History and Equity in the Bitcoin Distribution

When Bitcoin was new, it was not very popular. At first, only Satoshi was using it, and then only a small circle of Satoshi’s friends, then only the cipherpunks. Gradually adoption, and recognition increased. Some off the early adopters have a disproportionate share of the tokens. The largest individual holder of all is Satoshi with roughly 1 million bitcoins. This is about 5% of the total supply of the token.

Naturally this raises concerns about equity, should Bitcoin become the new financial base layer. I share this concern to some extent. I want crypto to succeed not only in the narrow sense of displacing the dollar and the banks and getting to say “told you so” to wall street. I want crypto to succeed also in making the world more inclusive and allowing individuals to interact without trusting intermediaries. I also sometimes roll my eyes at people whining about equity and inclusion in bitcoin because I, and many others, did all we could to convince our family and colleagues to learn something - anything - about bitcoin since 2013, and in many cases got laughed at or told I was shilling a Ponzi scheme. So I do truly want equity, but I also recognize that people who invested their time and energy and attention in bitcoin early have been rewarded - perhaps unfairly so.

But now the inequity is getting even worse. Crypto has reached the point where traditional financial institutions and governments are taking note and taking stock. There are now ETFs on traditional exchanges for some major crypto tokens. Wall street heard the “told you so”, shrugged it off, and got straight to accumulating crypto. They now strive to intermediate crypto transactions just like they intermediate dollar transactions. While blockchain networks offer fundamentally better trust assumptions and security guarantees, some people are still too lazy to learn about it, and others are priced out by wall street.

Normies Get Rekt

That brings me to another negative which is that sometimes when people do try to get involved, they don’t learn it quite right, or make a mistake and lose their money. In the crypto lexicon this is known as getting “rekt”.

The bear market of 2022 - 2024 was the hardest of all for me because a lot of regular folks lost money to frauds like FTX or 3AC. They got into crypto because they wanted the number to go up for them. They didn’t succeed, or maybe didn’t even try, to learn the fundamentals and got burned. Many people saw this and now think that all of crypto is a scam and are even less likely to learn about it now.

Here are some notes I wrote shortly after the 3AC incident in 2022.

Crypto just went through another boom bust cycle. The industry is bigger than ever. For true believers like me, that’s good… right? It also meas that people got rekt real bad, and everyone is noticing.

There is a lot of skepticism and negative attention around the crypto space right now. As a crypto believer, that can be hard at times, but ultimately I think ti is healthy. I think now is a good time to re-assess what we are building, what the tradepffs are, and what the goals are.

I occasionally daydream about a scenario that I refer to as “Satoshi’s Jubilee” which basically amounts to a divine intervention to fix the equity problem. I’ll describe it presently.

Satoshi’s Jubilee

Institutional money comes pouring in. The wallstreet bros buy the ETFs and convince their customers to buy them, and leverage them to the tits, and start doing their coke through bitcoin paper wallets instead of $100 bills.

And then Satoshi pulls out the rug. Imagine Satoshi airdrops their million coins to the plebs of the world. Or sells them into the open market and causes a crash.

All the get-rich-quickers and hodlers get rekt and the equity is redistributed again. At this point the world has had time to see why a blockchain based cyrptocurrency is necessary and knows how to build a good one. But all the historical allocations of the bitcoin network are reset and everyone gets a chance to get in on the new thing.

Maybe the new thing would be an existing good coin like xmr or eth, or maybe just a bitcoin relaunch.

It would take a strong narrative to convince the world that this was the last rug. For example, if Satoshi revealed that this was the plan all along. But maybe it shouldn’t be the last rug. Maybe the rug is the modern jubilee. The redistributing of the equity. The forgiving of the debts. The re-rolling of the character dice.

YHWH’s Jubilee

The name “Satoshi’s Jubilee” is inspired by the ancient Israelites’ Jubilee tradition which is described thus in Leviticus 25:

8 “You shall count off seven weeks[a] of years, seven times seven years, so that the period of seven weeks of years gives forty-nine years. 9 Then you shall have the trumpet sounded loud; on the tenth day of the seventh month—on the Day of Atonement—you shall have the trumpet sounded throughout all your land. 10 And you shall hallow the fiftieth year, and you shall proclaim liberty throughout the land to all its inhabitants. It shall be a Jubilee for you: you shall return, every one of you, to your property and every one of you to your family. 11 That fiftieth year shall be a Jubilee for you: you shall not sow or reap the aftergrowth or harvest the unpruned vines. 12 For it is a Jubilee; it shall be holy to you: you shall eat only what the field itself produces.

13 “In this year of Jubilee you shall return, every one of you, to your property. 14 When you make a sale to your neighbor or buy from your neighbor, you shall not cheat one another. 15 When you buy from your neighbor, you shall pay only for the number of years until the Jubilee; the seller shall charge you only for the remaining crop years. 16 If the years are more, you shall increase the price, and if the years are fewer, you shall diminish the price, for it is a certain number of harvests that are being sold to you. 17 You shall not cheat one another, but you shall fear your God, for I am the Lord your God.

The biggest difference from the rug-pull style Jubilee I described above is the regular recurring nature of the Israelite tradition. Whereas Satoshi’s would be one-off and at their discretion, the Israelites had the Jubilee predictably every 50 years. Rumor has it that Babylonian Kings sometimes did one-off debt cancellation and equity redistributions similar to Satoshi’s # Precedent

Dynamics vs Initial Conditions

In Math and Physics, you need two pieces of information to understand how a system will evolve over time. You need to understand the dynamics that govern the system (think math equations or physical laws like Newton’s) and you need to know the initial conditions (the state at some specific point in time).

The same perspective applies to financial systems. Concerns about early adopters or incumbents holding too much wealth right now are concerns about the initial conditions. Jubilees, especially Israelite-style recurring ones, refer to dynamics that govern the system.

In the long run, the dynamics are much more important than the initial conditions. I believe that the problem of inequitable initial distribution could only be remedied through an “act of god” like Satoshi’s Jubilee. But I believe there is much hope for better dynamics in future financial systems. So while it is noble to worry about inequity today. It is wise to design for an every more equitable future.

Perhaps there is a way to have some notion of continuous jubilee.