The Breakdown - Satoshi's Ghost: The Lost Trove of Satoshi Emails

Episode Date: February 27, 2024

NLW digs into the discussion around the more than 150 Satoshi emails that were just released as part of a trial proceeding against Craig Wright. Enjoying this content? SUBSCRIBE to the Podcast: https://pod.link/1438693620 Watch on YouTube: https://www.youtube.com/nathanielwhittemorecrypto Subscribe to the newsletter: https://breakdown.beehiiv.com/ Join the discussion: https://discord.gg/VrKRrfKCz8 Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW

Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. What's going on, guys? It is Monday, February 26th, and today, while we have a fun one with a huge trove of new communications from none other than Satoshi Nakamoto. Before we get into that, however, if you are enjoying the breakdown, please go subscribe to it, give it a rating, give it a review, or if you want to dive deeper into the conversation, come join us on the Breakers. Discord. You can find a link in the show notes or go to bit.ly slash breakdown pot. Hello friends today. Let's dive right in. Such a cool story. A huge trove of never-before-seen emails have shed new light on Bitcoin's pseudonymous creator Satoshi Nakamoto. The emails document early correspondence between Satoshi and Blockstream co-founder Adam Back, as well as Satoshi's

earlier collaborator, Marty Malmy. They were presented as evidence in the lawsuit between the Crypto Open Patent Alliance and Craig Wright, who of course claims to be Satoshi. That trial remains an absolute dumpster fire, with Wright repeatedly caught in lies and presenting fabricated evidence. The emails, however, represent the most significant release of previously undiscovered writings from Satoshi in Bitcoin history. Back and Maumee have both said that they kept the correspondence private up to this point to protect Satoshi's identity. However, they each felt that proving that right is not Satoshi was of such paramount importance that they were willing to risk disclosing the emails. Back's emails are rather brief, consisting of just five pages in which the two discussed prior

cryptographic papers in the summer of 2008, several months before the Bitcoin white paper was released. Satoshi had reached out to back to ensure his hash-cash paper was given the proper citation before the white paper was released. Back then told Satoshi about a number of other papers, including one about a system called B-Money put forward by Way Die in 1998. Satoshi said he had never heard of B-Money but acknowledged that it had a few similarities to Bitcoin. This was a direct contradiction to the story told by Wright and could be yet another smoking gun in the smoldering armory that is the Wright trial. The back emails were historically important and compelling, simply for being some of the first private writings of Satoshi to come to light,

but they were nothing compared to the Malmi archive. Malmy released over 120 emails between himself and Satoshi written between 2009 and 2011. Satoshi had noticed Maummi's contribution to Bitcoin discussion and invited him to assist with website creation and some more rudimentary coding tasks. The emails paint a portrait of who Satoshi was as a person and how they thought about Bitcoin. Bitcoiners immediately realized the importance of such a large new corpus of Satoshi's writings, and have basically spent the entire time since they were released pouring over the archive. Nick Carter, for example, tweeted, Wait, there's an insane amount of new Satoshi lore in these emails.

This is my Dead Sea Scrolls. For example, Satoshi was ambitious about Bitcoin scaling. He wrote that he believed Bitcoin would one day consist of 100,000 nodes and compared its potential throughput to credit card networks. Today, the Bitcoin network has scaled to around 50,000 nodes. However, the throughput of the network is completely different to the way Satoshi envisioned it. He believed that it would eventually be necessary to scale up the blocks size to accommodate 15 gigabytes of transaction data per day, roughly 30 times the size of the

current throughput. This revelation called back to the block size wars of 2017, when advocates of increasing Bitcoin's block size were rebuffed by those who wanted to use other means of scaling. Some of the key figures of the block size war popped up after these emails were released to re-litigate that fight. Mark Lamb, co-founder of bankrupt crypto exchange, Coinflex wrote, Of course Satoshi was a big blocker. We all knew this, but Marty Mommy emails make it painfully clear. Scaling on chain on mainnet is the way to go. Off-chain scaling of Bitcoin is just another way for censorship, elitism, and decels to hold back humanity from progress. Justin Bonds, the CIA of Cyber Capital, wrote,

Satoshi Nakamoto was a big blocker. This contradicts Maxi narratives as it exposes the capture and resulting pivot of BTC. The truth is that Satoshi would oppose everything that BTC stands for today, as the facts of history expose BTC for abandoning its own founding principles. Now, I will add here for color that if you spend any time on, for example, the Twitter account of Justin, it is just literally a parade of anti-Bitcounter. Bitcoin negative Bitcoin sentiment, just nonstop, constant. So to see this is not a particular surprise. Now, others had a different take on this. They reminded us that Satoshi was writing about Bitcoin during an entirely different era and was mostly discussing theoretical possibilities on how

the network would evolve. Key in understanding the context is the fact that early Bitcoin had no block size limit at all, as there were no blocks above one megabyte until long after Satoshi's disappearance. A lot of work has, of course, been built on top of Satoshi's work in the last 13 years, and new tradeoffs have emerged as the network scaled. Saying an obvious but very hard for some people to understand thing, given the near-godlike status that Satoshi has taken on, Kasa's CTO Jameson Lop wrote, many are excited about the new Satoshi emails just released.

It's great to have more of this history archive, but I caution folks from putting too much effort into interpreting Satoshi's words. Even Satoshi didn't fully understand Bitcoin, nor had the hindsight we have today. What some have identified as the single best quote from the new archive, some of the emails contained a recognition of the environmental impacts of Bitcoin as the network grew. Satoshi wrote, ironic if we have to end up choosing between economic liberty and conservation.

Unfortunately, proof of work is the only solution I've found to make P2P eCash work without a trusted third party. If it did grow to consume significant energy, I think it would still be less wasteful than the labor and resource-intensive conventional banking activity it would replace. The cost would be an order of magnitude less than the billions of banking fees that pay for those brick-and-mortar buildings, skyscrapers, and junk mail credit card offerings. We also got an explanation for the 21 million supply. With Satoshi writing, My choice for the number of coins and distribution schedule was an educated guess.

It was a difficult choice because once the network is going, it's locked in, and we're stuck with it. I wanted to pick something that would make prices similar to existing currencies, but without knowing the future, that's very hard. I ended up picking something in the middle. If Bitcoin remains a small niche, it will be worth less per unit than existing currencies. If you imagine it being used for some fraction of world commerce, then there's only going to be 21 million coins for the whole world. so it would be worth much more per unit. He then explained that the units could be adjusted to

make the price closer to existing currencies, essentially proposing that hundreds of thousands of sats are used as a base unit when necessary. As you might imagine, another line of discussion is whether this gave us more information about who Satoshi was. And indeed, many thought the new emails released enough information to allow them to make a good guess at Satoshi's true identity. At one stage, Satoshi asked for a donation to be deposited as euros, perhaps suggesting that he was not based in the U.S. Perhaps more importantly is the historic relevance of the donation. In 2010, a $3,500 donation was material to the project. With Satoshi writing, it might be a long time before we get another donation like that. We should save a lot of it. Less than a tenth of a price of a single

Bitcoin, and that was noted as a big donation that they might not get another one like it. On the other side of the ledger, Satoshi's emails were all sent during the day in the Pacific time zone, suggesting to some that he lived on the West Coast. As Bitcoin Twitter sleuths uncovered more and more clues about Satoshi's identity, many warned that this was a dangerous path to tread. Peter McCormick, who has interviewed Hal Finney's widow about the danger she was put in by claims that Hawa Satoshi wrote, any public speculation about who Satoshi is based on the email dump is irresponsible. Doxing right or wrong candidates introduces serious risk to them and their family. Big move, don't do this. Bitcoin core developer Matt Corallo wrote,

If I see someone talk about who might be Satoshi, I lose all respect instantly. Ignore whether we should or shouldn't. Acusing someone of being Satoshi puts them at very real physical risk. There's plenty of people who want to kidnap Satoshi seeking some Bitcoin. Don't do it. Today's episode is brought to you by Cracken. For far too long, the whole financial system has been standing still, too slow, only on for certain hours, overly designed for some types of people, but not for others. Crypto, at its best, represents progress. It asks the question, what if? It invites people in instead of leaving them out. It's on 24-7-365, and moves at the speed of real life.

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Crypto trading involves risk of loss. Cryptocurrency services are provided to U.S. and U.S. territory customers by Payward Ventures Inc. PVIVI, DBA, Cracken. Maybe the best point about this, outside of the very real and sort of common sense reflection on safety, was that NVK wrote, Satoshi designed Bitcoin so that he or anyone independently wouldn't matter. Satoshi didn't want to be sanctified or worshipped. Satoshi didn't want to be known. Satoshi faded away. Respect his wishes. Now, the reactions to this have been in so many ways, almost exactly what you'd expect. We have, on the one hand, the treatment of these emails as a

quasi-religious text and is an excuse to re-prosecute the block-size wars by those who believe that these are additional historical context. The folks who lost that battle and who are still raw about it, perhaps it makes sense that they would want to use these emails in that way. To me, I would simply say the same thing that I would have said then had we had the emails widely available then. The emails were written more than a half decade and thousands of dollars per value in Bitcoin ago. They were written in a different time with a different context without any of the knowledge that went into the debate and discussion around what the right scaling choices were at the time the block size wars were happening. Now, to some extent, Satoshi being elevated to quasi-religious

status was absolutely inevitable, a byproduct of how unique their story is relative to basically every other project company movement founder that's ever existed. To be and to have remained in this world anonymous is so fundamentally divergent from everything that makes modern society, modern society. I wrote about this when I first started to get into Bitcoin forever ago, calling it the long shadow of Satoshi's ghost. And basically my argument back then was that the utter uniqueness of Satoshi just disappearing and fading away cast a shadow over every other project, even which was well and truly, or radically more decentralized at least than it had been in the past. There's something so fundamentally different about the founder just ghosting,

disappearing, removing themselves from the equation. But I think that the only logic extension of that is exactly what NVK wrote, that this person, whoever they were, didn't want to be sanctified or worshipped. They didn't want to be the only person making decisions about Bitcoin. They had initiated it, they had given it to the world, and what the world did with it was the world's choice. Indeed, I think their withdrawal from the ecosystem suggests more than anything they could have ever said that their belief was that the only Bitcoin worth having in the long run was the Bitcoin that was a product of community choice. If that is the position that you take. Historical archives can't rise to the level of scripture because it's a fundamental

contradiction to what the would-be deity would have wanted. Now, of course, this is to say nothing of the fact that this was just a person, or I guess person's, although one thing I do think there is a broad sense of is that this trove of emails points people more in the direction of Satoshi being a person rather than a group. But ultimately, the decision to leave the ecosystem was a choice. And outside of the core choices of design, of how Bitcoin was put together, decisions like the 21 million cap, the issue and schedule and all of that. Frankly, the decision to leave was every bit as significant as those choices because of where it left Bitcoin. It left Bitcoin as something owned by everyone and no one all at once, both leaderless and leaderful, with each person engaged

in the community as a Bitcoin hoddler or as just a debater on Twitter with a stake in the outcome of every decision and every discussion. It's why one of the things you hear from me so often on this show, even when I'm sharing opinions that I fundamentally disagree with, is that these debates, as annoying as they can be, as contentious as they can be, as ill-toned and unmannered as they can be, are worth having. They are the gift that was given to us by the withdrawal of this person from the ecosystem. The debates, the discussions, the disagreements, and ultimately the decisions are the fire that has forged the resilience of this asset, which every day, every week, every month, every year

looks more resilient than anything else out there. I am a history lover, and I'm a person who is in awe of the contribution that Satoshi made to the world, vis-a-vis the introduction of Bitcoin. These documents are fascinating and elucidating, and we have tons to learn from them. But that doesn't mean that we need to do our best

to understand what this person might have wanted based on their emails for more than a decade ago, because their final and most profound decision was to leave and let us figure it out from there. One more big thank you to my sponsor for today's show Cracken. Go to crackin.com and see what crypto can be. And until next time, peace.