The Myth of Satoshi Nakamoto

Nora Khan

In March of 2014, Newsweek journalist Leah McGrath Goodman claimed to have outed Dorian S. Nakamoto as the enigmatic founder of Bitcoin. Goodman’s cover story supposedly debunked the prevailing theory: that Nakamoto is a group of genius developers using “Satoshi Nakamoto” as a pseudonym.

From the moment the digital currency was born, the media has tried its best to unveil its creator. Dorian, a 64-year-old former engineer living outside of Los Angeles, looks alternately hassled and exasperated in Newsweek’s photos, holding his hands up before reporters.[1]

Dramatic anecdotes about Dorian made the match seem plausible: he had worked under classified cover for the U.S. military and defense corporations, possibly building “warships”; family described him as obsessed with anonymity.[2] He’d been loosely employed for the last decade with little paper trail and had suffered a home foreclosure. Dorian, Goodman argued, had both the know-how and motivation to create an anti-authoritarian code that could (technically) disrupt the banking state.[3]

Soon after the piece ran, Dorian denied his role in creating Bitcoin, stating that he has never “worked on cryptography, peer to peer systems, or alternative currencies.”[4] He does not own a fortune estimated at many hundreds of millions of—at one point, a billion—American dollars. He is planning to sue Newsweek, claiming distress from the global attention from the piece.[5]

As of December 2014, it was widely accepted that Dorian is most likely not the creator of Bitcoin. For one, Dorian’s programming experience does not necessarily link him to creating an advanced cryptographic protocol. The name Satoshi Nakamoto is extremely common in Japan, and there is no evidence that Bitcoin’s founder ever wrote in Japanese.[6] The trail of Nakamoto’s encrypted e-mail accounts “would take something like a court order to open them up for investigation,” which is impossible without proof of illegal activity.[7]

At its highest point in 2014, Bitcoin had a market cap (USD) of $11.4 Billion.[8] Today, one Bitcoin is worth appx. $382 USD.[9] It’s estimated that 10,000 Bitcoin from 2010 are today worth $750,000.[10] A considerable number of the original investors are millionaires.[11]

The growth has baffled more traditional investors. Driven in large part by belief in how valuable its underlying technology is, Bitcoin’s value regularly tops the biggest tech stocks.[12] Executive Director of the Bitcoin Foundation, Gavin Andresen, described Bitcoin as a “huge $8 billion project” sustaining a worldwide economy, whose underlying code has to be refined and maintained with care.[13]

Bitcoin is not controlled by any government. This “hedge against the entire global currency system,” however, is on the radar of nearly every major American regulatory body, from the FBI to the SEC to the Federal Reserve.[14]

The burning intrigue over identifying Nakamoto reflects a wider curiosity about Bitcoin itself, which the creator defined in 2008 in a white paper.[15] His argument was straightforward: People needed better ways to pay for goods without a third party, like a bank, that commodifies trust. The traditional model that grounded most electronic payments was inherently flawed and too expensive. In allowing one point of authority to be the arbiter of trust, people would always be at risk of becoming victim to corrupt or compromised systems.

Nakamoto’s solution was elegant. A currency stored in code, on hard drives. One Bitcoin would represent a cryptographically signed block of transaction histories, produced along a massive, peer-to-peer ledger, shared among computers all over the world.

A single person could produce money by syncing her computer with the Bitcoin network and verifying transactions via cryptographic proof. Further, she could buy and sell from someone in Algeria without running through local banks or regulatory institutions.

Popular speculations on the founder’s identity remain: that he is Bit Gold developer Nick Szabo; that he was cypherpunk cryptographer Hal Finney, who passed away in August.[16] At the moment, Nakamoto could be one or many scholars, mathematicians and programmers spread around the world.[17]

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1. Goodman, Leah McGrath. "The Face Behind Bitcoin." Newsweek, March 6, 2014. accessed at http://www.newsweek.com/2014/03/14/face-behind-bitcoin-247957.html
2. Ibid.
3. Ibid.
4. “Dorian Nakamoto’s Statement Received on March 19, 2014,” appended to Goodman, “The Face Behind Bitcoin.”
5. Koebler, Jason. "Dorian Nakamoto Wants to Sue Newsweek, But He Probably Has No Case." Motherboard/VICE, October 14, 2014. accessed at http://motherboard.vice.com/read/dorian-nakamoto-wants-to-sue-newsweek-but-he-probably-has-no-case/
6. Tabuchi, Hiroko. "Will the Real Satoshi Nakamoto Please Stand Up?” New York Times, March 11, 2014. accessed at http://dealbook.nytimes.com/2014/03/11/will-the-real-satoshi-nakamoto-please-stand-up
7. Hall, Charlie. "The Ghost of Bitcoin." Polygon, September 4, 2013. accessed at http://www.polygon.com/features/2013/9/4/4660780/bitcoin-satoshi-nakamoto.
8. Bitcoin Market Capitalization. accessed at https://blockchain.info/charts/market-cap.
9. Bitcoin Market Price. accessed at https://blockchain.info/charts/market-price
10. Merchant, Brian. “This Pizza Cost $750,000.” Motherboard/VICE, March 26, 2013. accessed at http://motherboard.vice.com/blog/this-pizza-is-worth-750000.
11. Raskin, Max. “Meet the Bitcoin Millionaires.” Bloomberg Businessweek, April 10, 2013. accessed at http://www.businessweek.com/articles/2013-04-10/meet-the-bitcoin-millionaires.
12. Selkis, Ryan. “The Easy Way to Measure Bitcoin’s Fair Market Value.” Investopedia. accessed at http://www.investopedia.com/articles/investing/050914/easy-way-measure-bitcoins-fair-market-value-doityourself-guide.asp.
13. Goodman, “The Face Behind Bitcoin.”
14. Ford, Paul. "Bitcoin May Be the Global Economy's Last Safe Haven." Bloomberg Businessweek, March 28, 2013. accessed at http://www.businessweek.com/articles/2013-03-28/bitcoin-may-be-the-global-economys-last-safe-haven.
15. Nakamoto, Satoshi. “Bitcoin: A peer-to-peer electronic cash system.” (2008). accessed at https://bitcoin.org/bitcoin.pdf.
16. Popper, Nathaniel. “Hal Finney, Cryptographer and Bitcoin Pioneer, Dies at 58.” New York Times, August 30, 2014. accessed at http://www.nytimes.com/2014/08/31/business/hal-finney-cryptographer-and-bitcoin-pioneer-dies-at-58.html.
17. Biggs, John. "Who is the Real Satoshi Nakamoto? One Researcher May Have Found the Answer." Techcrunch, December 5, 2013. accessed at http://techcrunch.com/2013/12/05/who-is-the-real-satoshi-nakamoto-one-researcher-may-have-found-the-answer/