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LeoGlossary: Satoshi Nakamoto

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Satoshi Nakamoto is credited with being the investor of Bitcoin. This was the one who released the Bitcoin White Paper in 2008. We also see where Satoshi was the very first Bitcoin miner.

Nakamoto is an anonymous individual or group. Nobody is sure of the true identity of those behind Bitcoin. It is believed this came from the Cypherpunk movement with many such as Nick Szabo being accused of being Satoshi.

Nakamoto was present in online forums during the early years and interaction was done via email and posts there. No updates to any of the communications were received since 2010.

To date, the wallets tied to the early mining equates to the largest holding of Bitcoin. This amounts to over 1 million Bitcoin.

The name also lends itself to the smallest unit which is called a satoshi, or sat. There are 100 million satoshis in each Bitcoin.

Anonymity

Anonymity is synonymous with the tenets of the Cypherpunk movement. That group was extremely concerned about privacy, especially as it pertained to the future of the Internet. They rightly forecast the idea of the surveillance state, one where individuals could be at risk from governments based upon the postings online.

In addition to privacy measures taken by developers, they felt one defense was anonymity. It is much harder to track down a name on the Internet.

The ones behind Bitcoin took this approach.

Another theory as to the reason for a lack of revelation regarding the identity is the danger posed. Bitcoin was released as a monetary system that would operate outside the reach of either government or central banks. This was forged as a result of the Great Financial Crisis and the actions that were taken by the banks.

Satoshi felt a better form of money was necessary. The solution was Bitcoin.

This meant putting oneself in the crosshairs of some pretty powerful individuals and corporations. Wall Street has a great deal to lose if alternative forms of finance start to emerge.

The anonymity also led to speculation that the development of Bitcoin was done by an agency such as the NSA in the United States. Some believe this was a way to get people accustomed to the idea of digital currency, paving the way for the elimination of cash and the introduction of a Central Bank Digital Currency (CBDC).

Without a person to ask, there is no way to know who is behind the development of Bitcoin. That means it is impossible to determine whether friend or foe.

Double Spend Problem

In addition to being the first miner and mining the genesis block, Satoshi make an enormous contribution to the world of decentralized money.

Before the creation of Bitcoin, many earlier forms of digital currency failed. A number of Cypherpunks included David Chuam and Nick Szabo rolled out versions that predated Bitcoin. Chaum had eCash while Szabo produced Bit Gold. The latter was somewhere successful except for the fact that the verification was centralized.

Nakamoto provide a huge boost with the Proof-of-Work protocol because it solved the double spend problem without having a centralized entity performing the task. It is obviously a problem for a monetary system to have coins spent more than once. This was something that was solved through validators but Satoshi made sure it was decentralized.

The mining process meant that nodes were not correlated with each other. The incentive was for the computers to solve the cryptographic puzzle and earn the block rewards. Since there was payment to the block producers, they were incentivized to remain within the bounds of what the protocol set forth. Nodes that fell out of consensus were rejected, providing no benefit to nefarious players. As long as the hash rate was spread out enough so prevent a 51% attack, the double spend problem was solved.

Who is Satoshi Nakamoto?

Over the lift of Bitcoin, there were much speculation as to who is Satoshi Nakamoto. Here is a list of some of the people who were accused of being the Bitcoin invetor.

  • Hal Finney
  • Nick Szabo
  • Craig Wright
  • Dorian Nakamoto
  • Dr. Vili Lehdonvirta
  • Irish Student Michael Clear
  • Neal King, Vladimir Oksman and Charles Bry
  • Shinichi Mochizuki
  • Gavin Andresen
  • Jed McCaleb
  • Ross Ulbricht
  • Adam Back

Some even claimed that Elon Musk was Satoshi Nakamoto.

Other than Craig Wright, all denied the allegations they Nakamoto. Wright went ahead and tried to patent the Bitcoin White Paper. He also sued for libel anyone who denied the claim he was Satoshi and labeled him a fraud.

To date, Wright has done nothing to prove conclusively he is Nakamoto including moving any of the Bitcoin in the original wallets. This would prove that he had the private key, something only Satoshi or someone close to that individual would have.

Contribution

Even without revealing the true identity, Satoshi Nakamoto kickstarted a revolution of peer-to-peer money systems that are now spreading the planet.

Bitcoin was forked a number of times, creating Litecoin, Bitcoin Cash, and Bitcoin BSV.

Developers such as Dan Larimer created a number of blockchains tied to his delegated-proof-of-state (DPoS) protocol. These were Bitshares, Steem (which resulted in a fork creating Hive), and EOS.

Vitalik Buterin brought smart contracts to the world with the release of Ethereum in 2015. This was also forked on a number of occasions, creating many blockchains using the EVM architecture.

A lot of this is providing the infrastructure that many believe will be the basis for decentralized finance (DeFi). This, in the minds of some, will radically transform our entire financial system due to the advancement of technology.

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