The Bitcoin Conspiracy Too Big to Be True

Hal Finney’s Anarchist Bailout

The first person to receive a Bitcoin transaction was computer scientist Hal Finney, born in 1954. He was also the first to tweet about Bitcoin. And in 2004, he was the first person in the world to create a reusable proof-of-work system — before Bitcoin came along, using exactly such a system.

Was Finney Nakamoto?

What were the odds that a Japanese math professor named Dorian Satoshi Nakamoto (who had nothing to do with Bitcoin) happened to live 1.6 miles from Hal Finney’s home in Temple City? Coincidence. Publicly, Finney, who died in august 2014 of ALS, always denied being the elusive “Satoshi Nakamoto”, the pseudonymous creator of Bitcoin.

Though the general public has a right to believe whatever people say, or whatever they read in print, Finney was, after all, a known cryptographic activist, a cypherpunk working on digital anonymity, and a far-left anarchist. He was not someone likely to disclose himself or his true intentions.

As Forbes’ Andy Greenberg noted, Finney was the Forest Gump of digital anonymity:

From the development of the first widely used strong encryption software known as PGP, to early anonymity systems, to the first Bitcoin transaction, Finney was there.

The Original Bitcoin Ideology

But I’m not so much interested in who Satoshi really was but rather in what his intentions really were. What was the point of creating Bitcoin? Was it just a proof of work, a proof that it could be done?

Looking at the real world history of Bitcoin, the system, to date, has effectively enriched early miners such as former “Bitcoin Jesus” Roger Ver. Bitcoin has steadily been distributing billions of dollars from impatient day-traders to more patient long-term hodlers. (The only investment advice you’ll ever need is: wait.)

To find out about Bitcoin’s ideological intentions, we can start with the message left inside the Genesis Block, containing the first 50 Bitcoin ever minted (but never spent). The coinbase parameter of this first block reads:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks

It refers to this article from Britain’s The Times. (No, this doesn’t mean the creator of Bitcoin was British. It means the creator was careful enough to obscure his identity.) The full news article heading and subheading read, “Chancellor Alistair Darling on brink of second bailout for banks — Billions may be needed as lending squeeze tightens”, and then continues:

The Chancellor will decide within weeks whether to pump billions more into the economy as evidence mounts that the £37 billion part-nationalisation last year has failed to keep credit flowing. Options include cash injections, offering banks cheaper state guarantees to raise money privately or buying up “toxic assets”, The Times has learnt.

As an activist, Finney was very much concerned about people’s (financial) independence from governments and corporations. He was certainly opposed to government or corporate bank bailouts, which invariably means to tax the population for the mismanagement of their political leadership. Finney:

It seemed so obvious to me: “Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization — and [David] Chaum offers a completely different direction to go in, one which puts power into the hands of individuals rather than governments and corporations. The computer can be used as a tool to liberate and protect people, rather than to control them.”

During the early 1980s, Chaum was the inventor of eCash — the idea that sparked the idea for Bitcoin — and later founder of the company Digicash, a first (but failed) attempt to create electronic scarcity. The technology for Bitcoin wasn’t ready yet, not until Hal Finney invented a proof-of-work system to secure digital scarcity.

Indeed, Finney invented the very system that makes it impossible to counterfeit Bitcoins. He couldn’t deny that. And this feature is the central clue to Bitcoin’s ideological background. If the financial world were to run on a Bitcoin-like blockchain, governments and banks would not be able to print money to bail themselves out!

Banks and Bailouts

And what is a bailout, really? A bailout means that big banks or big corporations deemed too big to fail have effectively ruined themselves financially, either through bad management or risky dealings, and must now seize taxpayers’ assets to save themselves.

Instead of outright stealing people’s savings, banks simply print more money, thereby inflating the money supply and so devaluating everybody’s savings. (FYI, inflation is a hidden tax on the people’s savings. Prices and salaries may go up but savings remain the same. It’s the people with savings who bail out the banks.)

The very gist of the Genesis Message aligns with this far-left position, namely the belief that governments and banks are a sort of feudal establishments that live off the people’s labor, the same way shepherds live off their cattle. And when shepherds go starving in the winter due to unforeseen circumstances, they will be forced to kill off some of their cattle — a “bailout” — to feed their families.

By analogy, citizens of a state are like the tax cattle of the state’s shepherds. And far-left ideology (justifiably) rallies against this unfair condition. Anarchists want to break down the state and its power centers, so that the people may live as free individuals. I.e., so that the sheep may roam the planes again without being exploited by their shepherds.

Finney and Anonymity

One of Hal Finney’s life-long endeavors has been to create an anonymous digital communication system, together with Eric Hughes, a so-called remailer. But what for? To evade government oversight. To allow anarchists to work in the dark without being tracked. As with Bitcoin: to allow pseudonymous financial transactions that cannot be intercepted by governments.

In 2010, Gavin Adresen took over as Bitcoin’s first lead developer after Satoshi. The timing, for those in the know, shouldn’t come as a surprise. Hal Finney was diagnosed with ALS mid-2009, and if he indeed was the mysterious founder, he obviously could no longer maintain the Bitcoin codebase by 2010, due to his illness. Someone else had to take over.

Why would either Finney/Nakamoto have gone through such great lengths to hide their true identity? The answer is simple. If you are building a financial system that gives people freedom from state-governed banks, you have essentially given people the means to revolt against their masters. As the tool’s creator, you are an enemy of the state.

A Statist Twist

Today, though, we know it didn’t quite work out that way. Rather than being disrupted or even threatened by cryptocurrencies, central banks, corporations, and national states are now evaluating the emission of their own digital currencies. Facebook already attempted it with Libra. Likewise, Russia, the European Union, and China are known to be working on a crypto of their own. Venezuela, Senegal, Ecuador, and the Marshall Island were among the first to create their own state-backed coin.

States and banks, apparently, can use Bitcoin’s blockchain technology to their own benefit. And even though Bitcoin’s supply is limited to 21 million ‘coins’ (which can be further divided into 100 million satoshis each that can be transacted separately, in theory), that doesn’t mean central bank coins will have to be limited.

States will most likely issue coins on a sort of Ethereum contract or a Ripple-like chain, namely to control the supply! For example, it is possible to issue coins on an Ethereum-like chain whereby each coin is linked to its own contract. But the contract is owned by the issuer! So the state/issuer can unilaterally tax each issued coin (have bits sent to the tax authority without the citizen’s interference), or even cancel the contract and have the asset self-destruct.

That way, states can seize even greater control over the world’s financial system. Nakamoto/Finney’s anarchist dream of preventing banks from printing money and so taxing the people’s savings, therefore, has failed. Central banks are able to create digitally scarce coins with a supply they can fully control.

The Biggest Scam in Human History

But there’s more, and if I’m right, we’re looking at the biggest scam in human history, a sort of anarchist bailout.

You see, Satoshi Nakamoto mined almost one million Bitcoin, around 980,000 of them to be more precise, spread over ten to twenty-thousand different addresses. At $13,000 per coin, the Satoshi estate is presently worth over 12.7 billion USD. And if, as the Winklevoss twins suggest, Bitcoin may reach a price of $500,000 per coin, then the Satoshi vault will carry no less than 490 billion USD by then, or almost half a trillion dollars.

Barely three weeks after the Genesis Block was minted, Hal Finney himself calculated that Bitcoin might one day reach a price of 10 million USD per coin. At that rate, the stash will be worth 9.8 trillion USD, almost eight times the net worth of the United States itself!

Make My Day

Well, punk, I have one question for you. Do you really think Finney/Nakamoto took his private keys to his grave, disregarding enough wealth to buy half the world someday? Or do you think he left some kind of instructions for future anarchists to access the stash, and bankrupt the global financial system?

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