Who, What, Where: Satoshi Nakamoto

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Who? What? Where?

Satoshi Nakamoto is one of the wealthiest people on the planet. This person—or persons—has managed to throw global markets into a tizzy, without leaving home (wherever that may be). We know that he—or she—upended the traditional finance system and created a brand-new currency. We just don’t know who he is.

Satoshi Nakamoto is not a real person. Satoshi Nakamoto is the pseudonym of the creator of bitcoin. On Oct. 31, 2008, a white paperentitled “Bitcoin: A Peer-to-Peer Electronic Cash System” appeared on the mailing list metzdowd.com. It bore the byline of one Satoshi Nakamoto, the address of a new website—bitcoin.org—and the outlines of the first decentralized digital currency.

Ten years after that famous post—and seven years since Satoshi stopped publishing on the internet and receded even further into anonymity—no one has conclusively proven his identity, despite many, many attempts. As the 10th birthday of bitcoin approaches, let’s take a look at the shadowy figure who started it all.

BY THE DIGITS

31,000: Number of lines of code it took to create bitcoin

10,000: Number of bitcoins Laszlo Hanyecz paid for two pizzas in May 2010

$20,089: Highest price ever traded per bitcoin, on December 17, 2017

$6,275: Current value of one bitcoin at press time

28: Number of US households that could be powered for one day on the energy consumed by a single bitcoin transaction

21 million: Maximum units of bitcoin, according to its code

$109 billion: Market cap of bitcoin on the 10-year anniversary of the white paper release

ORIGIN STORY

“A team … or a genius”

“He’s a world-class programmer,” internet security researcher Dan Kaminsky told the New Yorker in 2011, after unsuccessfully searching Satoshi’s code for bugs. “He understands economics, cryptography, and peer-to-peer networking…. Either there’s a team of people who worked on this, or this guy is a genius.”

Either of those options is possible. There was no record of a coder or cryptographer named Satoshi Nakamoto before Oct. 31, 2008. His email address and website were untraceable. (There’s no proof of Satoshi’s gender, and we’ve opted to use male pronouns only for clarity—more on that in a bit.)

When he introduced the cryptocurrency, just months after the 2008 global financial crisis, Satoshi portrayed himself as a 36-year-old Japanese man angered by the irresponsibility of banks and governments. (Although his posting schedule suggested that Satoshi either didn’t live in Japan or had an irregular sleep schedule.) His currency would let people make financial transactions those institutions couldn’t touch.

So it’s fitting, perhaps, that Satoshi ensured he’d be untouchable as well.

EXPLAIN IT LIKE I’M 5!

And, um, what is bitcoin exactly?

Bitcoin is a digital asset that has gradually become revered as the internet’s gold. Like all money, it’s a collective fiction—it’s only valuable if others agree that it’s valuable. But, what crypto fans find remarkable about bitcoin is that it’s based on a secure, peer-to-peer economy.

No government or institution issues bitcoin or controls its monetary policy. Bitcoin is simply software, running on computers across the globe. Even if some computers are turned off or knocked off the network, there are thousands of others, maintaining the ledger of transactions—known as the blockchain—and preserving its history. That’s what makes it “distributed.” This setup makes bitcoin more secure, and makes it very difficult to regulate. The blockchain also replaces the trust needed for fiat currency, as Satoshi explained in 2009, since it substitutes for middlemen like banks, both central and commercial.

New bitcoins are made by “mining” them, which means doing the math that verifies the transactions. Since that keeps the system going, users whose computers solve the network’s puzzles are rewarded in bitcoin. Do the difficult cryptographic puzzle for one “block”—10 minutes’ worth of transactions—and you currently earn 12.5 bitcoins worth $80,000.

MILLION-DOLLAR QUESTION

What’s bitcoin for?

Although Satoshi Nakamoto envisioned bitcoin as “electronic cash,” it hasn’t really panned out that way. That’s partially because the bitcoin network is very slow (it processes just 3 transactions per second) and partially because the user experience leaves a lot to be desired. Keeping users’ bitcoin wallets secure and usable has also opened up market opportunities for the kind of middlemen Satoshi wanted to avoid.

So what’s the analog for a currency that’s expensive to mine and inconvenient to buy things with yet inspires mankind with awe and is valued despite its troubles? As Bloomberg’s Noah Smith argues, maybe it’s gold.

UNSOLVED MYSTERIES

Searching for Satoshi

Over the years, many theories have been floated about the true identity of Satoshi Nakamoto, from pioneering programmers to US government agencies. Newsweek fingered a former telecommunications engineer named Dorian Prentice Satoshi Nakamoto, but they were wrong by all indications. Eccentric Australian computer scientist Craig Wright claims to be the man, but hasn’t proven it.

The most compelling clues about Satoshi’s identity seem to point to Hungarian-American cryptographer Nick Szabo, the inventor of bit gold, a bitcoin predecessor. Szabo is also widely credited with inventing the term “smart contract,” an automated process often touted as a potential advantage of blockchain technology.

Szabo has denied it, but the evidence is intriguing. As detailed by the New York Times, Szabo belonged to a mailing list of cypherpunks in the 1990s, which included Adam Back, creator of hashcash (one of the few references made in the bitcoin white paper). Furthermore, when Szabo was developing bit gold around 1998, he apparently shared his proposal with Hal Finney, who later was the first recipient of a bitcoin transaction. Others have also pointed to similarities between Szabo’s and Satoshi’s writing styles.

QUOTABLE

“Writing a description for this thing for general audiences is bloody hard. There’s nothing to relate it to.”

— Satoshi Nakamoto

FUN FACT!

Some have speculated that Satoshi Nakamoto is actually a collection of companies—Samsung, Toshiba, Nakamichi, and Motorola.

Should the mask come off?

Do we need to know who Nakamoto is? Writing in the New Yorker, Adrian Chen argued that identifying Nakamoto, who owns enough bitcoin to single-handedly affect the currency’s value were he to unload his share, is in the public’s interest.

Others say that the creator’s anonymity is integral to the ethos of cryptocurrency. The point of bitcoin is that it doesn’t belong to any one bank, or government, or individual author.

“At the end of the day, knowing the identity of Satoshi is about as important as knowing who created HTTP or HTML,” Jason Weinstein, a lawyer with a specialization in digital currency, said in Slate. “Every day people communicate, socialize, get information, move money, and transact business over the Internet using these protocols without knowing how they work or who created them.”