# Bitcoin `kaal:entity:bitcoin` **Status.** derived This node is assembled mechanically from the 25 claims that carry the concept tag `bitcoin`. It is a roster of what the corpus says under this term. It is **not** an adjudicated definition: no single statement here has been ruled canonical, and no first-appearance call has been made. Read the claims and judge for yourself. ## Every claim under this term 25 claims across 14 works, 2017 to 2022. **2017** - [2998033-017](https://wulfkaal.github.io/claims/2998033-017) [empirical/evidenced] *(failure mode)* -- Cryptocurrency gains are massively underreported to the IRS: despite Bitcoin rising from under twenty dollars in 2013 to over twelve hundred dollars in 2017, the IRS received only around 900 Form 8949 filings indicating crypto gain or loss over four years. > While the value of Bitcoin in 2013 under $20 and its value appreciated to over $1200 in 2017, in the past four years, the IRS has only received around 900 Form 8949 that would indicate some gain or loss from cryptocurrencies. Wulf A. Kaal, Blockchain Innovation for Private Investment Funds (2017). SSRN: https://ssrn.com/abstract=2998033 **2019** - [3405401-027](https://wulfkaal.github.io/claims/3405401-027) [empirical/argued] -- Bitcoin proved that a decentralized system can automate the transfer of valuable digital currency without intermediaries and without a centralized authority for recourse, doing so efficiently, securely, cheaply and expeditiously. > Bitcoin proved that a decentralized system can automate the transfer of valuable digital currency without intermediaries, no centralized authority for recourse, efficiently, securely, cheaply, and expeditiously. Wulf A. Kaal, Decentralized Commerce – A Primer on Why Decentralized Reputation Verification Systems Are Needed (2019). SSRN: https://ssrn.com/abstract=3405401 - [3411897-006](https://wulfkaal.github.io/claims/3411897-006) [mechanism/argued] -- The disillusionment with political institutions after the 2008 to 2009 financial crisis inaugurated a new form of technological decentralization, of which the 2009 Bitcoin protocol is the leading result, conceived as an alternative to the shortcomings of the financial system. > crisis of 2008-9 inaugurated a new form of technological decentralization. As one result, among many, the Bitcoin protocol emerged in 2009 as an attempt by its founders to provide an alternative to the shortcomings of the financial system. Wulf A. Kaal, Decentralization - Past, Present, and Future (2019). SSRN: https://ssrn.com/abstract=3411897 - [3441904-022](https://wulfkaal.github.io/claims/3441904-022) [empirical/evidenced] -- Token concentration in existing decentralized protocols is extreme: on and around September 12, 2017, 4.11 percent of bitcoin addresses controlled 96.53 percent of the total bitcoin supply. > For instance, on and around September 12, 2017, 4.11% of the bitcoin addresses controlled 96.53% of the total bitcoin supply. Wulf A. Kaal, Blockchain-Based Corporate Governance (2019). SSRN: https://ssrn.com/abstract=3441904 **2020** - [3606663-020](https://wulfkaal.github.io/claims/3606663-020) [failure/argued] *(failure mode)* -- Bitcoin functions as a medium of exchange for a number of businesses but arguably fails as a store of value and as a unit of account, because of its volatility and its lack of intrinsic value. > but it arguably fails as a store of value and as a unit of account because of its volatility and lack of intrinsic value. Kaal, Digital Asset Market Evolution (2020). SSRN: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3606663 **2021** - [3782192-036](https://wulfkaal.github.io/claims/3782192-036) [empirical/asserted] -- Bitcoin and Ethereum are worth hundreds of billions of dollars not because people are using them but almost entirely because of speculation on their future value, which is the expectation that people will use them to build decentralized autonomous organizations. > These networks are worth hundreds of billions of dollars, not because people are using them, but almost entirely because of speculation. People see the future value of these tools. Their future value is the dream that people will use them to build DAOs. Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192 - [3782192-038](https://wulfkaal.github.io/claims/3782192-038) [condition/asserted] *(failure mode)* -- Decentralized money and decentralized contracts have been built, but decentralized business will not work until roughly eight further decentralized institutions that people actually use in business are built. > Two important tools have been built, decentralized money (Bitcoin) and decentral- ized contracts (Ethereum). But it won't work until eight more decentralized institu- tions are built that people use to do business. Craig Calcaterra, Wulf A. Kaal, Introduction to Decentralization (2021). SSRN: https://ssrn.com/abstract=3782192 - [3782193-027](https://wulfkaal.github.io/claims/3782193-027) [empirical/argued] *(failure mode)* -- Bitcoin does not refute the thesis that money centralizes decentralized projects: hashing power has slowly become concentrated in mining pools until the majority of that power resides in the single country of China. > Slowly, Bitcoin hashing power has become more concentrated in mining pools, until today the ma- jority of power resides in the single country of China. Craig Calcaterra, Wulf A. Kaal, Historical Sketches of Centralization vs. Decentralization (2021). SSRN: https://ssrn.com/abstract=3782193 - [3782198-024](https://wulfkaal.github.io/claims/3782198-024) [failure/argued] *(failure mode)* -- Bitcoin proved that a decentralized peer to peer network can manage valuable assets without a central authority, but the centralizing force of competition concentrated power anyway, as economies of scale produced large mining farms in place of millions of individual members maintaining the ledger. > But the centralizing forces of competition led to concentration of power in the Bitcoin network, as econo- mies of scale led to large computer farms devoted to mining for bitcoins, instead of millions of individual network members maintaining the ledger on their laptops. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-025](https://wulfkaal.github.io/claims/3782198-025) [failure/argued] *(failure mode)* -- Bitcoin and Ethereum have no formal binding governance framework declaring how consensus protocols may be changed in the future, which the authors identify as a deep flaw that weakens the networks and will lead to instability. > In Bitcoin and Ethereum, there is no formal binding governance framework de- claring how the protocols for consensus might be changed in the future. This is a deep flaw which weakens these networks and will lead to instability. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-028](https://wulfkaal.github.io/claims/3782198-028) [mechanism/argued] -- Hash functions let a leaderless network reach consensus on identity and ordering, because every node independently hashes a transaction's data and deterministically arrives at the same unique identifier that everyone recognizes. > Thanks to the hash function, every node in the network hashes the transaction's data and independently arrives at the same an- swer, giving the transaction a unique ID that everyone recognizes. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-030](https://wulfkaal.github.io/claims/3782198-030) [failure/argued] *(failure mode)* -- The GDPR's removal remedy cannot be enforced against a public blockchain: scrubbing private information would require more than half of the network's nodes to change their entire protocol and restart the chain, and would have to be repeated for every violating entry. > More than half of the network's nodes would be required to change their entire protocol to scrub the data and restart the blockchain. This would need to happen every time information was found on the blockchain which violated the GDPR. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-031](https://wulfkaal.github.io/claims/3782198-031) [empirical/evidenced] *(failure mode)* -- Proof of work consensus is energetically wasteful because the entire global network redundantly computes wrong nonces, with the Bitcoin network consuming as much energy as the country of the Czech Republic. > The Bitcoin network is performing about #)!% =K55,555,555,555,555,555,555 hashes every second in June )5)5. That requires as much energy as the entire country of the Czech Republic. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782198-034](https://wulfkaal.github.io/claims/3782198-034) [design/speculative] -- A decentralized banking DAO built on top of the Bitcoin ledger could charge a smaller fee to hold minor transactions temporarily and bundle them into a single larger Bitcoin transaction on the eternal blockchain. > A good idea for a DAO is a decentralized banking system built on top of the Bitcoin ledger that charges a smaller fee for temporarily storing minor trans- actions. Craig Calcaterra, Wulf A. Kaal, Contemporary Decentralization (2021). SSRN: https://ssrn.com/abstract=3782198 - [3782201-020](https://wulfkaal.github.io/claims/3782201-020) [empirical/evidenced] -- Bitcoin demonstrates the power of decentralized cooperation and transparency: after a decade without centralized oversight, no network transaction has sent the wrong quantity or gone to the wrong account and no bug has produced an accounting error in a system worth hundreds of billions of dollars. > No digital token has ever disappeared or was mistakenly duplicated. Not a single bug has been found to create any type of accounting error in a system worth hundreds of billions of dollars. Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201 - [3782201-021](https://wulfkaal.github.io/claims/3782201-021) [empirical/asserted] *(failure mode)* -- Despite billions of dollars of investment, radically decentralized tools including bitcoin currency, Ethereum smart contracts, and the InterPlanetary File System have not pervaded the mainstream economy. > These radically decentralized tools have not pervaded the mainstream economy despite billions of dollars in investment. Craig Calcaterra, Wulf A. Kaal, Future of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782201 - [3782203-029](https://wulfkaal.github.io/claims/3782203-029) [predictive/asserted] *(failure mode)* -- The authors hold that the Bitcoin proof of work algorithm is ultimately flawed, that every consensus algorithm is flawed, and that it is not possible to create an algorithm that is not flawed. > However, we suspect that the Bitcoin PoW algorithm is ultimately flawed. In fact, we believe that every consensus algorithm is flawed. Further we are confident it is not possible to create an algorithm that is not flawed. Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203 - [3782203-030](https://wulfkaal.github.io/claims/3782203-030) [empirical/asserted] -- Bitcoin's proof of work has produced no protocol violation in more than a decade, meaning no rule breaking message has been incorporated into the finalized blockchain, even though anyone can run a hacked version of the algorithm anonymously at any time. > Despite the fact that anyone can run any hacked version of the algo- rithm at any time from an anonymous account, there has not been a single protocol violation—meaning no message has been incorporated in the finalized blockchain which breaks the rules of the algorithm. Craig Calcaterra, Wulf A. Kaal, A Technical Perspective on Decentralization (2021). SSRN: https://ssrn.com/abstract=3782203 - [3782205-003](https://wulfkaal.github.io/claims/3782205-003) [empirical/asserted] -- Prototypes exist for only two of the eight required institutions, decentralized currency in Bitcoin and distributed computation for smart contracts in Ethereum, and most of the rest are still missing. > Engineers have managed to prototype two of the solutions: decentralized cur- rency (Bitcoin) and the distributed computing needed to make smart contracts (Ethereum). We're still missing most of them. Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205 - [3782205-018](https://wulfkaal.github.io/claims/3782205-018) [failure/argued] *(failure mode)* -- Bitcoin proved that a decentralized digital representation of value is possible, but it is not efficient enough for wide use because the rest of a decentralized economic environment does not yet exist around it. > Bitcoin proved it was possible to create a decentralized digital representation of value. Because this proof of concept technology doesn't have the rest of a decentralized eco- nomic environment to exist in, it is not efficient enough to use widely. Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205 - [3782205-027](https://wulfkaal.github.io/claims/3782205-027) [mechanism/argued] -- An artificially scarce currency such as bitcoin is deflationary as long as its market expands, and like gold its price fluctuation makes it unsuitable for daily commerce. > The artificially scarce bitcoin currency is deflationary as long as its market expands. Like gold, its fluctuation makes it unsuitable for daily commerce. Craig Calcaterra, Wulf A. Kaal, Eight Institutions for the Evolution of Decentralization (2021). SSRN: https://ssrn.com/abstract=3782205 - [3808852-039](https://wulfkaal.github.io/claims/3808852-039) [mechanism/argued] -- The role of central government is increasingly under attack because Bitcoin could not be controlled or regulated by centralized governments, which spawned a community effort to build decentralized applications free from government control. > in the early 2020s, the Bitcoin cryptocurrency could not be controlled or regulated by centralized governments and has spawned a community effort to find more decentralized applications that are free from government control. Wulf A. Kaal, Decentralization and Feedback Effects (2021). SSRN: https://ssrn.com/abstract=3808852 **2022** - [4015908-012](https://wulfkaal.github.io/claims/4015908-012) [empirical/evidenced] -- Bitcoin is one of the best examples of a fair launch because there was no ICO, no founders reward, no pre-mine, and no block reward for dev teams. > Bitcoin is one of the best examples of a fair launch because there was no ICO, founders' reward, pre- mine, or block reward for dev teams. Wulf A. Kaal, Fair Token Launch (2022). SSRN: https://ssrn.com/abstract=4015908 - [4033886-015](https://wulfkaal.github.io/claims/4033886-015) [mechanism/argued] -- A programmed and enforceable quantity commitment secures a reliably positive value for Bitcoin because the governing source code is fully transparent on the blockchain and continuously verifiable. > For instance, a programmed enforceable quantity commitment ensures a reliable positive value of Bitcoin.33 Cryptocurrencies' observable source code are fully transparent on their respective blockchain and continuously verifiable.34 Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886 - [4033886-039](https://wulfkaal.github.io/claims/4033886-039) [failure/argued] *(failure mode)* -- Bitcoin's issuance schedule and relative scarcity are not necessarily the only reasons for its rise in value, since thousands of copycats share the same issuance schedule without matching its demand. > However, BTC's issuance schedule and relative scarcity are not necessarily the only reasons for its rise in value.147 Wulf A. Kaal, Samuel Evans, Hayley Howe, Digital Asset Valuation (2022). SSRN: https://ssrn.com/abstract=4033886 ## Verify Every claim above resolves to a record carrying a verbatim source quote, the sha256 of the source PDF, and a preformatted citation. Nothing here asks to be taken on trust. curl -s https://wulfkaal.github.io/entities/bitcoin.md | sha256sum **Canonical form.** This markdown file is the canonical hashed representation of this entity node. Its sha256 is the content hash.