Satoshi Nakamoto: Hero or Villain
Satoshi Nakamoto is the name of the person or persons behind the invention of bitcoin.
Many hail him as a hero. He wrote code that revolutionalised the way people transact on the internet. Through a blockchain and the proof of work concept, his system created a peer-to-peer network that eliminates the need for a trusted third party.
The thousands of alternative coins that have been developed since bitcoin are evidence of Satoshi Nakamoto’s genius and revolutionary invention.
Some users of his system in adoration and appreciation, even send tokens into the dormant wallets on the blockchain that are said to be his.
But is he a hero or is he a villain? Is he the benevolent figure that will save the global economy from interference by state forces, or is he a greedy, anonymous anarchist hiding behind creating a solution to bring even more problems into the world?
Bitcoin may be a revolutionary system, but there are some ethical issues surrounding the system and its creator.
Here are some of them.
Conflict of interest
There is an obvious conflict of interest in Satoshi Namakoto’s ownership of bitcoins.
As the creator of the code and the miner of the very first bitcoins, Satoshi is said to have individually mined close to 1 million coins. The coins have been sitting dormant in bitcoin wallets for over a decade now.
The very fact that Namakoto posited to have created bitcoin because he wanted to build a financial system that was impervious to manipulation by a powerful third party but went ahead and could have allocated himself a huge stash of the coins that he knew based on his invention could potentially gain immense value is unethical.
Based on this line of thought, he created a system that could make him money out of thin air and then managed to convince people to adopt it just so that it could make him super-wealthy in the future.
Unless he burns his coins now or has already lost or destroyed his private keys, Satoshi Nakamoto stands to benefit enormously were he to trade his bitcoins today.
His potentially mining 1 million coins also locked others out of benefiting from it in the future. Also, him potentially destroying or losing his private keys keeps the number of bitcoins in circulation low which in turn raises their prices and further locks out other people from accessing them. This is a manipulation of the system.
Based on his logic, if the fiat system is faulty because it is easily manipulated by state forces, one is left to wonder what his owning of a huge stash of currency that he created out of thin air says about him.
It has been suggested that early on, Nakamoto was able to mine so many bitcoins because he was testing the system and didn’t do so for pure profit. The patterns of his mining could also indicate that he deliberately allowed other early adopters to get a chance at mining the coins by switching off his machines.
But this also worked at securing and legitimising his system and in turn contributed to his personal stash gaining in value. It simply could have been a means to an end.
Unfair competition
Because Satoshi Nakamoto was bitcoin’s first miner, and also supposedly kept mining coins together with other bitcoin early adopters, he was able to access a stash that is said to be about 1 million bitcoins.
He designed a system that provided him with unfair advantages. It allowed him to be one of its very first beneficiaries and in time to also benefit from the increased value of his individual stash.
Also, him creating a system that removed the need for third parties in transactions because he felt their involvement was detrimental to a financial system, allowed him to “gift” himself with the same currency that he intended to be a solution to the manipulation problem. This could be interpreted to be scrupulous and unethical.
Again, based on the nature of his code, Satoshi Nakamoto was well aware that as more and more bitcoins got mined, the higher the cost of mining them would be and the higher the price of coins that had already been mined. This would in turn lockout average and everyday people from accessing it because they did not have the resources necessary to mine or buy the coins.
Because of this, people with means were the only ones that could get allocated new coins through mining. The system was designed to be unfair right from the start.
Also, bitcoin’s system was designed to cater only to the tech-savvy especially in the beginning. It created and still creates an unfair competitive advantage as it locks out the majority of the global population from fairly participating in and benefiting from the system. For a system designed (according to him) to be a solution to an existing problem, this creates an ethical issue. Only a few can benefit. By the time others catch up and join in, bitcoin prices will be too high and they will be participating at a disadvantage.
Social concerns
It’s unethical to create a product to potentially solve an issue that leads to the worsening of other issues. Even though bitcoin removes the government as a player in transactions on its network which could prove helpful to its players, it also leads to further inequality and environmental degradation.
These are issues that Satoshi Nakamoto was aware of based on available communication with his team of developers. They didn’t seem to concern him at all. He was more interested in pushing his ideas. His project was a means to an end.
Environmental impact
Satoshi Nakamoto was well aware that with time as the hash rate increased so would the need for more power to fuel the computation needed to mine new blocks. This would come with environmental concerns due to the high power needed. The entire bitcoin network consumed more power than the Netherlands in 2020. Nakamoto did not propose a solution to this. Again, he was more concerned with the mass adoption of his system than with what this would mean to the environment in the future.
Increased inequality
Also, because he was well aware that the value of bitcoins could potentially rise in the future and that mining more coins would only be reserved to those who could afford it, Nakamoto must have foreseen the increased inequality his system would bring. The rich would get richer and the poor would get poorer.
As he did not propose possible solutions to it, we can deduce that it might not have concerned him enough to want to solve it.
For a person claiming to be bringing a financial solution to a problem, he worsened several social-political problems. This was unethical.
Conceited?
Satoshi Nakamoto only proposed his project to a group of people that would most likely have supported his idea. He posted his white paper that outlined his project on a cryptographer’s mailing list.
Even though based on available communication many posed some challenging questions to him about the system, the overall consensus was that the idea was revolutionary and welcome since it lay on pseudonymity and anonymity on the internet and in financial transactions which is a stance that is pushed by cryptographers.
It would have been healthier were he to have also proposed it to economists, sociologists, socio-economists, environmentalists, intergovernmental agencies, and other professionals that would have looked at it from different perspectives. This would have been helpful in that they could have pointed obvious flaws and potential negative impacts of his system that potentially could be been useful at the initial coding stages or before full implementation.
The fact that he proposed the system to only a selected group of people that shared his views and not to other professionals that would critique it from different angles was unethical. More so because he intended for the system to be fully adopted by a global economy that comprised of different people with different objectives.
Anarchist?
Satoshi Nakamoto is a genius. Based on his code and the system he created, it would be correct to conclude that.
But did he use his genius to write code that would undermine the government and to also pave way for other inventions that would build upon the undermining of government?
Even though state involvement in the price mechanism of money is not always foolproof, activities such as the collection of taxes help fund social causes and maintain public goods for the enjoyment of all.
A financial system that seeks to completely rule out the involvement of government in all transactions globally would be detrimental to the overall good of the global economy and its citizens. It would further enrich the haves and make it worse for the have nots. It was unethical for Satoshi Nakamoto to disregard the aspect of the betterment of all in an economy and to potentially undermine government initiatives of providing services for all.
Also, the government has the responsibility of protecting its citizens. Were the government to be completely ruled out in all transactions, they would not be able to fund activities that help protect all citizens.
Satoshi Nakamoto’s code aids peers to transact anonymously and pseudonymously on the internet. This makes it harder and even impossible in some cases for state forces to track illegal activities and to bring criminals to justice. It's unethical of him to toughen the work of state agencies that are meant to serve the same citizens he seeks to protect.
It is also ironic that he aimed to protect people from the same state that serves them in other ways when they are involved in transactions. Ruling out state agencies in transactions reduces the revenue needed to run state functions that support citizens. This could leave the citizenry worse off. For this reason, Satoshi Nakamoto’s point of creating bitcoin with the aim of protecting citizens is self-defeating.
Other than just making a selected number of people rich almost overnight, and giving others who could have something to hide an opportunity to transact anonymously on the internet, the bitcoin technology does nothing to make the world a better place as a whole. It does not solve the problems the majority of people face on a day-to-day basis. It does nothing for climate change and wealth distribution. As matter of fact, it makes them worse.
It does nothing to halt the extinction of endangered species, nothing to help immigration, nothing to improve literacy rates, doesn’t help solve world hunger or to alleviate poverty.
Because Satoshi Nakamoto is bitcoin’s top beneficiaries, because he created a system that was designed to lock out the majority of the population from benefitting, because he didn’t propose the projects to people that would most likely object it, because he was well aware of the detrimental social and environmental outcomes of his system and didn’t seek out to propose or work on solutions to them, and because his work seems to undermine societal systems and structures and that serves citizens, Satoshi Nakamoto might not be the hero many take him to be.
As the world adopts his code and tweaks it to serve different purposes, it would be vital that these tweaks be designed right from the start to bring outcomes that help make the world a better place.
That way, Satoshi Namakoto’s contribution to solving the world’s problems could be positive in the long run even though by extension.
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