First Time I Read the Bitcoin White Paper—Part 3: The Thinkers

Satoshi Nakamoto’s bitcoin white paper was published 10 years ago this week. To celebrate the anniversary, BREAKER spoke to well-known blockchain figures about the first time they read it and where they think bitcoin is going next. Earlier, we talked to blockchain’s nose-to-the-grindstone builders and its outspoken rebels.This time, we speak to the investors, futurists, and policy experts trying to see the big picture.

What most excited you the first time you read the white paper?

Neeraj Agrawal, director of communications at CoinCenter:
When a good friend showed me the white paper for the first time, I had a common reaction: that this was stupid and would never work. It took a lot of convincing for me to even begin to accept that there might be something to it. So what is striking to me [now] about the white paper is how radically new its ideas were at the time. My brain was totally hardwired to dismiss what I was reading.

Jalak Jobanputra, founder, FuturePerfect Ventures:
Technology and computers and algorithms were being used for so many things, so why hadn’t we applied that to transactions? So, the simplicity and the elegance of that. And then recognizing that to change behavior, you need economic incentives. It was very humanistic, as well as technologically advanced.

Jimmy Song, developer, educator, investor, hat-wearer: We have proposed a system for electronic transactions without relying on trust. Decentralized digital scarcity, which didn’t exist before bitcoin, was now possible.

My brain was totally hardwired to dismiss what I was reading.

Primavera di Filippi, co-author, Blockchain and the Law: The Rule of Code:
The promises of a decentralized coordination system, enabling people to interact directly with one another and exchange value without any central authority.

Nic Carter, public blockchain investor at Castle Island Ventures:
I didn’t have an ‘aha moment’ reading the white paper. But looking back, the most elegant and amazing feature it describes is the difficulty adjustment mechanism, which gives bitcoin its hardness. [Meaning: the way in which bitcoin’s math puzzles get easier when the price rises, and harder when the price falls].

What’s one promise bitcoin has fulfilled?

Di Filippi: Paving new ways to think about the role and function of money in society, enabling anyone to create ‘magic internet money’ and experiment with new economic models that were not possible before.

Agrawal: The damn thing works! It does what it says on the label. You can send value to anyone in the world. Sure, it has plenty of kinks to work out, but you really can use it.

Carter: The titular promise—peer-to-peer digital cash, in which cash is a bearer instrument. This doesn’t mean petty cash, i.e. cash suitable for small transactions. But that’s not what [the paper is talking about]. Bitcoin has unquestionably accomplished its primary goal.

Jobanputra: Making us think completely differently about money, and value, and ownership. People are so used to trusting institutions that maybe don’t deserve our trust, but they have a hard time trusting computers, even though computers run so much of our lives already.

Song: Decentralized digital scarcity. That’s the main promise and that’s what’s been fulfilled.

What’s one way bitcoin has failed so far?

Song: Getting people to know the difference between something that’s actually decentralized versus something centralized that pretends to be decentralized.

Carter: The privacy model as described in the white paper is weak, and bitcoin has unsurprisingly failed to enshrine absolute privacy. The SPV scaling part of the white paper ended up not being viable, so that could be described as a failure. But today, bitcoin only fails if you have unrealistic expectations.

Bitcoin only fails if you have unrealistic expectations.

Jobanputra: That’s a hard one for me because I’m such a bitcoin bull. But I think we haven’t properly communicated bitcoin’s value. A lot of people want to look at any new technology in a very static way—like if you just looked at the internet in 1994, it was not very impressive. So, not being able to communicate what the future is, what the roadmap is, amidst all this squabbling. It’s actually been hindered by the internet—by the fact that people are debating openly. That is great, but sometimes the real value gets lost in all the pettiness.

Di Filippi: Providing a framework for micro-payments with low transactions fees, and supporting a multitude of real-time peer-to-peer transactions, and machine-to-machine communication.

Agrawal: Bitcoin itself is fine. The community around it has failed to make a compelling case to mainstream audiences as to why a technology like this is important. We need an internet native money system that protects your privacy and is un-censorable in the same way person-to-person cash transactions are. To me, that’s obvious after being embedded in this for so long, but the message is clearly not making it out into the world.

What’s the biggest challenge of the next 10 years?

Jobanputra: Making sure that we continue to develop the technology, offer more scalability. I’m not one of those people that thinks that they should have rushed scalability—the core tenet of Bitcoin is its security. But making sure that dogmatism doesn’t get in the way of scaling, so the technology can be built upon and grow.

Song: Not ruining the killer feature: decentralized digital scarcity. There will be more pressure to centralize, more attacks to try to control bitcoin. Thwarting such attempts will be the biggest challenge.

Di Filippi: Scalability, making the bitcoin network handle a sufficient number of transactions without unreasonably raising the transaction costs.

Agrawal: It’s important to get policy around this technology right. The internet was helped along massively in the ’90s by smart policies that gave innovators safe harbor from regulations not designed with it in mind. Developers using cryptocurrencies like bitcoin would benefit from the same treatment.

Carter: Keeping bitcoin block space valuable, which means providing a sufficiently differentiated experience and value proposition so transactors are willing to pay a premium to use it. Aside from that, building out infrastructure that lets individuals and businesses use bitcoin without the risk of key loss.