretations of the protocol. They've created forks of Bitcoin, developed new ways of sending faster micropayments, and experimented with expanding the blockchain. 

Even finance and regulatory experts have developed their concepts of what Bitcoin should be, turning it into a reserve asset and a formal investable product in traditional markets. 

With such innovations, players, and applications in the space, some veering off considerably from Satoshi's original vision, is Bitcoin's creator still relevant in 2023? 

Bitcoin’s Conceptual Origins

In Bitcoin's early days, Satoshi was active in online forums. Bitcoin's creator carefully laid the groundwork for what would become the world's first successful experiment combining cryptography, payments, decentralized networks, hash functions, economic forces of supply and demand, synthetic scarcity, open source, and others. 

Bitcoin's early core developers took on the challenge, along with early miners and experimenters who used the cryptocurrency to pay for mundane things such as pizza. 

For Bitcoin believers, the technology changed everything. Satoshi Nakamoto's development of Bitcoin in 2008 has been hailed as a breakthrough in the world of money and currency. 

The first example of a digital asset that can be transferred over the internet without the need for a verifying third party, it promised to render traditional banks nearly insignificant and even challenged the existence of central banking by its independent code.

As a digital asset, bitcoin has no backing or perceived "intrinsic value"—at least by the traditional definition of money. Even though it has exceeded a decade of existence through tremendous bull runs and numerous market cycles, the asset is still not deemed fully mature. 

However, it currently enjoys much wider acceptance and a price reaching the tens of thousands—a far cry from the fledgling coin trading for a few dollars. Bitcoin is traded internationally, experimented on, used as payment and a store of value, and recently, proposed as a formal investment instrument in the form of ETFs. 

So, where does Bitcoin get its value? It all returns to its architecture and the fundamental monetary problems it solves. 

Satoshi combines past approaches to online cash

In the past, there were many attempts to create online cash. The concept of digital currency isn't exactly anything new. It's several decades old. 

In the 1980s and 1990s, people started experimenting with anonymous e-cash protocols. Such protocols relied on a cryptographic primitive, Chaumian blinding, created by legendary computer scientist and cryptographer David Chaum. Chaumian blinding conferred privacy properties to digital currencies. 

However, in those times, the concept and protocols spun from it failed to gain traction. This failure was due to their reliance on centralized intermediaries.

Another noteworthy project was b-money in 1998, created by Wei Dai. B-money was the pioneering proposal on money creation based on solving computational puzzles. It also pioneered the idea of how decentralized consensus could be implemented.

In 2005, the concept of reusable proofs of work was invented by Hal Finney. Reusable proof of work is described as a system that draws from several ideas, including that of b-money and the Hashcash puzzles of Adam Back. These concepts were combined to create the budding picture of what appeared to be a first attempt at cryptocurrency. Finney's initial model failed because it relied on trusted computing for its backend.

A few years later, in 2009, an improvement on Finney's concept emerged. This time, the invention had no centralized issuer or controller. The mysterious and pseudonymous author Satoshi Nakamoto further combined all the previous experiments and created a whole new model. 

Satoshi picked established primitives for ownership management via public key cryptography using a consensus algorithm to track ownership of the coins in the system. This decentralized concept was known as "proof-of-work."

Blockchain Technology: A departure from the original Bitcoin?

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As engineers understood Bitcoin further, they dissected its underlying stack. They referred to it collectively as "blockchain technology," a term referring to the chain of transaction records and other mechanisms behind Bitcoin, all leading up to a tool of distributed consensus. 

The evolution of blockchain technology as an entity has impacted finance and various industries. Programmers and engineers expanded blockchain's applications. They charted a new path and created other digital assets outside Bitcoin. 

Blockchain technology can be programmed to represent a variety of independent currencies and financial instruments with their own arbitrary rules. You can use it to design custom coins with unique features and purposes whose validation depends on their mining pools and other methods, such as staking. 

Moreover, the blockchain has also been used to represent ownership of underlying physical assets, leading to coins representing smart property. Tokenized real estate and digitized property ownership became entirely possible with blockchain technology. 

Through real estate tokens, property can be digitally investable and transferable. In addition, such tokens pave the way for more innovation and accessibility in real estate investment—beyond what we know today. Even legal contracts concerning property can be made simpler using the versatility and programmability of the blockchain. 

Other protocols, such as Ethereum, created Turing-complete blockchains. You can use Turing-complete language to create smart contracts that encode arbitrary state transition functions. Ethereum expanded the ideas around Bitcoin, allowing developers more freedom to experiment and delve into the possibilities of various transactions online beyond payments. 

The ecosystem has diverging beliefs, many of which go beyond Satoshi's original vision. Some crypto developers and users think Bitcoin has stagnated and ceased to become innovative, hence the reason for exploring other blockchains. 

Certain Bitcoin proponents, on the other hand, believe that Bitcoin's slower pace of change contributes to its strength, seeing its top application as that of a reserve asset—digital gold. 

Conservative investors think there's no need to fix something that isn't broken—the crypto experiments will continue and fail while Bitcoin remains the most reliable. It is, after all, the asset with the longest track record amid a sea of experimental crypto projects.

Satoshi Nakamoto's Ideas in Bitcoin's Early Years

Bitcoin's founder left a trove of ideas and messages that deliver clues on whether or not he intended Bitcoin's diverse state of development and expansion in the future. Some ideas are embedded in the white paper, while others are written in forum posts. These ideas provide insight into whether his views may be considered archaic by today's standards.

On trustlessness

The concept of “trustlessness" came to fruition with bitcoin. A trustless system does not require transacting parties to trust or even know one another. Bitcoin enables all transactions to be recorded on a blockchain, which is immutable and public.

Such immutable and public records, independently validated by a network of miners, do not require a trusted third party to validate the truth behind the transactions. Trustless systems, therefore, allow peer-to-peer (P2P) transactions. Anyone anywhere can conduct an anonymous transaction without needing the banking system or a network of central banks.

Satoshi expressed that the root problem with conventional or fiat currency is the trust required to make it work. To function correctly, the system must trust the central bank not to debase the currency. However, the history of fiat currencies proves that central banks have repeatedly breached that trust.

Trustless systems, therefore, are the opposite of centralized systems embodied by banks. Every centralized system we've used to hold and transfer money has used authority to verify data and decide on the data. 

Centralized systems have been proven to be vulnerable to theft and hacks. One of their foremost vulnerabilities is the problem of data alternation or manipulation. With Bitcoin, it is tough to alter the transaction record as one-way hash functions protect it. 

Even so, centralized systems are still the dominant way people keep, spend, and move their money today. Governments and banks have also continued to ensure their dominance. However, Bitcoin and the rest of crypto have presented a rival to such systems. Digital assets and the technology behind them have provided the unbanked with alternatives to financial inclusion.

On open source

Open source has democratized the way we approach software and invention. Open-source code is code written for everybody. It is posted publicly on the internet. It forms the backbone for Bitcoin, Ethereum, and other crypto protocols. 

The concept of open source predates Bitcoin and cryptocurrency. It was first popularized as a phenomenon in the 1990s when people first posted code publicly online. Today, the open-source culture has penetrated all sorts of online behavior. Linux, for instance, is still crucial to 37 percent of websites. Linux is an open-source operating system.

Satoshi Nakamoto has expressed the importance of open source to Bitcoin and its design. He believes in the independent review of code. In closed-source systems, it is not possible to verify the security. He thought it was essential for a program of this nature to be open source.

On banking and micropayments

Satoshi stated that banks, by default, must be trustworthy enough to hold our money and transfer it electronically. 

However, they can lend it out in waves of credit bubbles. They lend out our money with barely a fraction in reserve. 

Moreover, we have to trust them with our privacy and information. We are required to trust them not to let identity thieves drain our accounts. Their massive overhead costs make micropayments impossible.

The State of Bitcoin in 2023

The Bitcoin we use today has evolved from the Bitcoin that Satoshi Nakamoto and its early developers created between the late 2000s and early 2010s. Since then, there have been several technical upgrades, some hard forks, and numerous experiments on Bitcoin's use cases. 

Nothing gauges Satoshi Nakamoto's ensuring relevance better than the state of Bitcoin this year. Now that we've reviewed Bitcoin's origins and fundamentals, we move toward the present and future. What are the highlights of the Bitcoin ecosystem in 2023? 

True to its decentralized nature, Bitcoin is evolving in many ways, as all individuals and organizations interpret it differently.

On Bitcoin and property

Blockchain tokens—built on Bitcoin or other platforms—allow digital representations of property ownership and can even be traded online. However, as regulators have been focusing on reeling in the crypto and blockchain industry, you must balance such investment behavior with consultations with legal professionals.

We are also seeing the rise of real estate purchases using Bitcoin. There are several ways to buy real estate with bitcoin and other crypto. A select group of real estate companies and agents have experience accepting Bitcoin for property purchases. However, if you plan to use Bitcoin to buy real estate, you must ensure you don't need to obtain a mortgage. Treat it as a cash purchase. Most banks are hesitant to accept such transactions.

Isaac Zisckind, real estate lawyer and senior partner at Diamond and Diamond Lawyers, one of Canada's largest real estate law firms, understands the potential of a highly automated real estate market built on the blockchain. 

However, he says, "You need legal advice to handle real estate transactions if you are interested in buying or selling a property digitally, be it residential or commercial. A new technology doesn't exempt you from legal ramifications."

The larger crypto developer community has been dynamically experimenting with ownership via blockchain tokens. Though such concepts are offshoots of Bitcoin's original technology, Satoshi needed to show clear indications that he expected the Bitcoin blockchain to be used to represent real-world assets.

The end of crypto winter

In 2023, crypto winter has finally shown signs of thawing. We've seen traditional markets move from sluggish to bullish. Bitcoin, no matter the circumstances, has proven its fundamental value. 

Moreover, developers and engineers have continued to build relentlessly around it. Entrepreneurs have also navigated the touch climate to continue evolving their startups and expanding Bitcoin's utility. 

Photo by Kanchanara on Unsplash

The market is a clear indicator of Bitcoin's improving health. While there was still some volatility throughout 2023, the year ended with strengthening fundamentals. Spurred by speculation around ETF approvals, BTC's most recent rally is seen as an optimistic sign, a harbinger of a revival in 2024. 

Small account balances have also risen. This phenomenon indicates broad participation from retail investors who own between 0.01 BTC and 0.1 BTC. 

Innovations and developments

For payments and scaling, a Layer-2 (L2) solution, the Lightning Network, remains the most popular direction, promising to increase payment speed and reduce cost and congestion. In 2023, more than 5,400 BTC flowed through Lighting payment channels. 

Beyond Lightning, the year has also given rise to advances in rollups. UTXO Model Rollups mirror Bitcoin's existing state architecture, but the difference is that they add more data to every transaction. 

BRC-20s, Taproot Assets, Ordinals, and Bitcoin in DeFi have also shown promise. These projects and directions ensure that Bitcoin stays relevant and poised for a new wave of growth. 

Bitcoin ETFs and adoption as legal tender

Today, Many finance experts believe Bitcoin is better as digital gold—a store of value rather than a payment system, as Satoshi originally proposed. 

As a result of this thinking, institutions are now providing bitcoin custody solutions for a new market. Based on its potential as a new investment asset, financial titans such as Fidelity and BlackRock have also applied for spot Bitcoin ETFs, which promise to heighten demand once approved.

Governments like El Salvador have developed and adopted bitcoin-friendly policies as legal tender. These developments among institutions and states revolutionize how millions participate in the Bitcoin ecosystem.

Satoshi’s Staying Power: Scarcity and Decentralization Remain at the Heart of Bitcoin’s Value

Despite the numerous changes since Bitcoin's founding, many things in its original design remain constant: the Nakamoto Consensus with its proof-of-work mining and its static supply capped at 21 million coins. 

Furthermore, Bitcoin remains decentralized with no governing body, central bank, or controlling party, and incentives are distributed equitably across its voluntary participants. 

Satoshi Nakamoto's pseudonymity and non-participation in the invention and ecosystem he initiated further add to Bitcoin's value. Because of its decentralization, Bitcoin cannot be considered a security and has thus far avoided the fate of countless tokens and ICOs created using other blockchains. 

Satoshi's legacy extends far beyond Bitcoin's white paper, genesis block, and past communications. His design has ensured security and continuity, allowing a solid foundation for a global community to thrive. His groundbreaking ideas continue to reshape money and finance today, as proven by the financial products and governance revolutions Bitcoin is influencing. 

 

This post was authored by an external contributor and does not represent Benzinga's opinions and has not been edited for content. The information contained above is provided for informational and educational purposes only, and nothing contained herein should be construed as investment advice. Benzinga does not make any recommendation to buy or sell any security or any representation about the financial condition of any company.