Dear Friends,

Years ago, I thought I had a great idea.  If you are the type who likes to grab a blank sheet of paper and work something out, you probably have a very good idea what this feels like.  I have met many mathematicians, computer scientists, and theoreticians in many fields over the years, and I often talk to them about that moment when you've figured something out.  It's your baby, and you have so much hope.  You can't help but have visions of greatness, albeit sheltered in your own thoughts where no one can spy.  Outside, you try to be measured and professional, no matter how great the hopes and dreams may be.

My discovery was an algorithm.  I had been playing around with Dr. Back's proof-of-work algorithm and realised that I could ledger the protocol exchange and build an economy atop the stamps.  With just a few enhancements here and there, I could see an entire digital scarcity management system.  I called my algorithm Bitcoin.  It seemed so simple, yet so very interesting.  I figured out some of it's properties, secretly imagining great things it might one day do.

I think sometimes we can blind ourselves by our optimism.  I tried to remain cautious.  I published and let others look at it.  I watched as discussions formed around it, and tried my best to code a reference implementation.  I am not a professional software engineer, but a computer scientist has some experience, and the release of the functioning code went well.  Adoption was slow, which was good as it helped us find bugs without hurting people.  My caution turned to confidence as adoption grew.

But I had doubts.  Honestly, my economics knowledge was not as strong as I would have hoped.  I knew enough to know that scarcity and demand would reveal value, but I had no idea what that value actually was or how it would behave.  This was a seed that kept on gnawing.  Papers started being written on Bitcoin in economics journals, and I did my best to study every one I could find and read up on the methods used and theories referenced.  Most were coming to the conclusion that Bitcoin would not behave well like a currency, and this was troubling.

But the price of Bitcoin was rising, in spurts, and exchanges were popping up all over the world.  Adoption was greater than I ever expected (except in those parts of me that I didn't reveal), and new uses were popping up.  I had every reason to be proud of the great progress.  And as the price soared and user base exploded, I watched as a number of major scams, frauds, and outright thefts stole people's hard-earned money.  And I read more about the speculative nature of Bitcoin's valuation process, and the problems of deflationary currencies, and everywhere I turned I saw the economists had figured it out.  A huge bubble burst and I saw many lives ruined, and the economists had understood why that would happen long before it actually had.

And now I know why.  A currency that only gets value through speculation requires finding people to sell to at a higher price than bought for.  It requires predators.  People cannot use Bitcoin like a currency, because they cannot ignore buying power and it will never be stable.  They have to look at it as an investment, and so they have to be find people to fool into believing it will only go up, to justify why they are selling for higher.  They build stories, myths, lies really, to convince the newcomers on why Bitcoin will take over the world.  They seek out hype like a drug, the only means of building demand and growing the price.  And then, like clockwork, every little bump or boost in demand turned into a sell-off, as the predators consumed their newest victims. 

Of course, I understand the mythology.  The secret stories I would tell myself often sounded very similar.  I almost didn't even think they were lies.  I thought they were wishful, hopeful even.  I thought it was possible.

It is not possible.  This is the nature of the beast I have created.  No one sees themselves as predators.  They just want the price to go up and will sell when they think they can get out ahead.  They don't just fool others with their myths - they fool themselves as a psychological trick to justify to themselves how they ended up holding coins, or they were fooled and remain so.  Those who hold onto the coins and promote this to others do so only for investment purposes.  And perhaps most disturbing of all, I see in forums and discussions all over the internet people hoping for the next bubble with apparently no sense of irony or self-awareness.  Bubbles are pure, naked predation and this is so well known that you do not need deep economics knowledge to have heard news stories or read of their horrible consequences.

I see this beast and I feel such dread at what I have done.  This isn't just a few friends playing with spare change.  This is billions of dollars now, a goliath that has torn apart families, destroyed people's savings, and ruined lives.  Hundreds of thousands now have lost money because of me, and those still hanging on are turning their eyes towards finding the next round of fools to scam.

I'm really sorry.  I'm deeply, terribly sorry.  I hope you can understand why I released this algorithm and that my intentions were good.  We are all finite beings, and the depths of our knowledge are limited in time.  I wish I had known what I do now.  Even now, I wonder about various ways to tie value to the coin and fix things so a decentralized coin could indeed change the world for better, but that is not Bitcoin; that is something else.  I fear that is beyond me, now, and I need the world to understand the truth of Bitcoin.

Please, let us leave this exercise.  Let us stop hurting others to make a little money off them.  Let us make this right.


Kindly in service,
Satoshi Nakamoto
Creator of Bitcoin