Why is it impossible to create more units of Bitcoin?

This article was originally an answer to a member of Quora, a Q&A site in which I am a cryptocurrency columnist. The reader is a “Bitcoin beginner”. If you understand the nature and purpose of a blockchain, the political leanings of Satoshi or the economics of a capped cryptocurrency, then this reviews things that you already know. But sometimes, a recap can be fun. It helps ensure that we are all on the same page…

In a previous post, we have already addressed a fundamental question:

It has nothing to do with how many individuals can own bitcoin or its useful applications. It simply means that—if widely adopted as a payment instrument or as cash itself—the number of total units is capped at 21 million. But each unit can subdivided into very tiny pieces, and we can even give the tiny pieces a new name (like femto-btc or Satoshis). It is only the originally named unit (the BTC) that is capped.

But, this article addresses a more primitive question. (Actually, it is a naïve question, but this adjective has a negative connotation, which is not intended). I interpret the question to be: What prevents me from creating, earning or being awarded an amount that brings the total circulation above 21 million BTC?

The question is a bit like asking Why there are only two solutions to a quadratic equation? — Or (a metaphor): Why can’t you own a new Picasso painting?

In the case of Picasso, it’s because we know the ownership and location of the 1,885 paintings created during his lifetime. The Old Guitarist (shown at bottom) is at the Art Institute of Chicago. Unless there has been a serious error in record keeping, there cannot be any more paintings, because he is no longer around to produce new art.

You cannot create more bitcoin than the 21 million scheduled for release because that’s all the math yields. It is the capped quantity that Satoshi wanted in circulation—because he/she sought to create a deflationary token that could never be gamed by politicians or anyone else.

Consider the alternative. The Zimbabwe dollar had no cap. When the government needed more cash, they simply printed more. (This is exactly what the US does today). Eventually, they had 4 recalls and “official” devaluations. But, of course, the value of a Zimbabwe dollar (just like a US dollar, bitcoin or a Picasso painting) is not established by edict. It floats with supply and demand.

Eventually, 100 trillion Zimbabwe dollars was worth US 16¢. Then, it collapsed completely. You can still find a few 100 trillion dollar notes on Ebay. Ironically, they cost far more than 16¢, because western collectors are fascinated by them. Just as with a Picasso painting, all value boils down to supply and demand.

Of course, no citizen of means used the local currency even before it collapsed. They simply couldn’t trust their treasury. Today, Zimbabwe uses dollars, rands (SA), British pound and euros.

What about the US dollar? Only the most arrogant citizens believe that we control such a vast consumer market (and that we are such a huge debtor) that the world must continue to value or paper. But is this realistic? Is it sustainable? Does U.S. debt ever have to be repaid with real sweat and real products sought by creditor nations? Of course it does. The alternatives are unthinkable: We would go the way of Zimbabwe, the Roman empire—or worse. Think of the Wiemar Republic between world wars.

The US dollar has no cap. A trillion or so new dollars are printed ever year, in a series of emergency measures that transient politicians call “raising the debt ceiling”, or an “emergency requisition”, or humanitarian, infrastructure, disaster relief, military necessity, debt repayment—or whatever. This leaves us 20 trillion in debt and with no path to recovery. Our own president openly asked why we can’t just print even more money to square up with our creditors.

With Bitcoin, we will never face that problem. Will adopting Bitcoin as legal tender interfere with a government’s ability to tax, spend or enforce tax collection? Not at all! But one day, it will decouple governments from control of their money supply. And that will be a marvelous thing—for both individuals, organizations and governments. It will force nations to balance their books—just like every household, business, NGO and municipality.

When this happens, governments can still raise money (from taxes) and they can even borrow. But just as with an individual or corporation, they will need to find:

  • Creditors (or shareholders) who truly believe in the ability to repay
  • This means they are creditors that believe in a nations institutions & ethics
  • And this leads to a conclusion: What better way to move our institutions and ethics in the right direction than through the accountability owned to our creditors.

Bitcoin is the embodiment of radical technology, but it is not a radical concept. It is the simple and functional embodiment of free-market economics. It addresses a market need that Aristotle fervently researched 2050 years ago, but failed to resolve. Gradual adoption is analogous to denationalization of telephony, airlines and package delivery services. Imagine the positive fallout when this occurs! Hopefully, we will around to witness a society in which governments are decoupled from monetary policy & control!


Ellery Davies co-chairs CRYPSA, hosts the New York Bitcoin Event and is keynote speaker at Cryptocurrency Conferences. He sits on the New Money Systems board of Lifeboat Foundation. Book a presentation or blockchain consulting.

Should we ‘out’ Bitcoin creator, Satoshi?

Everyone likes a good mystery. After all, who isn’t fascinated with Sherlock Holmes or the Hardy Boys? The thirst to explore a mystery led us to the New World, to the ocean depths and into space.

One of the great mysteries of the past decade is the identity of Satoshi Nakamoto, the inventor of Bitcoin and the blockchain. Some have even stepped forward in an effort to usurp his identity for fame, infamy or fortune. But in this case, we have a mystery in which the subject does not wish to be fingered. He prefers anonymity.

This raises an interesting question. What could be achieved by discovering or revealing the identity of the illusive Satoshi Nakamoto?…

The blockchain and Bitcoin present radically transformative methodologies with far ranging, beneficial impact on business, transparency and social order.

How so? — The blockchain demonstrates that we can crowd-source trust, while Bitcoin is much more than a payment mechanism or even a reserve currency. It decouples governments from monetary policy. Ultimately, this will benefit consumers, businesses and even the governments that lose that control.

Why Has Satoshi Remained Anonymous?

I believe that Satoshi remains anonymous, because his identity, history, interests and politics would be a distraction to the fundamental gift that his research has bestowed. The world is still grappling with the challenge of education, adoption, scaling, governance, regulation and volatility.

Some people are still skeptical of Bitcoin’s potential or they fail to accept that it carries intrinsic value (far more than fiat currency, despite the absence of a redemption guaranty). Additionally, we are still witnessing hacks, failing exchanges and ICO scams. Ignorance is rampant. Some individuals wonder if Satoshi is an anarchist—or if his invention is criminal. (Of course, it is not!).

Outing him now is pointless. He is a bright inventor, but he is not the story. The concepts and coin that he gave us are still in their infancy. Our focus now must be to understand, scale and smooth out the kinks, so that adoption and utility can serve mankind.

Related Ruminations:

Ellery Davies co-chairs CRYPSA, publishes A Wild Duck, hosts the New York Bitcoin Event and kicked off the Cryptocurrency Expo in Dubai. Click Here to inquire about a live presentation or consulting engagement.

Newsweek relaunches to finger Satoshi

Last year, Newsweek magazine retired the print edition. As with most publishers, it is very difficult to fight the Internet. Not only have eyeballs moved to tablets and smartphones, but web sites are quicker to publish. Even if the audience exists, there are no dollars to pay reporters, editors and layout staff. That’s because advertisers have shifted their budgets to online venues such as the wildly profitable Google Adwords.

Unmasked? Not so fast!

Newsweek-coverBut today, Newsweek made the decision to relaunch their print edition with a jaw-dropping exclusive. Investigative reporter Leah McGrath Goodman and forensic analyst, Sharon Sergeant, claim that they have identified the mythical creator of Bitcoin. Even more peculiar, Goodman says that he is a 64 year old Californian whose real name has always been Satoshi Nakomoto. (Whaaht?!)

According to Newsweek this is a coup of epic proportion. But Wild Ducks reserve judgement for a future update… Newsweek has been a great American institution for almost 100 years. But I am confident that this story is just beginning to unfold and the facts as presented bu Ms. Goodman have an odd finish.

Satoshi Nakamoto-01s

March 7 update:  I did not create Bitcoin

In an exclusive, two-hour interview with Associated Press, a very private programmer, Dorian Prentice Satoshi Nakamoto, 64, denied he had anything to do with Bitcoin. In fact, he claims that he never heard of Bitcoin prior to the Newsweek investigation.. For Wild Ducks, The jury is out, but this is certainly one very interesting interview!

Fascinating Facts:

  • Mr. Nakamoto claims that he had never heard of Bitcoin until his son was contacted by reporters three weeks ago.
  • Researching the cover story, Newsweek writer, Leah McGrath Goodman, had an exchange with Mr. Nakamoto on his doorstep, in front of two police officers. When questioned about Bitcoin involvement, she claims that Nakamoto said “I am no longer involved in that and I cannot discuss it.”  But, in a two hour interview with The Associated Press, Nakamoto states that he was misunderstood—that the words “no longer involved” referred to a past career in programming and not to Bitcoin.
  • Today, The Wall Street Journal reports that the email account and credentials of the original Satoshi was revived to issue a single statement. The real Bitcoin creator also denies being the Californian fingered by Newsweek.

In the 24 hours since the story broke, you might think that a community of crypto currency enthusiasts is combing the web for every salacious detail of the possible unveiling. But, you would be wrong!

Most Bitcoin enthusiasts (including the editor of AWildDuck) are also privacy pundits. We have no problem if the identity of the elusive Satoshi Nakamoto remains a mystery. As an active member of several Bitcoin forums, I sense that most participants don’t want this man to be harassed—and don’t really care if he is or is not the brains behind Bitcoin.

Moreover, the person being sought did not commit a crime and clearly wants to remain anonymous. Therefore, serious attempts to uncover his identity using methods of forensics, pattern analysis or even chasing down every clue amount to invasion of privacy.

From the Wild Duck Archives…

  • Ted Nelson coined the term ‘Hypertext’. He suspects that Shinichi Mochizuki is the mysterious Satoshi Nakamoto. Check out the last section of our April 2013 article.
  • Find all of our Bitcoin posts here.