The Distribution Is Unfair

Changing the tool we use as money is an extraordinarily difficult thing to do.

For money to function properly, trust is absolutely key. If you do not trust that in the future you will be able to exchange your money for the things you want to buy, then money cannot function. To have that trust in the present, everyone must have it, since everyone will need to accept it as money in the future. This trust is a property that emerges within a collective. It is not possible to agree on a date on which everyone simultaneously transfers their trust to something else. Trust is not something that is acquired on a specific date.

Suppose we create something with better properties for functioning as money than the money we currently use, and we want the world to switch to using this new money. How do we convince the world to change? When we think about it for a moment, it seems practically impossible. We cannot force people to trust it. If nobody uses it as money today, then it simply is not money, according to its most widely accepted definition — that is, the generally accepted medium of exchange. And how can anyone use it if nobody has any of it? In fact, an additional problem arises: who has this supposed money in the first place? How is it distributed?

For something new to begin to be used as money is incredibly difficult, but if there is an ideal way of achieving it, it is the one Satoshi chose. It is hard to imagine a fairer method for creating a new form of money that the world could adopt in the future than the approach he used. Let us look at the series of events that allows us to make this claim:

• Satoshi announced his idea months before launching the network. If anyone had read his idea and implemented it, they could have started bitcoin before him. Nobody did, and it was Satoshi who entirely programmed the first version of bitcoin’s software, version 0.1, and made it available to the public two months after publishing the white paper.

• Since the solution to the double-spend problem was based on the proof of work algorithm, he had to mine the first block himself, which he embedded in the code itself. He made that block unspendable. The 50 bitcoin from the creation of the first block cannot be spent.

• As soon as the network launched, he made the software public so that anyone could start using it and generating coins. The numbers in that software were nothing more than numbers in a program nobody knew about --- they had no value. And since the difficulty remained constant at its minimum value from when Satoshi launched his node until December 30, 2009, we can infer that no more than two or three people were running the mining software concurrently during the first year, Satoshi being one of them.

• When Gavin Andresen¹ told him he had created a bitcoin faucet --- a website that gave five bitcoin to any user who requested them --- Satoshi replied that it was a fantastic idea and that he had thought that if nobody else built it, he would have done so himself. The goal was to distribute bitcoin (give it away) to those who did not want to put their computer to work mining.

• A year later, rather than trying to accelerate adoption so that those numbers would gain value as quickly as possible, when he had the opportunity to encourage WikiLeaks to accept bitcoin, he posted a response on the bitcointalk.org forum saying exactly the opposite: No, don’t bring it on. The project needs to grow gradually so the software can be strengthened along the way. I appeal to WikiLeaks not to try to use bitcoin. Bitcoin is a small beta community in its infancy. You would not get more than pocket change, and the heat you would bring would likely destroy us at this stage. This message, from December 5, 2010, makes it very clear that Satoshi did not want money for himself --- he did not even want quick money for other people. His priority was bitcoin’s long-term success.

• Furthermore, when a few days later an article appeared in PC World magazine about the possible symbiosis between WikiLeaks and bitcoin, Satoshi expressed his disappointment: WikiLeaks has kicked the hornets’ nest, and the swarm is headed towards us.

• The following day he published version 0.3.19 and disappeared. This is another of Satoshi’s great acts. He knew he had created money that functions in a decentralized way, but he also knew that the fact that the protocol is decentralized does not mean the project is. There are many centralizing forces that could cause the project to become centralized and therefore fail. Satoshi disappears, and bitcoin becomes a leaderless project. He disappears, moreover, long before it had any significant value.

• As if that were not enough, to this day Satoshi has not moved a single one of the bitcoin he mined during 2009, when only he and a handful of others were running the software. A true gift to humanity. Could it possibly have been done in a more altruistic and fair way?

The question of how Satoshi distributed the bitcoin is therefore answered by saying that he did not distribute them at all --- Satoshi did not generate them; the various nodes of the network generated them over time. According to the protocol, each node had the equivalent of a lottery ticket, so the distribution was proportional to all the nodes running on the network. The issuance of new coins was higher at the start and decreased over time. As we saw in the first part of the book, Satoshi designed it so that during the first 210000 blocks, 50 new bitcoin were issued in each one. During the next 210000 the issuance would be 25, and so on. Every 210000 blocks the subsidy (the new bitcoin issued to the miner in each block) is halved, giving rise to a stepped emission curve following a negative exponential with an asymptote at 21 million. During the first four years, half the total was issued. During the next four years, one quarter; during the following four, one eighth; and so on, until around the year 2140 the last satoshi is issued.

It is natural that if the project succeeds, those who were first to trust in this new form of money will gain an advantage. This happens in any field where someone adopts a technology before it goes mainstream. The same happened with those who invested in Apple before the first iPhone or in NVIDIA before the rise of artificial intelligence --- but there is no injustice in it, and even less so anything that Satoshi decided. There is no better way to issue a currency than to let each person do so voluntarily and without taking any advantage. Making it accessible to the entire world as a donation, letting each person do with it whatever they choose. Each person decides what probability of success they assign to the project. If the project succeeds fully and wins the majority trust of the world, in the future there will be no such thing as the “price” of bitcoin, since bitcoin will be the money in which all other goods and services are priced. It will make sense to buy goods and services, but it will make no sense to exchange it for a type of money that someone can print at will without limit.

If the distribution seems unfair to you, perhaps it is because you do not yet hold any satoshis and you feel what every bitcoiner has felt at some point: “it is already too late”. The good news is that it is never too late as long as satoshis can be bought with fiat money. Shed the mistaken preconceptions, unlearn what you have learned about bitcoin from mainstream media dominated by fiat propaganda, and act accordingly. Start studying bitcoin and acquire your first sats. You will see how the portion of the fruit of your labor that you save in sats gains purchasing power over time, since nobody will ever have the ability to devalue it.