The story of Bitcoin is fascinating and begins, as all good stories do, with a mystery.
In 2008, the original white paper describing how Bitcoin would work was produced by someone named Satoshi Nakamoto. Nakamoto left the Bitcoin project in 2010 and, essentially, disappeared. For years, no one claimed to be Nakamoto. Some thought the name was an actual individual; others suspected it might be a cover for a group of people. Trying to discover Nakamoto’s true identity became popular among crypto investors, journalists, and other researchers
We’ll start by providing a bit of history about Nakamoto’s most popular creation: the world’s most famous digital currency.
Who Started Bitcoin?
- The original white paper that proposed Bitcoin was authored by a mysterious figure known as Satoshi Nakamoto.
- Nakamoto, possibly a pseudonym used by a team of people, left the project in 2010 and disappeared.
- Since then, numerous people have tried to discover Nakamoto’s true identity. Suspects include Australian computer scientist Craig Wright and his former business partner David Kleiman.
How Did Bitcoin Start?
Although other cryptocurrencies were in development prior to Bitcoin, the risk of a phenomenon called double-spending was prominent. In Bitcoin’s original white paper, Nakamoto stated that, once launched, Bitcoin would become a peer-to-peer electronic cash system that could reduce the risk of double-spending. It would accomplish this by running on a network that could authenticate, prove, and then record every transaction — forever — in a digital ledger.
This ledger would be built from small packets of transaction data known as “blocks.” As more and more data from Bitcoin transactions were accumulated, blocks would be assembled together into a blockchain. That blockchain, which was designed to be distributed across every computer on the Bitcoin network, would include key data on every transaction, most notably, the digital wallet addresses of all participants and the amount of digital currency exchanged.
Nakamoto also suggested that Bitcoin would be safer and less risky for consumers to use because it wouldn’t rely on a third-party system like a credit card company and, therefore, transactions couldn’t be suddenly reversed. Since Bitcoin is easier to review for online transactions because of the blockchain, the risk of chargebacks would be minimal.
The Appearance of Nakamoto … Kind Of
No public documents suggest which person — or group of people — is Nakamoto. Additionally, Nakamoto’s identity has never been both revealed and then proven. But one person has claimed responsibility for being a part of the Nakamoto moniker: Australian computer scientist Craig Wright.
Wright has been involved in the Bitcoin community for a long time and was even named as Nakamoto by Wired in 2015. Four days later, Wired retracted its claim based on additional evidence and now believes that Wright’s claim to be Nakamoto is false. But that didn’t stop Wright from continuing to make his claims.
A year later, in 2016, Wright sat down on camera with the BBC and admitted to being a part of the team that operated collectively as Nakamoto. The BBC claimed that “Mr. Wright has provided technical proof to back up his claim using coins known to be owned by Bitcoin’s creator.” They also ran an article detailing exactly how Wright proved he was Nakamoto.
Critics with a deep understanding of Bitcoin, encryption, and cybersecurity continue to claim that the proof Wright provided to the BBC could have been faked.
One thing is certain: Wright’s old business partner, David Kleiman, is likewise suspected to be a part of the team that collectively operated as Nakamoto. As a result, his estate sued Wright for half of the original 1.1 million bitcoins that were minted when the currency launched in 2009. Today, that stack of coins, known as “Satoshi Coins,” is worth tens of billions of dollars.
When the verdict was handed down at the end of 2021, Wright was cleared of six of the seven charges brought against him. He was found guilty of one and ordered to pay over $100 million to the company that he founded with Klieman. Some argue that the evidence in the trial made clear that Wright was Nakamoto.
Others say the opposite, as the trial wasn’t about the identity of Nakamoto but, instead, whether or not someone had been wronged legally or financially.
In the end, owners of Bitcoin need to remember that, although the official website says that all Bitcoin users control the currency, Nakamoto’s actions or identity can heavily influence the value of all Bitcoins.
Is Nakamoto’s Influence Waning?
Satoshi Nakamoto may be revered in the Bitcoin community, but many have moved on from the chaos and uncertainty of proving who controls that identity. Some crypto enthusiasts and experts have issues with Nakamoto’s original Bitcoin plans:
- Nakamoto claimed that the miners who produce new currency tokens are just the nodes (or computers) responsible for operating the blockchain. In truth, anyone with a computer and access to mining software and a mining pool can mine for Bitcoin.
- Nakamoto claimed that Bitcoin transactions would instantly happen. This is false, as all transactions require mining to verify and then process transactions. Although that might have taken less time when Bitcoin was first launched, with more and more people now using the platform, the blockchain network is now slower and more crowded.
- Bitcoin is just code; it’s software. That software is open-source and, therefore, publicly available. As a result, copies of that software, called “forks,” have been launched to produce new currencies such as Bitcoin Gold and Bitcoin Cash. If new currencies are being forked off of Nakamoto’s original ideas and code, it suggests that Nakamoto’s impact isn’t as strong as it once was.
Nakamoto hasn’t been outwardly involved with the Bitcoin platform for years. In that absence, it’s no surprise that the founder’s impact isn’t as strong today as it once was. When viewed through the lens of financial history, this shouldn’t be surprising.
Is History Repeating Itself?
At one point in history, salt was a valuable currency. So were shells, tea, cheese, and animal fur. Today, we look back at these old currencies and wonder how anything other than gold or silver could have been used as common currencies. But they were. Over time, currencies change because what’s considered valuable changes. The arrival of Bitcoin is just financial history repeating itself.
After all, what is Bitcoin? It’s a currency of limited quantities that holds intrinsic value. That value is based on how many people use and have faith in the currency. No different, really, than any other currency.
Maybe Bitcoin will last as long as gold or silver. Maybe it won’t. But Nakamoto’s creation isn’t unusual when examining the history of money.
Will We Ever Know for Certain Who Nakamoto Is?
The more important question to ask is this: Does it matter? In the end, it doesn’t, which Wright has mentioned himself.
Instead, we’d be wise to understand and celebrate that Satoshi Nakamoto’s impact on global finance is immeasurable. The Bitcoin currency remains an alluring investment and will, in all likelihood, far outlive whoever is the real Nakamoto.