A satoshi is the smallest unit of a bitcoin, equal to just 0.00000001 BTC. Satoshi Nakamoto is the creator of Bitcoin and, coincidentally, the first person ever to implement a blockchain and deploy a decentralized digital currency. See the connection here? (Feels like he deserves a little more credit than one-hundred-millionth of a bitcoin though.)
Despite the fact that Bitcoin was born as an open-source communal project that has openness as one of its pillars, one riddle still remains unsolved: who created Bitcoin, or rather, who exactly is Satoshi Nakamoto?
One thing is for sure: the code that established the creation of Bitcoin originated with Satoshi Nakamoto, but this is pretty much all we know. It is also reasonable to assume that Satoshi did not work on the project alone. Logically, some of the early Bitcoin developers have been pointed to as possible creators of Bitcoin, but none of the existing hypotheses is credible enough to-date (details provided later on).
Let us start with a bit of history, outlining the facts that are universally acknowledged. In 2007, as Nakamoto himself claims, the Bitcoin code was written, and already in November 2008, the Bitcoin White Paper was published. The 9-page academic paper described “a new electronic cash system that’s fully peer-to-peer, with no trusted third party”, thus laying the groundwork for the Bitcoin protocol.
The next milestone was reached when the first-ever Bitcoin block (the genesis block) in 2009, which had a reward of 50 bitcoins, was mined: this marked the creation of cryptocurrency. A cryptic message it bore was as follows:
“The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”
The message refers to The Times headline from 3 January 2009. Some of the interpretations include a timestamp for the genesis of Bitcoin as well as an ironical comment on the instability caused by conventional banking. Fun fact: it took Satoshi 6 days to mine the genesis block – the same amount of time the Christian God needed to create the world.
What followed afterward was the establishment of the Bitcoin community with the Bitcointalk forum and bitcoin.org website. Satoshi collaborated heavily with the community in order to modify and improve the underlying Bitcoin protocol. Then two years later, in December 2010, all of a sudden Satoshi handed the reins to Gavin Andresen and thus ended his involvement with Bitcoin. Not forever though: he made a comeback in the spring of 2011 to leave a final message, in which he explained that he “moved to other things” and that Bitcoin was safe in the good hands of Gavin and everyone in the community. The world has not heard of the secretive creator of the first cryptocurrency ever since.
11 years ago, on Halloween eve, someone under the name of Satoshi Nakamoto published a paper describing the “Bitcoin P2P electronic cash system” on the Cryptography Mailing List at metzdowd.com – a message service run by a group of cypherpunks.
At the time the paper was published, many concepts underlying Bitcoin were already known, and cryptocurrency prototypes such as Bit Gold had existed. However, the innovative idea of Satoshi was about ensuring that the users trust one another and the network without relying on intermediaries – the ideology of bitcoin much talked about today.
Nowadays, when the cryptocurrency has gained so much attention and millions of dollars are poured into startups striving to capitalize on the underlying technology, it is hard to believe that Satoshi’s announcement gained little attention or approval even among the cryptography enthusiasts. One of the few positive comments was left by Hal Finney, who also happened to have received the first test transaction and is considered one of the possible identities of Satoshi Nakamoto.
In the paper itself, Satoshi emphasizes that “double-spending is prevented with a peer-to-peer network”, no mint or third parties are involved, and the participants can stay anonymous if they wish to.
Published more than a decade ago, the whitepaper does not help in solving the problems that Bitcoin is facing today, namely slow processing speed and high transaction fees. Nevertheless, it is fairly short, well-written and surprisingly accessible, so reading it is an interesting experience for anyone striving to deeply understand the principles that made Bitcoin possible. Read it here: https://bitcoin.org/bitcoin.pdf.
Don’t let the minuscule value of satoshi fool you: Satoshi, if indeed a single individual, is estimated to be one of the richest people on the planet, possessing about 5% of the total Bitcoin supply.
The first 36 000 Bitcoin blocks were mined from the same computer, which could logically only belong to Satoshi. Keeping in mind that a reward for a single block was 50 BTC at the time, and the fact that 63% of those bitcoins were never spent, Satoshi is estimated to be left with 1.1 million BTC. Just imagine the volatility of Bitcoin if Satoshi were ever to sell them! As of December 2017, which marked the peak of the Bitcoin price, the net worth of his assets was around 20 billion dollars, making him the 44th richest person in the world at the time. Wow.
Speculations about Nakamoto’s identity are probably the most interesting part of his story. Despite being pretty secretive and not revealing any personal details when discussing technical matters, some bits of information can be inferred from his active years. On this P2P Foundation profile, he claimed to be a 37-year-old man residing in Japan. Many speculations arise though because of his perfect use of English, as well as the lack of documentation or labeling of his software in Japanese.
Occasional British English comes through in his forum postings and source code comments (e.g. the phrase “bloody hard”). This has led to speculations about his Commonwealth origin. Furthermore, remember that encoded text from the genesis block? Yep, he was probably reading the London’s The Times at the moment of Bitcoin’s inception. And just in case that is not convincing enough, some community members actually graphed the timestamps of 500 of Nakamoto’s forum postings: there were almost no posts between 5 a.m. and 11 a.m. Greenwich Time. This corresponds to 2 p.m. to 8 p.m. Japanese time, which would suggest a weird sleeping pattern for someone living in Japan. The fact that the pattern held true even in the weekends suggests that Satoshi was actually asleep at the time.
Some of the early members of the Bitcoin community, as well as seemingly non-related individuals, have at different times been speculated to be Satoshi.
Hal Finney was a pre-bitcoin cryptography enthusiast and the second person (after Satoshi himself) to use the software, file bug reports and suggest improvements. A writing analysis consultant was employed to investigate the writing style of Hal Finney, and it presented the closest resemblance to Satoshi’s style out of all the potential candidates. However, the emails between Nakamoto and Finney and his bitcoin wallet history, which included the very first bitcoin transaction from Satoshi, which Hal forgot to pay back, combined with strong denial from Finney himself, suggest that he may not be the one. Hal Finney died of amyotrophic lateral sclerosis in 2014.
Nick Szabo, a Hungarian American, is another cryptocurrency enthusiast and an early community member who published a paper on “Bit Gold” – the main conceptual precursor of bitcoin. Remarkable similarities between his writing style and that of Nakamoto have been pointed out. One of the curiosities is that Satoshi referred to the ideas of Bit Gold constantly, but never mentioned Bit Gold directly. He has been in communication with Hal Finney and Dorian Prentice Satoshi Nakamoto since early Bitcoin times. Szabo has continuously denied being Satoshi.
Dorian Prentice Satoshi Nakamoto (the latter part being his birth name) is a Japanese American and early adopter of Bitcoin. Besides the name, some of the potential indicators are his libertarian background and university training in physics. By the way, he used to live just a few blocks away from Hal Finney. During one interview, Dorian seemed to have confirmed his identity by saying: “I am no longer involved in that and I cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.” It was later revealed that he misunderstood the reporter’s question and was talking about his former military service. He has also denied being Satoshi.
Another possible candidate is an Australian academic, computer engineer and entrepreneur Craig Steven Wright, who, contrary to the previously described individuals, actually claims he is Satoshi. To support the claim, he provided controversial cryptographic proof in his blogpost, which left many prominent community members unconvinced. Nevertheless, Wright’s statement was supported by several important community members, including Gavin Andresen, the developer who took over Bitcoin after Satoshi resigned. Just this year, Wright went full-on with his claims and registered the copyright for the Bitcoin White Paper and the initial Bitcoin code; he also reportedly started to sue people who claimed he was not the real inventor of Bitcoin.
The truth is, we may never be able to reveal the enigmatic identity of the creator of Bitcoin. The implications of revealing Satoshi’s identity would most likely result in serious doubt from the Bitcoin community and big problems with the global power structures. One thing is for sure though: Satoshi’s endeavor will strive for years to come, hopefully leading to a world where decentralization and digital privacy are not considered a utopia.