In Search of Satoshi - An Internet Mystery
On October 31, 2008, a mysterious figure under the pseudonym Satoshi Nakamoto published the Bitcoin whitepaper, outlining what he believed would be the future of electronic payments. Two months later, he released the software to the public. At first, he was active on forums, responding to emails and fixing crucial bugs. But two years later, he went silent. Today, Bitcoin has grown into a trillion-dollar project, yet its origins remain shrouded in mystery. Someone invented Bitcoin, gave it to us for free, and disappeared without a trace.
Satoshi Nakamoto made his final post on the Bitcoin forum on December 12, 2010, outlining some more work that needed to be done. The next day, he logged off for good. Later, Gavin Andreson announced that he would take over development. In April of next year, Mike Hearn, another early Bitcoin contributor, emailed Satoshi and asked him a series of questions. When asked if he was planning on rejoining the community at some point, he replied with “I've moved on to other things. It's in good hands with Gavin and everyone.”
This would be one of his last words, before vanishing three days later. So why would Satoshi leave such a successful project behind? Satoshi made his final statement on April 26, 2011, when he wrote to Andresen, “I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them.” Gavin replied, agreeing with Satoshis’s statement and informing him
that he had been invited to speak at an event organized by the CIA. He never responded. It looks like Satoshi was tired of the attention he was getting from Bitcoin and wanted to step out of the spotlight. One possibility is that Satoshi legitimately believed he was in danger. In his second to last forum post, he writes, “It would have been nice to get this attention in any other context. WikiLeaks has kicked the hornet's nest, and the swarm is headed towards us.” At this time, the U.S. government pushed companies like MasterCard and Visa to block payments to WikiLeaks. In response, WikiLeaks announced it would accept donations in Bitcoin. The community was generally positive about the publicity, as the price soared and more people saw Bitcoin as a viable currency. However, Satoshi thought otherwise. Bitcoin’s
Wikipedia page was removed and the coin started its reputation as a currency for criminals. In response to a user who asked WikiLeaks to “bring it on”, Satoshi replied, “No, don't ‘bring it on’. The project needs to grow gradually so the software can be strengthened along the way.” Is it possible that Satoshi was afraid of being doxxed and then apprehended by authorities. He was already intent on leaving Bitcoin and the interest from the CIA may have convinced him to vanish for good. However, this can also be interpreted as letting the community run itself. Bitcoin, as
a peer-to-peer network, should be governed by its users. So after years of solo-mining and crucial development, it’s possible that Satoshi believed Bitcoin was ready, so he moved on to other things. He didn’t want to be seen as a “mysterious shadowy figure” anymore and handed the project off. Today, Bitcoin Core thrives as an open-source project where anyone can contribute code, research, and documentation. It would be unfair for one person to make all the final decisions. Because of Satoshi’s opposition, WikiLeaks halted the launch of a Bitcoin donation channel until June, two months after his disappearance. Later, Bitcoin continued to gain notoriety
with its popular use in the Silk Road, an online market for selling illegal drugs, and when hackers stole millions of dollars from Mt. Gox, the largest Bitcoin exchange. But without Satoshi’s leadership, the community had to move on. Whoever Satoshi may have been, it’s clear that he walked away with a fortune in Bitcoin. In 2013, Sergio, an active Bitcoin forum user, discovered a pattern in the Bitcoin blockchain that allowed him to discover Satoshi’s holdings. He estimated that Satoshi mined around one million
Bitcoins, worth 50 [billion] dollars today, making him one of the wealthiest people alive. Put simply, mining is a guessing game where miners compete to find a valid hash. If they are successful, they are awarded with Bitcoin and attach a nonce to the blockchain. It starts at 0 but increases for every attempt at guessing the hash. Then, when the mining software is restarted, it resets back to 0. Because the blockchain is visible to everyone, Sergio complained about how this nonce could create a privacy vulnerability for miners.
He plotted every block mined with the x-axis as time and the y-axis as the nonce. Because nonce increases linearly with time, you can find straight lines and connect all the blocks to a single entity. But then he noticed something strange. Most of these lines had around the same slope, but there was a group of lines that were almost vertical, as if someone was mining with a supercomputer and not a consumer pc, as the others were using. He was sure that all of these blocks belonged to a singular entity and hypothesized that this was the work of Satoshi. The blocks started since the very beginning of Bitcoin and never stopped. They only reset back
to zero once in a while when Satoshi restarted his client, probably to back up his wallet. And what’s even more fascinating is that while most of the other blocks have been spent, Satoshi never moved his coins a single time. Satoshi’s massive fortune has yet to be touched. Further on-chain analysis from Whale Alert in 2020 reveals a great deal more about Satoshi’s mining patterns. First of all, it’s unlikely Satoshi had access to a supercomputer.
Instead, it looks like he was probably using multiple cores, with each core being assigned to multiple nonce values, a process known as multi-threading. We know this because certain nonces are missing from the blocks he mined. But the first mining software released by Satoshi only allowed for single-threading. It looks like Satoshi purposely weakened the power of other miners to give himself an advantage.
But he didn’t do this for his own self-interest. At the time, Bitcoin hardly had any value and miners simply mined the coin because they liked the project. Satoshi’s mining patterns show that he mined at a steady pace but decreased his mining speed over time as the Bitcoin network grew. He likely did this to protect the network from 51% attacks, where a single miner controls over 50% of the hash power and can falsely alter the blockchain. In the early stages of Bitcoin, Satoshi made sure he controlled at least 50% of the hashpower. But as more miners joined the growing network, Satoshi deemed the network safer and scaled back his efforts to give more block rewards to other miners.
So Satoshi was never in it for the money. He mined Bitcoin at a loss to foster long-term sustainability. The one million or so Bitcoins were just a byproduct of doing so, and they were not worth that much at the time. But this is no longer the case. Every time the price of Bitcoin reaches a new all-time high,
speculation of Satoshi’s fortune reemerges. What will he do with all of this untouched money? The first option that most people think about is cashing in. Satoshi could sell his Bitcoin through an anonymous peer-to-peer exchange. But the moment he moves any of his coins onto an exchange, the price of Bitcoin would plummet. Subsequently, selling a million Bitcoins would flood the market, devaluing the cryptocurrency even further. This would create fear, uncertainty, and doubt within
the Bitcoin community, possibly signaling that Nakamoto had lost faith in the currency. With this in mind, it’s unlikely that he would do such a thing. Amidst the 2008 financial crisis, his goal was always to create something that was open and fair for everyone. He developed Bitcoin for the people, not for himself. But surely, a cryptocurrency can’t be fair when the owner controls approximately 5% of the supply. That’s why some people believe Satoshi should destroy his coins. He could send all of it to a burner address. This would have the opposite effect as selling them.
By decreasing the total supply, the value of everyone’s Bitcoins would go up. Additionally, this would ease the mystery surrounding Satoshi. It would show that he really does care about the network itself and not about himself. This would eliminate the uncertainty of a single
figure controlling a million Bitcoin, with the possibility of dumping them at any moment. But it looks like this mystery will persist, possibly forever. This third possibility is that the money will never move. As for now, this seems like the most likely option. The first would cause Bitcoin to dump, the second would cause it to pump, but the third is just how things are. We don’t know why Satoshi is holding his coins. Maybe he doesn’t want
to suddenly create volatility in the price, maybe he lost the private keys, or maybe he’s dead. On March 6, 2014, Newsweek revealed the true identity of Satoshi Nakamoto in an infamous article titled “The Face Behind Bitcoin.” It identified Dorian Nakamoto, whose birth name is Satoshi Nakamoto, as the founder of Bitcoin. Besides the name, there was convincing evidence that Dorian was the creator of Bitcoin. He was laid off twice in the 1990s and fell behind on mortgage payments which led to the foreclosure of his house.
This may have given him the motive to create something against banks and governments. He encouraged his daughter to start her own business and “not be under the government's thumb". Newsweek tried to get more information from Dorian himself but was met with evasive answers.
His brother told Newsweek of Dorian’s capabilities but warned that “he’s worked on classified stuff”, and would “never admit to starting Bitcoin”. Dorian was described as a man of few words who screens his phone calls, anonymizes his emails, and, for most of his life, has been preoccupied with the two things for which Bitcoin has now become known: money and secrecy. After a few brief emails, he stopped responding with the mention of Bitcoin. So the reporter visited his house in California to interview him. Nakamoto called the police, and when asked about Bitcoin, responded with “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”. That was all he had said before retreating back to his house. The article led to a media frenzy, as reporters camped outside of his house in hopes of a quick interview. But for the most part, he dodged all questions. He eventually agreed to do a full interview with AP, where he denied all of the allegations. Dorian sent a letter to Newsweek, writing that their “false report has been the source of a great deal of confusion and stress for myself, my 93-year old mother, my siblings, and their families”. He just wanted people to respect his privacy.
The community ultimately felt sorry for Dorian, who was falsely thrown into the spotlight. They donated 102 Bitcoins to his wallet, where he later cashed out on an exchange. Even Satoshi himself came back for the first time in three years to say “I am not Dorian Nakamoto”. However, this account was hacked months later so this questions the authenticity of that message. In search of a sensational headline, Newsweek rushed reporting and cherry-picked evidence. There were only really two main convincing arguments: his name, and the quote “I am no longer involved in that and I cannot discuss it”. First, Satoshi Nakamoto is likely a pseudonym, as
it’s unlikely that such a secretive founder would use his real name. Next, Dorian later said that he thought the reporter was asking about his work for Citibank. He had worked on many classified projects with non-disclosure agreements and was worried the reporter would get him in trouble. In fact, he had never even heard of Bitcoin prior to the incident.
Overall, this fiasco shows what the real Satoshi was afraid of. But this doesn’t stop other people from claiming to be Satoshi for the sake of fame. In December 2015, an Australian computer scientist, Craig Wright, publicly came forward as the inventor of Bitcoin in interviews with Wired and Gizmodo. Unlike other hoaxes, who claimed they conveniently lost their keys, Wright stated he could definitively prove his identity with a cryptographic proof. In a subsequent interview with the BBC, he signed a message using a key known to belong to Satoshi Nakamoto. Although this was enough to fool many people, including Andreson,
the Bitcoin developer at the time, this was later proved to be yet another hoax. So how do we figure out his identity? According to his P2P foundation, he was born on April 5th, 1975, and lived in Japan. But this is most likely false reporting. Instead, we have to turn to his skills. See, Bitcoin was an incredibly revolutionary idea at the time,
and it took someone very unique to create it, not just any computer scientist. They needed to be an expert in C++, cryptography, peer-to-peer networking, and economics. It’s also likely that Satoshi is the identity of one person and not a group of people. In an interview, Andreson said that "Everyone who looked at his code has pretty much concluded it was a single person", based on how messy it was written. So there are a few candidates that fit these criteria.
Nick Szabo was an early pioneer in the cypherpunk movement, a group of people who advocated for strong cryptography and privacy-enhancing technologies. Since 1998, he had been working on a project called Bitgold, a peer-to-peer digital payment system similar to Bitcoin. However, Szabo was unable to find a solution to the double-spending problem, where the same currency can be spent twice. He reached out for help but stopped after the Bitcoin whitepaper was released. Bitcoin took many of the key concepts of Bitgold and expanded on it, solving the double-spending problem through a universal ledger system. Although Szabo’s work was incredibly similar to Satoshi’s, he was not referenced in the whitepaper. Additionally, stylometric analysis shows that Szabo’s writing
style is very similar to Satoshi’s. However, Szabo repeatedly denies these allegations. Hal Finney joined the [cypherpunks] email list early on. In 2004, he created the reusable proof of work system, which would later be used in Bitcoin hashing. After seeing Satoshi’s original email, he became fascinated by the idea and frequently corresponded with Satoshi. He famously received the first Bitcoin transaction ever of 10 Bitcoins from Satoshi himself. Finney lived a few blocks away from Dorian Satoshi Nakamoto, which might have been the inspiration of his pseudonym.
In 2009, Finney was diagnosed with ALS, which slowly left him paralyzed. Interestingly, the severity of this disease closely followed Satoshi’s disappearance. This, combined with his capacity to have created Bitcoin have led some people to speculate that Satoshi and Finney are the same person. During the last year of his life, Finney was extorted multiple times, with the attacker usually demanding a large sum of Bitcoin. However,
Finney repeatedly stated that he was not Satoshi so he did not have access to that many coins. He was already struggling to finance his medical expenses, and sold most of his early Bitcoin. Finney died in 2014 and chose to have his body cryopreserved. Adam Back, a British cryptographer, was also part of the [cypherpunk] community. In 1997, he invented Hashcash, a mechanism to prevent spam emails. With Hashcash, your computer would have to do some computational work before sending an email, which would only take a few seconds, but would prevent someone from mass spamming thousands of emails per second.
Before releasing Bitcoin, Satoshi contacted Back and his proof of work algorithm would later be implemented in Bitcoin mining. Suspiciously, Back appeared on the BitcoinTalk forum after Satoshi’s disappearance, and his first posts make him sound like he had always been around. Back worked on Bitcoin Core and co-founded Blockstream in 2014. All of Satoshi’s emails have been published by the receivers, but Back claims he purposely deleted them to protect Satoshi’s identity.
In 2011, Michael Clear was suspected of being Bitcoin's founder, but in an interview, he said “I’m not Satoshi, but even if I was I wouldn’t tell you.” And this is the problem with trying to identify a public figure as Satoshi. Until someone actually signs a message with one of Satoshi’s private keys, we can never be completely certain of his identity. But it looks like this will never happen so long as Satoshi chooses to remain anonymous. We can create convincing arguments of why someone could be Satoshi, but there will always be enough doubt for plausible deniability. Should we care who Satoshi Nakamoto actually is? Does it even matter? Not really.
Satoshi believed that the idea was far more important than the people behind it. Bitcoin was designed to be protected from the influence of charismatic leaders, even if their name is Gavin Andresen, Barack Obama, or Satoshi Nakamoto. It's ok that Satoshi is no longer here to lead Bitcoin. His legacy will undoubtedly live on.
But like all mysteries, it's fun to speculate about what really happened. Why did someone create Bitcoin only to leave years later? What will happen to the money? And who really is Satoshi Nakamoto? It’s unbelievable how someone could have created something so revolutionary, only to vanish into the darkness, as we continue, in search of Satoshi.