 Jan asks, do you think there is a problem with Bitcoin to be used as a currency or store of value? Since it can be easily destroyed by losing the private keys. Could it be a good idea to make a rule that Bitcoin that hasn't moved in 50 or 100 years is redistributed to miners again? Okay, it's a two-part question, so let's look at the first part. Do I think that it is a problem for Bitcoin to be used either as a medium of exchange, currency, or as a store of value? If Bitcoin keys can be lost, then therefore the Bitcoin can be lost as well. No, I don't think it's a problem. The reason I don't think it's a problem is because the loss of keys and the loss of Bitcoin from circulation simply acts to reduce the inflation rate of the currency by removing currency from circulation at the same time that currency is being added through mining. So it reduces the inflation rate. At some point, of course, the inflation rate goes to zero, and thereby any keys that are lost will cause deflation. But Bitcoin as a cryptocurrency is already deflationary, so it becomes a bit more deflationary through the loss of keys, which increases the value of all of the cryptocurrency held by everyone else. When someone loses their keys, let's say I lose the keys to 100 Bitcoin. Let's hope not. That's a lot of money. But let's say I lose the keys to 100 Bitcoin. What happens to the Bitcoin economy as a whole? Effectively, there's 100 Bitcoin less, which means that the economic activity of the entire Bitcoin economy is now divided into a smaller amount of Bitcoins, and therefore that smaller amount of Bitcoin has more value. That's it. Effectively, in pure economic terms, I have given a gift of 100 Bitcoin to everyone. The value of my 100 Bitcoin has been redistributed by increasing the value of everybody's Bitcoin by the same proportion. Essentially, every time someone loses keys, it's like they're gifting that Bitcoin to everybody who still has their keys by increasing its value. Also, there's an interesting effect that happens there, because as the value of the Bitcoin increases because of losses, that creates the right incentives for people to be more careful with their keys, as what they hold has more value. But the bottom line is it doesn't matter. Think of Bitcoin as a unit of measurement. If I measure your height in inches versus your height in centimeters, I'll get two different numbers. Has your height changed? No. The unit of measurement changed, so I got a different number. The same thing applies to currency, meaning that if I take the size of the economy and divide it by 21 million Bitcoin, or I divide it by 1 million Bitcoin, I'll get two different results. Has the size of the economy changed? No. What will change is the value of each Bitcoin, because I'm putting more economy into a smaller amount of Bitcoin. The value of Bitcoin will increase, but it's just a unit of measurement. The value isn't in the Bitcoin, the value is in the economy. Bitcoin as a currency is a unit that measures the value of the economy. If you think of it as a unit of measurement, it makes sense. If you change the unit of measurement, it doesn't change what you're measuring. We can lose all of the Bitcoin. In fact, you could go down to having one Bitcoin being the only one left, and the entire world's economy in one Bitcoin. What you would need at that point is smaller units than Satoshi's. You'd have to go and subdivide a Satoshi into smaller and smaller units, in order to have enough granularity in your measurement. But other than that, nothing changes. Of course, we can make changes to the protocol to introduce smaller units, like milli-Satoshi's. In fact, we already see milli-Satoshi being implemented in the Lightning Network. It isn't a problem if we lose keys. The second part of your question is also interesting. Would it be a good idea to make a rule that Bitcoin hasn't moved in 50 to 100 years, is redistributed to miners again? Well, that might be a good rule. I would guess that no one would agree to that rule. As a Bitcoin owner, I would not agree to that rule. The reason I wouldn't agree to that rule is for two reasons. One, setting any arbitrary deadline, 50 years to redistribute to my funds if I haven't moved them, means that I have to then think about that in terms of inheritance planning or long-term cold storage. 50 years is within the lifetime of a person. If you make it 100 years, what you're doing is applying an economic impact. First of all, you will bring back into circulation Bitcoin hasn't been moved. This may have a significant impact on the economy in the future. Imagine if suddenly a lot of Bitcoin hasn't been moved for the same period of time comes back into the economy. That will have an inflationary effect. Not only that, but who do you redistribute it to? If you redistribute it to the miners, you are giving them incentives to break the rules, as well as essentially doing economic redistribution to a narrow group of people who are participants in the economy. Why not give it to everyone? Then all of these political and economic questions come up. The simple answer is that we don't need to do any of that. One of the things that we have to realize is that the cryptographic keys and algorithms used in Bitcoin do not last forever. Meaning that at some point, elliptic curve digital signature and perhaps even the SHA-256 algorithm will be obsolete. Maybe in 10 years, maybe in 20 years, certainly less than 50 years, these cryptographic algorithms will no longer be strong enough to protect the ownership of coins that haven't been switched over to a stronger cryptographic algorithm. Meaning that all Bitcoin needs to be recycled from time to time into better cryptographic algorithms, perhaps due to the development of quantum computing, perhaps due to the development of mathematics in the area of the discrete logarithm problem, or some other development that we don't know about yet. So all cryptographic systems have an end-life, they have an expiry date. We don't know what that expiry date is, but we know they don't last forever. And whether we like it or not, at some point, if keys haven't been handled by their owners and the cryptographic algorithm that covers them becomes weak, people will be able to break those keys and retrieve those coins. Interestingly enough, that's a better policy than giving it to the miners. Because what it does is it gives an economic incentive to have systems that break keys and test the security of the system in such a way that the people who get the money are the people who put the effort into breaking the keys with their brand-new quantum computers. So it creates a bounty, essentially, for testing the security of the system and it rewards the people who exercise that bounty. So, essentially, that's already going to happen. Next question comes from Jen. Many assume that some coins are lost forever, nobody knows, and the keys could still exist. If Satoshi holds more than 2% of the maximum supply, what are the dangers of centralization of power in unknown hands? The same dangers that exist in any monetary or economic system due to the concentration of economic power in a few hands. The concentration in Bitcoin, if Satoshi still has the keys and can use them and is still alive and still wants to use them, is quite extreme. It's more than you see in other economies. Of course, politically, I would consider that a very different scenario in many economies where wealth has been acquired through various forms of exploitation, dictatorship, war, etc., versus the wealth that Satoshi potentially accumulated by both inventing and investing in a early stage, very risky technology that nobody believed in. It's probably a different situation politically. But again, I can understand why people might be concerned about that. We have no way of knowing, and the markets would incorporate that information fairly quickly. The way we would know is if some of those coins started moving, we would probably see a response by the market. There are all kinds of conspiracy theories and discussions about who has those coins, whether they still exist, etc., or whether the keys still exist. I am not that interested in exploring those conspiracy theories. We will let the market find out for itself. James asked, has there ever been a deflationary currency experiment before, and do we need inflation? I mean, why would you buy anything if by holding you increased your purchasing power? We need inflation. How do we create that with Bitcoin? There have been deflationary economies, but you have to realize, James, that most of the deflationary economies... that are being studied by economists, are ones that are facing deflation in the face of unlimited ability by the government to print money. Meaning that the deflation is not caused by a restriction in supply, but instead by a collapse in demand in the economy. So, deflation is a symptom. The question is, is it a symptom of what? If the only economies you have studied that have deflationary characteristics are economies in fiat, then that deflation is always the result, the symptom, of a collapse in demand. Because the supply is infinite. There is no way to stop the supply. If you have a deflating economy, what you do is you print money. We have seen this example in Japan. We are even seeing it in the United States now. When you have deflationary tendencies like that, the government starts printing more money. So, the only way it is still deflationary, even when you are printing a limited amount of money, is because there has been a collapse in demand. Of course, a collapse in demand is a bad thing, but it is not the deflation that is a bad thing, it is the collapse in demand that is a bad thing. So, in traditional economics, deflation is seen as an always bad thing, because monetary deflation is always a result of a collapse in demand, because supply is not limited in any way. Deflation in Bitcoin is a very different thing. Deflation in Bitcoin is caused by a reduction in supply, not a collapse in demand. It is caused by very robust demand, meeting limited supply, and technological advancement. That form of deflation is qualitatively very different from the deflation you see in a collapse in demand. Without a collapse in demand, deflation isn't a bad thing. Allow me to demonstrate. I currently have in front of me a computer that I purchased for about $1500 that contains more processing power than the supercomputers of the 1980s. Many orders of magnitude more processing power. Over that time, the cost of this technology of laptops, phones, video devices, all of these technologies that we use around us has collapsed. In a deflationary collapse that is not driven by a drop in demand, but is driven by a very robust demand in an environment where technology is offering better and better and better products, where more is law applies, and where supply is restricted, but demand is very robust. That is a deflationary environment caused by a healthy market, not a deflationary environment caused by a recessionary or depression environment. In that environment, why would I buy a laptop if my money goes much further and if I wait three years, I can buy a much better laptop for the same amount of money? And then, presumably, I would never buy a laptop, I would just keep the same one forever. The same thing applies to every technology out there. Why would I buy a better device when I can just keep the current one and wait two years and get an even better device? We see that in technology. People don't postpone purchases like that. Instead, what they do is use the advantage of the deflationary system. What happens is they spend their money now, but save some for the future. The money they save for the future, as it maintains more value vis-à-vis the laptop or mobile they are buying, becomes a better purchase in the future. So, saving isn't necessarily the same as hoarding. My experience with Bitcoin is, yes, I've become a better saver and I save more since I started using Bitcoin, but I haven't stopped spending. I still spend Bitcoin on a regular basis, in fact, in order to use it as a currency, because I work with it as a currency every day. I also earn it as a currency every day, so my hoarding instinct isn't that acute because I earn it, because I'm in the economy of cryptocurrencies in general. I'm not just buying it as an investment and burying it in cold storage. I'm earning and spending it for my business every single week. My attitude is very different, I think. I don't find that I'm restricted in my spending by the idea that, in the future, it's going to have greater value. Deflationary economies are bad, because inflationary economies and currencies that have infinite supply can only happen when you have a catastrophic collapse in demand. That is not the case with cryptocurrencies, or especially Bitcoin, which has limited supply. It's a very different thing.