Welcome to the GreatInsights blog. My name is StJohn Piano, and I am a Blockchain Researcher at Tela Network.
This article contains five quotations from Satoshi Nakamoto's original Bitcoin whitepaper, with a few of my own comments.
An audio version of this article is available at: youtu.be/G-W6Sew5IG4
"We define an electronic coin as a chain of digital signatures."
This is it - the key insight. This is the final change in the nature of money as it completes the long transition from precious metals to paper archives to computer networks. We move from money-as-object to money-as-history.
In order to protect the money-history from being changed, Satoshi invented his proof-of-work approach.
"Once the CPU effort has been expended to make it satisfy the proof-of-work, the block cannot be changed without redoing the work. As later blocks are chained after it, the work to change the block would include redoing all the blocks after it."
Previous approaches focused on making it elegantly impossible to change history. Satoshi's breakthrough was to simply make it increasingly expensive. Politically, this turned out to be far more robust.
"Proof-of-work is essentially one-CPU-one-vote."
This idea concisely describes the nature of politics within the Bitcoin cryptosystem. Political conflict outside of that system continues in all the myriad ways with which we are already familiar.
A quick statement from Tela Network:
"Nodes always consider the longest chain to be the correct one and will keep working on extending it."
Like his other design choices, this one is a simple, robust mechanism for resolving disputes over history. It can be entirely automated - no human mediation is required.
"If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth."
The importance of this final selected insight cannot be overstated. Satoshi designed an economic system that protects itself against anyone who can attack it, not by defense, not by cleverness, but by bribery. The Bitcoin cryptosystem finds the biggest player available, and offers him the world. It will pay him to protect it, grow it, and allow it to continue to offer its services to everyone else.
In many ways, Bitcoin is not just a currency. It brings with it a miniature legal system, a workable passport system, and an economic defense system. Perhaps it is best to think of it as a new country, with a new frontier.
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To prepare this article, I used the version of the Bitcoin whitepaper available at the Nakamoto Institute. I appreciate that it has hyperlinks to each of the references at the end.
Here are two bonus quotations from Satoshi. They are taken from one of his emails on the Cryptography mailing list.
"As computers get faster and the total computing power applied to creating bitcoins increases, the difficulty increases proportionally to keep the total new production constant. Thus, it is known in advance how many new bitcoins will be created every year in the future."
"Coins have to get initially distributed somehow, and a constant rate seems like the best formula."
Here is a final statement from Tela Network:
Tela Network's mission is to protect and reward human attention. Our messaging app prevents all spam and allows you to charge for your time. If you feel overwhelmed by the messages that you receive on social platforms, consider using Tela.
I hope you found this article interesting and insightful. Thank you for reading it. Take care, and good luck.
~ StJohn Piano
This article is the basis for Episode 2 of the GreatInsights Minicast, hosted by StJohn Piano, available here: youtu.be/G-W6Sew5IG4
Contact StJohn Piano on Tela:
Invest in the Tela Equity token:
"Bitcoin: A Peer-to-Peer Electronic Cash System", by Satoshi Nakamoto, published October 31 2008.
Email #014831, by Satoshi Nakamoto, "Bitcoin P2P e-cash paper" email thread, November 08, 2008, 06:54:38 PM, Replying to: #014822.