The first thing to understand about why people attack me and try to teach false mythologies about Bitcoin is that they never wanted the version of Bitcoin I created. Bitcoin isn’t anti-government, and no derivative blockchain ever will be. Many people are going to find this to be the case the hard way and lose a lot of money in the process. Then, I have warned them, and if they choose to ignore what I say, there is little I can do.
I’m going to start taking apart some of the false narratives.
Today, I am going to start with the narrative against sending many small transactions. It is a very pernicious and subtle lie that stems from misquoting things I said and putting them out of context. It originates from something that is quoted over and over and which you can see used along other common quotes such as the ones linked here.
Like many good lies, the narrative produced on the page relies on the laziness of the individual. They want you to take something that is referenced and read it out of context. The original is correctly linked, but it doesn’t do justice to the entire post.
The second line of one particular comment seems to to some extent support the claim that the idea is about stopping smaller payments.
Bitcoin is practical for smaller transactions than are practical with existing payment methods. Small enough to include what you might call the top of the micropayment range. But it doesn’t claim to be practical for arbitrarily small micropayments.
Firstly, as such we’re talking micropayments, and at the time in 2010, it was specifically saying that micropayments in the order of 1 cent — 5 dollars were still valid, but not ones that at the time were a thousandth of a cent. Even then, so it was at the time. The thread was concerning sending transactions in the order of BC0.00000001 or at the time something around USD cents 0.000001.
But the most important part here lies in my follow-up comment. I posted across multiple lines. As I do so often, I elaborated after my initial post. We see one example here:
Forgot to add the good part about micropayments. While I don’t think Bitcoin is practical for smaller micropayments right now, it will eventually be as storage and bandwidth costs continue to fall. If Bitcoin catches on on a big scale, it may already be the case by that time. Another way they can become more practical is if I implement client-only mode and the number of network nodes consolidates into a smaller number of professional server farms. Whatever size micropayments you need will eventually be practical. I think in 5 or 10 years, the bandwidth and storage will seem trivial.
My comment was very simple, I wrote it was not very good for smaller micropayments “right now.” Right now being in 2010. I then talked about using roundup systems and purchasing a thousand page accesses for searches at a time. As such, I was talking about Bitcoin at the skyrocketed price of USD0.10 for each bitcoin. The discussion was on payments and fees of less than 0.01 BitCoin, which at the time was USD0.001. That is, 1/10 of a cent. At the time in 2010, Bitcoin was still in early developmental phases. It was not about blocking access or saying that spam as people called it was bad, but rather about detailing the system at the time.
Importantly, people fail to note that I said the scenario was likely to be different 5 to 10 years on. “5 to 10 years” referred to the period between 2015 and now. We surpassed the required level of computational power years ago.
Bitcoin is practical for smaller transactions than are practical with existing payment methods. Small enough to include what you might call the top of the micropayment range. But it doesn’t claim to be practical for arbitrarily small micropayments. As such, a micropayment could be as small as 1/10 of a cent and the size of up to $5.00. When looking at solutions of well under 0.1 c, you would need to layer solutions — such as payment channels or, as I discussed, a means to aggregate. It is all there; in 2010, BitCoin was not ready for things like pay per search or per page view without an aggregating mechanism. They could have been done even then — just not in the form of individual transactions.
But the main and most critical part that people fail to see is that Bitcoin is designed to professionalise and end in server farms.
If Bitcoin catches on on a big scale, it may already be the case by that time. Another way they can become more practical is if I implement client-only mode and the number of network nodes consolidates into a smaller number of professional server farms. Whatever size micropayments you need will eventually be practical. I think in 5 or 10 years, the bandwidth and storage will seem trivial.
It is the point people seek to obscure. There is a false narrative and myth that Bitcoin is about running user nodes in a distributed network of individuals. It never was close to being so, and such was never the goal. More importantly, it doesn’t and cannot work in such form. The concept is not one of avoiding government and law, it is a distributed money system that works to create an honest ledger.
Client mode is SPV. It is not what people call SPV in the community, but rather something that we’ve been working on and building. The initial details of the concept are starting to be released in our wallet workshops, but the reality is that nodes are miners and that home users and Raspberry Pis play no part in Bitcoin mining. You may not like it, but there is little relevance here, and whether you like it or not, it’s a fact of life.
The reason why people attack server farms as a concept dates way back to 2008. It dates to when I first released the Bitcoin white paper and faced an argument from James Donald. His long-winded response was a rant about government being able to take over and implement monetary controls. I said way back, in the first set of posts, that the system would end in server farms. I did not say so once: I said it in 2008, I said it again in 2009, and I said it in 2010. It was not an accident or in error; Bitcoin ends as commercial server farms. Such is how it professionalises.
Only people trying to create new coins would need to run
network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware.
What you see in the desire to create small blocks is the desire to create bit gold and to replace Bitcoin.
Unfortunately for those failing miserably to understand Bitcoin (such as the Lightning Network developers), you need to understand that Bitcoin operates within the real world, which means law. The argument against and the attack on my version of Bitcoin had started before I even released the code. James A Donald started the push for small blocks and transactions with the following statement:
But I think we need to concern ourselves with minimizing
the data and bandwidth required by money issuers - for
small coins, the protocol seems wasteful.
Here lies the push for all of the changes to my protocol.
In the following statement, James Donald captures the incredible lack of understanding around Bitcoin.
The smaller the data storage and bandwidth required for
money issuers, the more resistant the system is the kind
of government attacks on financial networks that we have
Bitcoin isn’t designed with government as a threat, it’s designed to work within global legal systems. It incorporates many of the requirements of legislative processes such as Sarbanes Oxley and FINRA.
And, in my standard format I cut short a response to James Donald that everyone fails to link to the rant that it was.
>[Lengthy exposition of vulnerability of a systm to use-of-force
The rant that was cut can be found here.
I avoided answering and responding in full. I did so because I was getting annoyed. Hence the typo. You can tell I was getting agitated as my responses started getting more errors. Unfortunately, Satoshi is not perfect at spelling under duress. For the same reason, I tried to avoid getting into debates and arguments when using the Satoshi pseudonym.
Bitcoin is better than cheques, and it’s better than the existing system we see with Visa and Mastercard. But it is not and will never be a good system for crime and money laundering, which will be a very hard lesson for some people. Those like Mr James Donald and many in Core will cry and complain as government starts to crack down, but they will also learn what Bitcoin is really about. It doesn’t matter how much you try to attack me or my reputation, the matter won’t change. The path Bitcoin is going down was set in stone when I released the code. There are other ways to run the protocol and settings within Bitcoin, but there is no way to run a Bitcoin system, any blockchain outside of law and the control of governments.
People are going to discover just how fragile illicit transactions on Bitcoin really are.
And the thing is, the more you attack me for saying so, the more you are going to strengthen what I’m saying. It’s simple to cherry-pick comments that I’ve made and to take them out of context and twist their meaning, but the truth remains.
Bitcoin was never designed to be a system outside of law, nor was it designed to attack government. Not one statement that I’ve ever made presents anything other than Bitcoin as honest money. Not one statement that I’ve ever made explains Bitcoin as an uncensorable platform that would facilitate illicit money transfers, illicit payments, or money laundering. If you think so, if you think that any blockchain can aid you to such an end, you are in for a painfully hard awakening.
If you don’t like the fact that Bitcoin was designed to allow large server farms to act in a way that would allow the government to enforce orders including the seizure of illicit gains, then it’s very simple: you don’t like Bitcoin. More, you don’t want the idea of a blockchain at all. As I have written, Bitcoin is not designed to run on every single node. It is very clear. As people cherry-pick answers and try to twist my words, they do so with an agenda. They seek to alter Bitcoin and make it into something it was designed not to be.
It was not then that I decided to leave the development of Bitcoin as Satoshi, but well before.
It wasn’t something that began with the creation of a heroin store and the development of Silk Road by Ross Ulbricht and others such as Martti Malmi, it started way before.
But the thing is, no matter how hard you try, you can’t make a system that acts outside of law, because you can’t make a system that acts solely in cyberspace. Every computer, every line of code, everything you do exists in the real world. As much as you might want to avoid the fact, you exist in reality, and you will never escape it.