Back in 2009, Satoshi did more than just release computer code. He also painted a picture of what his invention symbolizes:
- 100,000,000 units make up a coin – named bitcoin.
- The coin is imagined to be money – peer-to-peer electronic cash.
- The coin is represented by a specific file – the whitepaper pdf
Compare this with FDCARD, an early NFT and perhaps the first ever crypto trading card.
- 100,000,000 units make up a card – named FDCARD.
- The card is imagined to be a game asset – in-game trading card.
- The card is represented by a specific file – a jpeg.
Let’s first state the obvious – NFT stands for Non-Fungible Token and bitcoin is NOT non-fungible! Neither is FDCARD. ‘NFT’ has become a generic term to describe tokens with symbolic meanings.
By a strict definition where an NFT must be a non-fungible token, OLGA is likely the first ever. More on that later.
Even with this generic definition, how can possibly bitcoin be considered an art token? Bitcoin sure was a scientific breakthrough. Satoshi described the concept brilliantly in November 2008 prior to launch:
“The network works in parallel to generate a chain of Hashcash style proof-of-work. The proof-of-work chain is the key to solving the Byzantine Generals’ Problem of synchronising the global view and generating computational proof of the majority consensus without having to trust anyone.”
More than a decade past, we can confidently conclude he succeeded. But I believe there is one crucial part we often overlook; economic incentives. Chapter 6 of the whitepaper is literally titled “Incentive” and explains that:
“[A miner] ought to find it more profitable to play by the rules, such rules that favour him with more new coins than everyone else combined, than to undermine the system and the validity of his own wealth.“
For these incentives to work, bitcoin must hold value.
Imagine Satoshi had presented the software in a different wrapping. Like one of the following:
- Hashpoint: A Peer-to-Peer CPU Lottery
- Immutable Ledger: A Tamper-Proof Timestamping System
- Blockchain: A Financial Platform of Endless Opportunities
Technically, all are good titles, arguably more correct than the one from the original whitepaper; “Bitcoin: A Peer-to-Peer Electronic Cash System”. Except that the cash metaphor convinced people to hoard tokens, which was essential to give these “coins” monetary value, thus create the necessary incentives.
The idea that 100 million units equals one coin made it even more attractive to collect. Even today, I am sure many keep buying bitcoin until they reach the magic one full bitcoin threshold. Which technically is 100,000,000 units or satoshis.
Another strike of genius was to add this message to the genesis block:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
The inclusion of a current news headline proved no pre-mine. Any headline from a major newspaper would do. But I don’t think it’s a coincidence that he referenced the bank bailouts of the time. This created an image of bitcoin as an opposing force to the financial system.
This quickly created a following among libertarians, if not also others critical of central banking and fiat money. I personally got introduced to bitcoin at a 2011 libertarian meetup. Regrettably I wasn’t sold on the idea immediately, especially since I didn’t buy into the electronic cash narrative.
Instead I had the idea grow on me over a few years.
Only in 2014, after a group of volunteers had created Counterparty, a peer-to-peer finance system on bitcoin I got sold on the idea. By inserting short messages in bitcoin transactions, one could mint custom tokens and even trade them like on the stock market. After I first tested the system, I wrote this note:
“Just for fun I minted my own coin called JP Gold. It can be transferred just as easily as Bitcoin, it can be sent to any Bitcoin address, and all goes through the blockchain. It is even better than Bitcoin in one aspect, I can choose to pay every holder of JP Gold a dividend…“
Knowing that I now could mint my own coins (and give them symbolic meanings just like Satoshi did), the next day I decided to express myself in a way no man had ever done before. I minted one non-fungible token and named it OLGA with description “My Eternal One & Only”. It paid off. Olga is now my wife.
The week after I decided to make an experiment. I issued 100 JPJA tokens, imagined they were shares and defined that each were entitled to 1% of my book’s revenues. The book was named “The Economics of Bitcoin”.
“My motive for [writing it] is to show that bitcoin is more than just a payment system. It is a financial platform of endless opportunities.“
Today it’s evident that blockchain has indeed become the backbone of a wider crypto economy, although ethereum has more to show for in this sense. But back then ethereum did not exist.
A final point is that if you strip all symbolism out of bitcoin it becomes the blockchain’s fee token. If you use the bitcoin network for whatever reason, you need bitcoin to pay fees. Trade bitcoin NFTs, you need bitcoin. Notarize files. guess what, you need bitcoin.
To sum it all up, I believe Satoshi used the whitepaper and genesis message to draw a symbolic meaning to his tokens. Maybe it’s a stretch to call the whitepaper a poetic masterpiece, but it did plant the image of a coin in many minds. This, in some sense at least, should qualify bitcoin as an NFT.
Testnet – Worthless Because We Say So
Understanding testnet can help put all above in perspective.
Testnet coins hold no value despite technically being near identical to bitcoin. Both chains even come bundled together in the bitcoin software. The reason testnet coins are worthless is because … we’ve been told that they are.
If someone wants to hoard these, or two parties decide to trade these coins, there is nothing stopping them. The bitcoin developers may “reset” the chain by unbundling the current test blockchain from a future update. But those who want to keep using testnet can always continue running the current version.