Why Satoshi Nakamoto should be considered for a Nobel Prize

The Nobel Prize in Economic Sciences recognizes important contributions to the economics world with a focus on those that have a long-lasting impact. Since its introduction in 1968, 49 awards have gone out to 79 economic researchers and other significant figures in economics.

The Blockchain, and by extension Bitcoin, completely transformed the foundation for a currency. It eliminates the intermediary financial institutions and government agencies involved in transactions and currency issuing. Bitcoin instead uses a decentralized, P2P network that handles these processes.

This currency doesn't require government control, and it offers a fully anonymous experience for users. Satoshi Nakamoto, the name used by the creator of Bitcoin and the Blockchain (or creators, as no one knows the identity of the inventor), started the cryptocurrency revolution that has spurred the creation of several similar currencies.

While Satoshi Nakamoto was not the first to experiment with digital currencies, he was the one who created the technology that acts as the backbone for its success and transformative impact: the Blockchain.

What Is the Blockchain?

One of the challenges associated with digital currencies is ensuring that transactions are genuine and that the money is not used more than once. In digital currency circles, this is called the double-spending problem. Bitcoin addresses this issue through the use of the Blockchain.

The Blockchain is a decentralized database that acts as a digital ledger. It can't be corrupted, as the Blockchain records the blocks of information that go to it, adds it to the chain, and distributes this information to everyone on the P2P network. The decentralized nature of this technology makes it impossible to change, eliminates any single points of failure, and doesn't require a separate controlling entity.

This technology made Bitcoin the digital currency innovation that it is. It made it possible to have a viable P2P currency that no longer required financial institutions to process the transactions and provide oversight. By moving them out of the middleman position, a whole new way of conducting financial transactions opens up.

The Long-Term Implications of the Blockchain and Digital Currencies

The long-term implications of digital currencies and the Blockchain are transforming economics and the world. Here are a few ways that this innovation has a significant impact on the world.

  • Digital transformation of bank transfers: Traditional bank transfers can take multiple days, have high fees and otherwise operate inefficiently. The Blockchain makes it possible to speed up this process and eliminate the costs that make it difficult to send money internationally.

  • Streamlining complex financial transactions: Digital currencies aren't the only use for the Blockchain. Consider the steps required in a real estate transaction and how long it takes to perform each part of the process. With Blockchain technology, real estate agents wouldn't need to work with third-party services for title checks and similar requirements.

  • Currency free of government control: Many people in economics believe that it's impossible to have a viable currency without centralized oversight, with an assumption that a country's government handles that as part of the essential infrastructure. Bitcoin showed that it's very possible to achieve this goal.

  • Global currency option: The Internet has globalized the world, but currencies haven't kept up with these changes. Expensive conversion and transfer fees make it difficult for people and businesses to collaborate together without someone losing money along the way. With Bitcoin, it's easy to work together. Developing countries get excellent benefits from this characteristic of digital currencies.

  • Protection from unstable currencies: The value of a traditional currency is closely tied with the political stability of its issuing country or region. Bitcoin removes this unpredictable element, which is valuable for people living in these locations. In some areas, digital currencies are the only option when the banks close down or run out of hard currency.

  • Reducing e-commerce fraud: The Blockchain can verify transactions throughout the e-commerce purchase process, reducing the risk of fraud from either party.

  • Chain of custody: The Blockchain offers an unalterable chain of custody for digital assets, which has applications in countless industries.

  • Censorship resistant: The decentralized nature of Bitcoin makes it difficult for censorship to impact it.

  • Own economy: Bitcoin represents a functional economy with transaction fees that aren't tied to the behavior of the people mining them. It uses the protocol as the basis for the entire system, which is a significant departure from other world economies.

  • Recognized as legal currency in several countries: As more countries see the potential of digital currencies, Bitcoin gains more mainstream acceptance. Billions have already been invested in this market, from casual users to hedge funds.

Previous Nobel Prize Winners for Economics

The case to award Satoshi Nakamoto a Noble Prize is strengthened by looking at previous winners for Economics.

For example, Finn E. Kydland and Edward C. Prescott won the 2004 award for their work in dynamic macroeconomics. They explored driving forces that influenced business cycles and time consistency. Robert C. Merton and Myron Scholes won the 1997 prize by developing a new way to get the value of derivatives. Richard Thaler won in 2017 for his research in behavioral economics.

All of these winners offered something valuable to the economics world, and Satoshi Nakamoto's contributions are in line with other award winners. The Blockchain not only transforms ledgers for financial processes, but it opens up the possibility of applying this to any area that requires records that have to remain secure and unaltered.

It will take years before the full impact of the Blockchain and Bitcoin are fully realized, and its invention will be heralded as one of the most important events in economic history. Hopefully, the Nobel Prize committee will recognize this fact in upcoming years and give credit where it's due.

 

Suggested Reads:

Bitcoin: A Peer-to-Peer Electronic Cash Systemby Satoshi Nakamoto - go.ruuderie.com/bitcoin-paper