Introduction
Bitcoin was invented at the turn of the new century and made public on October 31, 2008 by Dr. Craig S. Wright (a.k.a., Satoshi Nakamoto), an Australian polymath.
Wright was born in Brisbane, Australia to a family of both intellectual and public service (military) traditions. His maternal grandfather, Ronald Lynam, was a mysterious World War II code breaker. Ronald Lynam was an expert in cryptography, and did work related to the famous British codebreaking which was critical in allies winning World War II. He spoke multiple languages and was a senior figure within the international intelligence community. He was on General McArthur’s staff and reported to General McArthur’s number two. Wright’s uncle, Don Lynam, is a former Royal Australian Air Force Wing Commander, and his service to the RAAF earned him a prestigious appointment to the Order of Australia for his services to the RAAF with the Logistics Branch Headquarters Support Command.
Wright was very close to his grandfather and was deeply influenced by him. This was part of the reason why Wright was obsessed with mathematics, cryptography and internet security.
Having an ultrahigh IQ of 183 (placing him in the 1/10,000,000 percentile), Wright had developed extreme levels of interests in many areas of knowledge, from philosophy, theology, mathematics, physics, computer science, economics, law, accounting, finance, game theory etc. By late 1990s, Wright in his 20s was already an accomplished IT professional in Australia. He would later become a world-class computer scientist and arguably the single most highly certified and accomplished cybersecurity expert, especially in the area of digital forensics. Before he quit his job to focus full-time on Bitcoin in 2008, he worked as a consultant at BDO, one of the world’s leading Audit and Accounting organizations. His work in building security and auditing systems for Australia Stock Exchange and some other financial institutions had received high praises.
But Wright was destined not to be satisfied with just professional work, no matter what high-caliber the work was.
At the time, he had become obsessed with an idea of a Peer-to-Peer digital cash system.
The idea of ‘digital money’ wasn’t new. Other than the fact that fiat money was already quickly becoming digital, various forms of private Internet money had been invented but all failed. The idea of tokenizing a commercial item in digital form was also emerging but none had the fundamentally deep concept nor wide adoption. Wight studied all these progresses to figure out the reason why they didn’t work, and more importantly what would eventually solve the problem.
He wanted a system that would create value to the world, not merely be a commercial product that can be sold to others. This meant it should have the following traits:
- Integrity (corruption-resistant),
- Efficiency (low cost),
- Utility (things that improve people’s lives), and
- Wide applications (fundamental and universal)
Wright was supremely and uniquely qualified for he set out to do.
Having a Doctor of Theology (ThD), Wright knew what kind of value the humanity needs.
Learned in economics (eventually receiving a PhD in the discipline), Wright knew what kind of a system is needed to realize the value.
Skilled in computer sciences (eventually receiving a PhD in that discipline as well), Wright knew how to build the system.
Being the most highly certificated cybersecurity expert in the world, Wright knew how to secure the system.
Having a Masters of Laws, Wright understood how the system he created would interact with the real society including the legal systems and the political systems.
It all bears marks of a deliberate Divine preparation for this creation, for where in the world can you find another person who has all these necessary qualifications?
In 2008, after years of work, Wright finally got what he wanted and started to program it and write a whitepaper. In writing of the whitepaper, he consulted with his longtime friend David Kleiman, a computer security specialist in the US. The two had a very good friendly relationship, and Kleiman happened to be an excellent technical writer. Neither of them had any inklings that their collaboration would result in a huge controversy years later after David Kleiman died unexpectedly. See, Kleiman v. Wright.
Sometime in 2008, well before the publication of the Bitcoin whitepaper, Wright showed a copy of a draft to his uncle Don Lynam (who testified under oath in the case of Kleiman v. Wright).
Around August 2008, more than two months before releasing the Bitcoin whitepaper, Wright showed Stefan Matthews a copy of a draft. Matthews was then Chief Information Officer at Centrebet, a Melbourne-based company. The two had a long-term close work relationship. (Matthews publicly testified, including in a court proceeding under oath, for this and their prior interactions).
On October 31, 2008, Wright publicly released the final version of the Bitcoin whitepaper.
On January 9, 2009, Wright released the first public version of the software Bitcoin 0.1.
The rest, however, is not history, just yet.
Rather, it was the beginning of an unprecedented controversy in tech and business history. It is still history in the making, with little settled in the eyes of a confused and misled world, not even the real identity of Satoshi, nor the question of what Bitcoin really is. (See: Why I believe Craig Wright is Satoshi? and Mathematical proof that Craig Wright is Satoshi.)
The real Bitcoin
As designed by its creator, Bitcoin is a law-abiding dis-intermediating Peer-to-Peer cash payment system built on an IP-to-IP decentralized protocol compatible with IPv6, with unbounded scalability and extremely low transaction costs. Its native token, bitcoin, is meant to be a commodity traded in the market purely for its actual utility, instead of a vehicle of speculative investments.
The usefulness of the electronic Peer-to-Peer cash system comes from its having a unique combination of two seemingly contradictory properties at the same time, namely physicality and digitality, which were previously thought not possible to be combined at the base system-level:
(1) Physicality: physical cash-like instant settlement (versus the other account-based financial assets that require a long and costly process of settlement), and
(2) Digitality: digital convenience, programmability and traceability which paper cash and physical coins do not have.
See Bitcoin as a financial instrument. For more advanced topic, see Money & Currency.
The Blockchain
What came along with Bitcoin is an important technological breakthrough invention called ‘blockchain’.
The term ‘blockchain’ was introduced after the publication of the Bitcoin whitepaper. Dr. Wright himself had called his invention ‘timechain’ (due to his longtime interest in the science of time, see for example ‘The universe is a timechain- the quantum universal timeframe‘), but the term ‘blockchain’ caught on and became what most people know of the invention today. From a popular culture viewpoint, blockchain is probably a better term and therefore what happened was not surprising. It gives a very intuitive and visual description of what the system does: creating blocks of data at an interval of about 10 minutes and build them into an uninterrupted chain of blocks, secured by hashes of the blocks to make them immutable. This is, of course, an overly simplified description, especially omitting the Proof-of-Work (PoW) consensus which plays a critical role (see for example, Proof-of-Work is the only way to prevent corruption).
The Bitcoin blockchain is more than just a Peer-to-Peer cash system. The fact that the IP-to-IP decentralized protocol of the original Bitcoin is compatible with the updated Internet Protocol IPv6 has far-reaching implications well beyond bitcoin and cryptocurrencies.
The Bitcoin system makes the integration of the Internet of Data (IoD) and the Internet of Value (IoV) not only possible but in fact a natural fit with both backward and forward compatibility. The integration of IoD and IoV will constitute the New Internet, on which not only will the exchange of data be further improved, but also will the exchange of value be conducted as an intrinsic part of the Internet base protocol (rather than a mere application added upon the Internet).
This will bring about profound changes to the human society for the better, including the ability to avoid the current entrenchment with the centralized Big Tech controlling people’s data and opinions, and the serious problem of the entire financial industry having been corrupted to a gigantic bloodsucking parasite.
See ‘The New Internet and blockchain‘, especially section ‘What problems can the New Internet with blockchain solve?‘
An attack at the core that led the entire field to a wrong direction
But what we have today in the mainstream of the blockchain and cryptocurrency industry is not what Bitcoin was designed to be.
What we have today, whether it is BTC or the collective crypto world, cannot do any of that described above.
What happened?
Bitcoin came under attack and succumbed to it.
While the whole world was impressed and mesmerized by the appearance of a marvelous immutable blockchain, Bitcoin was under a human/social attack which its creator did not foresee nor was prepared for.
All happened without being noticed by the world which was totally distracted by the clever techno narratives.
The attack at the core led the entire field to a wrong direction.
From the very beginning, one of the key concepts that’s being elevated and focused is ‘decentralization’. Misconceptions of concept of decentralization has gone deeper and deeper. See Decentralization, a widely misunderstood concept.
The history of Bitcoin, in a convoluted way, has proven people’s focused concerns of decentralization was both right and wrong. Right because centralization was indeed proven to be a prominent cause of system corruption in case of Bitcoin; Wrong because most people misunderstood the concept of decentralization and failed to recognize the hidden centralization when it effectively corrupted the system.
The biggest risk of Bitcoin is not a hacked by a 51% node, but a hack at the Core.
Satoshi had designed Bitcoin remarkably well. But even Satoshi himself was not prepared at the time, at least not psychologically if he was intellectually, for the only real risk Bitcoin was facing:
Bitcoin can be attacked by people who create a new system that deviates from the original Bitcoin consensus, but pass it off as ‘Bitcoin’.
The only way to prevent this kind of internal attack is to have the Bitcoin base protocol deliberately and publicly fixed, set in stone, by effective and enforceable legal means. Satoshi didn’t foresee such a need until much later when it was too late to prevent the attack.
The above-described attack wasn’t only possible. It in fact has already happened.
Surprisingly (really shouldn’t be given the hindsight), the attacking group was the very people who worked as the core group of Bitcoin’s early development. Controlled or influenced, and assisted by external forces, the Core was able to at the same time fool the public by social engineering people into believing BTC is the real Bitcoin.
But the real shock was that they were able to lead the public to believe that the real Satoshi is fake or even a fraud.
Sadly, that is the current state of affairs in Bitcoin and crypto.
As a result of the misguided developments, many now mistakenly equate blockchain with ICOs and ITOs, or at least think that without ICO and ITO, there would be very little technological development.
With the crash of FTX, one of the largest crypto exchanges, people even worry that if these exchanges fail, the whole advancement of blockchain will die, when in fact the opposite is true: only the speculative crypto markets would be affected, but blockchain itself will see more robust development. See for example: Crypto is an obstacle to blockchain and DLT.
How did it happen?
Under the influence of multiple ideological undercurrents (including cyberpunk culture, techno-utopia, anarchism and communism, and subversion by industry stakeholders threatened by Bitcoin), the development of Bitcoin deviated into a very different direction as early as 2011, despite the objection and resistance by Satoshi himself.
The wrong direction was not caused by the technology itself, but caused by the following two concomitant factors:
(1) the then temporary inefficiency of the Bitcoin blockchain itself; and
(2) dubious human motivations that didn’t focus on real technology and business development, but on ideologies, plus pure speculations and get rich quick schemes instead.
It wasn’t that Bitcoin blockchain has turned out being unable to deliver, but that the real Bitcoin blockchain was mutilated and disabled intentionally to fit a certain narrow narrative. The changes were promoted as improvements, even the next generation blockchain, but in reality it was a corrupt movement from the norms of business and law into greedy short-term interest schemes and lawlessness.
From the very beginning, the real Bitcoin faced pervasive influence of antigovernment, anti-law, anarchy, and communism ideas, even criminal acts.
Although Satoshi himself deeply believes in the rule of law and other traditional Western faith, culture and values, he was almost an isolated lone case among the early community of Bitcoin developers and enthusiasts due to the community’s unique origin.
The others wanted to build a system that is beyond the reach of the government and law enforcement.
And they did, but only as a façade to cover something that is fundamentally ponzimistic. United under an antigovernment/anarchy ideology, BTC developers and their behind-the-scenes sponsors fundamentally changed Bitcoin from a utility-based productivity system to a vehicle of speculations. In the process, Bitcoin was corrupted from the original utility system to what we know today as Bitcoin under the ticker BTC, which is purely a vehicle of speculative investment largely based on antigovernment and even anarchy ideologies.
Satoshi himself was so disappointed that he decided to leave the BTC development at the end of 2010, only two years after the creation of Bitcoin blockchain.
Among the alterations made contrary to Satoshi’s design, the following are the most consequential:
(1) removed all the useful features of the original Bitcoin including most operation codes (OP_CODEs) and IP-to-IP (true Peer-to-Peer) capabilities.
OP_CODEs are foundational primitives of Bitcoin to formulate advanced functions and transactions including all smart contracting capabilities offered by Ethereum and all other hundreds of blockchains can offer together. Bitcoin could do it all, only with a far superior UTXO model with unbounded scalability to render all other blockchain’s including Ethereum unnecessary. (Yes, it is a fact, Bitcoin had most of the fundamental utilities from the very beginning, but they were removed intentionally, contrary to what most people know.)
IP-to-IP is how Bitcoin may truly become an integral part of the New Internet integrating IPv6 and blockchain. In 2010, Satoshi allowed it to be removed temporarily due to a lack of IPv6 implementation at the time that caused security concerns under IPv4. But BTC made it not only permanent but also incompatible with the modified protocols which were designed particularly for BTC’s own philosophy.
(2) limited the block size to a meager 1 MB, thus creating a hard mathematical ceiling of transactions per second to 5-7 TPS (a deliberate restriction in order to achieve the kind of illusionary decentralization for an antigovernment and law-resistant purpose).
(3) changed transaction data structure by separating the signature data from the main body, effectively breaking the signature chain and removing the tracing capabilities of Bitcoin.
Consequences of the Bitcoin attack
All above restrictions, disabilities really, were deliberately and carefully designed to promote the ideology of ‘the code is law’, the narrative of ‘power in millions of nodes is beyond the reach of the government’ and ‘digital gold’ moniker to draw money into the system by taking advantage of people’s greed and propensity to make speculative gambling.
All are necessary to lend technological support and philosophical support to the BTC ideology and narrative. Why that is so may require a separate discussion and will not be covered here. But See BTC and Bitcoin, what is the real difference?
In what it was designed to do, the alteration had a huge success, but only to the benefit of a small number of people, not the society at large. The system is not designed to create value and add it to the economy, but to only absorb value from the other parts of the economy. See Why BTC is a value-absorbing system, while the real Bitcoin is a value-creating system?
At the same time, removing the smart contracting capability of Bitcoin opened the door and paved the road for another influential platform namely Ethereum, from which almost every other blockchain evolved.
The Ethereum platform, despite its copying much of the Bitcoin, was based on a fundamentally unscalable design (most of due to its founder’s lack of understanding of economics) and is likewise only good for price speculations, instead of real economic utilities. See More proof that UTXO is superior to account-based systems; and Switching to PoS – Ethereum’s predicted corruption.
The simple fact is that BTC is limited to 5-7 transactions per second (TPS), and Ethereum about 15-20 TPS, while the real global adoption, especially with integration with IPv6 at the base layer, will require TPS easily in millions, or even billions in the future. See The necessary Layer 1 scalability. A full understanding of scalability to explain why these blockchains fell short is a deeply involving question requiring knowledge of not only computer sciences and economics, but also many other areas. However, with a reasonable level of objectivity, any educated person may learn to perceive the big picture correctly. See for example One blockchain as the base layer of IoV, and Solana vs. Bitcoin SV (BSV)
The diversion of BTC from the Bitcoin protocol is not merely a difference on the technicals, but represents a fundamentally different outlook of what kind of society one wants to have. It is ideology and value beliefs embodied and manifested in technological movements but with hidden political and social agendas – a social engineering phenomenon quite new, started less than two decades ago, but is coming with full force in the realm of blockchain and cryptocurrencies.
Within the industry itself, the diversion has resulted in an anomaly in which a severely manipulated version under the ticker BTC is passed off as the real Bitcoin, while the true Bitcoin and its inventor became an object of various attacks including libel and defamation (see The defamation case Wright v. McCormack is telling).
The public is essentially blocked from the truth by social-engineered obfuscation.
Meanwhile the wasteful and misleading trillion dollar movement has continued in the general crypto world. With the majority of developers being brought into a nonproductive field not knowing the underlying economic and legal implications, the real development of the real utility-based productive blockchain is ignored and sidelined, even actively suppressed.
As a result, the field of blockchain and cryptocurrencies has been reduced to a shop promoting coin prices, not creating economic values.
Although there are many intelligent groups working on good ideas of blockchain applications, these ideas are being built on a wrong foundation without a scalable and uniting base layer blockchain. Besides, the severe temptation of creating one’s own tokens and coins have drawn the energy to short-term focuses, further depressing the quality of the developments.
The ship can still be steered into the right direction
Despite the above described dire condition, the blockchain ship can still be steered to the right direction, with the proper recognition of the true values and utilities in a productive economy ranging from consumer to enterprise.
First, Satoshi left BTC but didn’t quit from Bitcoin. He continued to devote himself to making the real Bitcoin and Bitcoin Blockchain work for the benefit of the world. He has invented the subject matters of hundreds of patents and patent applications for technologies related to or derived from the original Bitcoin. He leads a team of over 200 researchers and engineers building the only platform in the world that is truthful to the original Bitcoin whitepaper.
Second, the anomaly in the crypto world wasn’t all deadly, because it unintentionally created a condition that, although adverse, allowed the real Bitcoin to grow healthily outside of the toxic Ponzi environment. The real Bitcoin Blockchain did grow in such a disciplined condition, steadily building a global ecosystem of entrepreneurs, developers and products that are remarkably uninfected by the get-rich-quick pandemic suffered by others. See The moral sentiments of Bitcoin.
Third, steering the ship toward the right direction does not mean throwing everyone else off the deck. It is to lay a better foundation for all developments in the field. There are many intelligent groups working on good ideas of blockchain applications. If these ideas are built on a correct foundation, they can be truly useful and productive. All applications on Ethereum, the biggest smart contract platform, can easily migrate to the base layer Blockchain of the New Internet. Migration has been made easy using a Transpiler that converts Solidity to Bitcoin scripts automatically. The innovative Transpiler makes the refactoring many times easier than re-coding.
Even BTC, Ethereum and some other existing blockchains may find their own usefulness with the New Internet (see below), benefiting from a much broader, more efficient and more productive new environment. Although they are not capable of forming the base layer of the New Internet, they may be either absorbed into the unified IoV and become overlay networks, or they may each find a place on an application layer to continue to serve its own purpose and customers. Such questions will be naturally answered by the market itself, not politics, although the law will always play a role.
The technology is ready for the New Internet. People need to open their eyes to see what opportunities lie ahead.
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