Satoshi’s Focus on a “Transactional Currency”

Written in response to the following question:

In the bitcoin white paper, it sounds like Satoshi is talking about a transactional currency. And yet, it seems like the better application is bitcoin as a store of value. So why didn’t he argue it more that way. It sounds more like he wanted to see a currency that could be used more day to day. So basically, if what I am saying is true, should be a concern that he didn’t really understand what he built?

TL;DR: Investigations into who Satoshi is/was or what his original intentions were might be interesting from an academic or historical perspective, but they have no bearing on the current economics or function of Bitcoin.

Does it Matter?

Does It Matter from an Economic Perspective?

Economics is solely a function of the appraisals of acting humans who appraise goods subjectively, based on what they believe the goods in question can help them achieve. What the inventor of a good intended or how that good was created bears little on how those human actors will make use of and appraise the goods in question. Examples abound in everyday products on the shelves around us.

Incidentally, therefore, Economics is, in general, “past-agnostic”. For example, successful entrepreneurs use concepts such as “sunken cost”. Questions around how Bitcoin could have originally “obtained value” and why “the first guy” accepted “worthless” Bitcoin as payment for a pizza might be interesting academic or historical questions (which I could expand upon at length), but actual economic actors involved with Bitcoin, concerned with their future liquidity/portfolio-values focus on today’s exchanges, data and price quotes.

I therefore find it more useful in economic analysis to first examine the perceived nature of something, and then work back towards its value, rather than consider what something was ‘intended’ to do. Yes, this can be rather difficult and complex (particularly when dealing with the value of a good, such as a money, that is appraised on its perceived value to others) due to second-order effects and feedback loops. For example, as Bitcoin establishes a longer history and gradual price-rise due to increasing perceived value, its perceived value among the masses will rise.

Bitcoin provides us with the ability to independently verify that each transaction (a) is authorized and (b) didn’t create new Bitcoins. It begins and ends there. And so, its value proposition can only be to serve as a “hard” money.

Does It Matter from a Technical Perspective?

No. Bitcoin has matured, been battle-tested and hardened over 11 years in the FLOSS wild. It is a different animal, is subjected to relentless peer-review and NASA-level, ultra-conservative coding standards and practices. Users of Bitcoin fully rely on the technical competence of a tremendously decentralized network of open source developers — not the technical competence of Satoshi. For better or worse (I think much better) — that’s how it is.

Satoshi: My Own Thoughts

I preface this part by reiterating my general lack of interest in this topic due to the lack of bearing it has on the economics or technicals of Bitcoin.

Do I Have Doubts About Satoshi’s Technical Competence?

No. In my opinion, as a programmer of over 30 years who has implemented Satoshi’s design in order to learn about it, I am dumbfounded by the genius of the design and most impressed by his ability to get it (mostly) right in the first iteration. I’ll leave it at that.

What Is My Take on Satoshi’s Intentions (Hopes?) For Bitcoin’s Economic Role?

Here I believe that it is most useful to consider the fact that Satoshi was a Cypherpunk (and so he subscribes to Cypherpunk ethos) and, within that context, the message he sent by embedding the infamous headline in the genesis block. This was him screaming loudly and clearly that Bitcoin was intended as a solution to central banks manipulating money supplies: a hard money (store of value focused).

Why Did Satoshi Talk about Transactions and Cash?

First, I think it’s crucial in understanding this to think about Bitcoin from the perspective of a programmer / designer whose biggest hurdle in creating this hard money is how to transact in such a way that one can independently verify that the money supply was not monkeyed with by solving the “double spend” problem. Clearly if one could not transact with Bitcoin, it would not be able to function as a hard money — or, indeed, any kind of money. From this perspective, of course the focus of the design and the code must be on the transactions, because this was the hurdle to overcome and the most complicated piece of the design/implementation.

Second, I have seen endless confusion in the space around money and its roles as a “store of value”, “medium of exchange” and “unit of account” vis-à-vis Bitcoin. Is Bitcoin a “money” if it is not a “medium of exchange”? How “transactional” does a money have to be to be considered a “medium of exchange”? (Does it matter?) I can also write at length about this but suffice it to say that a lot of previously buried ideas have been brought to light and there has been a lot of intellectual development in this space on those topics in the last 10 years — precisely due to the invention of Bitcoin. It should also be appreciated that there is an important temporal dimension or natural evolution/progression of a money as it is used differently through different stages of its development.

We would have to assume that Satoshi (1) was so crystal clear in his own thinking about the nuances of these concepts, (2) had an appreciation for the extent to which his whitepaper would come under scrutiny to the point that his not being precise on these nuances would lead to confusion and (3) had an extra appreciation for the progression of Bitcoin through various stages and that by not drafting his whitepaper in such a way so as to be relevant to each stage of development during that particular stage (particularly when read by someone without an appreciation for those nuances and that progression), would lead to such confusion. To assume this for Satoshi would be to confer him with some sort of omniscience.

I don’t believe it is useful to split hairs on wording in his white paper which was, let’s not forget, written by a flesh-and-blood, fallible human being and probably intended for a small audience of Cypherpunks. Perhaps, if given a second stab at it after 11 years (and in seeing how people have been fixated on his focus on transactions), he would have drafted it differently.


I’ll end by saying that if the greatest gift that Satoshi gave to the world is Bitcoin, then the second greatest gift he gave us was disappearing. People have a habit of looking for leaders and figures to follow. Such a tendency is toxic to The Decentralized Technology.

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