We may now know who Satoshi Nakamoto, the creator of Bitcoin, is. According to Newsweek, he’s a reclusive 64-year old Japanese man who lives in Temple City, California. And Satoshi Nakamoto is his real name. (He has reportedly denied being involved with Bitcoin.)
Newsweek portrays Nakamoto as secretive, reclusive and a little paranoid. And certainly the awkward scene when Leah McGrath Goodman confronted Nakamoto in his driveway suggests that the man is genuinely uninterested in seeking the spotlight.
But Nakamoto’s decision to disappear from public view just as Bitcoin was taking off wasn’t just a reflection of his eccentric personality. It was essential to getting the currency to take off.
Fiat curencies like Bitcoin are fundamentally built on faith. People treat a currency as valuable because they expect others to consider it valuable. And for a decentralized currency like Bitcoin, that faith depends on a belief that the rules of the currency will be stable over time.
For example, it’s generally reported as a fact that there will never be more than 21 million bitcoins. But that “fact” is just a social convention. There will never be more than 21 million Bitcoins because the Bitcoin community has agreed to a set of rules that doesn’t allow more than 21 million Bitcoins to be created. In principle, those rules could be changed. Bitcoin’s success depends on people having confidence that the rules won’t be changed in a way that will destroy the value of their holdings.
This means that a strong leader would have been a liability in Bitcoin’s early years. As Bitcoin’s creator, Satoshi Nakamoto would have had a unique ability to change the rules of the game and get the Bitcoin community to accept the changes—Nakamoto’s version of the Bitcoin software was Bitcoin by definition. As long as he was around, people would worry that he could make future changes that would destroy the value of their investments.
Disappearing in early 2011 helped to remove that potential impediment to Bitcoin’s growth. Gavin Andresen, Nakamoto’s successor as the leader of the Bitcoin project, is a smart and capable programmer. But he’ll never have the stature within the Bitcoin community that Nakamoto did. If Andressen tried to make dramatic, potentially harmful changes to Bitcoin, he’d face a lot of resistance from the rest of the Bitcoin community.
The lack of an official Bitcoin leader has also been an asset in the regulatory arena. A key argument for Bitcoin is that no one owns the Bitcoin network, which means there’s no way to regulate it. Had Nakamoto’s identity been known a year ago, he might have been dragged before Congress to testify at last fall’s hearings on the future of Bitcoin. Nakamoto might have faced pressure from regulators to change Bitcoin to make it easier to regulate. But with Nakamoto out of the picture, the leaders of the Bitcoin community could truthfully say that no one had the authority to change Bitcoin’s rules. That forced policymakers to accept the system the way it was and develop policies to accommodate it.
If the man Newsweek identified today proves to be the real Satoshi Nakamoto, the question is whether he’s been away from the project long enough that Bitcoin will continue to be seen as truly outside anyone’s control. I think the answer is probably yes. There’s now a significant community of Bitcoin developers who have grown used to managing the currency without Nakamoto’s input. They probably wouldn’t defer to him the way they would have in 2011. But just to be on the safe side, it would be smart for Nakamoto not to rejoin the Bitcoin development community any time soon.
“…no one owns the Bitcoin network, which means there’s no way to regulate it.”
In civilized societies, laws regulate behavior, not who you are. Using Bitcoins leaves you just as innocent or guilty for having purchased a pizza or laundering drug money, as you’d be for using cash.
It’s troubling that so often I see Bitcoin advocates make up fantasy scenarios as rationale when there are perfectly good and benign reasons to use them while expecting you’re operating within the letter and spirit of the laws. But if, for example it appears that some individuals were to try an end-run around US laws against funding terrorist organizations, Uncle Sam would pretty quickly do what was necessary to stop that behavior. Very likely, ordinary seizures of evidence, as apparently happened with Silk Road, would suffice. But no one should think the absence of a storefront saying “Bitcoin, Inc” would stop the Feds from going further in attempting to support a broadly popular law.
The broad acceptance of Bitcoin will not be helped by the notion that people use it because they want to skirt the law. It’s both a little foolish—it’s reminiscent of a wave of supposedly legal technicalities to avoid having to pay income taxes a few decades back—and a suggestion that founders’ motivations are not particularly trustworthy.
This is obviously not dispositive either way, but this image seems to be pretty important evidence to me. The authenticity of either email is debatable, although the former comes from the website of the LA Metro, and the latter is less important, as there’s other documents by “Nakamoto” online that demonstrate his control of grammar and lexis.
“Fiat currencies like Bitcoin …”
Bitcoin is not a fiat currency by any definition. In fact some countries have already declared it a commodity and not a currency (see – most recently Japan).
Dorian Prentince Satoshi Nakamoto is about as convenient a patsy as you can find.
He’s practically the Chauncey Gardiner of Bitcoin.
I find it amazing that people are still operating on the most tenuous assumption that the man living in SoCal is *THE* Satoshi Nakamoto. Seems like he’s just a guy taking the media for a joyride to get a free lunch out of it. There’s really no THERE there. And yet “journalists” still want to milk it for all it might speculatively be worth–like the tabloid sensationalists that they are.