Bitwala Academy

Who created bitcoin

Have you ever wondered about the genius(es) behind Bitcoin? And what about where cryptocurrency suddenly came from?

In this article, we explore the journey that led to Bitcoin’s invention and theories on who might have created the cryptocurrency.

Background

Ten years after the release of the Bitcoin whitepaper, the world is no closer to uncovering the true identity of its author. The quest to identify the elusive character(s) has revealed that while we can theorize, without solid evidence, we will never know who Satoshi is.

Nevertheless, there are some clear stages and actors that facilitated Bitcoin’s creation. As a matter of fact, before Bitcoin introduced cryptocurrency in practice, other virtual currency projects and proposals had already emerged during the early 1990s.

Pioneering online payments

DigiCash, founded by David Chaum in 1989, developed the pioneering technology behind online payments. It hosted the virtual currencies Ecash and cyberbucks, which used the cryptographic function of blind signatures. Even though DigiCash was unsuccessful, it paved the way for further innovation of online payment systems.

Through the 1990s, a group of individuals known as cypherpunks circulated their work on a mailing list through which they provided each others’ code with feedback and built upon each other’s ideas. The common goals and supportive environment amongst cypherpunks directly contributed to their dream of a secure, anonymous and independent digital store of value becoming a reality.

Julian Assange, Founder of WikiLeaks, and “publisher of secret information” is perhaps the most well-known cypherpunk (alongside Satoshi). Despite the U.S. government’s steps to block traditional funding to WikiLeaks, the organisation prevailed with the help of donations in bitcoin.

Building blocks

Attempts to create a privacy-oriented electronic reality in the lead up to Bitcoin’s invention can be seen through the development of proof of work concepts and the theorizing of cryptocurrency.

Wei Dai first elaborated on the theoretical basis of cryptocurrency, as an “anonymous, distributed electronic cash system” in 1998 on the cypherpunk mailing list.

Dai explored ideas in two suggested protocols for B-money. He included thoughts on the use of cryptographic proof of work solutions to create the money itself and enable transactions to take place. The core of Dai’s work is defined by the will the surpass a central authority in the supply and movement of the new currency.

Continuing along the wave of cypherpunk innovation, in 2004 Hal Finney fixed together more pieces of the puzzle. He bridged together elements from Adam Beck’s prior hashcash proof of work invention to release a new reusable proof of work concept.

Then, in 2005 another block was built by Nick Szabo. He published a proposal that explored ideas for a digital asset named “Bit Gold” that could be easily “securely stored, transferred, and assayed”. The proposal incorporated Finney’s cryptographic reusable proof of work concept. Again, the primary aim was to create a store of value that could exist independently without the reliance on a third party to act as an intermediary.

Finally, after those crucial foundations had been cemented, the dream to create a decentralized monetary system was achieved in Satoshi’s 2008 whitepaper to the cypherpunk mailing list.

“A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.”

Bitcoin emerged at a particularly crucial time when people around the world had lost faith in their governments’ central financial authorities. The global financial crisis inspired fear and anguish amongst populations and left people at a loss with whom to trust. People needed to know that there was an alternative out there – an alternative in which transparency was secured and prioritized.

Bitcoin came with the palatable offer of transparency emanating from a decentralised anonymous peer-to-peer network. And little was it known, Satoshi’s ideas would forever shake the globally accepted understanding of financial systems.

Who really created Bitcoin?

Despite Bitcoin’s global acclaim and value, Satoshi has not come forward to claim credit for their groundbreaking contributions to the global financial ecosystem. The infamous character has ensured their identity remains anonymous, but that has not stopped widespread speculation about the person behind the code.

Below, we explore the stories of some key players alleged to be Bitcoin’s founders.

Hal Finney

Hal Finney, the developer of a reusable cryptographic proof of work concept, also worked closely with Phil Zimmerman (PGP – Pretty Good Privacy creator). Finney was amongst the first to discover Satoshi’s proposal on the cypherpunk mailing list.

He offered to mine the first coins and even received the first bitcoin transaction sent as a test from Satoshi. Finney remained the first identifiable Bitcoin pioneer as he continued to assist Satoshi with modifying Bitcoin’s code in the early phases through discussions on BitcoinTalk.

Finney was a strong believer in the Bitcoin protocol and saw the potential that the proposal offered. His early adoption of Bitcoin, strong belief in its viability and his own valuable contributions as a notable cypherpunk led many to believe he was indeed its creator.

Dorian Satoshi Nakamoto

There were theories that attempted to link Finney with a Japanese-American man named Dorian Satoshi Nakamoto. Dorian, who lived just two blocks away from Finney, was both independently accused of being the founder of Bitcoin and of collaborating with Finney. The latter affirmation was assumed because of the close proximity of their homes. Both Dorian and Finney have denied the allegations posed about their identities.

Nick Szabo

The possibility of Szabo, the mysterious cryptocurrency expert and inventor of Bit Gold, being the creator of Bitcoin has been thoroughly investigated. Suspicions arose because Szabo has contributed strong foundations that led to the realisation of Bitcoin. In fact, the parallels between the protocols’ values and implementation of maths and cryptography were uncanny.

Even colleagues of Szabo at a Bitcoin startup noted his immense value and came to conclude that he must have either been the creator of Bitcoin or at least been amongst the core founders of the cryptocurrency.

Additionally, detailed research activities undertaken by both forensic linguistic experts and Skye Grey pointed to the high likelihood that Szabo was Satoshi. The research conducted by the forensic team compared the Bitcoin whitepaper with the writings of eleven Satoshi suspects, including Dorian Satoshi Nakamoto and Hal Finney.

The group found that the writing styles of Szabo and Satoshi contained repetitive similarities in terms of phrasing and word choice. Additionally, they found that the same open source-document preparation system, Latex, was used by Szabo in all his writings and by Satoshi for the whitepaper.

Grey’s research also identified clear correlations between their writing styles. Moreover, Grey found it interesting that although Szabo’s work afforded the crypto community with significant contributions, Bit Gold was not mentioned in the Bitcoin whitepaper. Yet, the paper credited B-money, hashcash and other relevant building blocks.

The results of the linguistic research were found to be “indisputable” in uncovering the Satoshi mystery. With his historically valuable involvement in the community alongside the expert analyses, it may have seemed as though the face behind Bitcoin had been exposed. However, Szabo himself would not budge and after everything, denied the claims that he is Satoshi.

Craig Wright

Wright was also considered as another possible Satoshi candidate. However, unlike the other usual suspects, he himself came forward in 2016 to profess that he was Satoshi. Based on preliminary evidence that Wright provided, some immediately doubted his self-proclaimed identity. While others, including core Bitcoin developer Gavin Andresen, found truth in his claims and could not derive any malicious intentions in his revelation.

Something big was promised. Wright claimed that he had Satoshi’s cryptographic keys to move bitcoin from the first blocks of bitcoin that were ever mined. The ability to perform that transaction would have provided concrete evidence of his proclamation. However, Wright backed out of his quest.

Wright apologised for his failure to follow up and brushed the commotion away by declaring that he no longer had “the courage” to do so.

What do we know about Satoshi?

Actually, nothing really. While there are speculations, we simply cannot know who Satoshi is until they reveal themselves or until the NSA releases their Satoshi conclusions.

Why remain anonymous?

There are different reasons as to why Satoshi would keep their identity secret. There are dangers associated with being the founder of such a globally disruptive currency and technology.

At its core, Bitcoin is free from governmental control and its use is often heavily scrutinized by lawmakers who view it as an enabler of illicit activity.

Additionally, Bitcoin’s nature was intended to inspire a community-driven, decentralised network in which participants shaped its fate. The concept of cryptographic proof was developed to overtake the necessity of a trusted intermediary in transacting value. Thus, the anonymity of Satoshi could be considered as somewhat logical and appropriate, especially considering the anonymous nature of Bitcoin transactions.

Bitcoin did not arise as a sudden anomaly but rather as a culmination of the various efforts undertaken by cypherpunks to create privacy-oriented digital payment solutions.

To conclude, whether Satoshi remains anonymous will not affect the already profound impact of Bitcoin and blockchain technology on our society as we know it.