Fixing money: Satoshi's disruption of human society

Bitcoin means different things to different people. I would like to share what Bitcoin means to me and explain what I believe to be Satoshi's core innovation.

Original Title: Fixing money: Satoshi's disruption of human society

Original Author: Eli Ben Sasson

Original Translation: Starknet 中文

Selected Overview

Bitcoin means different things to different people. I would like to share what Bitcoin means to me and explain what I believe to be Satoshi's core innovation. First, I want to clarify that the true essence of Bitcoin's innovation does not lie in cryptography, the internet, or computer technology. These emerging technologies are merely means to achieve a goal. What Satoshi truly revolutionized is one of humanity's most important inventions: social structure.

Social Structure Requires Integrity and Consensus

"Integrity: doing the right thing even when no one is watching."

------ C.S. Lewis

When it comes to social structure, you might think of friendship, cultural traditions, or today's popular social media. However, people often overlook that money is also a form of social structure. In fact, the essence of money is social structure.

Money is a system that carries immense value, and the existence of this value depends on everyone collectively recognizing that money should "operate like money." Therefore, to understand the essence of money as a social structure, we need to clarify two questions: what does it mean for money to "operate like money," and why is it necessary for everyone to reach a consensus on this?

People have some basic expectations of money: it cannot be printed endlessly at will; the money you hold will not disappear or increase without reason; you can freely use your money, and so on. These characteristics constitute what I call the inherent integrity of money. In other words, the essence of money determines that even if you are not constantly supervising it, it will still operate as you expect.

However, the inherent integrity of money is only one aspect. On the other hand, money also requires public trust (i.e., perceived integrity), meaning that there must be a broad consensus on its integrity across society; otherwise, money cannot maintain its value. For example, if there are rumors in society that the government will force banks to freeze assets, it will severely damage the public trust in money. Even if the rumors are false, money may begin to depreciate.

In summary, the value of money depends on both its inherent integrity and public trust. Any structure whose value is entirely based on inherent integrity and public trust is a form of social structure. Money is the purest and most influential form of social structure (other forms will be discussed at the end of this article).

Human society has been continuously inventing and redefining money. The simplest method is for society to select a homogeneous and scarce physical resource to serve as money. In my elementary school days, this physical resource was chewing gum wrappers. In prisons, cigarettes served as currency; in some societies, it was shells, salt, and stones; for thousands of years until the eve of modern times, gold played the role of money. But today, money is mostly digital, its scarcity relies on state endorsement, and the power to manage this resource is entrusted to a few specific companies (i.e., banks). To a large extent, the value of money depends on how much we trust the integrity of the state and its mechanisms that operate the monetary system.

Bitcoin is a completely new way to realize the social structure of money. Its innovation does not lie in the use of computer and internet technology, but in how it utilizes the internet to realize money as a social structure. Specifically, Bitcoin adheres to the following three unprecedented principles: (1) broadness (i.e., decentralization), (2) incentive-based integrity, and (3) public verifiability. We will explain these principles one by one.

Broadness (Decentralization)

Bitcoin is defined by a protocol, which is a set of programs run by numerous computers connected via the internet. Traditional money also relies on protocols (e.g., the SWIFT system), but the difference with Bitcoin is that its protocol invites everyone to participate in the operation of the system on an equal basis. Each of us can freely download the open-source software that defines Bitcoin miners, participate in creating new blocks with our own computers, and update the state of the Bitcoin ledger (i.e., who owns how many bitcoins). Moreover, broad participation is not just for convenience; the security, integrity, and value of Bitcoin are directly related to the broadness of its operating nodes. The more people participate in mining, the more secure the Bitcoin network becomes, and the more the public trusts its integrity.

In contrast, the traditional banking system does not welcome us to participate in its operations. At best, we can only understand our account situation within a very limited scope. "Broadness" is a true innovation in the history of human society, built on the principles of equality, autonomy, and democracy, which are the cornerstones of a free society. "Broadness" resonates with the ancient and fascinating idea of direct democracy, but goes further. Here, we are not only invited to participate