What Satoshi Nakamoto Can Teach You About Launching a Blockchain Application
Next January will mark the 10th birthday of Bitcoin and the first mention of the name Satoshi Nakamoto, its creator and blockchain pioneer. Remember when it first launched?
Maybe you thought Bitcoin and blockchain were a fad that would die out as quickly as they appeared. Maybe you thought they had potential but remained on the fence. Maybe you invested in them - but we’ll assume that if you’re reading this article, you hopped on the train a bit late.
Regardless of where you stand, the birth and growth of Bitcoin and the blockchain have lessons for everyone, but more so for those who want to make their mark in the blockchain world. If that’s you, take notes and learn from Satoshi Nakamoto’s moves himself.
A Little Background on Satoshi
If there’s one thing everyone knows about Satoshi Nakamoto, Bitcoin’s and the blockchain’s creator, it would be the fact that he’s (or she or they) is unknown and hence, mysterious. The name is merely an identity used to label the person (or people) who created the blockchain and the native cryptocurrency. It’s still not known exactly who’s behind the Bitcoin.
There is speculation that Satoshi is from the U.K. (despite the Japanese name) due to his use of British English and flawless grammar. He has been labelled by some collaborators as “weird, paranoid and bossy” due to his painstaking approach to coding. But there are few theories about who Nakamoto really is.
Hal Finney - A late, computer scientist who pioneered the concept of cryptocurrency and received the first Bitcoin transaction (which would make it strange for him to be the creator). He passed away from ALS in August 2014.
Nick Szabo - A computer scientist, legal scholar and cryptographer known for his research on digital currency. He’s also credited by many as the creator of the term “smart contract”.
Dorian Nakamoto - A trained physicist and who ended up working as a systems engineer, Dorian has been cited as the likeliest person behind the Satoshi Nakamoto persona. His birth name is Satoshi Nakamoto, he’s Japanese-American and has political views that align with the creation of Bitcoin. However, Dorian himself clarified the speculation as a being a case of mistaken identity.
Craig Wright - A computer scientist and businessman who has claimed to be Satoshi Nakamoto himself, although there is skepticism over his claims and overall involvement in the project.
There are several other individuals whom journalists and media personalities have linked to the pseudonym, but no one has come forward with convincing evidence yet. But for the purpose of this article, let’s not get hung up on history here. With Satoshi Nakamoto, who they are as a person is interesting, but what’s more important about them is what they did and how they did it.
The Lessons To Learn From Satoshi Nakamoto
Whoever, Satoshi Nakamoto is, his creation and rollout of the world’s first successful blockchain contains gems that you’ll want to emulate as an aspiring blockchain entrepreneur or professional. The lessons can be drawn from two main areas: the technical side and the business side.
Technical Lessons to Learn From Satoshi Nakamoto
Being the grandfather of cryptocurrency development, Satoshi can teach you much in terms of actually developing a cryptocurrency or any blockchain application. As a matter of fact, Bitcoin and its accompanying code and documents have become a textbook in the creation of digital currency. Bitcoin is used to define both the blockchain protocol “Bitcoin” (capital B) and “bitcoin” (lowercase b) the native cryptocurrency of the Bitcoin blockchain. The cryptocurrency, bitcoin is integral to the operation of Bitcoin as an incentive to keep miners honest and prove their innocence by participating in Proof of Work to arrive at a consensus, which in turn results in the minting of new bitcoin. It is also arguable that bitcoin is the first application of blockchain. It is seen as a store of value application, but can also function as an application for value transfer.
Either way, bitcoin is considered an application on the Bitcoin blockchain.
Build Your Website and Secure Your Platform
The first official appearance of Bitcoin dates back to August 2008, when the domain name Bitcoin.org was registered online. Apart from this, there was no website or any other platform on which bitcoin existed. It was nothing but a name at the time.
There’s a quick and short lesson to learn here from this: get started early and don’t sweat all the details (just yet). Get your idea registered even if it’s not fully developed - you’ll have plenty of time to stress over the more technical aspects of your application as time progresses.
Create a Solid White Paper
From the time of Satoshi’s seminal white paper to now, a blockchain and cryptocurrency project comes to life when the creator writes a white paper. Just as a refresher, a white paper is a document that serves as an “authoritative report giving information or proposals on an issue”.
The Satoshi Nakamoto white paper is just that. It is a nine-page document that details the basic functions, purpose and technical schema (code, hashing, etc.) of Bitcoin. All other major cryptocurrencies have followed suit and if you want to launch your own blockchain application, writing a white paper detailing its functions will be needed from the beginning.
Write the Code
In January of 2009, just a few months after the launch of the Bitcoin.org website and white paper, the code made its first appearance - 30,000 lines of it. It may seem odd that the code comes after the white paper and website, but creating this Bitcoin blockchain, which also had a native cryptocurrency required a good understanding of crypto-economics and solving mathematical problems.
In the case of applications on blockchain today – whether your application is on a public blockchain that uses cryptocurrencies and tokens or a consortium blockchain that does not require the use of cryptocurrencies and tokens to incent participants, the approach is the same - you need to lay down a strategy so that you’re not creating code haphazardly.
That’s precisely what Satoshi and the Bitcoin team did. In fact, Hal Finney, the late computer scientist mentioned earlier, discovered the Satoshi Nakamoto white paper via a mailing list. Enthusiastic about the idea, Finney offered to mine the first coins (ten of them) after Nakamoto announced the release of Bitcoin’s software.
In order to do this right – Your planning must include addressing the market and business value; how the use of blockchain changes current processes, and impacts participants, policies, regulations, resources; clearly articulating why blockchain makes sense (blockchain isn’t the right solution for many applications); governance model to be used alongside roles and responsibilities of participants; type of blockchain and consensus mechanism to be used; and of course if native cryptocurrency or tokens are used how this happens. In many instances, regulatory and legal criteria are also important such as privacy (HIPAA, GDPR, etc.), and securities compliance (AML, KYC, etc.). In case of blockchain solutions architecting the solution and understanding how data is managed on a blockchain (on chain) and what is kept off chain is also very important. Understanding these things before you start coding your smart contracts or placing data on a blockchain are critical.
This requires a significant understanding of blockchain (we are not talking about programmers here only but also how the blockchain business, solution and architecture come together), and an investment of time, energy and resources not to mention, skill/talent to develop your project. This could very well mean taking specific courses that teach how to do develop fore-mentioned business and technology strategy and solutions architecture.
Business Lessons to Learn From Satoshi Nakamoto
At its core, creating a successful blockchain solution is an entrepreneurial venture, so that means that you’ll have to make some wise business decisions along the way. Again, the mysterious Satoshi Nakamoto can teach you some lessons in terms of how to launch your own blockchain application in the most efficient way possible.
Build a Solid Team
First and foremost, there is speculation that Satoshi Nakamoto may in fact not be a single person, but rather, a team. Of course, no one knows for sure. But one thing’s certain nonetheless - that Bitcoin was (and still is) a team effort.
In fact, the late computer scientist Hal Finney, mentioned earlier, was the potentially the first person to work on Bitcoin (which would disqualify him as being Nakamoto himself). As mentioned above, Finney mined the first set of bitcoins now in existence. Other figures involved with the project included a range of computer scientists and developers such as Nick Szabo, Laszlo Hanyecz, Gavin Andresen and more.
The lesson to learn here is that launching a groundbreaking project can’t happen in a silo. No matter how much of a genius or talented you may be as a developer or business person, you need a team of people who can help you realize your vision - It’s not a solo act.
Know the Purpose of Your Blockchain, Know Your Audience
For many people, Bitcoin was just a fad, something that fueled the hobbies and interest of tech enthusiasts. But it was much more than that. Bitcoin was created with a strong purpose, one that’s outlined at the start of the Satoshi Nakamoto white paper.
“...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.”
Like any entrepreneur, the creator(s) of Bitcoin was frustrated with the way financial institutions handle commerce and currency, and wanted to create a system to ensure trust. They wanted to create a trustworthy, decentralized currency.
Likewise, if you want to create a blockchain application one day, you must do so with a specific purpose in mind. What will it offer users? What applications do you foresee it having and how can it contribute to the betterment of society? These basic fundamentals will guide your efforts, helping you and your team decide how to develop your product.
Be Willing to Give Others Leeway with Your Project
Whoever Satoshi Nakamoto is, they cut ties with Bitcoin in early 2011, handing over control to engineer Gavin Andresen. There are many theories fuelling why Nakamoto cut ties and has chosen to remain anonymous. They include his fears of making enemies with figures who’ll misuse Bitcoin.
Regardless of Nakamoto’s reasons, there’s one lesson that can be gleaned from their severing ties. Although we’re not suggesting you hide underground and abandon your work, there are benefits to handing over certain aspects of your project’s development to others.
Once Nakamoto allowed Bitcoin to be a more open source project, other developers were able to add their own technical and creative ideas to expand the functionality of Bitcoin. Had Nakamoto relied solely on their own ability, the cryptocurrency may have not grown into the world’s most successful digital cryptocurrency.
Learning From the Originator of Blockchains Themselves
There are many things to consider when working on a blockchain solution, too much to mention in one post. However, the lessons mentioned above contain some starting points from the Satoshi Nakamoto, the founder of what is now the world’s biggest cryptocurrency.
Creators of other blockchain applications have emulated the Satoshi “formula”, and have launched altcoins that compete with Bitcoin for a piece of the market. If there’s something to take away here, it’s the fact that Satoshi’s principles work.
So if you’re looking to create and launch your own cryptocurrency or blockchain application one day, take notes from Satoshi and the rollout of Bitcoin. Emulating the decisions made by Bitcoin’s founder(s) may help you create the next big thing in this space.