Craig Wright: Bitcoin follows laws, miners have incentives to enforce

By December 26, 2019 Bitcoin Business
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Bitcoin will prove its strength against the competition with millions of transactions per second, many of them just fractions of a cent, said Dr. Craig Wright in an interview released this week. It will do so while following laws, working with existing banking and financial frameworks, with miners incentivized to enforce its rules.

The interview with Cryptonites host Alex Fazel covered the spectrum of Bitcoin-related issues and features a number of talking points that have become familiar in 2019: law and order, the role of miners, Bitcoin’s economic incentives and Satoshi’s overall vision.

Though the interview appeared this week, it actually took place in October 2019. It followed a fiery panel at the CC Forum event in London, featuring Dr. Wright, Nouriel Roubini, Bobby Lee, Brock Pierce, Tone Vays. The panel has since become infamous due to the frequent angry clashes between participants—particularly between Wright and Vays, the latter appearing on-stage wearing an anti-Wright t-shirt.

Banking

Referring to the oft-repeated trope that Bitcoin was invented to destroy banks, Dr. Wright said that as “Satoshi Nakamoto” he had worked on the project long before the global financial crisis in 2008.

Bitcoin’s first, or “genesis” block in 2009 contained headline text about bank bailouts—a reference many took to be anti-bank, or anti-government. However it was necessary to look beyond that layer to see the real meaning, Wright said.

Bitcoin does not bank the unbanked. That’s cash under the bed. Banking is a completely different thing to holding cash.

It will still be open to a lot more people, though. More will be able to make payments, especially smaller ones. And it’s those smaller payments that will make the difference.

There’s also a misconception that Bitcoin (or any cryptocurrency) can create wealth simply by existing as an asset. This thinking has seen BTC in particular become static “digital gold” in which investors park their money, hoping it will somehow grow in value.

Dr. Wright reminded that wealth is product, projects, and economic activity. Bitcoin needs to be used if its proponents want to change anything.

The law, and how privacy with audit trails defeats corruption

Likewise, Bitcoin’s relationship with governments and the law often gets twisted. Wright clarified again that it’s not about destroying governments any more than it would banks.

It holds everyone accountable, and “that’s scary to a lot of people,” he said. Those people include corrupt politicians, police and executives at large corporations.

“It cuts both ways—governments, police, politicians are bound by the same system. Bribes, illegal campaign contributions … Imagine if a bunch of Democrats can’t ever lose emails again, because there’s records.”

Instead of anonymity, Bitcoin offers privacy. This means your identity isn’t always revealed, but there’s an audit trail should anyone want (or need) to investigate wrongdoing.

Dr. Wright said it would lead to a return of “old fashioned policing. Not the way NSA do it now. Not the way GCHQ over here do it now because they have to, but imagine the way it used to be, where we can trace people, and I can go to you and you can dob me in.”

Lightning Network, designed to compensate for BTC’s poor transaction capacity on-chain, can remove the ability to do this—and also lead operators to risk liability if funds they transmit are used in criminal activity.

For individual privacy, there are other means. Wright reminded everyone the Bitcoin whitepaper has a section on splitting change, and he advises people to do it.

“Imagine if your billion dollars is in five cent pieces. That’s how Bitcoin’s meant to work. You’re meant to have a big pile of all these keys.”

On miners, proof-of-work and staking

Dr. Wright addressed the criticism that massively scaling Bitcoin on-chain creates centralization issues, as mining coalesces into large and expensive data centers.

“This ASIC-resistance BS. Think about it … the system is designed to professionalize, to grow. There’s no way, in proof-of-work systems, you can actually create something that doesn’t end in a data center.”

Proof-of-stake systems are actually an old idea and are economically flawed, he said. They’re easily compromised through Sybil attacks, just like company shares—you can never be certain who’s actually controlling a voting stake. Large coin holders, just like large shareholders, may actually command more votes by “selling” or “lending” their stakes to proxies, influencing outcomes.

Proof-of-work (POW) is a vital economic incentive to securing Bitcoin. It demonstrates that someone is willing to burn this amount of effort to show they care about the long term future of the network.

That’s what miners are doing. Their investment is also important for compliance as well, Wright added. They would need to comply with regulations and court orders in their jurisdictions if they wanted to protect the millions they’d invested in infrastructure and electricity.

“Read the white paper. Really read the white paper. Don’t take what other people tell you it means. When I have that last sentence saying ‘enforce’ look up the meaning of the word. The word ‘enforce’ is very important.”

It’s this economic signaling that secures the network—something small-scale “home miners” don’t really have, and non-mining nodes can’t do.

Competition drives Wright and Bitcoin

Dr. Wright also described his 80 hour a week work ethic as being driven by competition. “Challenge me,” he said, noting that he writes on average 6,000 words and two whitepapers a day.

So too would Bitcoin flourish when challenged by other blockchain projects, thanks to its scalability. When Bitcoin has millions of transactions per second, that opens up everything, he said.

“I own BTC and BCH because they airdropped them to me. I haven’t really done anything with them, but I own them. Doesn’t mean I support them or anything like that. Eventually I’ll do something with them.”

Dr. Wright reiterated that Bitcoin’s IP holders will open up development for people who want to work with him—or alternatively, they can pay a licensing fee. Whatever that earns will subsidize development on the BSV chain.

“They’re sitting there saying Satoshi’s not relevant. Too bad! I invented the technology, I’m relevant. You may not like my vision, and you want to compete, go for it! I’m not going to stop you. I mean, I might charge you royalties for patents, but at the end of the day, competition’s good.”

Speaking of Satoshi…

Dr. Wright faced the now-inevitable questions from interviewers over the Satoshi Nakamoto pseudonym. He said he doesn’t care whether people believe he’s Satoshi or not, or whether there was a “Satoshi group” or not.

It’s not supposed to be about belief. He doesn’t want a religion, he said, and refuted that Satoshi Nakamoto is or was a Christ-like messiah.

That said, Dr. Wright does have a message to communicate: be sensible about compliance, and go out and build. Proof-of-work extends to human as well as machine activity.

He mentioned Centbee, the South African company that has built a network of over a thousand places people can buy Bitcoin in Africa. They’re a model for people who really want to help those in economically underdeveloped regions, rather than those who preach only of decentralization.

“Get off your f—ing white arse—sorry about the language—and stop telling people in Africa how to bloody live.”

“Get off your arse. If you want to change the world, do something. Don’t swipe on your phone, don’t make a pic of the Kardashians with the fucking thing. Go out there and do something.”

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