Satoshi Nakamoto: The mysterious entity behind Bitcoin
If you have heard of Bitcoin, then chances are, that you probably have heard of the name Satoshi Nakamoto. Satoshi Nakamoto has long been credited for being responsible for the creation of Bitcoin. The mysteries surrounding the identity of Satoshi Nakamoto are quite intriguing. Nobody really knows for sure, who is Satoshi Nakamoto or, what, Satoshi Nakamoto is. Satoshi Nakamoto is a pseudonym and it could be the name of a person, a group, or, even an organization.
So today here at BlockChainBiome, we’ll be discussing The mysterious entity behind Bitcoin and will try to solve all your questions regarding him.
Bitcoin has received so much press lately that you would have to be living under a rock to not know what it is. But, in the off chance that you have not heard of Bitcoin, let me try to explain. Bitcoin is a cryptocurrency that was largely created with the intention of removing trusted third parties. When Satoshi Nakamoto came up with this idea for Bitcoin, Nakamoto’s intention to create a distributed trust system was very clear. Nakamoto wanted to get rid of the middlemen, who would take a large chunk of the initial amount, for themselves. Satoshi Nakamoto also wanted to ensure that the privacies of the sender and receiver were well maintained and not violated. The entire system was intended on eliminating decentralization, which, is a concept prevalent in most transaction systems.
Satoshi Nakamoto, in the Bitcoin whitepaper, mentioned a few essential properties of Bitcoins and some of the prevalent problems that it could potentially solve.
These properties were:
- Prevention of double-spending using a peer to peer network
- Getting rid of mint or third parties
- The anonymity of the participants
- New currency can only be created through Proof of Work
Prevention of double-spending using a peer to peer network
Double spending is a flaw that exists in digital transactions. Simply put, double spending is a problem that exists when the same digital cash is used in two transactions. If I were to pay two different people, say, A and B with the same Bitcoin, and if both the transactions get validated at the same time, it leads to the problem of double-spending. Satoshi Nakamoto devised a way to get around this problem using a peer to peer network.
In a Bitcoin network, if I were to carry out the above transactions of sending the same bitcoin to two different people, first, both the transactions would be stored in the pool of unconfirmed transactions. Only the first transaction that gets confirmed will be added to the blockchain network. Since every block is timestamped and links to the previous block, it would be impossible to add the second invalid transaction.
The network also peers to peer. This means that there is no central figure that calls all the shots. Each node is an active part in the network and the nodes are responsible for validating transactions.
Getting rid of mint or third parties
Third parties not only extract a considerable proportion from the money that is being transacted, but also, can access information pertaining to the sender and receiver. This causes for a loss of secrecy and privacy. Satoshi Nakamoto’s proposal intended on removing these third parties.
Historically, if I had to send 100 USD from the United States to India, in all likelihood, only around 90 USD would reach my intended receiver. The rest of the amount would be gobbled up by third parties such as banks, insurance companies, brokers and other middlemen. Nakamoto’s proposal got rid of these problems by eliminating these third parties entirely.
The anonymity of the participants
Blockchain technology, on top of which, Bitcoin was built by Satoshi Nakamoto, ensures that the participants are anonymous. There is no need for individuals to furnish their details to any entity in the network, or, to the network itself.
New currency can only be created through Proof of Work
Satoshi Nakamoto also mentioned another brilliant property of Bitcoin in the whitepaper. This property ensured that new Bitcoins could be generated only after carrying out the computationally intensive task, called the Proof of Work. This was adopted from HashCash’s style of Proof of Work. Proof of Work can be thought of like a puzzle that needs to be solved.
Proof of Work can only be carried out by solving a certain puzzle through brute force. The cryptographic hash on the transactions need to be solved and since these hashes generated are mostly random, the solution also remains random. There is no methodology to solve this puzzle. It must be carried out through brute force. Currency in the system can only be added through this Proof of Work.
Who is Satoshi Nakamoto?
Let’s start from the beginning.
According to Wikipedia, Satoshi Nakamoto first registered on a research website called P2P, in 2015, as a Japanese man, born on April 5th, 1975. There is a lot of conversation and discussion over whether this country of origin and date of birth are actually accurate for this mysterious entity. Considering the fact that Nakamoto, to this day, chooses to have his/her identity concealed, it is highly likely that the information pertaining to the country of origin, and date of birth, are indeed, inaccurate.
Nakamoto then published the Bitcoin white paper titled, “Bitcoin: A Peer-to-Peer Electronic Cash System” in 2008. The first block in the bitcoin network is said to have been mined by Nakamoto in early 2009. This first block, commonly referred to as the genesis block, had the following message embedded in it:
“The Times 03/Jan/2009 Chancellor on brink of the second bailout for banks.”
The above text refers to the headline printed in The Times newspaper in the January 3rd edition of 2009. This leads many to believe that Nakamoto was perhaps, of English origin since The Times is an English newspaper. With this, Bitcoin was born, and, the rest, is history.
As one would expect, there has been a lot of conversation regarding the identity of Satoshi Nakamoto. Speculation has been rife, and many people have devised several theories on who Satoshi Nakamoto could really be. While many people have claimed to be Nakamoto, there really is no telling who is Nakamoto really.
The Potential Suspects
Hal Finney was a computer scientist and rumored to be the real Satoshi Nakamoto. Hal Finney was the neighbor of Dorian Nakamoto, who is also suspected of being the real Satoshi Nakamoto. Hal Finney was the second user of the Bitcoin software. He was also involved in the very first transaction of Bitcoin with Satoshi Nakamoto.
The fact that Hal Finney received the very first payment of Bitcoin has been considered enough proof to suggest that he is the real Satoshi Nakamoto. The belief that Finney is indeed the real Satoshi Nakamoto is fueled further by the fact that Finney was one of the earliest people using the Bitcoin software and was responsible for filing bug reports and improving the Bitcoin software. In addition, the writings of Finney were also very similar to the writings published by Satoshi Nakamoto and it is a popular belief that Finney was a ghost-writer who assumed his neighbor’s name to create Bitcoin.
Hal Finney, however, denied all claims that he was Satoshi Nakamoto. Sadly, he was not around to see Bitcoin grow to the extent that it has, in today’s world. Finney died in 2014 due to Amyotrophic Lateral Sclerosis (ALS). He spent a lot of the Bitcoin that he had on treatment for ALS.
Nick Szabo was a computer scientist and cryptographer. He is responsible for producing the concept of ‘Smart Contracts’. He was credited for creating ‘bit gold’, which, is a precursor to bitcoin. A stylometric analysis determined that Szabo’s style of writing was very similar to the style found in the Bitcoin whitepaper. This analysis provided more argument in support of the claim that Szabo was the real Nakamoto. Nick Szabo was known for using several pseudonyms and it is rumored that Satoshi Nakamoto just happened to be one of the pseudonyms that he assumed.
Several people are convinced that Szabo is actually Nakamoto due to his continued presence in the Bitcoin scene. A comment on his blog about digital currency further created suspicion. This comment made clear his intentions of creating a live version of digital currency. He made this comment even before Bitcoin had come into existence.
Dorian Prentice Satoshi Nakamoto
The name is enough reason to classify this man as a suspect, but, there is another reason why people believe that he really is the founder of Bitcoin. When asked by an interviewer about Bitcoin, he said, “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.” Dorian Nakamoto, however, later denied that he is involved with Bitcoin and that he had misinterpreted the question asked by the interviewer. It is hypothesized that someone who knew Dorian Nakamoto created Bitcoin and Nakamoto was fully aware and perhaps, even a part of the process of the creation of Bitcoin.
Even today, several publications and online blogs and forums refer to Dorian as the real Satoshi Nakamoto despite his constant claims that he is not the real Nakamoto.
Craig Wright, an Australian academic, claimed that he was the real Nakamoto. He even produced cryptographic evidence of it. He demonstrated assigning of a message with the public key that is associated with the first ever transaction done on Bitcoin. However, many Bitcoin developers said that the evidence provided by Wright did not prove anything. They say that it was all just an elaborate ruse.
Doubts still remain on whether Craig Wright was actually telling the truth. However, his claims were further strengthened when a hacker, who claimed to have hacked into Wright’s email, found out that the pseudonym was a joint pseudonym used by Wright and David Kleiman, who died in 2013.
Satoshi Nakamoto net worth
It is a popular belief that Satoshi Nakamoto owns over a million Bitcoins. That value is equivalent to over 3.7 billion USD according to today’s market. The value of Bitcoin reached its highest when it was valued at 19,783 USD. At that price, the Bitcoin owned by Nakamoto would be worth close to a whopping 20 billion USD!
It is not known whether the real Satoshi Nakamoto is still alive or if the real Nakamoto wants anything to do with Bitcoin right now. Many people believe that Nakamoto is dead and a million bitcoins he owned are frozen and inaccessible. Several people are worried that Nakamoto could also potentially crash the Bitcoin market. This is because Nakamoto owns nearly 5% of all Bitcoin that can be mined.
Why did Satoshi Nakamoto hide his identity?
There are two hypotheses that could answer this question.
Good Satoshi hypothesis
This hypothesis states that Nakamoto continues to keep his identity a secret to ensure that the creator does not overshadow the technology itself.
Bad Satoshi hypothesis
This hypothesis suggests that Nakamoto wanted to keep all his mined Bitcoins for himself and revealing his actual identity would have caused some trouble in his efforts to do so.
Perhaps, the determination of the identity is extraneous. The renowned developmental psychologist and psychoanalyst, Erik Erikson once said, “In the social jungle of human existence, there is no feeling of being alive without a sense of identity”. Nakamoto might have chosen to keep his identity hidden to ensure that the existence of the individual as the creator of Bitcoin does not overshadow Bitcoin itself.
There is no denying that the individual or organization that created Bitcoin had their reasons for concealing the identity. The bombardment of questions and the constant limelight, along with a potential threat to life could be some of the assumed reasons for remaining anonymous. Perhaps, the decision to hide the identity was made in order to ensure that all the limelight was on the technology and not the people behind it. Often, people get so engrossed in the identities of the individuals that they forget about the contribution. Perhaps, not knowing the identity of the people behind Bitcoin is in the best interests of this well-intended technology.