Who is Satoshi Nakamoto? Bitcoin wizard behind the mask

The day before Thanksgiving in 1971, a man who appeared to be in his mid-40s became infamous for taking over a commercial plane leaving Portland, Oregon. He gave the fake name Dan Cooper and, during the flight, told the flight attendant of a bomb in his briefcase. He demanded four parachutes and $200,000 in $20 bills (worth about $1.2 million in the early 21st century). He, then, parachuted out of the plane with the ransom money in hand. No one ever heard from him again.

Nearly 40 years later, in 2009, a figure claiming to be a 36-year-old Japanese man appeared on the flight of the financial world. But instead of stealing money, this person "left" 21 million Bitcoins, then disappeared into cyberspace. More than a decade has passed, but his identity is still a mystery. That character is Satoshi Nakamoto.

Who is Satoshi Nakamoto?

Satoshi Nakamoto is the name used by the pseudonymous person or group who developed Bitcoin and implemented the first blockchain database. Nakamoto was active in the development of Bitcoin until December 2010.

Though Nakamoto owns a Japanese name and also claimed to be Japanese, most speculation about his identity involves software or cryptography experts in the United States or Europe.

The one who invented money

To earn money, most of us have to work hard, some more reckless people counterfeit or steal it, but Satoshi Nakamoto did it in his own way: by inventing money. On the evening of January 3, 2009, he pressed a button on his keyboard and created a new currency called Bitcoin. There was no paper, copper, or silver—just thirty-one thousand lines of code and an announcement on the Internet.

Nakamoto’s invention is dubbed "digital gold" because it has only 21 million Bitcoins. Miners mine Bitcoin using computers to solve complex mathematical problems. The fastest computer would win the most money.

At first, a single Bitcoin was valued at less than $0.01. But merchants gradually began to accept it, and at the end of 2010, its value began to appreciate rapidly. 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”. Since then, its value has multiplied exponentially.

If Nakamoto ran the world…?

The anonymity of Nakamoto made many people question whether the creator of Bitcoin was on top of a Ponzi scheme. But it seemed that he was motivated by politics rather than the crime.

It was no coincidence that Bitcoin was born shortly after the crisis of 2008 when liquidity in global financial markets was significantly affected by the housing market collapse. On the same note, when the “too big to fail” bank Lehman Brothers filed for bankruptcy, Nakamoto published an essay on traditional fiat.

“The root problem with conventional currency is all the trust that’s required to make it work,” he wrote. “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust.”

If Nakamoto ran the world, he would fire the Chairman of the US Federal Reserve, close the European Central Bank, and shut down international money transfers. “Everything is based on crypto proof instead of trust,” Nakamoto wrote in his 2009 essay.

Also, in memory of the corruption of fiat currency, in the very first transaction made on the Bitcoin blockchain, the mysterious founder embedded a message that reads, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks". It referred to a headline of a news article that appeared that day in The Times in the UK that talked about a second bailout for the banks.

The test of a famous figure among hackers 

Currently, despite the absence of its creator, Bitcoin still proves its value, but at the beginning, this currency was the target of various “reliable tests”. 

Two years after being born, Bitcoin became the target of Dan Kaminsky, a leading Internet-security researcher. Kaminsky was famous among hackers for discovering, in 2008, a deadly error in the Internet that would have allowed a talented coder to take over any website or even shut down the Internet.

He alerted the Department of Homeland Security and executives at Microsoft to the problem and worked with them to patch it. He was one of the most adept practitioners of “penetration testing,” the art of compromising the security of computer systems at the behest of owners who want to know their vulnerabilities. 

He decided to investigate Bitcoin and felt it was an easy target. “When I first looked at the code, I was sure I was going to be able to break it,” Kaminsky said, noting that the programming style was dense and inscrutable. “The way the whole thing was formatted was insane. Only the most paranoid, painstaking coder in the world could avoid making mistakes.”

In a windowless basement full of computers in San Francisco, Kaminsky paced back and forth talking to himself, trying to picture the Bitcoin network in his head. He quickly identified nine ways to compromise the system and find points to insert his first attack. But when he found the right place, a message was waiting: “Attack Removed”. Kaminsky tried other points, but the same thing happened over and over again. He became furious.

“I came up with beautiful bugs,” he said. “But every time I went after the code there was a line that addressed the problem.”

He was like a burglar who was sure that he could break into a bank by digging a tunnel, drilling through a wall, or climbing down a vent. But on each attempt, he discovered a freshly poured cement barrier with a sign telling him to go home. “I’ve never seen anything like it,” Kaminsky added.

He pointed out the skills that Nakamoto needed to be able to build Bitcoin successfully. “He’s a world-class programmer, with a deep understanding of the C++ programming language,” he said. “He understands economics, cryptography, and peer-to-peer networking. Either there’s a team of people who worked on this,” Kaminsky concluded, “or this guy is a genius.”

Kaminsky wasn’t alone in this assessment. Soon after creating the currency, Nakamoto posted a nine-page technical paper describing how Bitcoin would function. That document included three references to the work of Stuart Haber, a researcher at H.P. Labs, in Princeton. 

Haber is a director of the International Association for Cryptologic Research and knew all about Bitcoin. “Whoever did this had a deep understanding of cryptography,” Haber said. “They’ve read the academic papers, they have a keen intelligence, and they’re combining the concepts in a genuinely new way.”

Refusing the title of “game-changer”

The value of Bitcoin has skyrocketed, but the identity of its creator is still next to 0. Before the advent of Bitcoin, there was no record of any programmer with that name. Nakamoto used an e-mail address and a website that were untraceable.

In 2009 and 2010, this mysterious figure published hundreds of articles in perfect English, and although he talked to other software developers to ask them to help improve the code, Nakamoto never revealed any personal information.

Then, in April 2011, he sent a note to a developer saying that he had “moved on to other things.” He has not been heard from since.

Bitcoin is known as the game-changer, and its creator is undeniably given that title. In the era of technology, this means money, power, and attention. As the creator of money, Nakamoto probably didn’t care about having more money, but power and attention are hard to resist. So why did Nakamoto refuse that privilege and keep a low profile?

Some people thought it was a marketing trick because mystery always attracts curiosity. But it's been 13 years since Bitcoin was born, if its founder used anonymity as a gimmick, the trick has dragged on too long. Perhaps Nakamoto had a better reason to hide: those who experiment with currency, thereby "desecrating" the sacred ground of institutions, often end up in trouble.

In 1998, a Hawaiian resident named Bernard von NotHaus began fabricating silver and gold coins that he dubbed Liberty Dollars. Nine years later, the U.S. government charged NotHaus with “conspiracy against the United States”. He was found guilty. “It is a violation of federal law for individuals . . . to create private coin or currency systems to compete with the official coinage and currency of the United States,” the F.B.I. announced.

Online currencies aren't an exception. In 2007, the federal government filed charges against e-Gold, a company that sold a digital currency redeemable for gold. The government argued that the project enabled money laundering and child pornography since users did not have to provide thorough identification. The company’s owners were found guilty of operating an unlicensed money transmitting business and the C.E.O. was sentenced to months of house arrest. 

Nakamoto seemed to be doing the same things as these other currency developers who ran afoul of authorities. He was competing with the dollar and he insured the anonymity of users, which made Bitcoin attractive to criminals. In winter 2011, a website was launched called Silk Road, which allowed users to buy and sell heroin, LSD, and marijuana as long as they paid in Bitcoin.

However, Lewis Solomon, a professor emeritus at George Washington University Law School, who has written about alternative currencies, argued that creating Bitcoin might be legal. “Bitcoin is in a gray area, in part because we don’t know whether it should be treated as a currency, a commodity like gold, or possibly even a security,” he said.

But gray areas are dangerous, which may be why Nakamoto built Bitcoin in secret. It may also explain why he developed the code with the same peer-to-peer technology that facilitates the exchange of pirated movies and music: users connect with each other instead of with a central server. There is no company in control, no office to raid, and nobody to arrest.

Sources: The NewYorker, CoinTelegraph, Livemint, Wikipedia