An Australian entrepreneur called Craig Wright (pictured above) has spent the last few months trying to prove that he is someone called Satoshi Nakamoto. Yesterday he gave up on his quest, but the mission to reveal who Satoshi really is remains important.
Satoshi Nakamoto is the pseudonym of the presumed creator of bitcoin, a digital currency that is pegged to the cost of computation. Wright hired a PR firm to sell himself to the BBC, the Economist and GQ as Satoshi, and set up an elaborate proof demonstration in a London hotel room. He also wrote a blog post attempting to explain his claim.
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Within minutes of his story going live, Wright’s proof was torn apart by encryption experts and the bitcoin community. Patrick McKenzie, a widely respected programmer, posted his attempt to . Security researcher Dan Kaminsky posted evidence that the digital signature which Wright said proved he is Satoshi was actually .
Speculation over the identity of bitcoin’s creator has gone on for years, with investigative journalists fingering a Japanese mathematician, a Finnish sociologist and the creator of Silk Road — the online black market — among others.
Will the real Satoshi…
There are two reasons why it matters who the real Satoshi Nakamoto is. The less important one is that as the inventor of the currency, he was generating (“mining”) bitcoin back when it was very easy to earn what would now be thousands of dollars in a few seconds, using just a simple desktop computer. As a result, Satoshi is estimated to hold a million bitcoins – worth around $452 million today – which amounts to roughly one-twelfth of all bitcoins currently in existence. To put it another way: if the bitcoin market was the size of US GDP, Satoshi would be an order of magnitude wealthier than Bill Gates. This translates into huge market influence, should Satoshi ever choose to sell.
The more important reason is that Satoshi would have the most powerful voice in debates over how bitcoin ought to be run. And the community is already embroiled in such a debate.
What makes bitcoin so special is its incorruptibility. Every transaction is automatically and indelibly recorded in a public ledger, shared across thousands of computers on the bitcoin network. Transactions are gathered into what is known as a “block” and added to the ledger.
The blocks are mined by giving computers hard mathematical problems, with a new block created only when the problem is solved. The question that the community is tackling is to do with the size of these blocks, which determines how many transactions can be added in one go.
The best explanation of the debate . Goucher explains that the “little-blockians” want the block sizes to stay small so that anyone with a computer can work with the currency. The “big-blockians” want bitcoin to become a universal currency, making blocks bigger so they can handle transactions on the scale of banks. The problem with this is that ordinary computers wouldn’t be able to handle the currency any more. Having Satoshi come down on one side of the argument or the other would probably tip the balance in its favour.
Ultimately, the Wright episode tells us little about Satoshi or bitcoin, but a lot about how trust works in the online age. It is no longer enough to have other humans “vouching for you”. The only way to prove you invented some cryptography is by using that cryptography in a way that convinces the online community that has developed around it.
All Wright had to do was encrypt a piece of text with a private key that we know Satoshi used, and publish this online for anyone to verify. But he didn’t do it.
“I believed that I could do this,” he after taking down his debunked proof. “I believed that I could put the years of anonymity and hiding behind me. But, as the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot.”
When it comes to bitcoin, courage has nothing to do with proof.
