Satoshi Nakamoto created Bitcoin in 2009. The name "Satoshi Nakamoto" is the pseudonym for the person or people who introduced the concept of Bitcoin in a 2008 paper. Nakamoto remained active in the creation of Bitcoin and the blockchain until about 2010 but has not been heard from since.
Key Takeaways
- Satoshi Nakamoto is the pseudonym for whoever penned the original Bitcoin whitepaper and is the identity credited with inventing Bitcoin itself.
- Several people have claimed or were thought to be Satoshi, but their true identity has never been verified or revealed.
- Given the price of BTC today, Satoshi would be a billionaire because it is rumored (but not proven) that they hold more than one million BTC.
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What Is Known About Satoshi Nakamoto
The Satoshi Nakamoto persona appeared to be involved in the early days of Bitcoin, working on the first version of the software in 2007. Communication to and from Nakamoto was conducted via email. The lack of personal and background details meant it was, and is, impossible to find out the actual identity behind the name.
Nakamoto was not the first to hit on the concept of cryptocurrency but was the one to solve a fundamental problem that prevented its adoption: Unlike paper currency, cryptocurrency could be spent more than once. This was known as "double-spending," and Nakamoto solved it by proposing a peer-to-peer distributed timestamp server. This distributed server would "...generate computational proof of the chronological order of the transactions" using something similar to the proof-of-work system designed by Adam Back.
Nakamoto’s involvement with Bitcoin, however,ended in 2010. The last correspondence anyone had with Nakamoto was in an email to anothercrypto developer saying that "they had moved on to other things." The inability to put a face to the name has led to significant speculation about Nakamoto’s identity, especially since cryptocurrencies have increased in number, popularity, notoriety, and value.
Notable Accomplishments
Satoshi Nakamoto published a paper in 2008 that introduced cryptocurrency to a much wider audience, initiating its rise to popularity.
The paper, Bitcoin: A Peer-to-Peer Electronic Cash System, described the use of a peer-to-peer network as a solution to the problem of double-spending. Cryptocurrency was not a new idea at the time; there had been more than a few attempts to create a digital currency. However, Bitcoin addressed a significant issue.
A digital currency or token could be duplicated in multiple transactions. This is not found in physical currencies since a physical bill or coin can only exist in one place at a single time. Because a digital currency does not exist in physical space, using it in a transaction does not necessarily remove it from someone’s possession. As a result, it could be spent more than once, causing it to be termed the "double-spend" problem.
Solutions to combat the double-spend problem had historically involved using trusted, third-party intermediaries that would verify whether a digital currency had already been spent by its holder. In most cases, third parties, such as banks, could effectively handle transactions without adding significant risk.
However, this trust-based model still results in additional costs and the risk of fraud. Third parties have proven to be unworthy of the trust placed in them in the past. It's not necessarily the institutions that provide the third-party validation services that are untrustworthy. It's the people involved in the transactions that cannot be trusted.
Thus, there is a need to remove the human factor altogether. Cryptography and automated group consensus mechanisms are currently the only way to get around human intervention in finances.
Double Spending Solved
Nakamoto proposed a decentralized approach for transactions using ledgers, a network, Merkle roots and trees, timestamps, incentives, cryptography, and a consensus mechanism. In a blockchain, timestamps are added to transaction information, and cryptographic techniques are used to encrypt the data. The encrypted data cannot be changed but must be validated. The network must verify the authenticity of the transactions based on a consensus mechanism called proof-of-work.
Because the record of transactions is distributed across many nodes in the system, it is difficult, if not impossible, for a bad actor to gain enough control of the system to rewrite the ledger to their advantage. The blockchain records are kept secure because the computational power required to reverse them discourages attacks.
Hackers would need a network that could validate and create blocks faster than the current network and then would need to introduce the new blockchain into the main network at the right time to overwrite it. They'd also need to deploy several other blockchain attacks at the same time.
Wealth
Analysis of Bitcoin's blockchain has helped deduce which addresses are likely Satoshi Nakamoto's to a relatively high degree of certainty. According to some researchers, Satoshi has about 1 million BTC in thousands of wallets. Others point to addresses with anywhere between 750 bitcoin and 1.1 million bitcoin. However, the only address known to be Satoshi's is the Genesis address, the first blockchain address with the unspendable 50 bitcoins in it. On March 22, 2024, it had about 100 bitin it, but it contiaccumulatingulate them because the community religiously sends them to the address, possibly as tokens of appreciation.
Anonymity was likely the only choice for Bitcoin's creators. If identities were known, it is likely the creator's lives would be upturned by the publicity. It is also very possible they would be targeted by criminals, so it might be best if they remained anonymous.
If the larger figures are true, and given that the maximum possible number of possible bitcoins is 21 million, Nakamoto's reputed stake of 1.1 million (5% of the total number of bitcoins) has considerable market power.
People Thought to Be Nakamoto
There have been several people attributed with being or claiming to be Nakamoto, but none of the claims or proposals have proven to be true.
Dorian Nakamoto is an academic and engineer in California who was named as the creator of Bitcoin by Leah McGrath Goodman in a Newsweek article in March of 2014. McGrath's report says, "The trail followed byNewsweekled to a 64-year-old Japanese-American man whose name really is Satoshi Nakamoto," but subsequent investigation ruled this Nakamoto out.
Hal Finney was active in the Bitcoin community before and after its launch and was the first person to receive a bitcoin in a transaction. He also coincidentally lived a few blocks from Dorian Nakamoto, who, it has been surmised, might have been the inspiration for a pseudonym invented by Finney.
Nick Szabo, an early cypherpunk, was friends with many people in that circle. In 2005, he wrote a blog post hypothesizing a digital currency called "Bitgold" that would not depend on the trust of third parties. Szabo has also been ruled out as a possibility.
Craig Wright is one of the more colorful characters to be nominated as the person behind Satoshi Nakamoto. Dr. Wright, an Australian academic and businessman, has claimed to be Satoshi on several occasions, even to the point of being involved in legal actions regarding ownership of the identity. A jury rejected a civil lawsuit against Wright brought by the estate of a former colleague, the late David Kleiman, in December 2021. Kleiman's estate argued that Wright and Kleiman together co-created Bitcoin and it was thus owed half of Wright's alleged 1.1 million BTC stash.
However, the Kleiman estate was awarded $100 million, indicating that the jury and court believed that Wright and Kleiman worked on the project together in some capacity. Also, in 2021, a court in the United Kingdom ordered Bitcoin.org to take down the Bitcoin whitepaper because the website was violating Wright's copyright of the whitepaper, indicating the court's opinion that Wright had intellectual rights to the paper in some way.
Craig Wright was taken to court by the Crypto Open Patent Alliance in February 2024 for falsely claiming to be Nakamoto and seeking intellectual property ownership of the Bitcoin blockchain. Judge James Mellor determined that Wright was not Nakamoto, commenting that the evidence against Wright's ownership was overwhelming.
Satoshi Nakamoto's Identity and Bitcoin
To some, the secrecy behind Satoshi Nakamoto's identity may be intentional. There are some very large-scale benefits to his, her, or their identity/identities not being known. Some may argue that the Bitcoin blockchain would not be able to function as efficiently if the identify of Satoshi was revealed. The arguments for this position would include:
- Decentralization: By remaining anonymous, Satoshi Nakamoto avoided centralizing power within the Bitcoin network. Had Nakamoto revealed their identity, they could have been seen as a central authority, potentially undermining the decentralized nature of Bitcoin. Instead, Nakamoto's anonymity ensured that no single individual or entity held undue influence over the protocol.
- Trustless System: Satoshi Nakamoto's decision to remain anonymous aligns with the trustless nature of Bitcoin. Users do not need to trust any single entity or authority. Nakamoto's anonymity reinforces this principle by removing the need for users to trust a known figure.
- Fostering Community: Satoshi Nakamoto's anonymity has encouraged a vibrant and diverse community to form around Bitcoin. Without a central figure, individuals from various backgrounds have been able to contribute to the development and growth of the Bitcoin ecosystem. This long-term community-driven approach may have been intentional when establishing the network.
- Focus on Technology: Some could argue that Nakamoto's anonymity shifts the focus away from that person's personality and towards the technology itself. Although much is made about Nakamoto's true identity, the lack of Nakamoto's presence can, in some contexts, mean more attention is given to the innovative state of blockchain.
Who Created Bitcoin?
Bitcoin was created by an anonymous person or group using the pseudonym Satoshi Nakamoto. Nakamoto published a whitepaper titled "Bitcoin: A Peer-to-Peer Electronic Cash System," outlining the concept of a decentralized digital currency. The true identity of Satoshi Nakamoto remains unknown to this day.
How Much Is Satoshi Nakamoto Worth?
Nakamoto reportedly holds one million bitcoins, but there is no proof except the blockchain address the developer used when corresponding with others (it holds about 100 bitcoins).
Is Satoshi Nakamoto a Real Person?
No one knows if Nakamoto is one person or a group using a pseudonym. However, it appears the actual person or people behind the name Satoshi Nakamoto was behind Bitcoin's design.
Did Satoshi Nakamoto Disappear?
Because Satoshi chose to be anonymous, it cannot be determined whether the person or group using the name has disappeared. As of February 2024, the true identity or identities of Satashi Nakamoto are unknown.
The Bottom Line
Because Satoshi Nakamoto was a crucial player in the development of cryptocurrency, it is natural for people to want to know who might be behind the pseudonym. The changes brought about by this person or group's ideas have revolutionized many aspects of modern life. It is possible that Bitcoin will not exist in the future, but blockchain technology introduced by Nakamoto and the advancements made using it are likely to be around for a long time.
