21M Bitcoins/2.1 Quadrillion Satoshis

Where do they live exactly?

What happens to them when they get lost?

Will they ever die, like all software before them? How??

These and more questions, in this short story.

Economics

Satoshi Nakamoto set into motion the creation, and eventual destruction, of all 21 million bitcoins in existence. But like entropy creates wonderful things, such as the evolution of complex life forms, so too does Bitcoin and its halvings, with the evolution of cooperative technologies like the lightning network, multi-sig, conjoin, zero-knowledge proofs, and even the trail of 30,000 crypto projects tagging behind can be thought of as Bitcoin’s children.

Eating its leftovers, and whatever it is too proud to eat.

Especially important is how Bitcoin facilitates the speedy collapse of ponzi-scheming bank-like businesses like FTX. If Bitcoin had not existed, the FED would have given SBF a nice fat loan to save his a**. Alas, if you lose Bitcoins and try to buy them back with a loan, the price shoots up fast to expose you and your cronies.

Bitcoin is thus the best moderator of the government’s appetite for expanding credit. Something which if not reigned in, helps fuel not just economic collapse but World Wars.

Yes, the World Wars were financed by credit expansion.

No more. There just isn’t enough room for credit expansion like that, for governments to misuse. And it could get smaller.

But let us dial back to the beginning. Back to the days when CDOs wrecked the world’s financial markets.

Origin

Once upon a time, location unknown, it was 2008. There was probably noise outside from people shouting for the heads of the Wall Street moguls who had mercilessly vaporized their life savings.

Sitting in his room and most comforted by the fact that he was a nobody, unfamous and unrecognized, was the man who would change the world of digital finance. The man who would put strange new ideas in the minds of kids dumping their Physics textbooks in the toilet, to go learn how to be Wolves of Wall Street. Dollar signs in their eyes, scientific reality be damned.

This man was called __.

That’s right, I do not know his name. Thankfully, he has a name he wants me to call him.

“Satoshi Nakamoto.”

The legend.

The man whose pseudo-name will be used for the smallest unit of the Bitcoin cryptocurrency.

Today is the day he puts it all together. It weighs virtually nothing at all. And if it were a book, it would hardly beat the Oxford English dictionary.

It is the code of Bitcoin, his baby.

An alien creature in the software world. With elements immune to copying the more users get a copy of the code. Elements that ossify, like energetic magma turning into precious rocks.

All other software has elements that are easier to copy, paste, modify, and hack, the more users get their hands on it. Makes sense right? I mean, more users, more developer intelligence to hack the ossified parts?

Wrong.

These elements are the ones they will all call bitcoins, or satoshis. It is time to breed them on his laptop. See how they behave.

He presses the RETURN key.

Deep inside his laptop, a series of quantum mechanical events are set into motion to produce these bitcoins. It is an intricate dance, and if the clock is not synchronized just right, if the CPUs are not well-dusted, bye-bye genius idea.

So, he has reviewed the code obsessively like a maniac prisoner on death row, reading and re-reading the constitution to save his ass from hanging.

10 minutes later, the first 50 BTCs are born.

He punches the air. ‘Whoop’. He loves code. God bless all coders on Earth. If everyone on earth were a coder, nobody would be cheated by big finance, propagandized by big news, or surveilled by big politics.

Quickly, he puts his favorite newspaper heading on it. Timestamps it for all the world to see, for as long as his creation lives.

“The Times 03/Jan/2009/ Chancellor on Brink of second bailout for banks”

Satoshi probably runs an O/S alike Kali Linux (which will be invented in 2013), with feelers straightened out for the slightest whiff of eavesdropping in the air. His laptop has been air-gapped these last many years, but now, he has to connect to the jungle that is the internet.

Like any jungle, there is food, and there are predators. There is also a ton of mediocrity and below all that, even more sh*t.

Tomorrow, he will unleash it, let it go native. Bitcoin belongs in this jungle, not his laptop. It will become a predator like no other. Would you look at that, some predator is sniffing at it already.

Aargh, doesn’t smell like a Social Security number. It moves on. Vanishes more like.

Haha. Satoshi laughs. He loves seeing these bots in action, zapping to and fro the internet highway. While the average person sees nothing, with his Kali-Linux-like feelers, he catches the equivalent of shooting stars, trying to hit his Windows. They all vaporize before landing. If he wanted, he would be working for GF - Google & Facebook.

Or, he’d have his own multimillion-dollar company. Or maybe, steal all of next year’s meals, and live in this basement for another year. Like some of these top-notch predators.

Nah. This is better. This is the game.

“Satoshi??”

The wife is calling.

“Satoshi”

“Dear.”

“Dinner is ready.”

He stands up. Stretches his muscular body out real nice. He is actually hungry, starving.

Divisibility Is Not Debasement

He loves this internet place. Been a week since he started chatting with nice, super smart chaps who speak code, logic, and mathematics, and the reception he is getting is all good.

Nobody is getting jealous that he made his own bitcoins in his bedroom. To the thousands now. Not yet. He hopes it doesn’t happen before a critical mass of support is reached.

Turns out he actually forgot something. The guys remind him that 21 million bitcoins are not enough for 7 billion people.

Strangely enough, it is data from the CIA that will help determine how many Bitcoin satoshis there should be.

The CIA helps create Bitcoin! Without knowing, I should add.

Here is the link to the story.

The conversation below is not on any forum, but it might have happened:

Satoshi: “So you want me to divide these bitcoins?”

Hal Finney: “Yeah”

Ray Dilinger: “Indeed”

Satoshi: “Hope you know this isn’t like Jesus feeding the 5000. And I will still make the subdivisions immortal to copying and counted as divisions of the full BTC”

Interestingly, a lot of people in the future, 15 years later, still do not get this part. They still think that because BTC can be divided into satoshis, it can be debased. It is like thinking if you take a $100 note to the bank and are returned 10,000 pennies, you are somehow poorer.

Your money has been debased? Noo. You’re actually richer because all that metal is more valuable than a single paper note.

This is a classic cognitive bias called ‘Anchoring’ – Jumping to conclusions too early.

Let’s jump into the future. Which is the present.

It is the future.

On the 14th of January, 2024, tweep @SamanthaLaDuc got this infinite money idea and yapped about it all over the place.

Samantha felt that because each bitcoin can be divided into 100 million smaller portions called satoshis or “sats’, Bitcoiners cannot claim scarcity or lack of dilution …

She ends by saying she did MATH.

How does it happen? How does the system know these satoshis are the only satoshis in the Bitcoin blockchain?

Where are these 21 million bitcoins, or if you prefer, 2.1 quadrillion satoshis? And can we make more of them?

There Can Only be 2.1 Quadrillion

The first thing to tell us we may be at the limits of how many divisions Bitcoin can suffer is the IEEE-754 standard for 64-bit computers.

As Bitzuma.com in the previously linked story writes:

To avoid turning Bitcoin into an accounting minefield, the number of total currency units must be kept below the IEEE rounding threshold - now and a hundred years in the future.

The IEEE rounding threshold is 2^53 which is approximately 9 x 10^18. 2.1 quadrillion satoshis is approximately 2 x 10^15, so if we were to divide our satoshis some more, we could only divide into 4500 smaller units before the ALU (Arithmetic and Logic Unit) inside most computer CPUs starts getting lost in math. Like LaDuc.

Any larger and the Bitcoin blockchain is going to become very bad at keeping records of the number of bitcoins in wallets, bitcoin divisions during halvings, etc. We wouldn’t want that.

So if these satoshis are pushing memory counters to the limit, then they are pushing our computers to the limit.

Who would have thought infinitely making Bitcoin subdivisions is impossible?

Well, now we know.

On Blackholes and Quantum-Resistance

Like people forget their car keys and house keys, people forget their private keys (or seed phrases) and once this happens, they can no longer sign transactions, and their Bitcoin satoshis or sats, are lost to cyberspace in the world that is the Bitcoin blockchain.

They are not really lost though, these are misplaced, and there is hope that when technologies such as quantum computing mature, they will be retrieved.

To briefly expound, this promise of quantum computing rests on the theoretical conclusions of an algorithm called Shor’s factoring algorithm. Shor’s factoring algorithm allows a quantum computer with a couple of million logical qubits to crack open a Bitcoin wallet address without the need for a private key.

The power of this algorithm provides logarithmic speedup, so it is really fast if we can get our hands on those logical qubits. Like you press the button, and only 8 hours later, the wallet is cracked open. No sweat.

An alternative quantum algorithm is called Grover’s search algorithm, and this one provides a quadratic speedup. So, it is not as fruitful as Shor’s. This one would work by super-brute-force searching for all possible prime factors to eventually land on the right ones that form the correct private key.

This is why today all sorts of quantum-resistant cryptographic schemes are being hatched. But I find this sort of thing a little ridiculous. Like building bunkers before splitting the atom, we are currently building digital bunkers before splitting the cryptographic atom.

But why it is happening is because it is big government that is most scared of a quantum hacking system. A nuke empowers a government to threaten another with destruction, so that is why Oppenheimer and his buddies got a private village and many billions of dollars to build this weapon.

A quantum hacking system, on the other hand, targets individually owned encrypted addresses, so the chance of it backfiring on its creators is a big one. For we are all individuals. Better to NOT create it, hence big-time pioneering work in quantum resistance.

Bitcoiners are quite safe, and they really shouldn’t worry. A quantum hacking system will be deployed first on centralized systems with big secrets locked behind RSA and SHA-2 encryption before the hackers think of stealing your couple of Bitcoins.

Moreover, the energy budget of running the hack on a one million logical qubit system, which will be something like a one billion physical qubit system, will be prohibitive. We are talking about a computer bigger than a plane hanger, with all parts cooled to nearly absolute zero. The return on that investment is only of seismic proportions if we are hacking something that should be hacked.

Endnotes

I have yet to mention black holes.

Satoshis that get misplaced or inaccessible within the blockchain can be recovered, and are like items lost in the vast expanse of space. Except this is cyberspace. Hacking systems are like a quick way to search for these items without using eyes e.g., if you have a big powerful magnet, you can attract a bunch of keys lost in outer space.

However, satoshis can be burned. Destroyed forever. These satoshis are said to have entered a black hole and technically, are as gone as data sent into the recycle bin on your PC and recycled, is gone. Crushed and turned into hawking radiation if it is a black hole, or heat if it is the recycle bin.

Basically, all memory circuits are reset to 0. Releasing all the energy stored in various parts that were holding onto a 1.

As the Bitzuma article I shared shows, a lot of satoshis have been burned already. And people keep burning some by sending them into the Genesis block, as a way of paying homage to Satoshi.

The Genesis block is a black hole for none of the sats that go in there will ever return.

When Bitcoin finally runs out of worldwide utility, perhaps because mining blocks is a net negative expense and too many satoshis are lost anyway, people will discard their hard drives containing the Genesis block.

They will send it to the recycle bin, essentially finalizing the demise of all those satoshis in there.

Like the entropic decay of the universe, Bitcoin satoshis are decaying into waste heat. But no worries, we can start it all over again. Perhaps better, for we shall have quantum networks then, hence, the ability to create truly synchronized blockchain operations using entanglement.