Bitcoin: A Peer-to-Peer Electronic Cash System (2008) [pdf]
I view this paper with both love and hate. I think it&#x27;s technically brilliant and fascinating, and at the same time incredibly naive and will do far more harm than good in this world.<p>While a trust free payment mechanism sounds wonderful, this implementation cannot succeed in the real world. In my mind proof-of-work is already an ecological disaster. As long as the price of bitcoin goes up, there is an incentive for miners to commit more energy and resources - yet those resources do not increase productivity.  Whether there is 1 transaction or 200k, Megawatts are wasted to mine that block. I doubt 99% of people getting into Bitcoin have a remote understanding of how this works. This concerns me far more than the threat of upending governments - my biggest fear is in fact that governments will instead choose to adopt this technology because they would love the ability to track the history of every transaction.<p>While there are several proposed solutions to many of bitcoins weaknesses, we live in the real world, and the real world goes where the money is. While bitcoin is decentralized in design, in reality, it is controlled by a few mining factions who ultimately control what code enhancements get adopted and how the game is played. Why would they want to increase the block-size, when a smaller block will lead to greater fees? Running a full node is getting expensive, and soon, only the deep pockets will be left to guard.<p>People will never get bitcoin. It&#x27;s simply too confusing for the average person. The user experience is a disaster. You&#x27;re telling me once I buy bitcoin, I&#x27;m supposed to transfer it to a hardware wallet? What&#x27;s a hardware wallet? Wait, so if I accidentally am off by one character in the address I sent money too it&#x27;s gone forever? There&#x27;s no one I can call? Bitcoin should never have been any more than just a novelty for the technically inclined, or a technology used for something other than a currency.  It&#x27;s why I can&#x27;t stand Coinbase - they are lining up the naive (and greedy) masses into the slaughterhouse.<p>I have non-technical friends who do not understand that their bitcoin is not backed by anything. They do not understand that the money they put in, was immediately taken out by someone else, and that the price of bitcoin is just a funny number. The $XXX billion dollar market cap is fiction. Owning a bitcoin does not give you claim to the output of some productive asset like a stock would.  Unfortunately, history tells us we&#x27;re in the early innings. The real dumb money is just getting in the door. But when the music stops, and the evangelists have squeezed enough out of this lemon, that funny number will go back to zero. And a lot of people who couldn&#x27;t afford it will get really hurt.<p>I&#x27;m confident that I could be making a killing in bitcoin right now. But it&#x27;s not about the money for me - my conscience just keeps saying stay away. I really hope either I&#x27;ve completely got it wrong or bitcoin just dies soon.