Who is Bitcoin creator Satoshi Nakamoto? Does it even matter?

9 Dec 2015 | Author: | No comments yet »

AP EXPLAINS: What is bitcoin? A look at the digital currency.

NEW YORK (AP) — Australian police raided a home Wednesday that, according technology websites, belongs to the founder of the virtual currency, bitcoin. For years, people wondered what brilliant basement nerd had created bitcoin, the virtual, untraceable cryptocurrency currently worth around $419 per coin, and controversially financing illegal activity such as the drug trade, terrorism, and whatever awful services one could purchase on the Deep Web.The stakes are high in the hunt for Satoshi Nakamoto, the person or people behind bitcoin, not just for the journalist who gets it right first, but also for the cryptocurrency itself. A: Bitcoin is an online currency that allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties.

Two publications recently announced that they may have identified him, and, concurrently, Australian authorities are honing in on him, possibly for—what else?—unpaid taxes. An Australian entrepreneur and academic, Craig Steven Wright, is the latest candidate, outed in articles by Wired magazine and technology news website Gizmodo hours before his home and office in Sydney were searched by police. Both articles said investigations based on leaked emails, documents and web archives pointed strongly to Wright being “Nakamoto.” “Either Wright invented bitcoin, or he’s a brilliant hoaxer who very badly wants us to believe he did,” said Wired. As both outlets reported, Wright, an engineer, academic, and businessman with several degrees, likely invented Bitcoin along with his friend, Dave Kleiman, who died in 2013.

But the search has already tripped up several journalists, most famously Newsweek’s Leah McGrath Goodman, who identified Japanese American Dorian Prentice Satoshi Nakamoto in March 2014 as bitcoin’s creator. Wright, whose businesses all involve virtual currency, recently announced plans to launch the “world’s first bitcoin bank.” Reuters noted that several computer forensics experts were seen at Wright’s house and that, according to his landlord, he had a very “substantial computer system set-up.” Australian authorities told Reuters that the raid had nothing to do with the recent stories by Gizmodo and Wired, and curiously referred all media inquiries to the Australian Tax Office—which, in 2014, ruled that bitcoin was an asset and not a currency, and therefore subject to the capital gains tax. (Nakamoto, incidentally, is worth about a million bitcoins, which translates to nearly $400 million in U.S. currency, according to Reuters.

Dorian Nakamoto denied it – as has nearly everyone else alleged to be the mastermind credited with writing the paper, protocol and software in 2008 that gave rise to bitcoin and its underlying blockchain technology. “Decision-making power doesn’t rest with any individual, but Nakamoto is such a mythical figure, if he appears he could become a sort of messiah to the community,” said Roberto Capodieci, a Singapore-based entrepreneur focusing on the blockchain. Bitcoin was launched in 2009 by a person or group of people operating under the name Satoshi Nakamoto and then adopted by a small clutch of enthusiasts. Persuading that community is not easy: while the system is decentralized by design, a cluster of so-called bitcoin miners based in China are key, Antony Lewis, a Singapore-based bitcoin consultant, said. Nakamoto dropped off the map as bitcoin began to attract widespread attention, but proponents say that doesn’t matter; the currency obeys its own, internal logic. Unlike traditional currency, bitcoins are not distributed by a central bank or backed by physical assets such as gold, but are “mined” using computers to calculate increasingly complex algorithmic formulas.

Miners run pools of computers that process transactions and create new bitcoins, an energy intensive business that has frozen out all but a handful of players. David Moskowitz, Singapore-based founder of start-up bitcoin brokerage Coin Republic, said knowing who Nakamoto was would be significant “because people are looking for a core voice behind (bitcoin). The police search of the man’s home in the wealthy northern Sydney suburb of Gordon lasted several hours and drew a steady trickle of perplexed neighbors into the quiet, tree-lined street. If Nakamoto chose to sell out, or even hinted that he might, that would push the price down, reducing the incentive to mine which might in turn provoke a steeper fall in the currency, Lewis said. Many described the man as quiet and somewhat standoffish, and said they had noticed the family kept an unusual amount of electronics running in the sunroom at the front of their two-story brick house.

On the other hand, Nakamoto could help reduce uncertainty by reassuring bitcoin users he was not going to sell his holdings in one go or, more drastically, do something called “burning” – publicly deleting the coin by sending them to a bitcoin address to which he or she did not have the key. Wright has not commented publicly on the Wired and Gizmodo reports, and Reuters attempts to contact him using various listed email addresses were unsuccessful. Businesses ranging from blogging platform WordPress to retailer Overstock have jumped on the bitcoin bandwagon amid a flurry of media coverage, but it’s not clear whether the currency has really taken off.

That could be done by announcing he would move some of the bitcoin believed to belong to him, and then doing so, or signing a message with one of the encryption keys used in emails known to have been written by Nakamoto when bitcoin first appeared. Moskowitz, who met him at a Singapore conference last year, said he was interesting and pleasant to talk to. “He’s clearly very intelligent and fits the profile,” he said. “But that doesn’t necessarily mean he is Nakamoto.” Hints as to Wright’s own feelings on unmasking Nakamoto can be found on Quora, a website where users answer questions posed by other users and vote for the best answer. In September someone with his name, position and profile picture “upvoted” another Quora user’s comment that “as a currency that is meant to be ‘for the people, by the people’, it is probably smart that no one knows who exactly started this coin. A network of tech-savvy users called miners keep the system honest by pouring their computing power into a blockchain, a global running tally of every bitcoin transaction. The blockchain prevents rogues from spending the same bitcoin twice, and the miners are rewarded for their efforts by being gifted with the occasional bitcoin.

A: A lot of the mischief surrounding bitcoin occurs at the places where people store their digital cash or exchange it for traditional currencies, like dollars or euros.

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