Elliot Olds
19 min readJan 16, 2019


Edited January 16 at noon PST to add the section “The meaning of ‘money’”, change some wording, and add an appendix.

Examining a Conspiracy Theory about Satoshi’s Intent

Dan Hedl recently published a popular tweetstorm in which he lays out a comprehensive theory of why we should think that Satoshi intended Bitcoin more as a store of value (SoV) than a medium of exchange (MoE).

I found Dan’s reasoning extremely unconvincing and will explain why below.

Why write an essay about this tired topic?

“Satoshi’s Vision” has been rehashed extensively over the years. Being overly concerned with this topic is associated with being enmeshed in unproductive tribalism. I agree with Dan that the topic itself isn’t important at this point.

So why does this essay exist?

To me the interesting thing here is that so many people in the Bitcoin community enthusiastically accept these arguments, and that more reasonable BTC supporters say nothing while these arguments go viral.

I’m reminded of the idea that in a religion only absurd beliefs function as a good test of people’s faith. Anyone can believe something that makes sense. Only someone who has extreme loyalty to the group will profess belief in the group’s favored absurdities.

The current state of discussion within the Bitcoin community looks like a runaway ingroup loyalty signaling loop.

I intend this post to be somewhat of a wake-up call to BTC supporters. We shouldn’t propagate bad arguments just because they come from “our team.” Bitcoin still needs to recruit a lot of people to remain the dominant cryptocurrency. To the extent that we allow our community to be associated with absurd rhetoric, we’ll drive people away.

This post will unfortunately be long, because a lot of context is needed to understand why the tweetstorm is misleading.

A TL;DR of the argument

Dan argues that Satoshi talked about Bitcoin being used for payments as a strategy for getting cypherpunks to help him build Bitcoin, while secretly preferring a store of value use case.

Dan implies that we should ignore what Satoshi explicitly and frequently said about Bitcoin as a MoE and instead use lots of indirect evidence about what Satoshi believed to conclude that he primarily wanted Bitcoin to be a SoV.

As we go through the tweetstorm, we’ll compare Dan’s theory to an alternative interpretation that I think comes through clearly when reading all of Satoshi’s writings: that Bitcoin was meant primarily to be used for payments, and that Satoshi thought giving Bitcoin gold-like properties would enhance its overall usefulness and also make it a great SoV.


I’m not making any claims about whether Bitcoin should pursue a SoV path or not. This essay will only address arguments about Satoshi’s intentions.

The meaning of “money”

I’ve added an appendix to this essay that goes into more detail on this topic. The short version is:

“Money” implies MoE at least as much as it implies SoV. Possibly more, but definitely not less.

Because Dan is arguing that Satoshi primarily intended Bitcoin as a SoV, references to Bitcoin as money by Satoshi still cut against his argument even if Satoshi meant “money” equally as both MoE and SoV.

Satoshi’s ideology

The argument is roughly that (1) Satoshi has a libertarian ideology, (2) Censorship resistant gold is a more libertarian thing than censorship resistant currency, (3) Therefore we should favor the theory that Satoshi intended Bitcoin as a SoV and not a MoE.

The weak point here is in step two. I’d really like to see the logic explained in detail. Making payments and storing value without the state’s interference both seem quite valuable to libertarian goals.

It’s instructive to actually read the post that is quoted in the 4th tweet.

Note that Satoshi is comparing Bitcoin to “conventional currency” (MoE). Later in the same post:

It’s time we had the same thing for money. With e-currency based on cryptographic proof, without the need to trust a third party middleman, money can be secure and transactions effortless. — Satoshi

Satoshi describes Bitcoin as “money” and then immediately uses “e-currency” seemingly as a synonym for “money.” He talks about how we need a system to make transactions effortless. In other words Satoshi is describing a MoE use case as clearly as anyone could. Follow the link and read the post and you’ll see that Satoshi doesn’t mention any SoV use case.

From the same post:

[Banks’] massive overhead costs make micropayments impossible. — Satoshi

Satoshi talks often about very small on-chain payments. This is one example. Another example occurs in the introduction of the whitepaper (which we’ll get to later).

Dan thinks that this post supports the SoV theory because Satoshi’s talks about trust minimzation which is a libertarian theme and somehow he knows that libertarians care more about SoVs than MoEs.

Basically Dan is saying “Ignore what Satoshi says — through a long chain of indirect logic we can infer that he must not really mean it.”

Satoshi‘s references to Bitcoin as like gold

In the original post, the thread is about whether Bitcoin is like a stock or like something else. In the thread people are looking for alternative ways to describe Bitcoin other than money. Here’s the post two posts before Satoshi’s:

Trying to figure out a non-money analogy for Bitcoin.

Satoshi’s full response to this thread was:

Bitcoins have no dividend or potential future dividend, therefore not like a stock.

More like a collectible or commodity.

Bitcoin is a new kind of thing, with some gold-like properties. Everyone already knew Bitcoin was a kind of currency because Satoshi frequently wrote about it that way.

A thread was started about whether Bitcoin should be marketed like a stock, and Satoshi correctly pointed out that Bitcoin is more like a commodity than a stock. Does this mean Satoshi didn’t want Bitcoin to be used as a MoE? Or did Satoshi not say “Bitcoin is more like currency than a stock” because he had already repeatedly described it in those terms?

Here is the original post. Satoshi was describing Bitcoin’s issuance mechanism. Bitcoin is obviously like gold in its supply.

It’s a mistake to infer that because Satoshi gave Bitcoin some gold-like properties that this means we can disregard that he repeatedly described Bitcoin as money/currency.

Part of the error here is in insisting that Bitcoin must be fit into a single pre-Bitcoin category. Bitcoin is unlike anything that had ever existed in many ways. It has properties of many things. We don’t need to pick a single one to the exclusion of all others.

This is another example of selectively quoting a reference to Bitcoin’s gold-like properties within the larger context of Satoshi talking about Bitcoin’s use for transactions.

Here is the original post. The full context is that it’s 2010, Bitcoin is very new, and people are still unsure about whether Bitcoin can have lasting value. The thread is about whether Bitcoin can “emerge as money”, or whether Bitcoin violates Mises’ regression theorem.

Here is fuller context from the same post that Dan quotes:

If it somehow acquired any value at all for whatever reason, then anyone wanting to transfer wealth over a long distance could buy some, transmit it, and have the recipient sell it.

Maybe it could get an initial value circularly as you’ve suggested, by people foreseeing its potential usefulness for exchange. (I would definitely want some) Maybe collectors, any random reason could spark it.

I think the traditional qualifications for money were written with the assumption that there are so many competing objects in the world that are scarce, an object with the automatic bootstrap of intrinsic value will surely win out over those without intrinsic value. But if there were nothing in the world with intrinsic value that could be used as money, only scarce but no intrinsic value, I think people would still take up something. — Satoshi

If you read the thread it’s clear that Satoshi is talking about Bitcoin becoming useful for exchange. The discussion is about how Bitcoin initially acquires any value at all so that the its network effect can get started. He thinks commodity-like scarcity can help bootstrap Bitcoin’s use as a MoE.

Specifically, note that the SoV narrative of Bitcoin today is that Bitcoin is valuable now because it will become widely adopted as a SoV in the future. Satoshi instead focuses on Bitcoin having value now because of its future value as a MoE: “…by people foreseeing its potential usefulness for exchange.”

To claim that Satoshi’s reference to commodities / metal in this context is evidence that he preferred Bitcoin to be an SoV rather than MoE is a complete misrepresentation of the discussion.

Satoshi is referring to Bitcoin here as a speculative asset / lottery ticket. Even if we interpret this speculative use as falling under the SoV umbrella, this is another example where context is ignored to twist Satoshi’s meaning.

Here is the full post. It’s January 2009 and no one knows if Bitcoin will catch on. We saw above that Satoshi recognizes that Bitcoin just needs to somehow acquire some initial value, and this will make it useful as a medium of exchange. The tricky part is: how will Bitcoin acquire that initial value? Satoshi is suggesting that one possibility is that the initial value could come from speculators.

I would be surprised if 10 years from now we're not using
electronic currency in some way, now that we know a way to do it
that won't inevitably get dumbed down when the trusted third party
gets cold feet.

It could get started in a narrow niche like reward points,
donation tokens, currency for a game or micropayments for adult
sites. Initially it can be used in proof-of-work applications
for services that could almost be free but not quite.

It can already be used for pay-to-send e-mail. The send dialog is
resizeable and you can enter as long of a message as you like.
It's sent directly when it connects. The recipient doubleclicks
on the transaction to see the full message. If someone famous is
getting more e-mail than they can read, but would still like to
have a way for fans to contact them, they could set up Bitcoin and
give out the IP address on their website. "Send X bitcoins to my
priority hotline at this IP and I'll read the message personally."

Subscription sites that need some extra proof-of-work for their
free trial so it doesn't cannibalize subscriptions could charge
bitcoins for the trial.

It might make sense just to get some in case it catches on. If
enough people think the same way, that becomes a self fulfilling
. Once it gets bootstrapped, there are so many
applications if you could effortlessly pay a few cents to a
website as easily as dropping coins in a vending machine.

I bolded just the part of the post that Dan quoted in support of the idea that Satoshi wanted Bitcoin to primarily be an SoV. Read the full post and ask yourself if Satoshi is really advocating the SoV use above the MoE use.

Satoshi is talking about Bitcoin gaining initial value through speculation so that it can later be used for payments.

Given the full context, Dan using this post as evidence that Satoshi preferred the SoV use case to the MoE use case doesn’t hold up.

What can we infer from the timing of Bitcoin’s release?

Dan goes on to argue that the timing of Bitcoin’s release was a clue that Satoshi preferred Bitcoin being used as a SoV.

I won’t spend much time on this. I find it as unconvincing as the other arguments. We’ll just look at the last tweet in the sequence:

Dan claims that we needed a censorship resistant SoV at the time, not a censorship resistant MoE. We basically just have to trust Dan’s diagnosis of what we “needed”, and use that to infer Satoshi’s motivations (again, disregarding what Satoshi said).

Dan misrepresents the “Bitcoin as MoE” story by comparing it to VISA. Bitcoin is both a currency and also a payment network. VISA is only a payment network.

The argument of MoE supporters is not that we need a payment network that we can use with fiat currency. It’s that we need a new censorship resistant currency, not controlled by any government, that can’t be inflated (and so also has nice SoV properties), which can be sent easily over the Internet.

This is far more significant than just being a VISA alternative.

Is Satoshi using the common meaning of “cash”?

Dan makes the argument that when cypherpunks use the word “cash” there is no connotation to small / medium payments. All they’re trying to connote is “bearer asset.”

I’ve never seen this argued for in any depth. The only evidence provided is a claim that when “cash” is used in “hashcash” and “Ecash” (see tweet below), it has that meaning.

I’ve read the hashcash paper, and this alternative meaning of cash doesn’t come through. The paper doesn’t talk about the meaning of cash, but its use is in line with the common understanding of use for small payments.

Hashcash was originally proposed as a counter-measure against email spam, and against systematic abuse of anonymous remaile — Hashcash whitepaper

Using hashcash to protect against email spam doesn’t go against any common meaning of “cash”. The amount of computational work to prove that you aren’t a spammer would probably be a few cents or less. “Spending” a few cents to send email is in line with what people might expect to use cash for. The hashcash paper has a section on “applications” that lists many other uses that all fit into the common definition of “cash”.

I also read Chaum’s paper that lead to Ecash and see “cash” being used in its normal meaning. Chaum discusses using Ecash for retail payments, and talks about units of Ecash equal to 1 USD.

I find no support for the claim in the sources he cites that “cash” was being used to mean something other than the common usage by Chaum or Back in their papers.

It’s possible that cypherpunks really did use “cash” in a way that didn’t connote small payments but it would be nice to see some real evidence.

This is awkward because even after substituting “bearer assets” for “cash”, this excerpt from the whitepaper still refers to peer to peer “online payments.”

So according to this theory: Dan is right about Satoshi’s preference that Bitcoin primarily be used as a SoV by definition, just because “cash” began as meaning “money box,” regardless of its meaning today.

Examining the whitepaper‘s stance on MoE vs. SoV in more detail

The “cash” debate is actually unnecessary, because the whitepaper talks extensively about MoE use being the motivation for Bitcoin’s creation. There are no references in the whitepaper to using Bitcoin as a SoV.

A lot of people complain about “cherry picking” quotes whenever people quote Satoshi at all. I’m going to comprehensively list every reference to either a MoE or SoV use case in the whitepaper. Let me know if I missed any.

The abstract

A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution

Putting aside the “cash” thing for now, the reference to “online payments from one party to another” is about MoE.

The introduction

Commerce on the Internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments.

It only makes sense for Satoshi to talk about “commerce on the Internet” here if he intends Bitcoin to be used for this purpose.

The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions

It’s hard to think of a more clear sign of Satoshi’s intent. He’s suggesting that Bitcoin is useful in part because it will be able to handle transactions smaller than current payment processors can handle. He’s saying that one reason Bitcoin will be better than existing solutions is because it’s cheaper (since it doesn’t come bundled with mediation services). We don’t have to theorize about what a specific word means to understand him here.

Merchants must be wary of their customers, hassling them for more information than they would otherwise need

Merchants, customers.

These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.

Satoshi uses the word “currency” for the first time, in the context of payments. If Satoshi’s main motivation is releasing a new digital gold, why is he only talking about payments and currency?

What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party

Electronic payment system. Satoshi is proposing Bitcoin as a solution to the problems mentioned in earlier quotes.

So far we’ve made it through the abstract and the intro and we’ve seen lots of talk about payments, a reference to usefulness for small transactions, and nothing about a digital gold.

Section 6: Incentive

The steady addition of a constant of amount of new coins is analogous to gold miners expending resources to add gold to circulation.

Finally, a reference to something SoV-like.

Mining is currently the best known solution to the coin distribution problem, and gold is a great analogy to get people to understand mining. So I don’t think we can infer too much about Bitcoin’s intended use from the fact that mining exists in Bitcoin.

Once a predetermined number of coins have entered circulation, the incentive can transition entirely to transaction fees and be completely inflation free.

The 21 million supply cap is an example of Satoshi making a decision that makes Bitcoin more appealing as a SoV.

Given what we’ve seen so far, which of these is more likely: that Satoshi thought that a MoE with a gold-like supply schedule would be a super awesome currency that could also be SoV-like? Or that he intended Bitcoin to be used primarily as a SoV?

The only way to get to the second interpretation is to assume that Satoshi was intentionally being misleading (something Dan later suggests).

Section 8: Simplified Payment Verification

Businesses that receive frequent payments will probably still want to run their own nodes

Satoshi is back to talking about Bitcoin being used in commerce.

General whitepaper remarks

As should be clear, Satoshi’s intent in the whitepaper doesn’t hinge on the meaning of the word “cash.”

He talks about payments many times throughout, including when he discusses the motivation for Bitcoin in the abstract and intro, and refers to cheap transactions as a motivating factor for Bitcoin.

In the whitepaper Satoshi never refers to SoV use cases, although he did make a design decision (the 21 million supply cap) that makes Bitcoin a better SoV.

The meaning of “peer to peer” in the whitepaper

Dan’s/Charlie’s point that payments between individuals in Bitcoin aren’t technically peer to peer is correct, although it doesn’t help the SoV argument.

It’s true that a lot of less sophisticated people often get confused by Satoshi’s usage of “peer to peer”, and falsely claim that that specific phrase in the whitepaper means “individuals transacting directly with each other.”

We can’t infer from the fact that payments in Bitcoin don’t technically work in a peer to peer manner that Satoshi intended Bitcoin as primarily a SoV. They’re completely separate issues.

Just to drive the point home, here’s Satoshi talking about direct payments between users (taken from a post that Dan quoted from earlier):

Users hold the crypto keys to their own money and transact directly with each other, with the help of the P2P network to check for double-spending. — Satoshi

That transactions are sent to miners who publish them in blocks is an implementation detail, meant to be invisible to users who have the subjective experience of sending/receiving money between each other.

If Satoshi was creating a MoE, would he have made it inflationary?

Dan is suggesting that according to one economic theory fixed supply currencies are bad MoEs. From this we’re supposed to infer that Satoshi must not have intended Bitcoin as an MoE.

The problem with this argument is that we have no indication that Satoshi subscribed to this theory. There are a lot of conflicting economic theories about a lot of things.

Every indication from Satoshi’s writings is that he thought that Bitcoin (a fixed supply currency) could be a very good MoE.

I believe Dan is wrong on the question of whether fixed supply currencies are inherently bad as MoEs, but I’ll skip that analysis in the interest of brevity (though here’s a good essay on flaws in Austrian economic thinking).

Can we infer Satoshi’s preference for SoV vs. MoE based on his dislike of bank bailouts?

Another instance of mentioning VISA to misrepresent the MoE-first Bitcoin as only a payment network and not also a censorship resistant currency.

Dan claims that because Satoshi wasn’t a fan of the bank bailouts, he must have wanted Bitcoin to be an SoV first and not a MoE which also had SoV properties.

A censorship resistant currency that also has SoV properties seems like something that could easily liked by an opponent of the bailouts. Without an actual argument its unclear why disliking bank bailouts should imply an SoV-only preference.

Do Satoshi’s cryptic references to gold suggest that he wanted Bitcoin to be a SoV first?

One interpretation is that Satoshi liked gold-backed currencies. Another interpretation is that Satoshi liked gold’s SoV use case in addition to its monetary one. Another interpretation is that he wanted Bitcoin to primarily be a SoV.

Again, what’s more likely: that Satoshi thought that creating a censorship resistant currency with gold-like properties would result in an even more awesome currency? Or that Satoshi didn’t really mean all that stuff he said about payments and Bitcoin as a MoE?

Note that at this point Satoshi has still not once explicitly referred to an SoV use-case for Bitcoin. The pure SoV use case is: you use non-Bitcoin currency to buy Bitcoin. You store that Bitcoin for a while. You sell that Bitcoin for non-Bitcoin money. Then you use that money to buy stuff.

Maybe Satoshi talked about this somewhere but I’m guessing Dan would have found it if it existed.

Is a MoE-first version of Bitcoin so non-threatening to governments that Satoshi wouldn’t have bothered being anonymous?

Again this downplays the MoE-first vision of Bitcoin as if it’s only a payment network and not also currency.

Creating a new form of currency outside of government’s control is a big deal.

The most plausible alternative to Dan’s view isn’t that Bitcoin isn’t used as a SoV at all, it’s that it’s primarily currency and also a SoV.

Does Szabo’s theory of money’s four-stage evolution imply Satoshi intended Bitcoin as a SoV?

Dan refers to Nick Szabo’s theory that money evolves in four stages.

If Satoshi did believe in the four stages theory, why wouldn’t he have mentioned that Bitcoin first needs to go through a SoV phase before it can become money? The four stages theory (at least interpreted by many in the BTC community) says that money can only evolve sequentially in those four stages. So unless Satoshi wanted Bitcoin to fail he should have mentioned this at some point instead of talking about using Bitcoin for payments right from the start.

Regardless of whether the 4 stages theory is true or not, we have no evidence that Satoshi believed in the 4 stages theory (aside from a small chance that Szabo is Satoshi).

Dan is trying to argue that Satoshi intended Bitcoin as primarily a SoV. It’s not enough to argue that Bitcoin makes more sense as an SoV.

Should we ignore Satoshi’s many references to Bitcoin as MoE because it was just marketing?

Dan can’t deny the huge volume of Satoshi’s writing that talks about Bitcoin as currency / a method for small payments. So he suggests that Satoshi pitched Bitcoin as a MoE as part of a plan to get cypherpunks excited about helping him build it, all while secretly preferring the SoV use case.

I guess we’re assuming that cypherpunks like MoE use cases more than SoV use cases and Satoshi knew this. The alleged cypherpunk attraction to MoEs instead of SoVs deserves some explaining, especially since Bitcoin’s current SoV-first narrative seems quite popular with many cypherpunks.

I’ve confined myself to quoting just the whitepaper and the specific posts around the time of the whitepaper that Dan referenced to support his claims. There are many posts from later years where Satoshi continues to talk about Bitcoin as a MoE. If I included quotes of Satoshi describing Bitcoin as MoE from all of his writings, this post would be many times longer. I’m not aware of Satoshi ever explicitly advocating a pure SoV use case (buy Bitcoin, store it, sell it, then use the money that you sold Bitcoin for to buy stuff).

The story Dan wants us to believe is that Satoshi wanted SoV to be Bitcoin’s primary use, never said so, and instead talked extensively about Bitcoin being used for MoE / small payments just for marketing purposes.

This is an extraordinary claim requiring extraordinary evidence. I don’t believe we’ve seen extraordinary evidence in this tweetstorm.


The object level

On one hand, we have what Satoshi clearly and repeatedly wrote.

On the other hand we have quotes that I’ve shown were taken out of context, a theory that Satoshi was misrepresenting his intentions for years, and many complex theories about the hidden meanings of Satoshi’s words and decisions.

The meta level

More importantly, I’m concerned that so much of the rhetoric that becomes popular in the Bitcoin community looks like this tweetstorm.

If our goal in the Bitcoin community is to “prove” to ourselves that we’re right over and over with questionable reasoning that looks crazy to outsiders, things seem to be going well.

If we want to give Bitcoin the best chance of actually establishing itself as the dominant cryptocurrency, this sort of rhetoric seems counterproductive.

Follow me on twitter.


The meaning of money, expanded

A previous version of this essay made more frequent use of the term “money.” Based on feedback from Murad Mahmudov, for clarity I’ve decided to replace many such references with either “currency”, “payments”, “transactions”, “MoE” or otherwise reword.

The issue is that “money” implies MoE but also implies SoV and unit of account (UoA) somewhat. Different people may have different understandings of the degree to which “money” implies these functions.

I believe that in common usage “money” necessarily implies significant MoE use but doesn’t necessarily imply significant SoV use. USD is currently a bad SoV but it’s still money. If USD inflated at 20% per year and was still used in commerce I’d still consider it money and I believe almost all others would as well. Most people would be much more reluctant to call gold “money” because it isn’t commonly used as a MoE.

Wikipedia backs up an interpretation where money means MoE possibly more than but definitely no less than SoV:

Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The main functions of money are distinguished as: a medium of exchange, a unit of account, a store of value and sometimes, a standard of deferred payment.

Money is defined in the first sentence only in terms of its MoE use, and then in the second sentence the other two uses are mentioned.

As we saw in the essay, Satoshi at one point uses “money” and “currency” in quick succession in a way that suggests he’s using them as synonyms. Whenever Satoshi talks about specific use cases he talks about Bitcoin as a MoE and not as a SoV.

Because Dan is arguing that Satoshi primarily intended Bitcoin as a SoV, references to Bitcoin as money by Satoshi still cut against his argument even if Satoshi meant “money” equally as both MoE and SoV.