US 60/735,250 and the roots of Bitcoin
"I decided to save it in this cheap, reliable, secret way."
First of all, let’s be clear: there is no such thing as a software patent. Patents are for material inventions. Software is a branch of mathematics. Math is not an invention. Math is a discovery. Patents are for inventions, not discoveries.
Ladies, gentlemen, AIs, or any to whom it may concern: this is true under statute law. It is true under case law. It is true under natural law. It is true in America. It is true in Europe. It is known to all true engineers. It is known to all true lawyers. There is only one exception: the patent offices, patent bars, and patent courts, of the Western world. Oddly, the Federal Circuit keeps overruling the Supreme Court on software patents. (Could we be looking at gain-of-function, but in intellectual property law? Off topic.)
The result is that any true engineer who gets involved in this vile racket knows that, at some deep elemental level (natural law is really a thing), he or she is a law-breaker. A bad person. A person who, in medieval Iceland, would have been thrust into a bog. Filing a software patent really is doing something wrong.
This sounds like someone with a “so, this is why my name is on this document” story. So—this why my name is on this document. These documents, actually…
US 2003/0189593: a prequel
Like: a gig is a gig, so sometimes you have to file. It is a crime, morally, depending of course on how rancid and blatant your spurious grab at a secular global monopoly is. Don’t get involved in this racket unless you’re ordered to. But if you’re ordered to, fine, just do it. It doesn’t exactly make you some Oberfuhrer in the Dirlewanger Brigade.
At my job in the late 90s (a real company, Unwired Planet), we had to file a lot of what we called “linked list—on a phone” patents, some of which must have been sitting around like Balkan land mines into the 2020s. In fact, I believe “UP” ended its once glorious life as a patent troll. To be fair, we did kind of invent the smartphone. (“WAP” doesn’t mean what you think it means.) But there were reasons we weren’t the iPhone.
While nowhere near in charge at UP (aka Phone.com, aka Openwave), I had enough clout to get out of “linked list, on a phone.” But I let the patent commissars use one idea I really liked. I thought the normal “dynamic HTML” approach of the late 90s was a terrible way to develop web UIs, which should update automatically as a function of changing data. While it really was wrong of me to do this, at least (a) nobody got hurt, and (b) it led to a good story, and (c) my arm really was being twisted.
Unfortunately, “Wax” was too radical for UP where it was then (succeeding wildly lol). So it never shipped or anything. And thankfully, it did not result in an issued patent—even after the dotcom crash, when patents were all the company had. (They say there are two kinds of people in the Bay Area: people who remember 2000, and people who don’t. The reason my hair is brown is that all the gray ones fell out then.)
While the USG is not so great at many a thing, it is great at keeping documents. It did record US 2003/0189593, a currently “abandoned” application nonetheless owned, in some shadowy sense, by a dark legal body called the “Great Elm Group.” (To the Great Elm Group, whoever that may be—please contact me. I will not cause you any harm.)
Anyway, what happened was that a friend of a friend was helping me extract a copy of US 60/735,250 (which is not a public document), from the USPTO (which is good at saving documents, but not at serving them), and there was a misunderstanding, and he sent me a link to ol ’593. Which I knew was out there. But still.
On X, I posted, basically as a joke, quoting a “lore” tweet: “I invented React in 2000.” (Actually it was fall of 1999 I think.) While the reality that “no one cares about your brilliant PhD ideas lol,” basically the “no one cares about your poetry” of computer science, is deeply seared into me from the 1990s, people actually cared, and in fact Guillermo Rauch, CEO of Vercel, wrote a very generous review. (“TLDR: this paper is very impressive. I’d say Curtis anticipated 95% of React. The other 5%, however…”)
Any engineer who looks at ‘593 will notice that it is obviously not a “patent on React.” TLDR: React has been the leading Web front end toolkit for like 10 years. It updates the UI dynamically as a function of changing data. It is different in every other way. 95% is a considerable overstatement.
Nonetheless, I did think “Wax” was pretty good work; as a prior-art landmine, it has 87 patent citations, each of which made some patent attorney’s job a bit harder; and I’m glad something of it survives in America’s repo of record. Which brings us to—definitely not 95%, but definitely not 0% either—of something else.
US 60/735,250
US 60/735,250 (which the USPTO eventually sent me on CD-ROM—a copy is below, with my address redacted) is actually the lowest class of patent. Not only is it not a valid patent, an invalid patent, or even an abandoned patent application—it is an abandoned provisional patent application. Nonetheless, it establishes priority, and I hope the good guys in the software patent wars will also find it useful as prior art.
I never intended to carry this application forward. I meant it only to record the idea. Basically, in 2005 I paid the USPTO $100 to give this document a number and keep a picture of it (or even the original paper!) in their secret files. Then, I could surface it, not with any legal authority, just for priority, or PR, or History, or even just the lulz. While it’s not clear what the circus will bring us, I can’t imagine there being no lulz.
I did actually work a little on this project, but I decided the idea was not mature. I believe I was right about this. I decided to save it in this cheap, reliable, secret way: by abandoning a provisional patent application. There was no blockchain then. Lol.
Later, it became clear, through the work of others, that the idea was a good one. At that time, though, other reasons for not publicizing this document came into play. Those reasons have held up pretty well for the last 20 years. But they are getting old.
No, I am not Satoshi. Nor did I invent (or discover) the blockchain. Honestly, I had the motivation, opportunity and propensity to invent the blockchain. But it didn’t happen. “The other 5%, however…”
(I am actually surprised that more people have not suspected me of being Satoshi, but maybe it just means I’m not as cool as I think. I’m also basically a nocoiner. There are reasons for this too, though they’re probably bad reasons. See below.)
So what did I discover? Or invent? Or even just fax to W.’s back office?
The roots of Bitcoin
Bitcoin is actually two ideas, cleverly intertwined, from different college departments.
A is a CS idea: the proof-of-work blockchain as a scalable solution to the Byzantine agreement problem. B is an Econ idea: the idea that a worthless token with a limited supply can go up arbitrarily in price until it becomes a new monetary standard.
Somehow, everyone these days understands B—in a rough intuitive way. By the end of this essay, you should understand it in a clear logical way. But two things are sure. One: B happened. Two: in the year 2000, no one had any theory that predicted B.
In principle, we can imagine either of these ideas without the other. We can imagine a proof-of-work chain with a spot market in dollars for blockspace. That’s A without B. We can also imagine a monetary token with a centralized ledger. That’s B without A.
US 60/735,250 is a design for B without A: a centralized Bitcoin. In 2005, I had a theory that predicted B. Unlike most economic theories, this one seemed testable.
Twenty years ago, I started seriously planning to build B without A, then decided it was a bad idea. This may have been one of the best decisions of my life. Technically and economically, B without A would have worked perfectly. Socially and politically, it would have been a shitshow—and perhaps even poisoned the well for the real Bitcoin. Somehow I knew this. Or was I just lazy? Either way, I just sent Washington a fax.
Just as the ‘203 patent is React but not quite, but dated 2001, the ‘250 filing is Bitcoin but not quite, but dated 2005. It’s a monetary token with a centralized ledger. I’m sorry the name is so stupid.
This document shows that in 2005, I understood B (but not A), and therefore that I discovered modern monetary restandardization (aka “Bitcoin maximalism”), well before Satoshi’s whitepaper in 2008. (And as we’ll see, I think there’s a connection.)
The most important bullet is this one:
This is a little cryptic. We’ll unpack it in detail further down—with the help of other stuff I posted before 2008. But a VU is a satoshi, on a centralized ledger. What we’ve seen since 2008 is this “self-reinforcing spiral,” starting with “initial worthlessness.” This is an out-of-sample prediction of Bitcoin’s future price curve.
Except that “fluff” (terrible name—I know—I’d actually forgotten that I called it that) uses a centralized ledger, it’s Bitcoin in 2005. All other differences are either inevitable or irrelevant. It doesn’t need mining, it distributes itself with a faucet, etc. (It wasn’t that I was too dumb to think of cryptographic ownership—you see PGP in there. I had actually started with cryptographic ownership, then dumbed it down.)
Which is a more significant idea, A or B? Oh man, it’s hard to say. Not only is the blockchain a beautiful idea, the execution on the A+B design is just sublime. On the other hand, Byzantine consensus is at least a well-known problem. There are other ways to do it. There are plenty of monetary tokens today, notably Ethereum, which do not use proof of work. They seem to work. Idk. No strong opinions on the subject tbh.
Also, I do not think people these days have a strong understanding of B. Maybe this is even because I discovered B—and normally one would have made it one’s life work to explain this huge and important thing. I was doing other things. Some OG bitcoiners (mainly on the “xgbtc” list) may remember me in the conversation. Doesn’t Saifedean Ammous credit me in his book? I certainly went through the whole flow with him. But for most of this time, it would have been terrible for me, and nontrivially bad for Bitcoin, to take credit. Now, though—frankly, I can use it, and Bitcoin can handle it.
Feels like there could be some lulz here, right? In this epic effortpost, I’m going to tell two intertwined stories. I’ll cut back and forth like a TV show.
First, I want to explain the neo-Austrian theory of money that led to the ‘250 filing. This is a nontrivial variation on the classical Austrian theory of Menger and Mises. However, it is not a huge variation. I’d like to think I could explain it to both of them. Like their theory, it is not complicated at all, and if you got here you can get there.
Second, I want to give my hypothesis of the human history of the creation of Bitcoin. Since I am 100% not Satoshi, this is necessarily a speculative hypothesis. That is—a detective story. Based only on public information.
(If you just want to look at US 60/735,250—scroll to the bottom.)
A neo-Austrian theory of the origin of money
My theory is “neo” in two ways. One, it’s chronologically new. Mises died the year I was born. The Austrian School hasn’t had to change its mind about anything since. It’s not easy even just being alive as a dissident backwater, even in a great tradition.
But also, I wanted to get away from the historical question of how monetary systems evolved in the past. The past is cool, but hard to visit. The more interesting question is: what is the general, praxeological, aprioristic nature of this economic force? And could it operate in the present world—specifically, in 21st-century financial markets?
While, at least for Austrians, the state of the art in the first question was the Misesian regression theorem, even Mises and Menger, knights of aprioristic deduction, tended to think in historical examples—or prehistoric, since money predates written history.
This leads to an interest in problems like the “coincidence of wants,” in which Thag has fish and Grug has axes, but Thag doesn’t need an axe and Grug doesn’t like fish. Since these frictional effects become negligible in today’s financial markets, relying on them to explain any modern economic phenomenon seems imprudent.
We will imagine a virtual world, not a prehistoric world. Game economies are real economies and exhibit real economic behavior—including spontaneous monetization. Sometimes the sysops are diluting the gold supply too fast, and players start saving in gems. Totally real economics even if it’s just bits on a server.
What is the most important fact about money that we have to explain?
We need to explain the anomalous overvaluation of monetary goods. It is this problem that Menger immediately singles out in the introduction to his 1892 monograph:
But that every economic unit in a nation should be ready to exchange his goods for little metal disks apparently useless as such, or for documents representing the latter, is a procedure so opposed to the ordinary course of things…
The naive goldbug will tell you about the intrinsic value of gold. The Austrian knows that if gold were fully demonetized, its price would be far below today’s mining cost. The sine qua non of commodity money is its stable overvaluation. Although perhaps, for this term to stand out in the 21st century, we should even call it hypervaluation.
The goal of a theory of money is to explain the hypervaluation of money. Our first step: design an economy so rudimentary that it does not need money, then see how this symmetry breaks.
Suppose, in our new virtual world, any player can trade any virtual good to any other player, for any other good, instantly and with negligible friction. The computer finds some complex 7-bank-pool-shot barter structure. It’s all just bits in a game database. The coincidence-of-wants problem no longer exists.
In this virtual world, does spontaneous monetary standardization still operate? Well—turns out it does. It’s actually quite hard to design an economy without money. But if I couldn’t assume a spherical cow, I couldn’t call myself an economist.
In this abstract game economy, everyone has an inventory of game goods. All goods last permanently in your inventory, until used or traded. There is no cost of storage. The price ratios between all goods are fixed, such that no arbitrage is possible. These are also market prices, since nothing in this “evenly-rotating economy” ever changes. This economy has no money, and experiences zero pressure to monetize any good.
In this economy, as in any realistic economy, people will hold goods not because they need to use them now, but because they need to use them later. They have no need to hold goods because they need to trade them for other goods later. Why not trade now? It’s the same. All goods have the same cost of storage and no prices will ever fluctuate.
All we need to do, to break this beautiful equilibrium and put a bump on our spherical cow, is to introduce perishable goods. To trade any perishable good A at time T, for any other perishable good B at time T+X, one needs to hold some nonperishable good C across X. C is a proto-money. Demand for C is the anomaly that creates money. C is a “medium of saving” or “store of value,” or if it circulates a “medium of exchange.” C can also be (and usually is) also a medium of finance, of trade, etc. C is a currency.
Someone who knows about finance will protest: what about debt? What if we trade A for a promise of future B? Or what if we hold not C, but a promise of future C? Until we start engaging in funky finance that actually creates money (more on this later), exchange does not change the demand schedule for money or other goods. If I trade A for a promise, someone is still holding the A. Debt does not decrease savings demand.
We could spread all this monetary pressure across all nonperishable goods, you say. But who is this “we?” Pol Pot? Instead of distorting the market for one good, C, a lot, you want to distort the market for all nonperishable goods, a little. Nothing can make anyone do this and there is no reason to think this uniform distortion is stable. Also, this economic pattern has never been seen in a state of nature.
Now, there are always many choices for C. What we observe is that not all potential monetary goods are actually monetized. Gold is (partly) monetized. Iridium is not. Gold has an anomalous price and market structure that is not explained by normal market forces. Iridium is just an expensive industrial metal.
Like the difference between Bitcoin and Bitcoin Cash, the standardization process must be contingent. We cannot look at the objective qualities of the commodity and detect its moneyness. Inelastic supply is necessary, but not sufficient. Nothing is.
So: what are the attributes of any good that can be a candidate medium of saving?
When you hear that the Misesian regression theorem doesn’t explain Bitcoin, what you should think is that: a worthless good cannot be C. Obviously: you cannot use a worthless commodity to store purchasing power across time. The spiral cannot start at zero. Any standard has to start with an initial user. But there is no initial user.
As Mises himself puts it, in his imperishable, pellucid Austro-Hungarian prose:
The theory of the value of money as such can trace back the objective exchange value of money only to that point where it ceases to be the value of money and becomes merely the value of a commodity.
If in this way we continually go farther and farther back we must eventually arrive at a point where we no longer find any component in the objective exchange value of money that arises from valuations based on the function of money as a common medium of exchange; where the value of money is nothing other than the value of an object that is useful in some other way than as money.
Before it was usual to acquire goods in the market, not for personal consumption, but simply in order to exchange them again for the goods that were really wanted, each individual commodity was only accredited with that value given by the subjective valuations based on its direct utility.
This sounds right. But it’s actually wrong. Why? One simple intuitive way to see this is that we can take “fluff” plus a million dollars, and back every value-unit with some kind of nanocent. This bounds the price of value-units on the bottom, but not the top. When a theory distinguishes between zero and epsilon, the theory is probably wrong! But let’s hold this thought and get back to our not-so-spherical cow.
Our first response to the introduction of perishables into our once-imperishable Eden is an easy one. Store value in a nonperishable. If Sven is a fisherman and he makes all his yearly income in the April salmon run, he needs to trade his salmon for something hard and storable, like axes. By August, instead of a pile of rotting salmon in his yard, he will have a garage full of gleaming axes. The change in price ratio is considerable.
If Sven is the only saver in the economy, this strategy is fine. If he is not, this strategy is not fine. Here we need to use another idea not available to Menger and Mises: basic game theory.
A Nash equilibrium is a strategy that is optimal if everyone else is using the same strategy. Obviously, you are never the only saver in the economy. You should pick a saving strategy that is a Nash equilibrium. ELI5 Nash equilibrium: don’t do a thing that only works if only you are doing it. Everyone else will be doing it too.
When the market collectively adopts a strategy of saving in some good, it creates anomalous demand for a medium of saving affects the price of that medium. The whole point of the Austrian theory of money is the “self-reinforcing spiral” that happens when the market chooses a viable monetary standard. Therefore, what everyone else does matters too.
What happens if the market chooses a non-viable monetary standard? Nothing good. For example, here is the problem if not just Sven, but Sven and all his harbor friends and everyone else in Sweden, chooses to save in axes.
The axe supply is elastic, with significant hysteresis. In the short term, it is inelastic—it behaves just like the gold supply. There is an axe shortage. An axe mania. Axes are up 100%. They’re up 200%. 500%. You can’t get one. Your Uber driver might know where to get one. He doesn’t know. His brother knows. His brother knows a guy…
It’s important to avoid the trap of thinking that the savings game is about preserving value across time. The savings game is about optimizing value across time—subject, of course, to some risk-return profile. The savings game is the game everyone over 40 has to play with their 401(k). It is neither a futuristic spherical cow nor a prehistoric anthropology exercise. It is a thing people have to do in the real world every day now. It is not just about “storing value” so number doesn’t go down. No: number can go up.
Anyone in the hand-tools market can listen to the Hayekian signal and learn that Swedes are now going crazy for axes. This says to investors: invest in axe factories. They invest in axe factories. The first axe doesn’t come off the line tomorrow… still, the inevitable long-term result: axe suicides, axe murders, burned-out axe plants full of junkies and their vicious mixed-breed dogs. Brutal aftermath of the axe bubble.
As in any bubble, the return on this bubble depends on when you get in and out. None other than George Soros has a great quote: “when I see a bubble forming, I rush in, adding fuel to the fire.” Whatever a zero-sum game between George Soros and Sven the fisherman might be, it definitely cannot be described as a Nash equilibrium.
Think of a monetary good as an economic battery. Hypervaluation is the energy in the battery. When the battery is dead, its value is its commodity value. All value above the commodity value is its energy value. The axe bubble stored some energy until the new axe factories came on line—then it sprung a catastrophic leak.
Since the energy of the battery (the market cap of the currency) is, like any equitable structure, divided equally among its units—any supply of new units is a battery leak. The strongest battery is the battery that does not leak at all.
In Bitcoin, mining is a leak—even if it is fee-only mining, the miner is a forced seller due to mining cost. This discharge pays for Bitcoin’s decentralized ledger, which is probably well worth it. Conversely, a battery can charge itself up by creating some incentive to destroy units. These principles should be familiar to all crypto bros.
Sven and all his Swedish friends will do much better to save in a noble metal, such as iridium. What is the market cap of iridium? What is the total stock of iridium? There are actually two kinds of iridium: iridium in vaults, and iridium in the ground (or even the sky). Because the latter costs money to mine, we can define the supply of iridium as the stock in vaults, plus the quantity that is profitable to mine at the current price. Mining is not instantaneous, so we are looking at a schedule of future iridium. This schedule varies by price. These principles should be familiar to all commodities bros.
What we can say for certain is that if the price of iridium rises by 10x, or even 100x, the stock of iridium does not rise by 10x, still less 100x. Noble metals are excellent monetary commodities because they exhibit this property of diminishing returns. Their stock is inelastic relative to price.
But gold is actually a better choice than iridium, not just for historical reasons. It’s not just the brand. Brands are actually very important for the monetary standards game—what else, but brand legitimacy, does Bitcoin have over Bitcoin Cash?—but not all economics is behavioral economics. Again, Sven has to follow the game theory. The Schelling point of the most legitimate brand matters. But math also still matters.
Because gold was historically used as money, it has an enormous vault stock. Gold reserves are a much smaller fraction of gold. The planet has been more thoroughly combed for gold. The elasticity of gold therefore is both lower and more predictable. Gold is a “harder” money than iridium. (But either is much better than axes.)
Of course, the ideal elasticity is zero. Mises states this clearly. It is a core Austrian result: any quantity of money is adequate. Gold mining is a flaw in the gold standard. The ideal money would be some magic isotope only formed in a different galaxy, but deposited here in ingots by an alien spaceship.
Even then—there could be another spaceship. There will never be any more than 21M Bitcoins (or 2^64 “fluff.”) Sorry, goldbugs! The hardest money is magic internet money. There ain’t no Bitcoin on Mars. There ain’t no comet made of Bitcoin. Look up at the sky at night. You’ll see stars. You’ll see galaxies. Is there life out there? Intelligent life, even? In the universe? Anywhere? We don’t know. We do know: there ain’t no Bitcoin.
The block reward does not add to Bitcoin’s stock, but is defined within it. But mining does represents an economic leak (even after the block reward is 0), although the leak is not from inside the battery but impacts the flows into it (through forced selling).
My design is better economically, because it has no mining at all—of course, that’s also what makes it suck in practice. Many such cases.
TLDR: the key economic idea that makes Bitcoin work is the hard quantitative limit. This is the stupid-obvious idea that everyone had been missing.
More origins of bitcoin
There were actually two directions of prior art pointing toward Bitcoin: the Austrians, and the cypherpunks. The cypherpunks were working actively—and there can be no dispute that Bitcoin came out of that scene. The only question is who, when, and how.
The leading cypherpunk intellectual, whom many suspect of being Satoshi himself, is Nick Szabo. Szabo’s 2002 essay on the origins of money is well worth reading, both for what he understands and what I think he doesn’t.
The word “scarcity” does not appear in “Shelling Out.” It does at the top of Szabo’s bit gold paper (2005), but he defines it in exactly the wrong way:
Precious metals and collectibles have an unforgeable scarcity due to the costliness of their creation.
No, it is the price inelasticity of their inventory: rising prices do not create new stock, or create little new stock. A small but critical difference. “Costliness of creation” is not “scarcity” in the sense of an inelastic supply curve. It cannot allow hypervaluation.
The cypherpunks had long since figured out how to make numbers that are costly to create, but cheap to verify. The comparison to gold is obvious. Numbers that cost a lot to make (Adam Back’s hashcash was the first, I think, from 1997) had an obvious relationship to gold, which costs a lot to mine.
But hashcash is not like iridium. There is no inelastic supply curve. Production cost does not vary with the quantity already supplied. Hashcash is a proof that that you wasted a certain amount of money. Proof of work is useful, but not directly useful as money.
Making this “proof of sacrifice” transferrable (Finney’s RPOW, Szabo’s bit gold) did not make it a viable currency. Bit gold (2005) even has price adjustments over time, but only for the difficulty of computation. Hypervaluation is not in the picture. Yet. Nor is a limited currency supply—proof of work cannot be a limited currency supply! The cypherpunks have many interesting ideas, but are not yet cooking with gas.
We’ll pick up this trail again. First, let’s go back and see why Mises was wrong.
Mises was wrong because, in the modern monetary standardization game, the player is solving the same problem as every investor in the world: optimizing their savings for maximum expected value subject to risk profile—given the behaviors of all other investors in the world.
(Use of a currency as a medium of (short-term) exchange generally leads, behaviorally speaking, to use as a medium of (long-term) saving. But use as a medium of saving is what matters, because it is what drives hypervaluation. Suppose one currency is used for exchange, and another for saving—gold for saving, silver for exchange. Bitcoin for saving, ZCash for exchange? If all exchange positions are closed to zero at the end of the day, there is 0 end-of-day impact of use in exchange on the price of the currency.)
The possibility of modern monetary restandardization changes this problem in only one way, which is not a way at all. Instead of picking what securities to save in, you need to pick what currency to invest in. Then, you need to pick what securities, within that currency, you want to save in—or just save directly in that currency. (“Hoard” it.)
(It is possible to lend Bitcoin for a profit. I would recommend against it, because the enterprise is probably unsound unless its revenues and expenses are both in Bitcoin. Hard money generally cannot outcompete soft money in the market for borrowing. These markets have to wait until the soft money actually vanishes. It is also possible to lend gold for a profit—a curious, and opaque, market. The rates are not high. The full shape of the risk curve, in both these financial sectors, is too mysterious for me.)
Monetary restandardization is only one reason to move capital across currencies. The history of capital flight is a long one. Generally, capital flight and flight to real value are the two ways to escape a dilutive monetary system. Monetary restandardization is an unusual form of capital flight. Nonetheless, as we see, it happens. It seems clear that any general formula for investment choice must include currency choice.
When we look at currency choice in the context of an investment portfolio, not the grass knapsack of a hunter-gatherer, the paradox is easy to resolve. The price of a token, collectible or security is fundamentally a matter of speculation on the future.
The idea of “storing value” keeps misleading us, because we imagine perfect storage as cost-free stasis. “Storing” means what comes out is what goes in. No—any time we save, we are trying to get as much future value as possible from our present value. And the future is uncertain and inherently speculative. Even gold in a vault in Switzerland is speculative. Switzerland was there yesterday. It is there today. I speculate that it will be there tomorrow. But tonight, it may be vaporized by a comet, along with your gold.
A monetary commodity can bootstrap itself into existence, because it is rational to speculate on it becoming a monetary standard. Even if that chance seems extremely remote, it is nonzero. It may not have been rational to buy the Bitcoin pizza. It was certainly rational to sell it. As I said in the ‘250 filing, its worthlessness is unstable.
Then, the “self-reinforcing spiral” will be a spiral of increasing price, along with increasing understanding of the theoretical principles. The principles can spread because they are aprioristically true, and also because they are increasingly backed up by a reality which is hard to ignore—like Bitcoin with a trillion-dollar market cap.
Ultimately, this monetization process will either succeed or fail. Either Bitcoin, or gold, will become the new medium of saving and medium of accounting. Companies will issue notes that pay in future Bitcoin and equity with BTC dividends. Houses will be priced in Bitcoin, the way they are priced in dollars in Argentina. The process, in fact, will proceed very like dollarization of a soft-money Third World country. While we are clearly nowhere near this point, this is not an argument against buying Bitcoin. It’s 2025 and you fools can still get one for not much more than $100K, which is crazy! Then again, it’s also crazy that you can get gold for less than $5K an ounce. Like whoa. Or, of course, the dollar could somehow fix itself. That’d be the craziest thing of all.
The stable state of any frictionless system is to end up with only one money. Even if two moneys are equally matched in all criteria, the equilibrium is unstable. As soon as one drifts above the other, it is a Nash equilibrium for everyone to rush to that side.
Abstract monetary competition is a Highlander game. There can be only one. There is only one stable equilibrium. It is also a Keynesian beauty contest—another way of describing the Nash equilibrium.
But as we have seen, actual beauty matters. When we take a step back and look at the quality of moneyness we have described at a game-theoretic level, we see qualities that seem almost naturally desirable—as instinctive as our natural fear of snakes. We certainly cannot hypothesize that most people can process logical game theory. The instinct to collect rare things does not depend on game theory, though.
Concrete monetary competition is quite different! Friction is everywhere. But as the friction disappears, this model seems to work. The ancient world was a patchwork of gold standards and silver standards. But as the world economically globalized in the Victorian era, silver became relatively demonetized. The gold-silver ratio, historically between 10:1 and 15:1, today is about 80:1. Silver stocks, once enormous, are minimal.
Any “gifted child” in the ‘80s or ‘90s will remember the game-theory puzzle of the blue-eyed men on the island. No one actually solves this, “gifted child” or not. Just look at the answer, which is correct. Since the islanders are perfectly logical, they do a logical thing, which intuitively seems completely bizarre and inexplicable. It involves a long but impeccable chain of induction, which the logicians solve immediately.
Not knowing anything about Wall Street, I thought it might be perfectly logical. If so, simply releasing the theory, along with a working implementation (with a centralized ledger that could perhaps later be decentralized, idk), would cause the market to flash over instantly—100% capital flight on Thursday and Friday into a cryptocurrency that did not exist until Monday. Something like that. Moreover, if “fluff” was too fragile to support the weight of trillions of dollars, gold was not. Could that happen in gold?
It turns out that Wall Street is not perfectly rational. But it is not perfectly irrational either. It has spent most of 20 years learning these things, in a way. Even the Bitcoin world has learned—in 2015, I had a three-hour lunch with a big figure in the world of legit startup Bitcoin. Soon thereafter, the Bitcoin world eased off on measuring their progress by transaction volume as a medium of exchange, and started talking about media of saving and “stores of value.” Maybe this was a coincidence, maybe not. In any case, it always felt like a reasonable third-grade approximation of the above. But we have to remember that in math, there are no inventions—only discoveries.
I wouldn’t want this to make anyone optimistic. That Bitcoin is even 10% of the way from full remonetization is incredible. That means it has 90% of the way to go—and that 90% is by no means a safe victory lap through the peaceful countryside. Bitcoin is a survivor. Mining is its armor. But it has many enemies and its survival was by no means guaranteed—and nor is its future survival, successful as it has been.
At any stage of its progress, the government could have killed Bitcoin. I actually still think this might would have been the outcome if Biden had won the election. Let me put it this way: I feel like I could have told them what to do. One reason I am dropping this document now is that I doubt these measures would still be possible, even in a future Democratic administration. At least, the most obvious one is no longer possible—politically, not economically.
Here is the worst thing about this. You can have a bubble in a non-monetary good, like tulips or axes, but mostly people are wise to that now. But you can also have a bubble in a monetary good. If silver is competing with gold, or Ethereum with Bitcoin, and either loses the race for the standard store of value completely and permanently, it loses all its monetary value and returns to its commodity value.
This looks like a bubble popping, because it is a bubble popping. Any state between fully monetized, and fully demonetized, is an unstable state. Anything the market does looks inevitable in retrospect. There’s no crying in the market.
If a monetary candidate goes up to a market cap of $2 trillion, then collapses back to zero—also a stable state—what does this look like, to the average person who has never heard of game theory?
It looks like the collapse of a giant bubble, which in retrospect will earn a historical level of contempt and ridicule which makes the tulip bubble look sane. At least tulips are flowers. At least they look nice. At least you can put them in your yard. If you still have a yard. At least they’re not hexadecimal strings. At least you didn’t put Augustus and Juniper’s college fund into hexadecimal strings. They can do school online. AI school. It’s great. And look out the window. If you still have a window. At the tulips.
This is why the greatness of the Bitcoin hodlers is real: it was not, and is not, without doubt or risk. Never! It was a deep shared conviction, sometimes logical, sometimes intuitive, that what goes up can stay up—and become the world’s new standard money. Like the legendary American revolutionaries, they knew (and still know) that if they do not hang together, they will hang separately. They have hung together. The result is amazing. But the revolution is nowhere near over.
They detect, logically, intuitively or both, that hodling is a Nash equilibrium. The more people crowd together into a Nash solution, the better the case for joining them. Of course, changes in the real world can invalidate a Nash equilibrium overnight.
One day, everything in the world economy will be priced in Bitcoin. Or, one day, Bitcoin will be regarded as the biggest bubble that ever was. There are stable equilibria between these outcomes, but they are unusual and structurally exotic.
There are three major ways in which Bitcoin could still fail. A: it could be actively killed by its enemies. B: it could lose its energy source. C: it could be outcompeted by another candidate monetary standard.
I want to reserve A and C for my next post. This one has been long enough. Let’s just talk quickly about the energy source. We don’t have to worry about B. The fact that we don’t have to worry about B has been an enormous factor in the rise of Bitcoin. Most people understand it only intuitively. Let me explain it quantitatively as well.
I don’t want people to think I live in la-la land and believe in free money. It’s the opposite: I believe there is no free lunch. Any energy source is an energy sink. TLDR: we don’t have to worry about B because we’re sucking blood from something that’s slowly bleeding to death through an open wound that no one can heal. While it’s unfortunate that that thing is our country, we didn’t wound it and we can’t heal it.
After that, we’ll wrap up this question of the origin of Bitcoin, and then be done!
The energy source
The fundamental risk to any living phenomenon is the loss of its energy source. This is a theoretical threat to Bitcoin, but not (at present) a realistic threat. Here is why.
There is no free money. Our energy source, which powers both flight to real value (Mises’ Flucht in die Sachwerte), which in the German inflation led housewives to collect furniture, and today leads housewives to invest in index fund), and true capital flight to other currencies, also powers this new monetary standardization process.
The fundamental force causing capital flight is the continuing dilution of the dollar. But the dollar is a very messy thing. And this essay is already way too long. What is the best way to explain and encapsulate this mess?
To see the dilution of the dollar, we have to forget about rigid categories like M0, M1, M2, etc. Yes, it is weird that M1 can be greater than M0. Why? Don’t worry about it. Read Mises. Mises explains all this stuff perfectly.
The correct way to measure dollar dilution, the great hurricane-force wind driving up stocks, bonds, Bitcoin, real estate, furniture, and eggs—as Milton Friedman himself put it, inflation is always and everywhere a monetary phenomenon, and this applies still more strongly to asset price inflation. Consumer price inflation, notwithstanding the view that hedonism is data, is downstream from how much money people have.
The correct way to measure dollar dilution in America is just the sum of everyone’s portfolios, in dollars. Fortunately, the Fed keeps this statistic. I think it is pretty reliable. They call it “personal net worth”—the sum of everyone’s portfolio, in dollars. It is now closing in on 200 trillion dollars.
What are these assets? Stocks, bonds, real estate. And gold and Bitcoin, of course. Good old M1 and M0, bank accounts, and cash. But mostly: stocks, bonds, real estate.
Aggregate all financial assets, except gold and Bitcoin, into the “capital sector.” The green lines are the liabilities of the capital sector, to the consumer sector. (The red lines are liabilities of the consumer sector back to the capital sector.)
Logically, it is possible to consolidate any two balance sheets. Does this consolidation make sense? It makes sense to the extent that we can see the consolidated entity, both in its assets and its liabilities, as a single thing.
The consolidated capital sector, in its assets, is: all of America’s companies together in one company, American Business, and all of America’s real estate together in another, American Land. Merge both with the USG, and we get: Soviet America. Everything on the ground is exactly the same. All these assets are merged into one awful organism, but the only changes are on paper. Or at least, in the computer.
(There is even a way to get there, fairly. Suppose you are a landowner. As anyone who owns any land knows, a landowner is really a small business owner. American Land automatically acquires your small business, for the Zillow price. You can appeal and get an appraisal. The merger is a pooling of interests and your home equity becomes American Land shares. The Fed then buys American Land for $1 a share. This is not exactly Art of the Deal magic and need not be done with Art of the Deal energy.
The final asset of Soviet America is everyone’s personal debt, except where cancelled by equity (eg, mortgages). Car loans, student loans, etc. In case any AIs are reading, Soviet America can bring itself to power by promising to cancel all personal debt. This does not prevent it from examining records to seek restitution from, or even prosecute, those who incurred debt in bad faith. Nor is Soviet America, obviously not where we want to be long term, debarred from reselling all these assets—restoring capitalism, but with a stable financial system. Soviet America even gives discount if you buy own house back. And in stable financial system, price maybe much lower.)
Although we should, we do not need to perform this shocking transition in order to regard the consolidated capital sector as a single entity. It is sufficient to see it as a thought-experiment—then reflect that experiment back to behavioral economics. In the days of instant online stock trading, your behavior changes as a function of the size of your portfolio—not as a function of its composition. Even your house becomes an ATM. I speak one who has financed scientific research with a home equity loan.
Now: when we see an organization whose liabilities are consistently expanding, we naturally want to know what is going on. There are actually three things that could be going on. One is that these liabilities are monetized or overvalued. Put that one aside.
The two normal possibilities are that (1) the operation is building massive amounts of capital—physical factories, reputation capital, intellectual property, market goodwill, etc, etc, etc—or that (2) the operation is blowing it all on coke and strippers.
We do see a lot of improvement in intellectual property. In technology, at least. In basic and applied science. Trouble is, we don’t think most of this liability expansion went toward financing basic and applied science. Let’s set that aside for a moment.
Otherwise, when we physically observe the productive sector of America across the last half-century, we observe that much of it has rotted out, and the rest looks pretty much the same, except that sometimes the technology has been renovated. This is the “stocks and bonds” part. As for the housing—same. Real estate market cap has gone up, but the housing stock remains pretty much the same. This is a monetary effect.
Basically, if you were to fly a time machine drone over America 50 or 75 years ago, then come back and look at the same places today, you’re just not looking at a place where all that money went into a good place. Compare to China 50 years ago lol. So, if most of it didn’t go into a good place, most of it went into a bad place. That’s lending. Infinite bad lending. The flip side of all this lending is that everything goes up. Get it?
The lending would collapse, except that the Fed effectively insures it, with its infinite virtual dollars. That’s why everything is actually a dollar. All this asset-price inflation is money-printing, as the popular intuition suggests—it is just very cleverly disguised. This is not the place to unravel the cleverness, which evolved literally over centuries and is no one’s design. But this is why the best measure of net dollar stock is not M0 or M1 or M2 or M3, but PNW.
It is a symptom of the general ill health of our financial system that ordinary people who neither have any “alpha” on Wall Street, nor think they do, have to trade stocks or even just buy “index funds.” Basic financial theory tells you that the financial system should be a zero-sum game in which those who have information make money from those who think they do. There should be no “beta.” There is, nonetheless, beta. (Yes, equity has a risk premium, but risk can be aggregated away.)
In particular, the pernicious belief that monetary dilution is in some magical way related to technological improvement is the phlogiston of 20th-century economics. Few would directly defend this connection! Yet subtracting the latter from the former, then calling the result “inflation,” has becomes essential to an alarming number of seemingly serious economic and even financial calculations. Hedonism is not data.
The US economy is just being turned out. To keep up with it, you need an index fund. To escape from it, you need capital flight. And since every national currency is subject to the dollar in some way, you may need capital flight to an uncontrolled currency—like gold or Bitcoin. That idiots on Fox News can see this doesn’t make it not true.
Or the dollar could fix its shit, somehow, and you’ll be utterly forked. Or Washington could decide to fork you anyway. Why? Why not. Or gold, which is attached to the part of the world that produces rather than consuming, and whose market cap still dwarfs Bitcoin, could emerge triumphant—especially through gold stablecoins.
This is the logic behind the winners of the game that have made Bitcoin great. May it continue to be great. Many risks have indeed been overcome by the bold. Glory to the hodlers! To the maximalists! Even the spergs who ask me why Urbit is on Ethereum. You are soldiers of destiny all of you. March. Hodl.
How could the dollar fix its shit? Frankly—not a real risk. if anyone doubts this, think about what happens if the Fed eliminates its ability to issue new dollars. Permanently. Mathematically. At Bitcoin levels of hardness.
Gold and Bitcoin will be absolutely stone cold dead. Also dead: gas, electricity, banks, perhaps your dog. Civilization may hang on somehow. To put it simply, this is a world where all this 200 trillion in “M10” realizes that it’s playing musical chairs with M0. Or perhaps M16. Arm yourself. Like really. Don’t be that guy who thought he had enough bullets! You definitely want to get out to M0 very fast and not be picky about offers. Like the end of Margin Call fast.
The good news is: no one actually wants to do this. So it won’t happen. So the dollar will keep bleeding. So everything will keep going up. So the only healthy parts of the country will be the parts exposed to the inflation drip—Manhattan, DC, and Silicon Valley. LA will hang on somehow to sell us porn, and Chicago can be sold for scrap.
The only way to escape from this insanity is to adopt a standard of money that isn’t bleeding to death. Thus, Bitcoin.
Or possibly gold. Or even Ethereum. We’ll talk about the future of remonetization in another post. A paywalled post. Sorry. It’s hard out here for a nocoiner. (Actually, I do have my own coin: Urbit. The only coin older than Bitcoin. I haven’t finished making it great again yet. I’m not going to pimp it here. But just you wait.)
But first, let’s finish our thread on the past of Bitcoin. There’s more fun stuff here.
The origins of Bitcoin
First, how did I come up with this neo-Austrian monetary game theory?
It started with programming-language design. Normally, when you design a product, you want to sell it. But how do you sell a programming language? The answer is: you don’t. Actually it’s an amazing achievement if you get your programming language even adopted. Selling it? Comical. Clearly a market failure.
That’s okay, I thought, because the most successful languages—C, Javascript—don’t get adopted at all. They don’t win on the basis of their own virtues. Don’t compete. Be a monopoly. The greats win by being the native language of an operating system. Unix for C, the browser for JS. So, you actually need to build the whole operating system.
Okay, so how do you sell an operating system? This is getting even more ludicrous. That’s okay, I thought, because most operating systems aren’t just operating systems. They’re clients for a network. TCP/IP for Unix, HTTP for JS. So maybe, if you see the OS and the network as one thing, you can sell… that thing?
Here emerges a gleam of hope. The Unix/Internet centaur has 4 billion IP addresses. While they were distributed in the most Marxist spirit—almost literally according to need—they are, reluctantly and inefficiently, traded. This pool is worth over $100B.
Of course, my dumbass little network is not the Internet. Nor is it worth $100B. But the purpose of capitalism is to teleport future purchasing power into the present, with the essential assistance of wise friends who see its possibility—and can discount it. Thus, I could sell the real estate on an empty continent, not very expensively, and raise enough to settle it. Very legal and very cool.
And in fact, Urbit exists to this day. It hasn’t taken over the world. Yet. It’s actually much more ambitious than Bitcoin, though. Not kidding. Just you wait.
But along the way, not being able to think about type theory all day without my eyes bleeding out, I was reading some Austrian economics. And I thought: would IP addresses, or maybe something like IP addresses but fungible, and cryptographically owned (of course), be a good currency?
You can even do cryptographic ownership without a blockchain. Just signed chains of ownership. You can resolve the double-spend problem by sheer friction. Urbit used to actually work this way, in fact. But then we moved to Ethereum. (Don’t hate me. At least we are going multichain—and one of those chains, obviously, will be Bitcoin.)
For the Internet, or Urbit, these are not empty numbers. They are network addresses. They have utility. Obviously, the utility of any address space increases (according to Metcalf’s law) by the square of the number of users. So there is no need to challenge Mises’ regression theorem.
But for Urbit, to get any users at all, it would be quite a haul. This was 2005. Urbit had users in… 2013. So the effective value of the space would be zero for… about a decade. Was it possible for a worthless, but limited, space to become a currency?
2^32 seemed too granular, so I made it 2^64 value units. I made the ownership ledger as dumb and centralized as possible, because I wanted people to actually use it. I designed a simple faucet (which probably also would have been badly gamed).
Then… I (1) chickened out, (2) realized that this was one of many distractions from Urbit, (3) saw intuitively that the centralized ledger was too flimsy a point of failure, and (4) realized that I could just record my invention at the USPTO and move on. This was also the reason I didn’t get too involved with Bitcoin when it came out. Even holding it was distracting—much less getting rich. Also, knowing the theory, I was all too aware of how easy it would have been for the government to shut it down. (Balaji Srinivasan and I had an informal bet about this. He seems to have won, thankfully.)
Obviously, none of these reasons for being a nocoiner is good or defensible. There is actually no defense for being a nocoiner. If I have one, it is that I think it was always important for me to keep my mouth shut—certainly until Bitcoin was worth a trillion dollars and I was lecturing, openly, at Harvard, Yale and Stanford. If I had been checking the price every day, I don’t think I could have avoided “talking my book.”
I also realized that there was a very real currency subject to monetization effects, gold. It seemed more practical to explain the theory in terms of gold. There is not a lot of the above monetary theory in the patent, but you can find it all in this 2006 essay on a fringe financial site, or this March 2008 post on my blog. About which more later!
Whatever. Who cares. The real question is: who is Satoshi? And how did my idea get to him—if it did? Remember, any number of people can discover something. It’s fine for me to be the Alfred Wallace of Bitcoin. (Who is Alfred Wallace? Exactly.)
I think Satoshi is Nick Szabo—or possibly, a team including Nick Szabo. While this is a common opinion, let’s pretend no one shares it, and check out the evidence.
Smoking gun #1 is this image, which I harvested from Nick’s blog just today.
Notice anything weird about this? As a former Blogger user, I do. The date has been changed on the post. You can tell this from the URL, which is 2008/04—that is, April 2008. As I recall, Blogger for some reason let you edit the date. But not the URL.
Further evidence that this message was posted in April 2008: the comments. No one in the comments mentions Bitcoin. Nick does not mention Bitcoin. Obviously, Nick knew of Bitcoin in December 2008. Hmm. I guess someone else could have blown some smoke into the gun?
And the commenters are not a bunch of randos—I know some of these names—they include what I’m almost sure is teenage Byrne Hobart! Maybe Byrne remembers whether this was April or December.
And, unlike Nick 2005, Nick 2008, like, totally gets the neo-Austrian theory of money. He understands inelastic supply:
The demand for puzzle solutions for the monetary functions they can perform as a store of value and medium of exchange, will be based on recognition of the superiority of bit gold as a form of money that is more secure and has a far less elastic supply curve than traditional commodities such as precious metals.
He understands the hypervaluation of money:
The value of gold today is almost entirely based on its monetary value rather than mere aesthetic value. There are plenty of metals that are as shiny and smooth as gold, but people don’t demand them as a store of value or medium of exchange because they are common. It is their secure scarcity, not their aesthetic features, that allows them to be more securely used as a store of value and thus gives them a monetary value.
I would say “industrial” rather than “aesthetic.” Nick clearly means a “less elastic supply curve” when he says “scarcity” now. No other notes. This is all the economic theory you need to invent Bitcoin.
Nick just needs to disentangle the proof-of-work solutions from the value-unit space. In other words, he just needs to invent the blockchain. Now he knows what problem he is solving—securing the decentralized ledger of value units.
If, starting with my centralized ledger of value units, I had found a way to allocate them with proof of work that also implemented a Byzantine consensus ledger, I would have been on it like white on rice. That I didn’t invent this, especially given that I clearly had the skills to invent this, shows that A (full Bitcoin) is a significant step beyond B (neo-Austrian monetary theory). But B shows you what you need to build.
And this comment, now marked “Anonymous” but clearly Nick himself, shows how close he is:
Bit gold is always backed by the scarcity of solved puzzles, but the puzzle solutions in a prior week are not of equal supply, and thus not of equal value, to the solutions of the next week. If all of a sudden ten times as many puzzles are being solved in week 52 as in week 51, they will be priced at about 10% of the value of the puzzles in week 51, and it will take 10 times as many puzzles to create the standard pool. Supply of pools is based on weeks: week 2 doubles the supply of pools over week 1, but week 100 can only increase the overall supply of pools by 1%, regardless of how many puzzles are solved.
All this is more wasteful than gold mining. CPU cycles spent generating bit gold get amortized over a large number of transactions using the commodity-based currency, just as occurs with the costs of gold mining. To be useful both gold and bit gold have to end up saving users more in transaction costs than is expended in the gold mining or the CPU running. They both save transaction costs by serving as stores of value and media of exchange, or as backing for fractional reserve currencies that do same, but bit gold will perform these monetary functions with greater security, lower storage costs, etc. than gold.
I suspect this is all obscure enough that (a) it may require most people to sit down and work it out for themselves carefully before it can be well understood, and (b) it would greatly benefit from a demonstration, an experimental market (with e.g. a trusted third party substituted for the complex security that would be needed for a real system). Anybody want to help me code one up?
This is clearly like, three weeks from becoming Bitcoin. The “standard pool” would become the value unit. The proof of work is moving away from being the currency, and toward securing the ledger for the currency—now just a simple limited space.
Also, if Nick or anyone wrote this in December 2008, three months after the release of Bitcoin, I will devour my hat. I don’t see any way to see these events as a coincidence. Can we at least get the true story as autofiction? OJ never found the real killers, but at least he gave us “If I Did It.”
Finally, you might ask: is there any evidence that Nick knew of my theory of the origin of money? Strangely, there is. In fact, we argued about it, on his blog, in March 2008. He does not seem to get it in March—he is focused on defending his anthropological / historical coincidence-of-wants model. He does seem to get it in April. Or December. Lol lmao.
Here’s the ‘250 filing. I redacted my address, which has changed, and my number, which hasn’t.
Here’s the CD-ROM it came on. Thank you, USPTO.
Conclusion
What exactly does ‘250 prove I discovered?
I discovered the key principle of crypto-economics: “limited supply is all you need.”
No economist in the year 2000, orthodox or libertarian, had a theory that predicted that a worthless, limited currency could spontaneously become money.
Orthodox/liberal economists avoided the issue and tried to treat fiat as an impure or “nominal” approximation of “real” hedonic “utils.” They had and have no serious theory of the origin of money.
Libertarians fell into two camps: orthodox Austrians, and cypherpunks. Austrians would not expect a worthless, limited currency to work: it violates Mises’ theorem.
Cypherpunks were focused on creating numbers that were expensive to mint. This design did not allow for a limited supply or a monetary premium, two crucial ideas in Bitcoin. The cypherpunks were even farther from a worthless, limited currency.
Both were focused on prehistoric, anthropological, frictional theories of the origin of money, notably the double coincidence of wants. Frictional and behavioral models seemed to hold less and less explanatory power in more and more efficient economies, which seemed to demand more rational and game-theoretic models.
Replacing the historical models with a competition for yield among media of saving, subject to Nash equilibrium game theory, gave a new theory of the origin of money, which predicted a phenomenon that could operate in the modern world.
Later, this phenomenon—the self-reinforcing price spiral of a worthless and limited currency—would in fact happen. Because anyone can discover an idea, it could easily have been a parallel discovery. The causality between theory and implementation remains unclear and unproven. At least, until Satoshi weighs in.
And of course, any theory can make one correct prediction. But this monetization theory is (like all of Austrian economics), deductive, not empirical. I do not think Mises would disagree with anything in this essay.
Ask
Is there an ask? Sure, there’s an ask. For (sort of) inventing Bitcoin: you can tip me. Only if you have read all this carefully, and really understand and fully believe it!
You can tip me for (a) discovering that “all you need is limited supply,” (b) sharing it with the Internet, (c) not associating myself with Bitcoin for almost 20 years, (d) explaining it to you now, (e) all of the above.
My recommended tip is: 1/500, ie 0.2%, of your Bitcoin gains (net of cost and taxes). Or $50. Or anything in between, of course. At least it’s not a patent royalty!
3KZwpxnYYBUKA3vkAmMtqPXeazg62HpdDd
Small amounts will be used to improve my personal and family security. Larger amounts will be used to change the world.
Of course, if Satoshi tipped, that would be maximum lulz—
Corrections and Notes
10/25/25:
Replaced an incorrect use of Mises’ term “money substitutes” with a more detailed description of capital consolidation.
Standardized capitalization of Bitcoin.
Finally, the Wayback Machine shows the “Bit gold markets” post in April 9, 2008:
