Bitcoin History – Everything you need to know about Bitcoin and its mysterious origins
Since it was created in 2009, Bitcoin has experienced significant highs and lows. Just this week, the cryptocurrency surpassed an $11,000 evaluation for the first time in history.
Bitcoin is considered the preeminent cryptocurrency in the world, but there’s still plenty of mystery surrounding its creation. Who came up with Bitcoin? Was it created by more than one person? And who is Satoshi Nakamoto?
Here’s a rundown on the currency’s strange beginnings:
In 2008, the first inklings of bitcoin begin to circulate the web.
In August 2008, the domain name bitcoin.org was quietly registered online. Two months later, a paper entitled ‘Bitcoin: A Peer-to-Peer Electronic Cash System’ was passed around a cryptography mailing list.
The paper is the first instance of the mysterious figure, Satoshi Nakamoto’s appearance on the web, and permanently links the name “Satoshi Nakamoto” to the cryptocurrency.
On January 3, 2009, 30,000 lines of code spell out the beginning of Bitcoin.
Bitcoin runs through an autonomous software program that is ‘mined’ by people seeking bitcoin in a lottery-based system. Over the course of the next 20 years, a total of 21 million coins will be released.
But Satoshi Nakamoto didn’t work entirely alone.
Among Bitcoin’s earliest enthusiasts was Hal Finney, a console game developer and an early member of the “cypherpunk movement” who discovered Nakamoto’s proposal for Bitcoin through the cryptocurrency mailing list.
In a blog post from 2013, Finney says he was fascinated by the idea of a decentralized online currency. When Nakamoto announced the software’s release, Finney offered to mine the first coins — 10 original bitcoins from block 70, which Satoshi sent over as a test.
Of his interactions with Nakamoto, Finney says, “I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere. I’ve had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.”
Finney has flatly denied any claims that he was the inventor of Bitcoin and has always maintained his involvement in the currency was only ever secondary.
In 2014, Finney died of the neuro-degenerative disease ALS. In one of his final posts on a Bitcoin forum, he said Satoshi Nakamoto’s true identity still remained a mystery to him. Finney says he was proud of his legacy involving Bitcoin, and that his cache of bitcoins were stored in an offline wallet, left as part of an inheritance to his family.
“Hopefully, they’ll be worth something to my heirs,” he wrote.
As of today, one bitcoin is worth more than $10,000.
Nearly a year later, Bitcoin is slowly on its way to becoming a viable currency.
In 2010, a handful of merchants started accepting bitcoin in lieu of established currencies.
One of the first tangible items ever purchased with the cryptocurrency was a pizza. Today, the amount of bitcoin used to purchase those pizzas is valued at $100 million.
The cryptocurrency began attracting interest from tech elites, as well. In 2012, Cameron and Tyler Winklevoss purchased $10 million worth of bitcoin, and, in less than a year their investment had more than tripled. It’s been estimated the Winklevoss twins own 1% of all available bitcoin.
In 2011, the Silk Road, an online marketplace for illegal drugs, launches. It uses bitcoin as its chief form of currency.
Bitcoin is inherently traceless, a quality that made it the ideal currency for facilitating drug trade on the burgeoning internet black market. It was the equivalent of digital cash, a self-governing system of commerce that preserved the anonymity of its owner.
With Bitcoin, anyone could take to the Silk Road and purchase cannabis seeds, LSD, and cocaine without revealing their identifies. And the benefit wasn’t entirely one-sided, either: in some ways, the drug trafficking site legitimized Bitcoin as a means of commerce, even if it was only being used to facilitate illicit trade.
Two years later, the mysterious figure known as “Satoshi Nakamoto” disappears from the web.
On April 23, 2011, Nakamoto sent Bitcoin Core developer Mike Hearn a brief email.
“I’ve moved on to other things,” he said, referring to the Bitcoin project. The future of Bitcoin, he wrote, was “in good hands.”
In his wake, Nakamoto left behind a vast collection of writings, a premise on the workings of Bitcoin, and the most influential cryptocurrency ever created.
Wait, so who is this Japanese-American guy named Satoshi Nakamoto?
Google “Satoshi Nakamoto” and the results will lead you straight to image after image of an elderly Asian man. This is Dorian S. Nakamoto, named “Satoshi Nakamoto” at birth. He is almost 70 years old, lives in Los Angeles with his mother, and, as he has reminded people hundreds of times, is not the creator of Bitcoin.
In 2014, Newsweek reporter Leah Goodman published a feature story pinning the identity of Bitcoin’s creator on Nakamoto due to his high profile work in engineering and pointedly private personal life. Following the story’s immediate release, Nakamoto was dogged by reporters, who trailed him as he drove to a sushi restaurant. Nakamoto told a journalist from the Associated Press that he had only heard of Bitcoin weeks earlier, when Goodman had contacted him about the Newsweek story.
Two weeks later, he issued a statement to Newsweek, stating he “did not create, invent or otherwise work on Bitcoin.”
Dorian Nakamoto’s claim was corroborated by the actual Bitcoin creator Satoshi Nakamoto a day later, with Satoshi’s username mysteriously surfacing in an online forum to post: “I am not Dorian Nakamoto.”
The Craig Wright controversy
In 2016, Australian entrepreneur Craig Wright claimed to be the creator of Bitcoin and provided disputed code as proof. Bitcoin developer Gavin Andresen further corroborated Wright’s gesture, saying he was “98 percent certain” that Wright was the pseudonymous Satoshi Nakamoto.
But others were quick to disagree, and Wright’s claim drew fierce skepticism from the cryptocurrency community online as well as alleged interest from the FBI. Amid the sudden influx of scrutiny, Wright deleted his post and issued a cryptic apology. “I’m sorry,” he wrote, “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.”
Nick Szabo has been repeatedly identified as the creator of Bitcoin, a claim he denies.
In the course of determining the identity of Satoshi Nakamoto, there’s one person who has been thumbed again and again: hyper-secretive cryptocurrency expert Nick Szabo, who was not only fundamental to the development of Bitcoin, but also created his own cryptocurrency called “bit gold” in the late ’90s.
In 2014, a team of linguistic researchers studied Nakamoto’s writings alongside those of thirteen potential bitcoin creators. The results, they said, were indisputable.
“The number of linguistic similarities between Szabo’s writing and the Bitcoin whitepaper is uncanny,” the researchers reported, “none of the other possible authors were anywhere near as good of a match.”
A story in the New York Times pegged Szabo as Bitcoin’s creator, as well. Szabo, a staunch libertarian who has spoken publicly about the history of Bitcoin and blockchain technology, has been involved in cryptocurrency since its earliest beginnings.
Szabo firmly denied these claims, both in The New York times story and in a tweet: “Not Satoshi, but thank you.”
Here’s how the real “Satoshi Nakamoto” could prove his identity:
He could use his PGP key
A PGP key is a unique encryption program associated with a given user’s name — similar to an online signature. Nakamoto could attach his to a post or a message indicating his identity.
He could move his bitcoin
Nakamoto has amassed a fortune in bitcoin: He’s thought to possess over one million coins, which today would be valued in excess of a billion dollars.
Theoretically, Nakamoto could move those coins to a different address.
Dorian Nakamoto, Nick Szabo, and Craig Wright aren’t the only ones who been pinned as the inventor of Bitcoin.
There’s a laundry list of people who have been pegged with this claim, but so far, they’ve all been struck down. Just this week, Tesla and SpaceX founder Elon Musk denied being Bitcoin’s creator.
The Wikipedia entry on Satoshi Nakamoto names at least 13 potential candidates as being responsible for the creation of Bitcoin.
It’s been nearly 10 years since Bitcoin’s beginnings, and we’re still not any closer to confirming who invented it.
Why would the inventor of the world’s most important cryptocurrency choose to remain anonymous?
As it turns out, experimenting in new forms of currency is not without its consequences.
In 1998, Hawaiian resident Bernard von NotHaus dabbled in a fledgling form of currency called “Liberty Dollars” to disastrous results: He was charged with violating federal law and sentenced to six months of house arrest, along with a three-year probation.
In 2007, one of the first digital currencies, E-Gold, was shut down amid contentious circumstances by the government on grounds of money laundering.
If the inventor of Bitcoin wants to remain anonymous, it’s for good reason: by maintaining anonymity, they’ve avoided adverse legal consequences, making their anonymity at least partially responsible for the currency’s success.
Besides, one of the founding principals of Bitcoin is that it’s a decentralized currency, untethered to conspicuous institutions or individuals. In his original proposition on Bitcoin, Nakamoto wrote, “What is needed is an electronic payment system based on cryptographic proof instead of trust, allowing any two willing parties to transact directly with each other without the need for a trusted third party.”
Why would someone go to all the trouble of creating a decentralized currency without sticking around to receive any of the credit?
Much of the mystery surrounding Nakamoto involves his motivations. Why would someone go to the trouble of creating a detailed and brilliant decentralized currency, only to later completely disappear from the public view?
A closer look at one of Nakamoto’s original postings on the proposal of Bitcoin sheds some light on his possible motivations.
In February 2009, Nakamoto wrote, “The root problem with conventional currency is all the trust that’s required to make it work. 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. We have to trust them with our privacy, trust them not to let identity thieves drain our accounts.”
In Bitcoin forums, it’s been speculated that Nakamoto might be “a libertarian and hates the corrupt rich people and politicians.” Other Bitcoin enthusiasts suggest the timing of Bitcoin’s emergence is a clear indication of its raison d’être: The currency, which was created in the years following the housing bubble burst in 2007, might have been invented as means of disrupting the corrupted banking system.
Here’s what we know about Satoshi Nakamoto for sure:
They’re a genius
In a New Yorker article from 2011, a top internet security researcher describes Bitcoin code as an inscrutable execution that nears perfection: “Only the most paranoid, painstaking coder in the world could avoid making mistakes.”
They speak fluent English
Nakamoto has written extensively about Bitcoin, authoring close to 80,000 words on the subject in the course of two years. His work reads like that of a native English speaker.
They might be British
Judging by their spelling, and their use of British colloquialisms (they refer to their apartment as a “flat” and call the subject math “maths”), it’s thought they might hail from the UK.
The timing of his posts seem to indicate this fact as well: It’s been pointed out that Nakamoto posted during UK daylight hours.
They might be more than one person
The foolproof brilliance of Bitcoin’s code have left many wondering if it isn’t the work of a team of developers. Bitcoin security researcher Dan Kaminsky says Nakamoto “could be either a team of people or a genius.”
On Tuesday, Bitcoin hit a record high. How does its creator feel about its success?
Joshua Davis, who spent four months researching the possible identity of Bitcoin’s creator for a New Yorker story, says he’s deeply curious about how the cryptocurrency’s creator feels about its success.
“Every time I see a news post about the rise of the value of the Bitcoin, I wonder if Satoshi is seeing that too. What’s he thinking? Is he proud? Is he thinking that, at some point, some day, he’ll finally reveal himself?”
If “Satoshi Nakamoto” hasn’t revealed himself by now, it’s unlikely we’ll ever know who is.
Our guess? It’s this guy.
June 7, 2021