There are new headlines about Bitcoin every single day. Yet despite the enduring media frenzy surrounding Bitcoin, almost nobody talks about Bitcoin’s founder. He’s the Willy Wonka of crypto, holding $65 billion in bitcoin himself and giving out thousands of golden tickets to his believers. And yet, unlike the eccentric chocolatier, we utter his name less frequently than Voldemort’s.
Why is nobody talking about Satoshi Nakamoto?
Today, I’ll investigate the founder of Bitcoin. Who exactly is Satoshi Nakamoto? Why did he create Bitcoin? What has he been doing since 2008, and what does he think of his wild creation now? Lastly, if he’s so influential, why isn’t he mentioned in the same breath as Elon Musk?
What’s Ahead:
Who founded Bitcoin?
The “who” and “why” behind Bitcoin have distinctly different answers. In short, the founder left behind an extensive “why,” and vanished before fielding a single interview.
Who founded Bitcoin?
In stark contrast to the recent Coinbase IPO, the founding of Bitcoin itself was hardly an explosive, media-fueled debutante party. In fact, Bitcoin emerged on the Internet quieter than a church mouse.
The first official sign of Bitcoin online was the purchase of the domain “bitcoin.org” in August of 2008. The domain was registered to Satoshi Nakamoto, who on October 31st published a white paper to the site called Bitcoin: A Peer-to-Peer Electronic Cash System. He also shared the paper with a small cryptography mailing list he was a part of.
On January 9th, 2009, Nakamoto published v0.1 of the Bitcoin and blockchain software to SourceForge, a site where developers share open-source software, and mined the first 50 bitcoins himself. Interestingly, he added a textblock to the lines of code: “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.” This addition has been interpreted as both a timestamp and a cheeky dig at existing financial systems.
To further develop Bitcoin and blockchain software, Nakamoto began working with various developers around the world, including Martii Malmi in Finland and Gavin Andresen in America. Upon working with him, Nakamoto’s colleagues quickly realized two things:
- Nakamoto was a genius, and his creation was going to change the world.
- They had no idea who Nakamoto really was.
Nakamoto was a pseudonym, and there was no breadcrumb trail leading back to his (or her) identity. When conversing with his fellow developers, Nakamoto was careful to never reveal any self-identifying information. His dedication to staying anonymous fuels theories to this day that he may never want to be discovered.
In 2012, he revealed in an online profile that he was a 37-year-old Japanese native, but nobody bought it; he’d apparently never conversed or published in Japanese, and his mastery of English was a little too perfect for a second or third language.
The mystery of his (or her, or their) true identity continues to this day. But if you’ve ever Googled “Satoshi Nakamoto,” you’ll notice that he has a picture. Where did that come from?
If the identity of Satoshi Nakamoto is a mystery, who’s in the photo?
If nobody knows who Satoshi Nakamoto is, why does this guy keep popping up in Google?
The infamous photo of Satoshi Nakamoto is a true stranger-than-fiction tale, and perhaps even the oddest part of Bitcoin’s already mysterious history.
Technically speaking, that is Satoshi Nakamoto… but it’s not quite the man we’re looking for. Here’s what happened.
In 2014, after a two-year investigation, Newsweek journalist Leah McGrath Goodman felt confident she’d tracked down the real Satoshi Nakamoto. His real name was Dorian Satoshi Nakamoto, a then 64-year-old Japanese-American man living in California.
According to Goodman, he’d checked all the boxes of a reclusive Willy Wonka of crypto:
- He’d worked on several secretive government and fintech projects in the 1990s.
- He’d been laid off and seemed to harbor resentment for his former government and finance clients.
- He’d encouraged his daughter to go private, starting her own business “not under the government’s thumb.”
Armed with this “evidence,” she confronted Nakamoto at his single-family home in the Los Angeles suburbs. Realizing she was a reporter, Nakamoto refused to talk to her until police arrived. Soon, with two befuddled Temple City cops now present, Nakamoto began to answer her questions.
It didn’t take long for Goodman to directly ask about his involvement in Bitcoin:
“I am no longer involved in that and I cannot discuss it,” Nakamoto told her. “It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”
Seeing Nakamoto’s rising discomfort, the police then shooed Goodman away. But to her, that’s all the validation she needed. By letting that statement slip out, he’d “tacitly acknowledged his role.”
“Standing before me, eyes downcast, appeared to be the father of Bitcoin.”
Immediately after she asked about Bitcoin, Nakamoto began stonewalling Goodman, shying away from calls and emails. She tried reaching out to all of his family members, who acted confused and blocked her as well. To Goodman, this was merely more supportive evidence:
“Not even his family knew,” she wrote.
Feeling confident she’d found her man, Newsweek ran Goodman’s 4,500-word feature on March 6th, 2014, under the headline The Face Behind Bitcoin. In it, they included photos of him, details of his personal life and medical history, and of course, his “admission” to founding Bitcoin.
Horrified and eager to clear things up, Dorian Satoshi Nakamoto took a car ride with one of the (many) reporters standing outside his house. In statements later published to the AP, Nakamoto claims he misunderstood Goodman’s question about Bitcoin. He’d worked on many confidential projects over the years, so when she asked about “Bitcoin,” he heard “bitcom,” and assumed it was one of those secret projects.
“When we get hired, you have to sign this document, contract saying you will not reveal anything we divulge during and after employment. So that’s what I implied.”
Despite two years of “forensic journalism,” Goodman’s theory began crumbling under the lightest scrutiny by members of the media and crypto community alike. The most damning pieces of evidence were
- Nakamoto’s lack of cryptography experience or knowledge.
- His lack of fluency in English.
- His struggles to pay his own medical bills and those of his 93-year-old live-in mother.
Things got so bad that the real Satoshi Nakamoto actually stepped in, messaging the world for the first time in five years via the same account he used to publish his original whitepaper in 2008:
And yet, despite contrary evidence piling up, Goodman and Newsweek doubled down on their research, shrugging off accusations of confirmation bias.
In response, both Ars Technica and Nakamoto’s own brother published pieces condemning them. The former called out their “colossal arrogance” while Arthur Nakamoto describes how his family was “frightened… angered… and highly concerned.” Providing his driver’s license and a family photo as proof, he added:
“How dare this Leah demean, belittle the comforts of an old man in poor health who has barely enough money to feed himself and takes gentle care of our 93 year old mother in a modest house.”
Although the Newsweek piece was met with commensurate backlash, and very few people still believe that Dorian Satoshi Nakamoto founded Bitcoin, he’s still the literal face of the entire operation.
It wasn’t all bad for Dorian Nakamoto. The crypto community raised 47 BTC for him, and although it was reportedly cashed out by the fundraisers for $21,000, it’s possible that unseen benefactors also sent him a few bitcoins that weren’t cashed out. If he’s held onto them, they’re now worth over $50k each (As of Apr. 28, 2021).
The real Satoshi Nakamoto remains totally anonymous
To date, the real Satoshi Nakamoto has achieved his (or her, or their) goal of remaining 100% unknown.
Even the admins of his own site, bitcoin.org, admit that they know pretty much nothing about him. They link out to his Wikipedia page, which is mostly full of theories ranging from:
- A Finnish professor and his gifted cryptology student.
- A secretive government agency.
- Elon Musk.
- Programmer and cartel boss Paul Le Roux.
- Members of Bitcoin’s early dev team, though each has publicly denied it.
Given the army of journalists, government agents, and online detectives hot on his trail, it’s downright impressive that Satoshi Nakamoto has remained anonymous all this time.
Why did Satoshi Nakamoto found Bitcoin?
Nakamoto’s “why” comes in the form of his original 2008 white paper, Bitcoin: A Peer-to-Peer Electronic Cash System.
For the uninitiated, a white paper is just a report helping the reader understand a complex concept or selling them on a new idea. There are white papers on political issues, medical developments, and of course, cryptocurrencies.
Nakamoto’s white paper on Bitcoin is surprisingly short – minus references and lines of calculations, it’s under seven pages long. And yet, it’s remarkably cohesive and sure makes a compelling case for the existence of Bitcoin.
Here are the most critical and/or interesting takeaways:
Internet transactions currently require a third-party mediator, and that sucks
Right out of the gate, Nakamoto’s primary case for the existence of Bitcoin is that Internet transactions are a pain in the ass. Currently, if I want to send money to you over the web, we have to use Venmo, Square, or some other third-party service. You can’t just “send money.”
Per Nakamoto, requiring every online transaction to flow through a third-party financial institution works “well enough” for now, it’s unsustainable for three primary reasons:
- First, the very nature of requiring a third player in every transaction is slow and inefficient. Imagine if every time you wanted to hand someone cash you needed to find a notary. That’s basically what’s happening on the Internet, and Nakamoto isn’t having it.
- Second, by stepping in the middle, third-party banks often play a mediator in disputes. Not only does having a human escrow create the possibility for fraud in both directions, but it also costs the banks tremendous resources, which are then passed along to consumers as fees and commissions.
- Finally, Nakamoto doesn’t outright say this, but his cheeky line in his source code hints at it: banks are flawed. They’re vulnerable to corruption and bad decision-making and they can fail. (Can you tell that Nakamoto published his white paper in the early months of the global Recession?).
Before engaging in some slam poetry against the banks, Nakamoto reels it in and summarizes the need for Bitcoin thusly:
“What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
Basically, we need to be able to swap cash online just like we do it in person. How will we do it? Blockchain.
Blockchain tech is faster, safer, and more objective than bank mediation
If having a third-party watch over every online transaction is a flawed system, what can we replace it with?
When he says “cryptographic proof,” Nakamoto means blockchain – and he spends the rest of the white paper explaining how blockchain technology can replace a bank. Nay, all banks.
Sound crazy? Hear him out.
One of the main reasons why big banks need to babysit all of our online transactions is to prevent fraud. Governments and banks like to know who’s paying whom and for what so they can prevent double-spending and track illegal activity.
But even with online payments flowing through PayPal and Square, the process of tracking money online is extremely difficult, leaving fraudsters and tax dodgers plenty of places to hide.
But what if every single online transaction was recorded in a single place? What if there was one giant database that recorded who paid whom for what until the end of time? How many resources would banks and governments save if they no longer had to monitor online transactions, and could simply access the public record any time they needed?
That was the goal of blockchain tech. As Nakamoto puts it, the blockchain, i.e. ledger of all Bitcoin transactions, is a “single history” of our online payments. By letting a computer code validate and log transactions instead of thousands of banks, it creates a system that’s faster, safer, and immune from outside influence.
But if we all buy into a single computer program, won’t someone just hack it?
Unlike banks, hackers won’t mess with Bitcoin because there’s no motivation to
Nakamoto isn’t so myopic to think that the bad guys won’t try to mess with Bitcoin for personal gain. In fact, defense from “attackers” is one of his key talking points, and his proposed solution is kinda genius.
The blockchain’s defense from attackers has two layers: one “physical” (based in code), and one psychological.
The nature of Bitcoin makes it really hard to steal
Unlike cash, bad guys can’t just take bitcoins at gunpoint. They’d have to manually go into the blockchain and change their own balance. But due to the nature of blockchain, a single bitcoin doesn’t exist without its extensive transaction history. The two are inextricably linked.
So the hacker would have to break into the blockchain, give himself bitcoin, and log an extensive fake history of his stolen bitcoin – all of which are impossible.
Nakamoto admits that it would be easier for a bad guy to “defraud people by stealing back his payments.” This would mean assembling enough computing power to override what’s already being logged and maintained in the blockchain, essentially outpacing the real one. But given how the global computing power behind blockchain now takes up more energy than Argentina, that would be a lot of computers just to commit fraud.
By that point, you’d come up against Nakamoto’s compelling psychological defense
Besides, why steal when you can mine it?
Believe it or not, the ability to “mine” bitcoins was originally conceived, in part, as a theft deterrent.
Even in his original white paper, Nakamoto knew that maintaining the blockchain would require immense computing power across the world. Computers and electricity cost money, so he’d need to provide some sort of incentive for people to sustain his creation. Accordingly, he dedicated a whole section of the white paper to “incentive.”
The creator of a new block would receive one bitcoin as payment, and they’d continue to receive a steady stream of newly-minted bitcoin as long as they dedicated CPU power to the blockchain. “This adds an incentive for nodes to support the network, and provides a way to initially distribute coins into circulation since there is no central authority to issue them.”
Nakamoto likened the process to “gold miners expending resources to add gold to circulation,” hence bitcoin mining.
Mining also served to deter thieves. If the blockchain takes 100 teraflops to maintain, and you assemble 101 teraflops to attack it, why not join it and literally start printing money instead?
“If a greedy attacker is able to assemble more CPU power than all the honest nodes, he would have to choose between using it to defraud people by stealing back his payments, or using it to generate new coins. He ought to find it more profitable to play by the rules, such rules that favor him with more new coins than everyone else combined.”
That’s the gist of Nakamoto’s white paper: online transactions suck, so let’s replace all these banks with a single protected ledger. It’s really a white paper about blockchain, not Bitcoin or cryptocurrency.
It’s safe to say that Nakamoto never conceived of Bitcoin as an investment. Instead…
Bitcoin was really just a vehicle for proving blockchain technology – then, Nakamoto disappeared
Just two and a half months after publishing his white paper conceptualizing Bitcoin and blockchain, Satoshi Nakamoto released the first version of the software for free on the open-source website SourceForge.
For the next year, Nakamoto worked with a skilled team of developers to further flesh out the source code. In 2010, however, he handed the project to a member of his inner circle, Gavin Andresen, and vanished.
In the years after Nakamoto’s disappearance, Gavin Andresen founded both The Bitcoin Faucet, which gave bitcoin away, and The Bitcoin Foundation, which supported education and acceptance of Bitcoin. Andresen himself stepped away from managing Bitcoin in 2014.
Today, with the blockchain established, no one person “manages” Bitcoin anymore. It’s a self-sustaining entity, managed by millions of traders and miners around the world. Somewhere, maybe in Japan or Russia or Finland or Africa, Satoshi Nakamoto is watching his creation grow.
Hopefully, for the crypto community, that person isn’t Craig Wright.
Oh, and about Craig Wright…
Nobody heard from Nakamoto again until late 2015, when Wired and Gizmodo both outed Australian computer scientist Craig Wright as Satoshi Nakamoto.
Wright embraced the claims, and six years later, still lists “Creator of Bitcoin – Satoshi Nakamoto” on his homepage. Gavin Andresen supports Wright’s claims as well because although they never claimed to be the same person, Andresen saw Wright “sign messages with keys only Satoshi Nakamoto could possess.”
But the greater crypto community isn’t convinced. Wright said he’d provide irrefutable proof but pulled back when he realized it would paint a massive target on his back. Now stuck between a rock and a hard place, he said “I am the source of terrorist funds as Bitcoin creator or I am a fraud to the world. At least a fraud can see his family.”
Even if Craig Wright really is Satoshi Nakamoto, the backlash against him seems to indicate that nobody wants to know who the founder of Bitcoin is. Bitcoin and blockchain have grown up fine without the identity of its founder being known, and that’s how it should be.
Satoshi Nakamoto is like Batman. He’s not supposed to be a man – he’s supposed to be a symbol.
In The Dark Knight, the Joker didn’t want to kill Batman – he wanted to kill the symbol, specifically the symbol of hope for Gothamites. He knew that merely revealing Batman would weaken, even destroy all that he stood for and all that he symbolized.
Similar to how Batman symbolizes justice for Gotham, Satoshi Nakamoto symbolizes hope and free trade for investors. Nakamoto revealing himself to be Craig Wright, an arrogant ex-con who designed the first online casino, does nothing to support the livelihood of Bitcoin. If anything, it undermines it.
As Wright faces an avalanche of legal troubles, the crypto community has moved on. They’ve separated the symbol from the man, and the mysterious legend of Satoshi Nakamoto continues. His 2008 vision for Bitcoin marches towards reality – although Bitcoin exchanges have been hacked, the blockchain is healthy, and each year more and more companies have begun accepting BTC as payment.
The Batman of free trade has kept Gotham safe.
Summary
The “why” behind Bitcoin is crystal clear. Satoshi Nakamoto created Bitcoin in 2008 as a way to facilitate online transactions without the need for a third-party financial institution.
Blockchain tech would be faster and safer than anything else on the market, and the resources it would free up would create limitless potential for both banks and governments. Best of all, “mining” would keep Bitcoin decentralized, democratic, and safe from malicious attacks.
Millions of investors around the world believe in Satoshi Nakamoto’s “why.” The exploding valuation of Bitcoin over the last decade is a testament to that, and it’s entirely possible that cryptocurrency, even Bitcoin itself, will be the future of online transactions.
But who founded Bitcoin? Who is this person who built the first blockchain by hand, creating millionaires and billionaires out of normal people and forcing global governments to scramble in response?
Who is the real Satoshi Nakamoto?
Better question: does it really matter?
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