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Are you Satoshi Nakamoto?

The bitcoin protocol was first published in 2008 under the pseudonym, Satoshi Nakamoto. For years there has been speculation about exactly who this really was who invented the first global scale cryptocurrency. Some people were ‘outed’, erroneously: Newsweek Magazine looked a bit red-faced in 2014 when it identified the inventor of bitcoin as California based Dorian Nakamoto, but he denied the story and it soon faded.

This week, the bitcoin creation story became more interesting, and also more complicated: Australian tech geek Craig Wright has now publicly claimed to be the real Satoshi. In the run up to his public post asserting his identity, Wright released material to leading news outlets, BBC, The Economist and GQ (!), which he said validated his claim. He also engaged some of the leaders of the bitcoin movement, who came out in support of his claim. The Economist was not convinced however, claiming that there was insufficient time to validate the claim before his self-pronouncement. Others also harbor doubts, claiming for example that Wright’s writing lacks the clarity of Satoshi’s.

The assertion spotlights some of the issues at the core of digital identity. For digital transactions like bitcoin transfers, identity is established primarily by the use of a private key which is contained in a key registry but may not be linked to any disclosed or verified real identity as Wright describes in painstaking detail in a blog post. Since Satoshi was known to have transacted bitcoins in the early days, Wright could assert his claim to identity by demonstrating that he has in his possession a private key known to have been used by Satoshi. Of course, ‘known to be used by Satoshi’ may be hard to establish; but this demonstration is apparently part of Wright’s claim. He says in a subsequent blog post: “I can prove access to the early keys and I can and will do so by moving bitcoin but this should be a necessary but not sufficient condition for this extraordinary claim.” In other words, even if Wright uses Satoshi’s key, does that necessarily make him Satoshi; or simply someone who knows one of the digital attributes used by Satoshi? After all, someone who uses your bank user name and password may be able to access your account, but it may not be you (it could be your spouse, for example, with whom you share an account); or worse, that person may not have your approval to do so.

So, after enjoying the cover of pseudonymity for a number of years, Wright’s claims are now subject to the same burden of proof as anyone else’s in the exploding digital world—in the absence of a secure, robust register of private keys which is mapped to an accepted real world identity through a robust authentication process (not simply going on line and asserting that you, the owner of the key, are Craig Wright), proving authorship beyond any doubt may be very hard to do.

Why has Wright surfaced now, you may ask as I did? The Financial Times speculates that, because there are sharp divisions in the bitcoin community which threaten to split, or fork, the bitcoin blockchain into two, the value of existing bitcoins, of which Satoshi is believed to hold a large number from the early days, may be at risk. The appearance of the almost mythical founder in the flesh now may be because he wants to weigh in on the debates to protect the value of his investment. If true, this would be understandable, but so much for any theory that Satoshi invented bitcoin for the sheer beauty and integrity of the protocol!

 

By David Porteous

David Porteous
David has been involved in finance inclusion initiatives internationally for more than two decades. He received his bachelor’s degree in Accounting from the University of Cape Town, and later obtained an M.Phil in economics from Cambridge and a PhD (Economics) from Yale. David has held executive roles in public and private financial institutions in Africa, and is the founder and CEO of BFA, a consulting firm based in Boston.

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