From: Satoshi Nakamoto
Date: February 18, 2009 at 20:50:00 UTC
Subject: Bitcoin open source implementation of P2P currency
It is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow:
- Whenever someone finds proof-of-work to generate a block, they get some new coins
- The proof-of-work difficulty is adjusted every two weeks to target an average of 6 blocks per hour (for the whole network)
- The coins given per block is cut in half every 4 years
You could say coins are issued by the majority. They are issued in a limited, predetermined amount.As an example, if there are 1000 nodes, and 6 get coins each hour, it would likely take a week before you get anything.
To Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things.
If there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.
In this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.
Tortuga / 🐢
npub1e3…0qvr5
2024-09-30 16:11:01
Author Public Key
npub1e3mx09yq53gyh9368qyuhfstgk8t7p5vvfcnvgwa4994y7rqg37s20qvr5Published at
2024-09-30 16:11:01Event JSON
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"content": "From: Satoshi Nakamoto\nDate: February 18, 2009 at 20:50:00 UTC\n\nSubject: Bitcoin open source implementation of P2P currency\n\nIt is a global distributed database, with additions to the database by consent of the majority, based on a set of rules they follow:\n- Whenever someone finds proof-of-work to generate a block, they get some new coins\n- The proof-of-work difficulty is adjusted every two weeks to target an average of 6 blocks per hour (for the whole network)\n- The coins given per block is cut in half every 4 years\n\nYou could say coins are issued by the majority. They are issued in a limited, predetermined amount.As an example, if there are 1000 nodes, and 6 get coins each hour, it would likely take a week before you get anything.\n\nTo Sepp's question, indeed there is nobody to act as central bank or federal reserve to adjust the money supply as the population of users grows. That would have required a trusted party to determine the value, because I don't know a way for software to know the real world value of things. \n\nIf there was some clever way, or if we wanted to trust someone to actively manage the money supply to peg it to something, the rules could have been programmed for that.\n\nIn this sense, it's more typical of a precious metal. Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up, which could attract more users to take advantage of the increasing value.",
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}