Last week was a fascinating one for Bitcoin, with the digital currency and payments system once again receiving attention from traditional media sources. On Monday, the BBC, The Economist, and GQ all published interviews with the Australian academic and possibly tech entrepreneur Craig Wright in which he claimed to be Satoshi Nakamoto, the mysterious creator of Bitcoin.
Meanwhile, as the debate as to the veracity of that claim once again raged, two things of actual importance occurred that reaffirmed that investors everywhere would be wise to hold at least a small position in the virtual currency.
The mystery of the true identity of Satoshi has all of the ingredients of a high tech thriller and so is much loved by the press. There have been numerous articles claiming to have “found” Satoshi and even speculation that Wright is the man has been around a while. When it first surfaced in December of last year, I wrote here that I didn’t believe he was the one, and, in a way, hoped he wasn’t. At the time I wrote that
“If Satoshi is outed then whoever it may be will have an outsized influence in any future decisions such as the imminent one on how to increase the transaction capacity to deal with growing demand. Thus, a concept based on collective decision making will begin to resemble more conventional currencies, only with a one man central authority.”
That fear, that if the creator of Bitcoin became known, part of the essence of the project would be lost, and that it could become even less democratic and decentralized than traditional currency, surfaced again as I read the interviews on Monday.
Wright said that he would be giving incontrovertible proof of his claim by moving some of the Bitcoin that Satoshi still had control over. Curiously though, just a couple of days later he backed down, saying that he no longer “had the courage” to go through with it.
Maybe I am just a cynic, but that indicates to me that, as I felt back in December, the whole thing was bunk from the beginning. I am not sure what Wright’s motive could have been, but then nor do I really care. I am just happy that we are back to the state where, as a message originating from an IP address generally believed to be controlled by the real Satoshi Nakamoto said in December, “We are all Satoshi.”
While the press was busy with Wright’s claims, however, some things of actual import were happening. First, in an interview on CNBC, the presumptive Republican nominee for President, Donald Trump, stated that debt could always be “re-negotiated,” which in terms of sovereign debt amounts to a default, but that default wasn’t an issue when “you print the money.”
Polls show that he is unlikely to be elected and even if he does pull it off, I cannot see him actually taking the U.S. down the path of the Weimar Republic, Zimbabwe, Argentina or other victims of hyper-inflation. His comments, however, do illustrate one thing. A fiat currency is always vulnerable to bad policy, something unlikely with a peer to peer currency, where decisions are made collectively by those with a stake in maintaining the value.
Critics of Bitcoin maintain that that is of little use if the currency in question is not universally accepted, but the other news of significance, reported by NBC recently, takes us one step closer to that being the case. The town of Zug in Switzerland has announced that it will become the first municipality to accept Bitcoin in payment for some fees. It is not universal acceptance, of course, but it is a major step forward for crypto currency.
With currencies the best guide to the probable veracity of a story and its potential influence is the market reaction. When the Wright stories broke last week BTC/USD was around $445, and as I write today is approaching $454. The market, it seems, has spoken and sees the reminder that fiat currency is subject to the (sometimes questionable) wisdom of our leaders and the evidence of growing acceptance of Bitcoin as far more significant than the latest Satoshi story. We can only hope that things remain that way.