Who is Satoshi Nakamoto: The creator of Bitcoin
The first Bitcoin was mined on January 3, 2009, by someone known as “Satoshi Nakamoto.” Today, Satoshi Nakamoto is recognized as the pseudonym of the person or group of people who created Bitcoin — an invisible figure or figures whose technological creation has influenced the world.
Satoshi Nakamoto was already a familiar name among cryptography enthusiasts like computer scientists and hackers long before the Bitcoin boom. Someone had posted on online message boards and corresponded with fellow developers via email under the same name years prior. Although unconfirmed, it is widely suspected that the person (or persons) behind the pseudonym was also behind those communications.
Months prior to mining the first bitcoin, Satoshi Nakamoto had published a white paper on a cryptography mailing list entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System.’ The paper, published on October 31, 2008, outlined a decentralized peer-to-peer protocol that was cryptographically secure.
In the white paper, Nakamoto described it as a ‘purely peer-to-peer version of electronic cash’ that ‘would allow online payments to be sent directly from one party to another without going through a financial institution or any intermediary.’
The origins of Satoshi Nakamoto
Bitcoin was born after the subprime mortgage crisis of 2008, where liquidity in global financial markets was significantly affected by the housing market collapse. The crisis inspired the creation of Bitcoin, a fully functional form of digital currency based on a distributed ledger technology (DLT) called the blockchain.
Nakamoto’s white paper laid the groundwork for future forms of cryptographically secure systems that are designed to be tamper-proof, transparent and censorship-resistant. The system’s goal was to allow individuals to reclaim financial power through a decentralized financial system. The idea of decentralization eliminated the need for middlemen, such as companies, financial systems or governments, to be involved in digital currency exchange. The transactions would be secure and tracked through a blockchain. The difference with blockchain was that it was visible to all participants and securely distributed across an entire network.
The birth of Bitcoin
Although Nakamoto remains a mysterious figure, his goal for creating cryptocurrency, in itself, was never a mystery. Simply put, he created it to take financial control back from financial elites, giving ordinary people a chance to take part in a decentralized financial system.
Bitcoin remains open-source, meaning that no one has the power to own or control it in its entirety. Its design is public and it is open for anyone to participate.
Bitcoin was a response to the Great Financial Crisis, which showed that even the world’s biggest banks can fail. It highlighted the fragility of the modern financial system and called for the decentralization of financial transactions. As such, cryptocurrency was born, and Bitcoin was one of the first options outside the traditional financial system for the public to participate in intermediate-free financial transactions.
The blockchain is how cryptocurrencies like Bitcoin develop trust among users and ensure security, as it is a network-based ledger that all participants can access. The ‘genesis block’ of Bitcoin was mined on January 3, 2009, by Satoshi Nakamoto, officially launching the blockchain. A genesis block is the first block of a cryptocurrency to be mined and acts as the foundation of the blockchain.
For the first few months of its existence, Bitcoin had no monetary equivalent worth. Miners, people who used their computers to solve complex math problems to discover or “mine” new bitcoin, were doing so only for novelty.
Miners also helped to verify the validity and accuracy of Bitcoin transactions. The actual Bitcoin payout received by miners is essentially a reward for auditing and processing the highly-encrypted data that is part of each transaction. This ensures that each Bitcoin is properly accounted for and cannot be spent more than once.
The first real-world transaction happened on May 22, 2010, when a man from Florida agreed to exchange two $25 pizzas for 10,000 Bitcoin, thereby making May 22 “Bitcoin Pizza Day.” It marked the first economic transaction for the cryptocurrency. Back then, Bitcoin was valued at four Bitcoins per penny. Since then, its value has multiplied exponentially.
Possible identities of Satoshi Nakamoto
Three years after publishing his white paper on Bitcoin and mining the genesis block, Nakamoto bowed out of the cryptocurrency scene.
He sent an email to another Bitcoin developer on April 23, 2011, saying that he had “moved on to other things,” and that the cryptocurrency’s future was “in good hands.” Since then, there has been no communications from Nakamoto’s previously known email addresses.
Throughout Bitcoin’s long history, nothing has been more controversial than the identity of its founder. Numerous speculations have surrounded Nakamoto’s identity. Some people claimed that Nakamoto was the pseudonym of a group of cryptographers, not just one person. Yet others surmised that he might be British, a member of the Yakuza, a money launderer, or a woman disguised as a man.
Over the years, a few individuals have been suspected of being the man behind the elusive pseudonym:
In 2014, Newsweek journalist Leah Mcgrath Goodman published an article entitled “The Face Behind Bitcoin.” In one of the highest-profile attempts to reveal Nakamoto’s identity, Goodman identified Dorian Nakamoto as the elusive Bitcoin creator.
Goodman cited similarities between the two Nakamotos, including mathematical skill, temperament, Japanese descent, and political leanings. Dorian Prentice Satoshi Nakamoto, then 64 years old, was living in Temple, California when Goodman reached out to him. Dorian had previously worked on computer engineering and classified defense projects, according to Goodman.
However, Dorian Nakamoto later denied any involvement with Bitcoin. He dismissed any published quotes as a mere misinterpretation on the reporter’s part. Nakamoto claimed that his quote was taken out of context and that he had been talking about engineering rather than Bitcoin at the time of the interview.
Later, Satoshi Nakamoto confirmed on an online Bitcoin forum that they are not Dorian Nakamoto — putting an end to the rumors.
The Newsweek article sparked a debate regarding Dorian Nakamoto’s privacy, which the crypto community felt had been violated when Newsweek published a photo of his Los Angeles home.
As a result, the crypto community raised over 100 Bitcoin on behalf of Dorian Nakamoto to express their gratitude and support concerning his ordeal. Dorian later appeared in a YouTube video in 2014 thanking the community, saying that he was going to keep his Bitcoin account “for many, many years.” Although the video has since been taken down from the original account, copies of it still exist online.
Whereas Dorian Nakamoto denied being Satoshi Nakamoto, Australian computer scientist Craig Wright claimed that he was the man behind the pseudonym.
Wright claimed the identity in 2016 after Wired Magazine released a profile on him in December 2015. The article was entitled “Is Bitcoin's Creator this Unknown Australian Genius?” and was apparently based on documents leaked to Wired.
The evidence consisted of a paper on cryptocurrency supposedly published on Wright’s blog a few months before the infamous Bitcoin white paper’s release. Leaked emails and correspondence regarding a “P2P distributed ledger” also surfaced as well as transcripts of tax officials and lawyers containing statements from Wright regarding his involvement in creating Bitcoin.
But evidence came to light proving the contrary. The blog entries had been backdated, as were the supposed public encryption keys linked to Nakamoto.
A major identifier on the blockchain is the “public encryption key” — one half of the two-key system that crypto holders need to carry out encrypted transactions. In Wright’s case, it appeared that both Nakamoto’s public keys and the blog entries were backdated — making his claims much more suspicious.
Wired later recanted its claim and edited their article under the title, “Is Bitcoin's Creator this Unknown Australian Genius? Probably Not.” The publication cited the supposedly fraudulent evidence that Wright released to back his claim as the reason behind their conviction.
Following suspicions from the crypto community, Wright eventually backed away from the claim.
Crypto expert Nick Szabo was also one of the media’s “suspected Satoshis.” In 2015, The New York Times published an article entitled “Decoding the Enigma of Satoshi Nakamoto and the Birth of Bitcoin.”
Comparisons were made between him and the mysterious Nakamoto owing to similarities in writing and preoccupations, as well as Szabo’s significant contribution to the development of Bitcoin.
Nick Szabo is a computer engineer by profession. He is also a cryptographer and a legal scholar, and has published works that were tangentially related to Satoshi Nakamoto’s intellectual preoccupations at certain times. For example:
Szabo pioneered the concept of Smart Contracts in a 1996 paper entitled “Smart Contracts: Building Blocks for Digital Markets.” Szabo conceptualized “Bit Gold” in 2008, which was also a decentralized form of currency and a precursor to Bitcoin. Szabo also previously worked for DigiCash, a digital payment system that used cryptography.
Both Nakamoto and Szabo reference economist Carl Menger in their communications.
In his book, “Bitcoin: The Future of Money?” author Dominic Frisby was convinced that Satoshi Nakamoto and Nick Szabo were the same person and presented arguments to support his hypothesis. Szabo, however, denied the allegations concerning his supposed secret identity.
Hall Finney was a computer scientist, coder, and cryptography enthusiast even before the Bitcoin boom. He died in 2014 at the age of 58 after battling amyotrophic lateral sclerosis, or ALS, for five years.
Other than Nakamoto himself, Finney was reportedly the first person to have worked on debugging and improving Bitcoin’s open-source code. He also received the first Bitcoin transaction in 2009 from Satoshi Nakamoto, himself.
He was also neighbors with Los Angeles-based engineer Dorian Satoshi Nakamoto, a fact that Forbes journalist Andy Greenberg found interesting, if not suspicious. Greenberg took writing samples from Hal Finney and Satoshi Nakamoto to a writing analysis consultancy service. Because of similarities in their writing style, Greenberg initially surmised that Finney may have been Nakamoto’s ghostwriter, at the very least. He also floated the idea that Finney might have used Dorian Nakamoto as a ‘front’ to hide his identity.
However, Finney denied such claims and presented evidence to prove that he was not Satoshi Nakamoto. Upon meeting Greenberg, Finney presented the emails that he and Nakamoto had exchanged over the years, as well as his Bitcoin wallet’s history.
The writing consultancy likewise concluded that Nakamoto’s alleged emails to Finney were a match with Nakamoto’s other published writings, cementing Finney’s claim that he was not Nakamoto.
Why Satoshi Nakamoto matters
The figure “Satoshi Nakamoto” matters, whether he is a person or a group — not because of his identity (or lack thereof) — but because of his contribution to the greatest technological invention of all time. Nakamoto paved the way for cryptocurrency to evolve and develop to respond to the 2008 crisis, creating an alternative currency system.
Of course, despite attempts to secure crypto, compromising cryptocurrencies remain a genuine possibility. However, this risk is something that even more traditional models of finance face regularly.
The difference that cryptocurrencies like Bitcoin represent is the concept of decentralization and equality. A distributed public ledger via blockchain effectively records, verifies, and validates Bitcoin transactions while making them secure via cryptography.
Since its inception in 2009, no hacker has managed to infiltrate it. Bitcoin also remains relevant years after it was introduced by Nakamoto. Large corporations and investors are becoming increasingly aware of its value and potential. Likewise, even businesses are beginning to accept Bitcoin as payment. The crypto market has also grown exponentially as more people become interested in mining and trading Bitcoin.
Furthermore, Nakamoto’s creation represents innovation and disruption. It was (and still is) a powerful reminder that all things must continue to improve to survive. In an industry notorious for its resistance to technology, cryptocurrency delivered a jolt to the financial world and shook things up for the better.
Crypto paved the way for various forms of digital currencies and peer-to-peer payment systems to evolve and be integrated into modern society. Innovations such as digital currencies work for the consumers’ good by offering them alternative modes of payment and investment.
Financial institutions are likewise responding to the challenge by adopting more customer-focused and innovative approaches to finance.
Satoshi Nakamoto: Truths and mysteries
Despite the media’s efforts to investigate and reveal Satoshi Nakamoto’s identity, he remains a mysterious figure whose real-world persona is unknown.
However, it might be interesting to look at the bits of information that we do know about Nakamoto, either from public records or skillful sleuthing. Let’s dive in.
Satoshi Nakamoto is a coding genius
The New Yorker cites Nakamoto as a “preternaturally talented computer coder” who created Bitcoin with “thirty-one thousand lines of code.” To the uninitiated, the reason why the platform remains safe, secure and trustworthy is thanks to Nakamoto’s virtually perfect code. It has no mistakes. This, in part, is why it has not been hacked since its creation.
In a 2011 article entitled “The Crypto-Currency: Bitcoin and Its Mysterious Inventor,” The New Yorker reported how renowned and highly-experienced Internet security researcher Dan Kaminsky tried to break Bitcoin’s code — and failed.
For everyone’s appreciation, Kaminsky wasn’t an average coder. In fact, he is famous among hackers because he discovered a major flaw in the Internet in 2008. He alerted the Department of Homeland Security and Microsoft and Cisco executives to address the problem immediately. Without his discovery, any skilled coder could have been able to shut down the Internet or take over any website.
That being said, Kaminsky was excited to potentially find similar fatal flaws in Bitcoin. He saw it as an “easy target,” something that might be easily compromised. However, what he encountered was Satoshi’s near-perfect code, which he later found to be impenetrable.
Satoshi Nakamoto is fluent in British English
Nakamoto’s code and white paper on Bitcoin reveal that the infamous coder is fluent in English, particularly British English. This, in part, is why some people believe that Nakamoto might be British, despite his claims of being Japanese.
He also employs British usage in emails to fellow coders like Finney, as evidenced in some of their email correspondences. Programmer John McAfee claims to know who Satoshi is, on account of a linguistic analysis of Nakamoto’s white paper.
Satoshi Nakamoto may be more than one person
There are also claims that Nakamoto may not be just one person. Instead, they may be a group of people who worked on perfecting and creating the code behind Bitcoin. Owing to its outstanding code, Bitcoin continues to thrive alongside other cryptocurrencies.
Some people, like Bitcoin developer Laszlo Hanyecz, believe that the level of coding at which Bitcoin was created would have necessitated more than just one person. According to him, it is highly likely that it was created by a team of coders.
No one is sure if Satoshi is male or female
For all we know, the whole “Satoshi” thing could be a smokescreen to hide the identity of a female genius. Satoshi Nakamoto claims to have been born in April of 1975.
In the same way that no one is sure if Satoshi is Japanese, people are theorizing that he could also be a female.
In a male-dominated industry like tech, it’s not far-fetched for a woman to use a male name to gain an equal footing among her peers. Historically, female writers have used male pseudonyms in an attempt to penetrate the literary scene and gain the respect traditionally accorded to male authors.
What if Satoshi employed a similar trick? No one can really say for sure, but this idea has been an empowering thought for a lot of women in development. New York Congresswoman Carolyn Maloney popularized the tagline “Satoshi is female” at an event for women in blockchain.
The future of Bitcoin
Since its creation, Bitcoin has had a storied past, and not without scandals. Originally designed to be a decentralized and borderless alternative to fiat currency, Bitcoin has been slowly centralized to some degree. Large banks and financial institutions, for example, have begun opening crypto trading desks and custody services for crypto.
Some would call this a “compromise,” a departure from Nakamoto’s original vision of a revolutionary platform that eschewed financial institutions.
However, with the rise of “Bitcoin whales” who have large Bitcoin holdings, the cryptocurrency is said to have fallen under the control of the elite few yet again. These large investors control Bitcoin’s price in the markets and have the funds to put up mining farms for mining Bitcoin. Consequently, the more miners, the more difficult the mining is (since the mathematical problems become more complicated).
The good news is that Nakamoto’s creation doesn’t seem to be going anywhere anytime soon. It has paved the way for the creation of over 11,000 different forms of cryptocurrency and continues to grow in value.
Should the right technological advancements be in place, it is a genuine possibility that people are going to embrace Bitcoin in more everyday transactions. Many organizations believe that Bitcoin may soon become the “currency of choice” in the global trading scene.
However, Bitcoin’s blockchain also needs to evolve and be able to handle more transactions in a short span of time. Until then, we shall wait and see.