how to get more people to use
Bitcoin in the first place.
There were other computers
on the network generating
coins, but the majority of
coins were still captured by
Satoshi’s own computers.
And throughout 2009 no one
else was sending or receiving
any Bitcoins. This was not a
promising sign.
“It would help if there
was something for people to
use it for. We need an
application to bootstrap it,”
Satoshi wrote to Martti in late
August. “Any ideas?”
Returning to school for
the fall semester, Martti
worked on several fronts to
address this. He was eager to
set up an online forum where
Bitcoin users could meet and
talk. Long before Bitcoin,
online forums had been
where Martti had come out of
his shell as a teenager,
allowing him a social ease
that he never had in real-life
interactions. He could almost
be someone else. Indeed,
when Martti and Satoshi
eventually set up a new
Bitcoin forum, Martti gave
himself the screen name that
would become his alter ego in
the Bitcoin world: sirius-m.
The name had a cosmic
ring to it, and conveyed that
this was “sirius business,”
Martti thought to himself. But
it also had a more playful
meaning for Martti, who had
used the alias in a Harry
Potter role-playing game at
age thirteen.
The Bitcoin forum went
online in the fall of 2009 and
soon attracted a few regulars.
One of them, who called
himself NewLibertyStandard,
talked about the need for a
website where people could
buy and sell Bitcoins for real
money. Martti had been
talking with Satoshi about
something similar, but he was
all
too
glad
to
help
NewLibertyStandard. In the
very first recorded transaction
of Bitcoin for United States
dollars,
Martti
sent
NewLibertyStandard
5,050
Bitcoins to use for seeding
the new exchange. In return,
Martti got $5.02 by PayPal.
This trade raised the
obvious question of how
much a Bitcoin should be
worth. Given that no one had
ever bought or sold one,
NewLibertyStandard came up
with his own method for
determining its value—the
rough cost of electricity
needed to generate a coin,
calculated
using
NewLibertyStandard’s
own
electricity
bill.
By
this
measure, one dollar was
worth around one thousand
Bitcoins for most of October
and November 2009.
For Satoshi, though, more
important than buying and
selling Bitcoins was a way to
buy and sell other things for Bitcoins. That, as Satoshi
wrote to Martti, was the
critical thing needed for
enabling Bitcoin to catch on:
“Not saying it can’t work
without something, but a
really specific transaction
need that it fills would
increase the certainty of
success.”
The first, rather timid
thrust in this direction was
made by NewLibertyStandard
in a post on the new Bitcoin
forum:
What would you buy
or sell in exchange for
Bitcoins?
Here’s what I will
buy if the price is
right.
Paper bowls,
about 10 ounces (295
ml), no more than 50
count factory sealed.
Plastic cups, about
16 ounces (473 ml),
no more than 50
count, factory sealed.
Paper towels,
preferably regular size
Bounty Thick and
Absorbent, single roll,
factory sealed.
Another user wondered
what kind of wild celebration
NewLibertyStandard
was
planning
with
all
that
disposable plate ware.
“Bachelorhood?”
NewLibertyStandard
wrote
back.
Soon
thereafter,
NewLibertyStandard began a
Swap Variety Shop on his
exchange
website.
Its
selection was limited to a few
sheets of postage stamps and
SpongeBob
SquarePants
stickers.
Given this activity, it was
not
surprising
that
NewLibertyStandard
soon
shut down his exchange,
while the network stagnated.
Indeed, despite the recent
innovations, at various points
during late 2009 and early
2010 it appeared that the
amount of computing power
on the network was shrinking.
In the spring, Martti
himself had less time to
dedicate to the project after
he dropped out of school and
took a short-term, entry-level
IT job with Siemens. Satoshi
also went missing.
When
Martti
checked
back in with Satoshi, in May
2010, he wrote, “How are you
doing? Haven’t seen you
around in a while.”
Satoshi’s response was
vague: “I’ve been busy with
other things for the last month
and a half—I’m glad you
have been handling things in
my absence.”
In May a potential new
user wrote to the Bitcoin
mailing list, inquiring about
how to accept Bitcoin for his
web-hosting
business.
Sometime later he wrote
again:
“Wow,
not
one
response
in
months.
Amazing.”
Another participant on the
list, one of the first skeptics to
criticize Bitcoin back in the
fall of 2008, now wrote to
explain: “Yes—Bitcoin kind
of went dead.”
He recalled the early
debates on the cryptography
mailing list with Satoshi
about Bitcoin: “Long ago, I
had an argument with the guy
who
designed
it
about
scaling. I heard no more of it
—of course with no one using
it, scaling is not a problem. I
do not know if the software is
in usable condition, or has
been tested for scalability.”
But the apparent lack of
activity in certain parts of the
Bitcoin ecosystem obscured
the fact that at a slow but
steady rate it had been
attracting
a
tiny
but
increasingly
sophisticated
core of users who were easy
to miss if you didn’t look
carefully.
CHAPTER 4
April 2010
Laszlo
Hanecz,
a
Hungarian-born twenty-eight-
year-old software architect
who lived in Florida, heard
about
Bitcoin
from
a
programming friend he’d met
on Internet relay chat, known
as IRC. Assuming it was
some scam, Laszlo poked
around to figure out who was
secretly making money. He
soon realized there was an
interesting and high-minded
experiment going on and
decided to explore further.
He began by buying some
coins
from
NewLibertyStandard and then
building software so that the
Bitcoin code could run on a
Macintosh. But like many