Satoshi Nakamoto: who was he?

Satoshi Nakamoto was the inventor of Bitcoin protocol and the creator of the first version of Bitcoin software in 2009. He claimed to be a 36-year-old Japanese man born in 1975 and who had spent more than a year writing the software. 

He published his first paper on Bitcoin, explaining on the Cryptography Mailing List that he had been working on a peer-to-peer trustless electronic system that worked without a third party trust.

Shatoshi had written hundreds of posts in flawless English in 2009 and 2010, and used untraceable email address and website. The fact that he published the paper in flawless English and there being no Japanese references or languages in Bitcoin software made many to doubt his claimed Japanese identity.

He had called other software developers in the community to improve the code but did not reveal his personal details. Nakamoto handed control of the source code to Gavin Andersen in mid-2010 and Andersen led the Bitcoin Core development team until 2016.

Shatoshi began to fade from the community toward the end of 2010 and in the spring of 2011 wrote to other developers that he had "moved to other things." He has not been heard since then.

His motivations for the currency were political and related to the financial crisis of the time, and he wanted a currency that would not be under control of the unpredictable ailing monetary policies and banking predictions and influence by politicians.  Bitcoin was introduced a few months after the collapse of the banking sector in 1998.

“The root problem with conventional currency is all the trust that’s required to make it work,” he wrote. “The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust. Banks must be trusted to hold our money and transfer it electronically, but they lend it out in waves of credit bubbles with barely a fraction in reserve.”

It is now clear why Shatoshi wanted a software-controlled currency. He envisioned releasing twenty-one million bitcoins over twenty years, each coin released every ten minutes or so. The money would be mined using machines. Although the first single bitcoin was worth less than a penny, it was worthy more than 29 US dollars by June of 2011.

The rate dropped to five dollars in September following market gyrations. Only seven million bitcoins were in circulation but they had a value of thirty-five million dollars at that time.

The value was driven by the participation of more computer specialists to mine, acceptance among merchants who traded the coin, and the popping up of forty-four exchanges where anyone with bitcoins would trade them for official currencies like dollars and euros.   

Nakamoto remained true to the nature of Bitcoin innovation that he wanted to establish since writing that "participants can be anonymous" when introducing the Bitcoin protocol paper to the Cryptography Mailing List on November 2008 since his true identity is not known. Although the name is Japanese, it is not even possible to know whether he was Japanese or not, a male or female.

Search for real identity and the controversy

The search for real identity of Satoshi Nakamoto only introduces further confusion.  There have been many suspicions flying from all corners.

First, some people analyzed his paper and claimed that the publisher was not a Japanese. Others analyzed his online posts and discovered a decline in post frequency between 5 and 11am GMT time so they believed this was his sleeping time and so he could have been living in America 

New Yorker’s Joshua Davis who suspected that Satoshi Nakamoto was Michael Clear, a graduate cryptography student at Dublin's Trinity College. To reveal the identity, he claimed to analyzing 80,000 words of Nakamoto’s online writings and using linguistic clues. Clear denied the claims publicly at the 2013 Web Summit. 

Davis also suspected Finnish economic sociologist and former games developer Vili Lehdonvirta, but the claim was denied by Adam Penenberg at FastCompany. Penenberg claimed that Nakamoto could have been a name used by three people Neal King, Vladimir Oksman, and Charles Bry. He figured out this by typing into google, unique phrases used in Nakamoto's bitcoin paper to see if they had been used elsewhere.

The tracing also involved tracing of the ownership and registration of bitcoin.org, which was registered using a Japanese anonymous registration service, and hosted it using a Japanese ISP on August 18 2008 but later transferred to Finland on May 18th 2011.

You can read more details on the controversy here.

Accomplishments

The fact that Shatoshi needed a trustless currency and money system that would avoid double spending, and where users would remain anonymous, required him to innovate cryptography and combine a couple of ideas together.

That was not all. A reliable code was needed. The currency was supposed to be stable. The currency needed to have real demand. The money system had to be secure in the face of computer systems, especially to safeguard assets and ensure anonymity and privacy.  

Dan Kaminsky, an Internet-security researcher and known practitioner of “penetration testing,”tried to penetrate Bitcoin protocol to no avail. Dan had, in 2008, found hitches in Internet code that would allow anyone to take over any website and shut down internet. He alerted the Department of Homeland Security and executives at Microsoft and Cisco, who found a patch for it.

Dan set his eyes to break the bitcoin code and came up with 9 ways to break it, but later confessed; “every time I went after the code there was a line that addressed the problem.” He met an "Attack Removed,” poster every time he found the right spot. He noted that either a number of people had worked on the protocol or that Shatoshi was a genius.

“He’s a world-class programmer, with a deep understanding of the C++ programming language,” he said. “He understands economics, cryptography, and peer-to-peer networking.”

Shatoshi published a nine-page technical paper on how bitcoin would work after he created it. In the paper, he referenced Stuart Haber, a researcher at H.P. Labs, in Princeton. Haber is a director of the International Association for Cryptologic Research.

Today, Bitcoin can freely be used to purchase products over the internet. It can also be traded on various exchanges. Bitcoin also inspired many cryptocurrencies to date.