Satoshi’s white paper – how far are we?
Why Satoshi’s white paper is yet far from our reality.
October 31 2024 has marked the 16-year anniversary since the publication of “Satoshi white paper”, what many think is the “monumental concept of future finance from the founder of Bitcoin”.
The original work is heavily focused around the decentralisation of the financial system.
This nine-page document titled “Bitcoin: A Peer-to-Peer Electronic Cash System” laid out the principles and technology behind Bitcoin, aiming to establish a decentralised, trustless system for digital transactions. According to the author, the following principles must be met to fully accomplish the decentralised and “free” finance system:
Direct Transactions: This enables digital payments between individuals without intermediaries like banks, promoting financial decentralisation.
Blockchain & Proof-of-Work: Introduces blockchain as a public ledger, with miners using proof-of-work to secure the network and add new blocks.
Double-Spending Solution: Recording each transaction on the blockchain ensures that it is unique and irreversible, preventing duplicate spending.
Fixed Supply: Caps Bitcoin at 21 million coins, creating a deflationary currency model similar to precious metals.
Mining Incentives: Rewards miners with Bitcoin for validating transactions, and securing the network through incentivized participation.
However, despite the rationale behind the proposed movement towards Bitcoin or blockchain-based currencies, as of November 2024, the cryptocurrency market is facing either direct criticism and state restrictions or is shaped around the crypto-enthusiasts.
Despite some influential figures such as Donald Trump taking a 180 turn on his stand about Bitcoin, we are very far from reaching the full potential of utilising crypto.
5 main reasons can highlight the problems Bitcoin in particular is facing right now:
Scalability Issues: Bitcoin’s blockchain technology, while revolutionary, struggles with high transaction volumes. Bitcoin’s block size and 10-minute block intervals limit its speed and efficiency, making it less practical for everyday transactions compared to traditional systems like SWIFT.
Regulatory Uncertainty: Governments worldwide have mixed approaches to cryptocurrency, with some regulating it heavily or banning it outright. This regulatory uncertainty limits adoption and stifles innovation, as many financial institutions and businesses are hesitant to dive into cryptocurrency fully.
Energy Concerns: Bitcoin’s proof-of-work model requires significant computational power, leading to environmental concerns about energy consumption. This has driven debates about sustainable alternatives and limited Bitcoin’s appeal as a widely scalable solution.
Volatility: Bitcoin’s price volatility makes it challenging to use as a stable currency. Many see it more as an asset for speculation rather than a reliable medium of exchange, which has delayed its role as a global currency.
Slow Integration with Traditional Finance: While there are advances in integrating cryptocurrency with existing financial systems – complex concerns about transparency remain. Banks, businesses, and users have been slow to adopt it due to technical, security, and usability challenges.
While Bitcoin and blockchain technology have demonstrated immense potential, the mentioned hurdles have so far prevented the full realization of “Satoshi’s vision” for a peer-to-peer electronic cash system on a global scale.
