The mystery creator of the digital currency bitcoin has finally stepped forward. Or has he?
Australian inventor Craig Steven Wright announced Monday that he is “Satoshi Nakamoto,” the elusive, pseudonymous bitcoin founder.
In interviews with the Economist, BBC, GQ and a few bitcoin insiders, bolstered by a technical demonstration intended to prove that he and Nakamoto are one and the same, Wright tried to lay to rest one of the biggest mysteries in the tech world.
But Wright, who first emerged as a leading Nakamoto contender last December , may not have closed the case.
While some bitcoin experts accept his demonstration as evidence that Wright is indeed Nakamoto, others argue that his supposed proof — a series of complex mathematical operations listed in a blog post — doesn’t prove anything.
Bitcoin allows people a way to make payments without using banks or national currencies such as the dollar or the euro. Because bitcoin transactions are unregulated and anonymous, the currency has proved popular among libertarians, tech enthusiasts, speculators and criminals. Nakamoto, who founded the currency in 2009, dropped out of sight in 2010, but bitcoin has mostly chugged along without him.
Knowing who actually founded bitcoin wouldn’t have any immediate effect on the digital currency.
But the founder might have standing to weigh in on a bitter technical dispute that threatens to hamper bitcoin’s growth. And the real Nakamoto would be rich and able to disrupt bitcoin just by selling chunks of his holdings. Nakamoto possesses around 1 million bitcoins worth some $440 million; those coins have never been touched.
Wright’s announcement is the latest twist in the long search for the real Nakamoto, a pursuit that’s become a cottage industry for journalists and online sleuths.
In 2011, The New Yorker focused speculation on cryptography researcher Michael Clear, who denied it. Newsweek fingered Japanese-American engineer Dorian Satoshi Nakamoto more than a year ago, though this Nakamoto quickly insisted in an AP interview that it was a clumsy case of mistaken identity.
So is Wright actually Nakamoto?
Gavin Andresen, an early bitcoin developer who had extensive dealings with Nakamoto before he vanished, says yes. Andresen said he met with Wright in London and was “convinced beyond a reasonable doubt” that Wright is the bitcoin founder. Andresen said Wright demonstrated that he holds the key associated with some of the earliest bitcoins created.
Others are dubious, largely because Wright’s public “proof” of his identify was totally different — and, to them, far less convincing — than his private demonstration to Andresen.
A BITCOIN PRIMER
A look at the digital currency
Bitcoin is a type of digital currency that allows people to buy goods and services and exchange money without involving banks, credit card issuers or other third parties. Its origins have long been a mystery — though an Australian man long rumored to have ties to bitcoin has come forward claiming to be its creator.
Who is this man, and how does this system work?
- HOW BITCOINS WORK
Bitcoin is a digital currency that is not tied to a bank or government and allows users to spend money anonymously. The coins are created by users who “mine” them by lending computing power to verifying other users’ transactions. They receive bitcoins in exchange.
The coins also can be bought and sold on exchanges with U.S. dollars and othercurrencies. Their value has fluctuated over time. At its height in late 2013, a single bitcoin was valued above $1,100. On Monday, it was worth about $445.
Because the currency isn’t formally regulated, its legality is a bit fuzzy. The currency has also drawn the ire of many in law enforcement and cybersecurity because it’s difficult to trace, making it a currency of choice for hackers behind ransomware attacks. But in September, New York state regulators approved their first license for a company dealing in bitcoin.
- WHY BITCOINS ARE POPULAR
Bitcoins are basically lines of computer code that are digitally signed each time they travel from one owner to the next. Transactions can be made anonymously, making thecurrency popular with libertarians as well as tech enthusiasts, speculators — and criminals.
- SHOULD I TRADE IN ALL MY CASH FOR BITCOINS?
That would be a questionable decision. Many businesses such as blogging platform WordPress and retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage. Leading bitcoin payment processor BitPay works with more than 60,000 businesses and organizations, while the total number of bitcoin transactions has climbed to over 200,000 per day, more than double from a year ago, according to bitcoin wallet site blockchain.info.
Still, its popularity is low compared with cash and cards, and many individuals and businesses won’t accept bitcoins for payments.
- HOW BITCOINS ARE KEPT SECURE
The bitcoin network works by harnessing individuals’ greed for the collective good. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin. As long as miners keep the blockchain secure, counterfeiting shouldn’t be an issue.
- HOW BITCOIN IS VULNERABLE
Much of the mischief surrounding bitcoin occurs at the places where people store theirdigital cash or exchange it for traditional currencies, like dollars or euros. If an exchange has sloppy security, or if a person’s electronic wallet is compromised, then the money can easily be stolen. The biggest scandal involved Japan-based bitcoin exchange Mt. Gox, which went offline in February 2014. Its CEO, Mark Karpeles, said tens of thousands of bitcoins worth several hundred million dollars were unaccounted for. He was arrested on suspicion of inflating his cash account in August.
- HOW BITCOIN CAME TO BE
It’s a mystery. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto. Bitcoin was then adopted by a small clutch of enthusiasts. Nakamoto dropped off the map as bitcoin began to attract widespread attention. But proponents say that doesn’t matter: The currency obeys its own internal logic.
- WHO IS THE REAL NAKAMOTO?
There’s been plenty of speculation on Nakamoto’s identity over the years. In December, the technology magazine Wired and the website Gizmodo both concluded that Australian computer scientist, inventor and academic Craig Wright was probably the man behind the pseudonym. The reports offered detailed circumstantial, but no hard proof, and hedged their conclusions accordingly.
On Monday, Wright told BBC News, the Economist and GQ that he is Nakamoto. (He also put out a press release .) Wright said he launched the currency in 2009 with the help of others. Wright told the BBC that he decided to make his identity known to stop the spread of “misinformation” about bitcoin.
If Wright is the founder, he is likely a very wealthy person. The person going by the pseudonym Nakamoto is believed to have amassed about 1 million bitcoins, which would be worth about $450 million if converted to cash.
“To me, he proved absolutely nothing,” said Emin Gun Sirer, a computer science professor at Cornell University. Sirer and others said Wright’s blog post mainly amounts to a little sleight of hand using publicly available data.
“He is just giving you cut-and-pasted pieces from old Satoshi-signed messages,” Sirer said.
Jerry Brito, executive director of the Washington-based cryptocurrency think tank Coin Center, questioned why Wright provided the supposed proof only in private exchanges with Andresen and a few others.
“What I’m saying does not prove that he is not Satoshi,” Brito added. “I’m just saying the evidence he’s presented is not conclusive at all.”
Wright claims he has come forward now because media speculation about his involvement with bitcoin has violated the privacy of his staff. He told the Economist that he wanted to “set the record straight,” and in the BBC report he said that he isn’t seeking fame or money and just wants to be left alone.
Those might not be the only reasons. Wright is being investigated by Australian tax authorities and might need money. Going public might make it easier for him to cash in Nakamoto’s bitcoins.
