## Wednesday, August 21, 2019 ... //

### A crypto CEO demands nationalization of Satoshi's $10 billion A few days ago, a guy "revealed to be Satoshi Nakamoto", the father of the Bitcoin, at SatoshiNRH dot com. James Bilal Khalid Caan, a Pakistani guy in the U.K., wants you to believe that the non-trivial system was created by a migrant whose hard drive was eaten by the dog, who believes in Chaldean numerology and the importance of conversion of letters "Satoshi Nakamoto" into numbers according to an arbitrary medieval scheme, and whose top intellectual achievement was to invent a sequence of words about an irrelevant failed bank that could have BITCOIN as a generalized acronym. This "reveal" was utterly ludicrous, of course, because Caan's IQ is some 40 points lower than what is needed to be Satoshi Nakamoto. The Bitcoin system and especially the Bitcoin economy are flawed for a huge number of fundamental reasons but the creator of this system was still very intelligent. Nick Szabo or Craig Wright may have had the intelligence and everything that was needed – but Caan could not. He wasn't even able to make the files on his server invisible before the "M Moment". However, a more shocking proposal appeared last night: Ray Youssef, the CEO of Paxful, some cryptocurrency exchange (which is facing claims of robbery and fraud), made this bold proposal. The Bitcoin holders may get rid of the worries that the real Satoshi Nakamoto sells his 980,000 coins – worth$10 billion as of today – by codifying a "soft fork" that will invalidate or "burn" all of these coins. In fact, the CEO's words make it clear that he wants not only Satoshi's coins but also Satoshi himself to "get lost"! Yes, an apparatchik in the Bitcoin cult wants to improve the cult further by slaughtering the cult's God-Creator.

The only excuse is that the Jews-Christians have previously done something comparable LOL. But the cryptoexchange's Latin "peaceful" name makes the fiery proposal juicy, anyway.

Wow. Now, the Bitcoin is often sold by its proponents as the ultimate safe storage of value that is protected against all evil parties, where no one can become powerful to rip others, and so on. Needless to say, this promotional talk is wrong for many reasons such as

* the variable price of the Bitcoin that may easily drop 85% in a few months
* the possibility that the governments will just declare it illegal and stop the industry
* those 51% attacks by which miners may reverse recent transactions

and more. But here we see much clearer evidence that the whole complex machinery with the mining to "codify" the ledger – mining that already devours as much electricity as my Czech homeland during the same time – is totally useless because a majority of certain folks may easily edit the ledger in ways that are totally insane, arbitrary, malicious, and criminal.

Such a majority vote can prevail over an arbitrary amount of mining or wasted electricity.

The blockchain is a "pop science" of a sort, it's wildly more popular than it should be, but it's still a theoretically cute nontrivial invention of an alternative way to keep a universally agreed form of the list of transactions and account balances. Its creator probably doesn't deserve $10 billion for that but he surely deserves millions just for the intellectual achievement – and as far as I can say, he deserves more money from this "industry" than anyone else in the world. He actually had to work hard, write a lot of code, run notebooks to do the early mining, and more. So he surely had some expenses. Many of the initial wallets believed to be Nakamoto's haven't ever made any payments which may be because * Satoshi Nakamoto died or cannot move * He is alive but he lost the private keys * Satoshi Nakamoto is actually a project of a whole country or a similarly huge institution for which$10 billion isn't really a big issue
* Satoshi Nakamoto is alive and didn't want to create panic by moving the early coins but he may do so in the future

There may exist some other options, feel free to add them. However, the last option – that Nakamoto is just a saver or a HODLer who is simply delaying his spending – is totally plausible. Now, a rogue Paxful CEO arrives and demands the liquidation of Satoshi's coins. Why? He and similar people could sleep more easily – because they wouldn't be worried that an actual Satoshi starts to sell the Bitcoin which will probably send the price downward. (If Craig Wright is the Satoshi or near-Satoshi, he may start to sell lots of coins on the first day of 2020.)

For his convenience, he wants to steal something that has the value of $10 billion right now – from a person or persons who deserve some money for the cryptocurrency more than anyone else in the world. Achieved people's Bitcoin are about as safe as the Czechoslovak capitalists' factories back in early 1948. Hardcore Stalinist Bolsheviks similar to comrade Youssef were waiting to rob everyone who wasn't a loser – well, some of the nationalization already started in "democracy" of 1945 but I don't want to go into details. The nationalization was a huge crime, one that has severely damaged the lives of many great people and that was also greatly responsible for the liquidation of 90% of the Czechoslovak economy over the following 41 years. These are not funny things and as far as I can say, a person who is credibly plotting to rob others of$10 billion – without a glimpse of a valid justification – deserves the most irreversible punishment by which I mean that capital one. If it has been abolished in his country, it should be restored just for himself because this case is really special. Similar Bolshevik giga-thieves aren't innocent mosquitoes. They are tumors that need to be safely suppressed.

Responses to his proposal were generally negative. But that may be temporary. The key fact is that the integrity of people's holdings – including Satoshi's – depends on the "generosity and reticence" of a majority of a certain community that either coincides with the miners or that de facto controls what the miners may think and do (the second option is included because I think that the "power of the miners" is just an idealized description – in reality, the miners are being blackmailed and controlled by other, more ideological people).

It could happen that hardcore Stalinist thieves such as this "Gentleman" will start to introduce soft forks that will selectively "annihilate" particular wallets or wallets hypothetically belonging to various people that the majority started to dislike or consider "dangerous". Just accept that this evolution is possible because it is possible. There is no valid enough argument that would guarantee that proposals such as "nationalize Satoshi's coins" will always be rejected.

If one million coins were destroyed, along with the risk that the owner abruptly sells them, the price of the Bitcoin would probably go up because of that. The Bitcoin is a stock of a (worthless) company – but when some risk that someone will suddenly dump lots of stocks is erased, the stock becomes more valuable. Assuming the stock-Bitcoin analogy, it's even reasonable to estimate that the price should go up by about 5% because you just divide the "Bitcoin pie/company" to 20 million instead of 21 million coins/stocks. For this reason, the nationalization of Satoshi's holdings is almost exactly a theft that would make Satoshi poorer (or broke) and that would make all other holders of the Bitcoin richer – they would be the thieves.

With this rational thought, the holders of the Bitcoin really have the incentive to nationalize the coins of others – as long as they feel sure enough that they belong to the "safe majority". Such a wave of nationalization may arrive – like it did arrive to Czechoslovakia after the war (where it was led by an inarticulate drunkard named Klement Gottwald). If it arrives, we may say that:
What individual holders actually possess in BTC is decided by this majority.
But if it is true, the Proof-of-Work with the electricity consumption is pretty much pointless, isn't it? It may easily be replaced with the Proof-of-Holdings or Proof-of-Political-Influence-on-the-Bitcoin-Community (perhaps the Proof-of-Twitter-Followers) and the results may be analogous while all the electricity would be saved.

The ledger may be simply expanded by new transactions and various voting members of the community may just add stamps under the ledger, and when a sufficient number of stamps is added, the new entries in the ledger become official. The Proof-of-Work with all the useless cryptographic tasks – which consume a near-maximum amount of energy – is often quoted as some extremely ingenious and practically useful invention. In reality, it's just one of the quirky and amusing but not really better ways to "vote" about the version of the ledger that is official.

This rogue CEO has shown that the "safety of your BTC" is really a fantasy because some organized movement of thieves within the "community" may easily decide that you're "dangerous", like Satoshi Nakamoto, and make you broke. He has also shown that the anonymity is largely a fantasy – because he implicitly claims that he knows that these wallets belong to the same particular person. He doesn't quite and cannot quite know it but it is true that there may be a rather high degree of confidence in similar statements. BTW it seems likely to me that Nakamoto has owned other wallets that are not generally known to be his.

The Bitcoin is neither safe nor protecting the privacy of the holders and all the cryptographic work that makes it differ from other "systems of money and payment" is just a Rube Goldberg Machine-like curiosity, not something that actually makes the holders safer, because the decisions to steal or not to steal are ultimately always done by the people in real time, not by the flawlessness of algorithms. When people want to rob others, they may always find a way to do so, regardless of the algorithms – e.g. by pointing a gun at your forehead. The cryptographic Rube Goldberg mechanism of the Bitcoin only makes the holders safer against some "trivial" threats that are negligible in systems with a trusted authority, anyway – but they can't protect you against other, often much graver and more realistic, threats.

The real worries include that of a new Gottwald, a piece of waste, who arrives, supported by a few million of jealous losers, and steal almost everything from a subgroup of the holders who are declared the "enemy". They will do so regardless of the "currency" in which the "enemy" holds the wealth – crowns, dollars, marks, roubles, stocks, bonds, or Bitcoin – and regardless of the color of the paper (or the added stamps or cryptographic stamps) on which the ownership is written down. That's why it's missing the point to be obsessed with the color of the paper or some cryptographic formalities defining the "electronic stamps" certifying the validity of transactions. And that's why the idealized "decentralization" of an algorithm in principle doesn't mean any significant "decentralization" in practice. And even if it did, decentralized people may still be thieves and scum.