Dan Held is the founder of crypto portfolio service Picks & Shovels. He previously founded data service ZeroBlock, which sold to Blockchain, and served as VP of product at ChangeTip.
This exclusive opinion piece is part of CoinDesk’s “Bitcoin at 10: The Satoshi White Paper” series.
In my last article, “Soil,” I covered the Cypherpunks or the “Soil” in which he planted the Bitcoin seed giving it the best chance for survival.
Satoshi’s design of Bitcoin’s genetic code made it the best species of money ever created, he waited for exactly the right moment to plant the seed, and had planted it in the most fertile soil. Now it was time to nurture Bitcoin’s development.
I’ve paired this song to “Gardening” because I think it fits the feel of the piece and adds additional depth. If you enjoy listening to this, please follow my playlist on Spotify.
“The project needs to grow gradually so the software can be strengthened along the way.” — Satoshi Nakamoto
Satoshi chose to be anonymous, which fit the ethos of the Cypherpunks. People can project hopes and dreams on an anonymous individual, ensuring maximal narrative fit. That’s why a book is often better than the movie. His anonymity was a critical component of the founder story — dev worship is dangerous things for an open source project aiming for decentralization. Volunteers need to rely on trusting the objective reality of the code, rather than focusing on the merits of the project leader.
“It is high time for everyone involved in BTC to stop concerning themselves with the question of the identity of Nakamoto, and accept that it does not matter to the operation of the technology, in the same way that the identity of the inventor of the wheel no longer matters”- Saifedean Ammous
As a subtle jab to central banks, and as a nod to his admiration of the gold standard, he chose his birthday (on his p2p foundation website profile) as the date the US made gold ownership illegal through Executive Order 6102, April 5th. And he chose 1975 as his year of birth which is the year when the US citizens were allowed to own gold again.
“[with Bitcoin] we can win a major battle in the arms race and gain a new territory of freedom for several years.” — Satoshi Nakamoto
In his public statements, he usually focused on ordinary, mainstream, users, with his tone sometimes even excited in suggesting many ways bitcoin could be made more convenient or useful for commerce or other things. Satoshi was practical, which made interactions very easy and comfortable. He tended to avoid philosophical discussions and political arguments.
Additionally, Satoshi took steps to signal to the Cypherpunks, and future members, that Bitcoin wasn’t a scam. The conservative deescalation of his mining contributions, never spending any of his coins, nor using his influence for any purpose, shows that he wanted the world to make up their own mind about his project and judge it on its own terms. And unlike every other founder in history, Satoshi never cashed out.
“Bitcoin benefited from an extremely rare set of circumstances. Because it launched in a world where digital cash had no established value, they circulated freely. That can’t be recaptured today since everyone expects coins to have value. Not only was it fair, but it was historically unique in its fairness. The immaculate conception.” Nic Carter
Many of the early Cypherpunks became core developers in the Bitcoin protocol like Hal Finney and Adam Bach. The caliber of the early development team attracted talented (soon to be “core”) developers.
“Gifted people tend to want to work with other top people and work on something that matters, that they believe in. Motivation matters. Protocol design and coding is partly an artistic, aesthetic endeavor; people do their best work on a mission: uncensorable global internet money” — Adam Back
The Gardener Leaves
Satoshi showed a great level of restraint and took a long-term perspective on issues, as when Satoshi resisted the calls for bitcoin to market itself as a funding mechanism for Wikileaks after PayPal famously froze its account. This, Satoshi argued, would only bring down legal and regulatory hammers that much faster. Satoshi recognized the need to carefully cultivate Bitcoin.
“I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. You would not stand to get more than pocket change, and the heat you would bring would likely destroy us at this stage.” — Satoshi Nakamoto
The connection to Wikileaks at such an early stage, at the height of what could be called public resistance against the Iraq war, probably gave Bitcoin a very different dimension. So he did not mince his words nor hide his intention for leaving in what can be called the last public statement where he says the US government was headed towards Bitcoin.
“It would have been nice to get this attention in any other context. WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us.” — Satoshi Nakamoto
In April 2011, Gavin Andressen notified Satoshi that he was meeting with the CIA. Any further involvement might give away his identity which would endanger the long-term success of the project. Bitcoin now had enough support that he could walk away, and so he did.
“Satoshi left because he didn’t want its influence to affect the protocol development creating a single point of failure. The very idea of “Satoshi Vision” itself is against Satoshi’s vision for Bitcoin” — Frederico Tenga
Satoshi was able to walk away because Bitcoin had trust minimization baked into the protocol. This is what made it socially scalable.
“Power and scale breed conflict and corruption, that the purest part of any revolution is the beginning.” — Dhruv Bansal
It is easy to start with good intentions, however as things scale that becomes harder and hard to maintain. Bitcoin was specially architected to be trust minimized. Satoshi set it up so that there is no one person or group whose power can be coveted, usurped, or broken.
“Bitcoin is a social breakthrough, not a technological one” — Alex Hardy
Bitcoin needed to be the universal language for money. You are communicating with strangers worldwide, which you neither know nor trust that agree you own an abstraction of value.
“Bitcoin is a distributed incentive structure we collectively engineer and freely opt-into. It’s political technology, the first of its kind. This leaderless-ness is one part of what gives Bitcoin — in particular, beyond other cryptocurrencies today — such robustness.” — Dhruv Bansal
HODLing, the Hero’s Journey
“In the beginning of a change the patriot is a scarce man, and brave, and hated and scorned. When his cause succeeds, the timid join him, for then it costs nothing to be a patriot.” — Mark Twain
Satoshi built Bitcoin for the believers in a new financial system, the HODLers, the revolutionaries. The ones who were disenfranchised with the existing financial system. The ones who would be attracted by the prospect of sudden and spectacular change in their life.
We must heed the call for a Hero’s Journey (the HODLer) that is rooted in HODL. It’s not just a meme, it is representative of foundational values upon which stronger cultural memes are eventually developed. This supports Bitcoin’s cultural foundation.
The Hero at the beginning of their Journey has values that do not agree with the values that the Hero ends up with at Journey’s end. That is the entire point of undertaking the Journey, but is also what makes it so frightening. The Hero must let go of his/her former self in the pursuit of this transformed version of themselves. The Journey’s end is unknown, but what is known is that the Journey inspires the acquisition of new knowledge, the relinquishing of outdated paradigms and the abandoning of the familiar. The HODL Journey in Bitcoin sketches a map that becomes clearer with the acquisition of knowledge.
“Over and over again, the financial system was, in some narrow way, discredited….The rebellion by American youth against the money culture never happened.” — Big Short
Satoshi needed to bootstrap the network with an incentive mechanism — the block reward which (a) controlled currency supply of Bitcoin and (b) created an incentive for people to participate in the network. Each cycle brings aboard a new set of true believers; a new set of HODLers. They, in their turn, become strong advocates for the adoption of Bitcoin as a store of value. Contagious Freedom. Vijay Boyapati
“Hodling bootstrapped Bitcoin into existence. Hodling increases value, which increases demand, hash rate, and network security, which, in turn, attracts new hodlers and devs. This self-reinforcing feedback loop drives Bitcoin’s network effects, security, and value.” — @TobiasAHuber
Satoshi had encoded in Bitcoin DNA a mechanism to incentivize the participants, through the shared belief in Bitcoin manifested via HODLing.
“In this sense, it’s more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.” — Satoshi Nakamoto
Early HODLers believed in Bitcoin despite overwhelming negativity and false information (ex: labeled as a currency for money launderers and drug dealers, price fluctuations). HODLers had stronger risk appetite to weather the volatility of being a first mover. They’re practitioners of skin in the game.
In terms of the Hero’s Journey, “HODL!” is the mentor’s advice to the Hero in his Journey. Its roots are firmly based on the futility of trying to beat the market (Efficient Market Hypothesis and Hayekian Distributed information both dictate that the market can’t be systematically outperformed).
The increase in Bitcoin’s price has corresponding virality. And as it expands, HODLing becomes popular with people with a lower risk appetite, pulling in more and more network effect into the Bitcoin black hole — Dan McArdle
Via the Lindy Effect, the longer Bitcoin remains in existence the greater society’s confidence that it will continue to exist long into the future. It slowly seeps further into the psyche of those in charge.
“Protocols die when they run out of believers.” — Naval
The faith in a new financial system is what binds everything together. Bitcoin is not just a software project. It’s a method of coordination for a large group of people who face powerful adversaries. Bitcoin isn’t just a technological breakthrough, it’s also a social one.
“When people are ripe for a mass movement, they are usually ripe for any effective movement, and not solely with a particular doctrine or program. All mass movements are competitive, and the gain of one in adherents is the loss of all the others….A stable and sustainable ideology must be the foundation of all cryptocurrencies. No amount of cryptography, or consensus protocol development will help a cryptocurrency with an unstable and bankrupt ideology. Stable ideologies allow communities to thrive“. Kay Kurokawa
A simple example in religion is the Christian tenet that “there is one true god”. This belief strengthens the religion because it weakens membership in competing religions. Communities with unstable ideologies will eventually collapse.
“Unlike Bitcoin, nobody needs to explain why gold is valuable. Gold is simple. Bitcoin is complicated. So in the long run, the argument goes, Bitcoin can never replace gold… It’s true that the stories we tell matter, but those stories can change. Stories don’t win over everything. Eventually, raw utility supplants tradition. Bitcoin is a serious improvement over gold and starts to displace its role, the market will respond and re-price accordingly… To the digital native of the future, Bitcoin wallets will probably seem more natural than vaults full of useless metals painstakingly drilled out of the earth.” — Haseeb Qureshi
Money is a winner-take-all technology, driven by network effects. The crypto with the most HODLers, therefore, is the most demanded by consumers and will be the ultimate winner.
“Bitcoin is digital gold in the eyes of [HODLers]. To some extent this group already operates on a Bitcoin Standard: investments are evaluated on their ability to yield a return in Bitcoin.” Tuur Demeester
HODL forces us to extend our gaze beyond the present. It forces our present selves to content with an alternate reality. HODL asks us to reconfigure our present set of preferences to permit the consideration of a future Bitcoin-based digital economy.
HODL is a noble basis for a Journey. Through the sacrifice of current consumption, HODLing is a net benefit for everyone as it increases every coin’s purchasing power.
“No Hero fights alone; All for one, one for all. Your call to HODL need not be the same as mine; indeed, they can be very different. Yet, in the end, they all redound to the benefit of each other.” — Prateek Goorha
Bitcoin promises an alternative for citizens across the world to keep their savings in a form of money that can neither be confiscated nor diluted. If Bitcoin grows much larger, it may force governments to become a voluntary organization. Through HODLing, we may finally be free.
‘The secret to happiness is freedom; the secret to freedom is courage’ — Thucydides
Those who opt-in to Bitcoin, are trading something abundant for something scarce, trading the past for the future, trading financial dependence for financial sovereignty.
Satoshi architected the perfect genetic code necessary to a new species of money, Bitcoin. He then waited for the precise moment to plant the new species, the 2008 Financial Crisis. At that moment, he distributed the whitepaper to the only group that cared — the Cypherpunks. And finally, he nurtured Bitcoin to a stage where it no longer needed him.
Many digital cash systems came and went over the years before Bitcoin and after Bitcoin. Most were just whitepapers, some wrote and developed code, some even built a community, but it will be extremely difficult to repeat the success of Bitcoin’s planting.
“Let the future tell the truth, and evaluate each one according to his work and accomplishments. The present is theirs; the future, for which I have really worked, is mine.” — Nikola Tesla
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