It’s fashionable in Bitcoin these days to argue that Satoshi Nakamoto did not care about low transaction fees as an essential feature of Bitcoin.
The argument goes that Satoshi didn’t care about fees because other cypherpunks like Nick Szabo and Hal Finney didn’t care and that therefore anyone who claims otherwise is wrong. And so today we have the modern culture in BTC that unironically tells people to “just use Visa” if they want low fees.
Finally! Kudos for this unconvenient honesty. “Cash” in the cypherpunk culture had nothing to do w/ “muh low fee & fast confs”. Actually, sending physical cash from Alice to Bob across the world, is MUCH slower & more expensive than a bank wire transfer! Cashness is not that!
— Giacomo Zucco (@giacomozucco) September 11, 2018
Evidence aside that Satoshi was not part of cypherpunk culture at all and that Bitcoin was an independent invention from the concepts outlined in papers like b-money and bit gold, this kind of appeal to authority relies on its listeners never actually reading Satoshi’s writings for themselves.
The fact is that, whatever side of the BCH/BTC line you fall on, Satoshi did indeed care about micropayments. And whether he was wrong or right, we shouldn’t rewrite history to serve an agenda.
In the interest of helping people have a proper understanding of the ideas behind the creation of Bitcoin, let’s look at all the times Satoshi mentioned low fees or micropayments, the first of which is an often neglected passage in the introduction to the Bitcoin White Paper:
The cost of mediation increases transaction costs, limiting the minimum practical transaction size and cutting off the possibility for small casual transactions, and there is a broader cost in the loss of ability to make non-reversible payments for non-reversible services. With the possibility of reversal, the need for trust spreads.
Here Satoshi makes clear that payments above 1 cent USD are a clear part of Bitcoin’s utility:
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…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.
The root problem with conventional currency is all the trust that’s required to make it work…Their massive overhead costs make micropayments impossible.
For micropayments, you can safely accept the payment immediately. The size of the payment is too small for the effort to steal it. Micropayments are almost always for intellectual property, where there’s no physical loss to the merchant. Anyone trying to steal a micropayment would probably not be a paying customer anyway, and if they want to steal intellectual property they can use the file sharing networks.
Your approach to micropayments sounds right…The end goal though should get to something like you describe, where it’s similar to using your cell phone without really having to think about the per minute charges.
This last passage is interesting because it clarifies that when Satoshi is talking about “micropayments” he’s talking about smaller transactions than are capable with the existing payment system. It is often used to say he changed his stance, but it’s clear that he always meant for fees to be low enough for most day to day spending.
Arbitrarily small payments below 1 cent USD could be done with payment channels.
Bitcoin isn’t currently practical for very small micropayments. Not for things like pay per search or per page view without an aggregating mechanism, not things needing to pay less than 0.01. The dust spam limit is a first try at intentionally trying to prevent overly small micropayments like that. Bitcoin is practical for smaller transactions than are practical with existing payment methods. Small enough to include what you might call the top of the micropayment range. But it doesn’t claim to be practical for arbitrarily small micropayments.
Of course, the thoughts of Satoshi alone are not an argument, but understanding one of Bitcoin’s key early value propositions and the reasoning for it should be one tool we use in informing the kinds of decisions made in the Bitcoin protocol in the future.
For most of its history, Bitcoin functioned as Satoshi hoped it would. It did indeed have low fees that made it very useful as cash. Whether it can continue to have those is a separate question that we’re seeing play out in realtime with BTC and BCH, but denying that history outright is dangerous and puts us at odds with the Lindy Effect.
There has been unfortunately far too much propaganda and misinformation from so-called thought-leaders who either haven’t read Satoshi himself or who know what he said and are pushing a false narrative in spite of it. Micropayments and low fees were part of Bitcoin whether certain people like it or not.
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