Satoshi Nakamoto's three major innovations: How to reshape the human monetary system

When we talk about Bitcoin, many people think of cryptography, blockchain technology, or the value growth of digital assets. But these are just surface-level. Satoshi Nakamoto’s true genius lies in discovering a problem that has been overlooked for thousands of years: money is fundamentally a social structure, and this structure can be radically redesigned. He didn’t invent new cryptographic techniques; instead, he combined existing technologies to create a completely new way to maintain human trust in money.

Why Money Requires Integrity and Consensus

Before delving into Nakamoto’s innovations, we need to understand a fundamental question: why does money exist?

Money’s value isn’t because of the material it’s made of, but because everyone believes it “should operate like money.” This collective belief is the entirety of what money is.

Money must meet two conditions. The first is intrinsic integrity—money must function as expected. Your money can’t disappear without reason, the supply can’t be arbitrarily increased, and you have the right to freely use your assets. This is the basic property of money as a tool.

The second is public trust—society must believe that this money possesses the first condition. Merely being honest in fact isn’t enough; the entire society must recognize this honesty. Even rumors that the government will freeze bank accounts are just rumors, but such rumors can damage the value of money because people will sell out of fear.

Throughout human history, the ways to satisfy these two conditions have constantly changed—from elementary school era with chewing gum wrappers, prisons with cigarettes, ancient societies with shells and salt, to the gold standard in modern times, and today’s fiat currencies issued by states—each era has used different methods to maintain trust in money. Currently, we rely on centralized institutions like governments and banks to uphold the integrity of the monetary system.

Nakamoto’s revolution begins here: he found a new way to simultaneously realize both conditions without relying on any centralized authority.

Inclusivity: Making Everyone a Guardian of Money

Nakamoto’s first innovation is inclusivity, which is decentralization.

Bitcoin operates on a protocol—a set of rules all participants must follow. Unlike traditional financial systems, Nakamoto invites everyone to participate equally in the operation of this system. Anyone can download open-source software, use their own computer to create new blocks, and maintain the ledger. The more participants, the more secure the network, and the more trust everyone has in it.

This sounds simple, but it is revolutionary. In traditional banking systems, ordinary people cannot participate in the operation of the financial system; at most, they can view limited information about their accounts. Nakamoto decentralized this power—you’re no longer just a user of the financial system; you can become a co-maintainer.

The background of this design is important. Bitcoin was born after the 2008 financial crisis, which exposed a problem: a centralized financial system controlled by a few can print money at will and bail out “too big to fail” banks, while ordinary people are powerless. As the global unbanked population increases and financial surveillance intensifies, Nakamoto’s principle of inclusivity is a direct counterattack to this status quo—it redistributes financial power back into the hands of ordinary people.

Incentive-Based Integrity: Let Economic Interests Safeguard the System

Nakamoto’s second genius design is incentive-based integrity.

This may be the most wonderful part of his entire invention: Bitcoin uses economic incentives so that all participants will automatically do the “right thing” even without supervision.

Specifically, miners who successfully create a new block receive Bitcoin rewards. But this reward isn’t in dollars or euros; it’s in Bitcoin itself. Here’s the clever part—if you continue to violate the protocol, the Bitcoin you earn will depreciate because the system’s integrity is compromised. So even without oversight, miners are “forced” by economic interests to operate the network honestly. This creates a self-consistent closed loop: I want to earn Bitcoin → Bitcoin only has value when the system is honest → Therefore, I must be honest.

Compared to traditional financial systems, bank employees don’t directly benefit from maintaining system integrity. They operate the system for wages, and the system’s integrity is enforced through contracts and laws. That’s why we need countless regulatory agencies, auditors, and legal systems—because interests are not aligned.

In Nakamoto’s design, interests are automatically aligned. No one needs to “regulate” miners to do the right thing because doing the right thing is in the miners’ economic interest.

Public Verifiability: The Ultimate Transparency

Nakamoto’s third innovation is public verifiability.

Anyone can verify the entire history of the Bitcoin network with a laptop—from the genesis block in 2009 to every transaction. This sounds obvious, but it’s impossible in traditional payment systems. Banks and credit card companies have massive data centers to process transactions, and ordinary people cannot verify the true state of the system. Even if you have access to your account information, you cannot verify the integrity of the entire system.

But on Bitcoin, I can use my laptop right now to verify the latest blocks in real-time and confirm that no fraud has occurred. This not only gives everyone the ability to audit the system but also makes transparency itself a guarantee of integrity—any attempt to compromise the network’s integrity will be immediately detected.

Challenges and Opportunities: How Far Can Bitcoin Go

Nakamoto designed this perfect triangle, but each corner faces severe challenges in reality.

The Crisis of Inclusivity

Inclusivity is the most fragile feature of Bitcoin. Creating a Bitcoin block requires enormous electricity consumption, which naturally leads to economic effects—larger operators can operate at lower costs. In the long run, a dystopian future may emerge where the Bitcoin network is controlled by a single country or a few large corporations.

If this happens, all the principles Bitcoin relies on will be destroyed—its resistance to censorship, open access, and the fixed supply cap of 21 million will vanish under centralized control. Therefore, maintaining inclusivity is not a one-time effort but a prolonged battle that everyone concerned with Bitcoin must participate in.

The Dilemma of Scalability

To achieve public verifiability, Bitcoin sacrifices processing capacity. Currently, Bitcoin can handle about 10 transactions per second (TPS). For a system aiming to be a global currency, this is far from enough. To enable 7 billion people worldwide to use Bitcoin for daily shopping, millions of transactions per second are needed.

This leads to a classic dilemma: either maintain public verifiability but accept low throughput, or improve scalability but give up verification, re-delegating trust to centralized institutions.

Paths to Technological Breakthroughs

The Lightning Network, implemented since 2018, is an excellent solution for Bitcoin. It allows transaction parties to establish payment channels, settle directly, and only record the final result on the main Bitcoin chain. This extends Bitcoin’s throughput capacity to nearly unlimited. It sounds promising, but it has two obvious drawbacks:

First, low capital efficiency. Parties need to lock funds in advance, similar to requiring grocery stores and customers to lock a sum exceeding their monthly expenses at the start of the month.

Second, continuous monitoring is required. If you’re not constantly watching your payment channels, the other party might exploit your negligence to steal funds.

A superior solution already exists—and this is why I have dedicated over a decade to blockchain research. zk-STARK protocols enable anyone to verify all Bitcoin data on their smartphones, even at a scale millions of times larger, without trusting any third party. This completely solves the two major drawbacks of the Lightning Network: high capital efficiency and no need for users to constantly monitor.

I invented this protocol 15 years ago and first introduced this technological breakthrough at the Bitcoin Conference in 2013. Later, in 2018, I co-founded StarkWare to promote its practical application. Today, we have successfully developed zk-STARK as a mainstream scaling solution for Ethereum.

My greatest hope is that one day Bitcoin can also integrate zk-STARK technology through a soft fork. Many in the ecosystem are working toward this goal.

Beyond Money: The Universal Significance of Nakamoto’s Model

Interestingly, Bitcoin’s innovation goes far beyond money itself.

Money is indeed a social structure built through society, but it is not the only example. Land and property registration systems are social structures; election and governance systems are social structures; marriage registration, degree certification, credit ratings, and even personal reputation are social structures.

What do these structures have in common? Their value depends entirely on societal collective recognition. More importantly, most of them are monopolized by centralized authorities—state governments, large corporations, professional associations, etc.

Nakamoto’s innovation raises a fundamental question: can all these social structures be redesigned in the same way? That is, based on the principles of inclusivity, incentive-based integrity, and public verifiability?

Imagine a world where banks share equity and fees with operational network participants, governments invite citizens to participate in the monetary system’s operation and reward their contributions with newly issued currency. Adopting this higher standard of governance would give citizens more autonomy and foster a freer, more vibrant society.

These are still ideals. But if someday human society truly makes such a leap, it will be entirely thanks to the light Nakamoto has ignited. He not only redesigned money but, more importantly, provided a blueprint for democratizing all social structures. This is his most profound disruption to human society.