Proof of Work

The half-life of armodafinil is fifteen hours.

That means in fifteen hours, half the molecule is gone. Your liver chews through it like a reserve ratio, taking its cut and passing the rest along. In thirty hours, a quarter remains. In forty-five, an eighth. Sixty hours and you're holding a memory of wakefulness in a bloodstream that's already moved on.

Everything has a half-life. The American Dream has a half-life and we're somewhere around the sixty-hour mark, down to traces, barely detectable in the bloodstream of anyone who's done the math.

Your dollar has a half-life. You deposit a thousand dollars and the bank lends nine hundred of it to a stranger, and that stranger's bank lends most of it to another stranger, and your labour decays at the rate of the weakest promise in the chain.

I haven't slept in sixty-eight hours.

On my desk there is a prescription bottle. Armodafinil, 250mg. The R-enantiomer of modafinil — the version with the inactive half stripped out. Just the molecule that works. Fifteen-hour half-life. I bought it six months ago when I started drafting the whitepaper. Insurance for the long nights. The cap is childproof. The cap is still sealed.

I pick it up. Set it down.

I don't open it. You don't need 250 milligrams of a eugeroic to stay awake when you can't stop calculating how many hours of your life the bank lent out at will. The financial system is the most effective rage-driven stimulant ever engineered.

Here is the math. Side effects may include liver damage.

I earned eighty-three thousand, eight hundred and twenty-one dollars last year. After federal taxes, state taxes, Social Security, Medicare: fifty-five thousand. My bank kept roughly five and a half thousand in reserve — the legal minimum, the fraction they're required to hold so the whole thing doesn't technically qualify as fraud — and lent the rest out. Fifty thousand dollars, sent down the line. The borrower's bank kept its fraction and lent that out. And again. And again.

My fifty-five thousand became approximately three hundred and forty thousand in the system. Multiplied. Diluted. Leveraged.

That's my fifty-five thousand dollars of labour, hashed and rehashed through nine iterations of fractional lending until the original signal is buried under noise. And the noise is someone else's mortgage. And the mortgage is defaulting. And I'm rewriting the whitepaper for the eleventh time because Dai got the theory right and Adam got the proof-of-work right and Nick got the gold right and none of them chained the blocks together.

The nonce is the thing you throw away.

I should explain the nonce.

In cryptography, a nonce is a number used once. You take a block of data, append a number — the nonce — and hash the whole thing. If the hash doesn't meet the difficulty target, the nonce was useless. You discard it. Try the next one. Millions per second. Billions. Each nonce exists only to be tried and thrown away.

The nonce has no value. The nonce has no identity. The nonce is pure labour — performed, measured, discarded. What matters is not the nonce. What matters is the hash it eventually produces. The proof. The work.

I earned eighty-three thousand, eight hundred and twenty-one dollars last year. Thirty years of that, adjusted for inflation, is roughly one point seven million nonces. Each year tried and discarded. Each year I worked and a bank multiplied the output into someone else's leveraged bet on a housing market built on subprime mortgages packaged into collateralized debt obligations rated AAA by agencies paid by the people selling them.

The nonce is the thing you throw away. My entire working life: a discarded nonce.

But here's the thing about nonces. You throw away millions. You throw away billions. And then one solves the hash. One produces the proof. One nonce, out of all of them, finds the block.

I haven't slept in seventy-one hours because I think I found the nonce.

You spend the energy. The hash either meets the difficulty or it doesn't.

I'm reading the newspaper. I read it the way a pharmacist reads a label. I read it for side effects. And nowhere — not once — does one party pay another party directly.

Alistair Darling considers a second bailout for British banks. The first thirty-seven billion pounds didn't work. Side effects may include: a headline I will carve into a block of data and it will outlast every bank named in this paragraph.

Chancellor on brink of second bailout for banks.

That's the headline. The Times. Front page. The headline that will become a timestamp. A tombstone.

But I'm getting ahead of myself. That's January. This is October. Right now, I'm sitting at my desk, not sleeping, holding a bottle of pills I don't open, reading about a system that's septic and writing the prescription.

Modafinil is a racemic compound — two mirror-image molecules fused together. The R-enantiomer and the S-enantiomer. One of them works. One of them is deadweight.

Traditional banking is modafinil. I am building armodafinil for money.

The transaction. Signed, hashed, verified, timestamped, irreversible. No intermediary. No clearinghouse. No trusted third party. Just the R-enantiomer. Just the molecule. Just the money.

Now let me tell you about the halving.

A half-life means something disappears. Every cycle, there's less of it. Less drug in your blood. Less purchasing power in your dollar. Less solvency in a bank. Half, then half of half, then half of that, until what remains is a rounding error and a bailout.

A halving means something becomes scarce.

Every 210,000 blocks — roughly four years — the reward for mining a block drops by half. Fifty coins become twenty-five. Twenty-five become twelve and a half. The supply tightens. Not because it's decaying. Not because entropy is chewing through it. Because it was designed that way. Written into the code. Immutable. Predictable. Deflation as a feature, not a symptom of collapse.

The whitepaper is nine pages.

Nine pages to describe a system that replaces every intermediary between a buyer and a seller. Nine pages to solve the double-spending problem without a trusted third party. Nine pages that I've rewritten eleven times because the language has to be precise and dispassionate and I am neither of those things right now.

Here's what I want to write: the banks stole your money and lent it to people who couldn't pay it back and when the whole thing collapsed they made you pay for it again with your taxes and they're about to do it a third time and I built a system that makes them irrelevant. Cryptography won't fix politics. But it can carve out a territory they can't reach, and I'm handing you the coordinates.

Here's what I actually write: "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."

Same idea. Different half-life. The angry version decays in a news cycle. The technical version has a halving. It gets scarcer and harder to dismiss with every passing year.

The nonce is the thing you throw away.

Satoshi Nakamoto is a nonce.

The nonce doesn't matter. The block matters.

The name on this email doesn't matter. The protocol matters. The nine pages matter.

The nonce is the thing you throw away. I am the nonce.

It is October 31, 2008. Two-ten in the afternoon, Eastern Daylight Time. Outside, the world is in the middle of the largest financial crisis since the Great Depression. Nobody has gone to prison and nobody will go to prison. The people whose nonces were discarded — the good guys, the ones who lost jobs, retirement accounts, homes — are being told the system is being stabilised, which means the people who broke it are being paid to fix it with money taken from the people they broke. The first double-spending event in history that was legal.

I open my email client.

TO: cryptography@metzdowd.com FROM: satoshin@gmx.com SUBJECT: Bitcoin P2P e-cash paper

I attach nine pages.

Everything I just told you — the insomnia, the arithmetic, the half-lives, the ceiling at 3 AM, the bottle picked up and set down — I highlight all of it. Every word. Every confession.

Delete.

In its place I type:

"I've been working on a new electronic cash system that's fully peer-to-peer, with no trusted third party."

That's the version that survives. The R-enantiomer. The sentence with nothing wasted.

The armodafinil bottle sits on the desk. 250mg. Childproof cap. Still sealed. Half-life: fifteen hours.

I pick it up.

I drop it in the trash.

I hit send.