Frank Schuil is a Dutch entrepreneur living in Sweden, and the CEO and co-founder of bitcoin exchange service Safello.
In this opinion piece, Schuil argues that the identity of bitcoin’s creator could have a great impact not only on the technology, but potentially the future of the world’s economy.
At the time of writing, the community seems to have embraced the idea this unveiling was an elaborate hoax, despite his early involvement and relevant background.
While some will continue the search for Satoshi Nakamoto, it is good to gain an understanding of why it matters who he, she or they might be.
Satoshi’s role in development
After a period of active involvement in the development of the bitcoin protocol, Satoshi handed over the scepter to former Bitcoin Core maintainer Gavin Andresen at the end of 2010.
Gavin then handed the keys to the kingdom over to Wladimir van der Laan, who now serves in this position. Since then the development roadmap has been managed with two degrees of separation between the current team and its inventor.
Further, after Wright failed to provide conclusive proof he was Satoshi Nakamoto, Gavin’s judgement – he defended Craig – was put into question and his commit access was revoked. As a result, there now exists an even bigger gap between the inventor and the development of the protocol.
So why does this matter? Open-source software is exactly that – open source. Anyone can make a copy of the bitcoin blockchain and start their own version of it, like has been done by Bitcoin Classic, Bitcoin XT and Bitcoin Unlimited.
However, the original version of the protocol, Bitcoin Core, and the developer group supporting it, has been dominating miner and node adoption since day one. As such, they practically have a monopoly on protocol changes.
While their work has predominantly benefitted bitcoin and it’s ecosystem, voices rose to oppose Bitcoin Core’s scaling strategy. The aforementioned competing protocols were the result of this heated debate.
Now this is where things get interesting. Satoshi could play a crucial role if he, she or they plans to make themselves known. None of the alternative protocol implementations have reached a threshold of adoption by the miners or nodes (they need both) for a so-called hard fork from Bitcoin Core to manifest.
Bitcoin Classic, the latest and arguably most successful attempt at this, supported by Satoshi’s successor Gavin Andresen, got really far, and is still in the running.
Now, imagine if Satoshi comes out of hiding in favor of supporting Bitcoin Classic? What would happen? It could very well be the push Bitcoin Classic needs to reach a tipping point and overtake Bitcoin Core.
The implication of such an action is not only the potential for a hard fork away from the Bitcoin Core protocol, but also a hard fork away from its developers as it impacts who has commit rights to the most popular version of the protocol.
In this case, Gavin could reclaim the scepter and it wouldn’t be hard to imagine that Satoshi, the person or the group, would take the lead over development of Bitcoin Classic. The team currently working on Bitcoin Core would effectively be replaced.
It’s the equivalent of firing a development team to replace it with another. And just like a company firing its team, some developers may join the new team, others may not. And the development of the protocol may improve or deteriorate, affecting bitcoin’s future.
As you can probably imagine, this underlying dynamic for becoming the lead protocol creates a toxic work environment for both sides of the coin – pun intended.
Satoshi’s 1 million bitcoins
As the very first miner on the bitcoin network, Satoshi accumulated and theoretically still has access to roughly 1.1m bitcoins (estimations vary).
That’s 7.1% of the current money supply and 5.24% of the money supply when all coins are finally mined by the year 2140. At the current market price of $453, Satoshi’s bitcoin stash is now worth $499.4m, and $1.34bn when bitcoin peaked at $1,216.73 in 2013.
This in itself is not a problem. Everyone can appreciate that the inventor of this new kind of money and its underlying blockchain technology deserves to be handsomely rewarded, even if it makes Satoshi a billionaire. So, why does it matter?
Today, the market presumably has priced in the 1.1m bitcoins as lost coins. Satoshi by some is considered deceased with no heir to the coins or having lost the keys – it happens to the best of us.
If Satoshi suddenly were to reveal itself by proving to have access to the dormant coins, it could shake up the market. Even worse, if Satoshi decided to offload the coins to other cryptocurrencies or fiat money, it could spark a selloff that crashes the price.
How likely is this to happen? Not very likely. Even if Satoshi has access to the coins, it’s unfathomable that he/she/they would jeopardize either their wealth or invention. The market reaction, however, is harder to predict.
Coming back to Satoshi being a billionaire. If bitcoin ends up becoming the global reserve currency or reaches other milestones of adoption, the wealth of 1.1m bitcoins may exceed $1tn. Consequently, Satoshi could become the first trillionaire.
To some, this contradicts the wealth inequality that bitcoin set out to reverse. Others argue that the wealth distribution would still be better than is the case with the current financial system.
Either way, it begs the question of Satoshi’s motives. What personal beliefs does Satoshi have and how may those beliefs impact our society? Having such wealth in the future would give Satoshi a sphere of influence that stretches well beyond the technological innovation of cryptocurrency or blockchain.
And therefore it matters who Satoshi is…
For those interested in the views of Craig Wright – in case he turns around and proves he’s Satoshi – this interview gives a remarkable insight into his thinking and is definitely worth the watch.
Few people that I know of speak so passionately about bitcoin and its future use cases, let alone in 2014.