Why didn't Satoshi include strong privacy protections in the initial release of Bitcoin?

Satoshi didn’t add strong privacy protectins to Bitcoin at first because he was more focused on encouraging adoption. The privacy technology available in 2009 would have made:

• Transactions too slow and costly (Miller 2015, 1; Habib et al. 2022, 341; Hearn 2017)

• The code harder to understand (Vacca et al. 2022, 214; Dananjaya 2025, 18; Finney 2013)

• The supply harder to audit and trust (Miller 2015, 3)

• Regulators more hostile (Ross 2024, 1)

Satoshi believed that pseudonymity provided “good enough” privacy and expected that future developers would improve the code to enhance privacy if necessary (Nakamoto 2009, 1). He did not anticipate how effective network analysis would become at unmasking pseudonymous accounts. Nor did he expect that Bitcoin’s software development would be hijacked by a cabal of developers who would “ossify” the code to profit by offering their own Layer 2 “solutions” (Solimano and Kelly 2025, 2; Bitfinex 2024, 3).

Bitcoin’s Layer 2 privacy solutions—such as Lightning, Liquid, Cashu, and mixers—are often difficult to use correctly, custodial, centralized, or not fully private (Belov 2024, 2; Spears 2024, 4). As a result, most BTC transactions now occur via centralized, surveilled, and censorable platforms like Coinbase or “Wallet of Satoshi” (Bigger Insights 2023, 1; Bhardwaj 2025, 2).

If a coin lacks effective privacy, it is not “fungible”—an essential feature for “p2p electronic cash” (Zucco 2020, 2; Leishman 2024, 5). Users are hesitant to accept coins that might be linked to previous crimes. Furthermore, no one wants to be targeted for robbery because their entire history of holdin

gs and trades is visible to government regulators and criminals alike.

Jameson Lopp maintains a long list of individuals who have been robbed, tortured, or killed by criminals targeting their Bitcoin holdings (Lopp 2024, 1).

Similarly, I maintain a list of political prisoners, many of whom are incarcerated because they attempted to develop or provide optional privacy services for Bitcoin (Ships 2024, 1).

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Footnotes

1. Belov, Constantine. Liquid vs Lightning Network Comparison Analysis. B2BinPay News, 2024. This analysis compares the trade-offs of major Layer 2 protocols, noting that Liquid relies on a central federation while Lightning requires complex node management. https://b2binpay.com/en/news/liquid-vs-lightning-network-comparison-analysis/

2. Bhardwaj, Chirag. Custodial vs. Non-Custodial Wallets: Where is Your Crypto Held?. BitGo Resources, 2025. This report explains the inherent privacy and control trade-offs of custodial wallets, noting that users of such services lack financial autonomy and are subject to surveillance. https://www.bitgo.com/resources/blog/custodial-vs-non-custodial-wallet/

3. Bigger Insights. Bitcoin’s Fatal Flaw: Why Financial Surveillance Is Inevitable Without Privacy. Bigger Insights Blog, 2023. This technical critique argues that the high cost of Layer 1 operations leads to the “ossification” of Bitcoin into a hub-and-spoke model dominated by custodial wallets. https://biggerinsights.com/bitcoins-fundamental-flaw-that-no-ones-talking-about/

4. Bitfinex. Is Ossification Good or Bad for Bitcoin?. The Bitfinex Blog, 2024. This article outlines the debate over protocol rigidity, noting that critics fear ossification prevents necessary privacy upgrades and forces users onto centralized layers. https://blog.bitfinex.com/education/is-ossification-good-or-bad-for-bitcoin/

5. Dananjaya, Lakshitha. The Digital Footprints of Satoshi Nakamoto: A Comprehensive Analysis of Bitcoin Forum Communications. ResearchGate, 2025. A systematic study of Satoshi’s forum posts revealing a consistent pattern of prioritizing security, gradual evolution, and pragmatic problem-solving over experimental privacy features. https://www.researchgate.net/publication/391213893_The_Digital_Footprints_of_Satoshi_Nakamoto_A_Comprehensive_Analysis_of_Bitcoin_Forum_Communications

6. Finney, Hal. “Bitcoin and me (Hal Finney).” Bitcointalk, 2013. This primary source documents the very first Bitcoin transaction and Hal’s reflections on the early development of the protocol’s codebase. https://bitcointalk.org/index.php?topic=155054.0

7. Habib, Gousia, et al. Blockchain Technology: Benefits, Challenges, Applications, and Integration of Blockchain Technology with Cloud Computing. Future Internet, 14(11), 2022. This paper notes that Satoshi chose a ten-minute block interval to balance security, but early privacy tools would have made transaction verification significantly slower. https://www.mdpi.com/1999-5903/14/11/341

8. Hearn, Mike. “Satoshi Nakamoto Emails.” Plan99, 2017. A collection of archived emails between the Bitcoin creator and Mike Hearn detailing the technical constraints of early blockchain scaling and transaction verification. https://plan99.net/~mike/satoshi-emails/

9. Leishman, Alex. Understanding Bitcoin Fungibility. River Learn, 2024. This educational piece explains how lack of privacy allows for the “tainting” of coins, which can lead to exchanges refusing transactions and breaking fungibility. https://river.com/learn/bitcoin-fungibility/

10. Lopp, Jameson. Physical Adversary Attacks. GitHub, 2024. A documented repository of violent crimes committed against Bitcoin holders, highlighting the safety risks inherent in a public, transparent blockchain. https://jlopp.github.io/physical-bitcoin-attacks/

11. Miller, Andrew. “What Satoshi Did Not Know.” Financial Cryptography and Data Security, 2015. This research examines the early technical trade-offs Satoshi navigated, specifically how prioritizing a transparent, auditable supply came at the expense of complex on-chain privacy features like zero-knowledge proofs. https://ifca.ai/pub/fc15/89750001.pdf

12. Nakamoto, Satoshi. The Quotable Satoshi: Privacy. Satoshi Nakamoto Institute Archive, 2009. A collection of Satoshi’s original forum posts outlining his belief that privacy could be maintained by using new public keys for every transaction. https://satoshi.nakamotoinstitute.org/quotes/privacy/

13. Ross, Katherine. Satoshi Emails Elaborate Bitcoin Origin. Blockworks, 2024. This article details correspondence where Satoshi warns that pushing the “anonymity” angle could trigger a severe regulatory backlash. https://blockworks.co/news/satoshi-emails-elaborate-bitcoin-origin

14. Ships, Archer. Help Free Ross Ulbricht and Other Crypto Prisoners. Substack, 2024. This list provides advocacy details and context for developers and service providers who have been imprisoned for their work on privacy-centric Bitcoin tools. https://archerships.substack.com/p/help-free-ross-ulbricht-and-other

15. Solimano, P. and L. Kelly. Bitcoin devs clash over adding ‘existential’ filtering feature to $2.2tn network. DL News, 2025. This reporting describes the conflict over Bitcoin’s code, where critics allege developers favor Layer 2 roadmaps at the expense of base-layer utility. https://www.dlnews.com/articles/people-culture/the-new-bitcoin-blocksize-war/

16. Spears, Charlie. Exploring the Bitcoin L2 Saga and Recent Solutions. ChainLight Blog & Research, 2024. The researchers highlight that many Bitcoin Layer 2 implementations function as multi-signature systems rather than trustless protocols, increasing centralization risk. https://blog.chainlight.io/ecosystem-explorer-exploring-the-bitcoin-l2-saga-and-recent-solutions-3d8eb08055e8

17. Vacca, Anna, et al. An empirical investigation on the trade-off between smart contract readability and gas consumption. IEEE/ACM 30th International Conference on Program Comprehension, 2022. This paper argues that optimizing blockchain code for performance often results in lower readability, a trade-off Satoshi navigated by choosing a simpler base protocol. https://ieeexplore.ieee.org/document/9796349/

18. Zucco, Giacomo. A Treatise On Bitcoin And Privacy Part 1: A Match Made In The Whitepaper. Bitcoin Magazine Culture, 2020. This treatise explains the critical economic relationship between transaction privacy and the fungibility of Bitcoin as a medium of exchange. https://bitcoinmagazine.com/culture/a-treatise-on-bitcoin-and-privacy-part-1-a-match-made-in-the-whitepaper