There are only two worlds where that level of extreme monetary ideology can be found – amongst libertarians and Cypherpunks.
How much of a Cypherpunk was Satoshi?
When the moment came to make his invention known to the world, Satoshi could have announced it anywhere. On a tech forum, on a dedicated website, in a newspaper, to academia.
But of all the forums in the world available to him, he chose the cryptography mailing list.
Why? And what does that tell us?
The original Cypherpunks mailing list had been disbanded several years earlier. Excess spam, squabbling among posters (known as flame wars) and a general dilution in quality had all played a part in the decision to disband it. The more technical posters – the likes of Hal Finney – gravitated to the cryptography mailing list. The more politically and philosophically inclined contributors, it seems, went elsewhere.
How did Satoshi even know about the cryptography list? He must have at least been a lurker, otherwise why would he have gone there? Had he posted on it before, maybe under a different name? Did he know other people who posted on there? There must be some kind of connection.
When he announced Bitcoin on the list, he could have been seeking a critique on it. On the cryptography mailing list he knew he could find a target audience – skilled programmers like Hal Finney – who would understand and even appreciate his project, give him productive, intelligent criticism, and perhaps help develop it. What’s more, they would respect his anonymity – Cypherpunks have a long history of communicating anonymously. It is part of their tradition. Pseudonyms, such as Satoshi Nakamoto, are not unusual.
We know Bitcoin required knowledge of Cypherpunk technological ideas: the Hashcash invention of Adam Back and Hal Finney’s reusable proofs of work. It’s not quite so clear how aware Satoshi was of the work of Wei Dai and Nick Szabo (see the footnote for more on this92), although Satoshi did later say, ‘Bitcoin is an implementation of Wei Dai’s b-money proposal on Cypherpunks…and Nick Szabo’s bit gold proposal.’93
It all re-enforces this obvious connection between Satoshi and Cypherpunks.
For all the glamour and excitement you might associate with the Cypherpunk world and its revolutionary ideas, there were not many of them. There were even fewer with an interest in developing a new form of digital money. ‘Nearly everybody,’ says Nick Szabo, ‘thought it was a very bad idea. Myself, Wei Dai, and Hal Finney were the only people I know of who liked the idea (or in Dai’s case his related idea) enough to pursue it to any significant extent until Nakamoto…Only Finney and Nakamoto were motivated enough to actually implement such a scheme’.94
Most libertarians, meanwhile, saw some kind of a return to a gold standard as the answer to the world’s monetary woes. Gold is something that Satoshi clearly understood (in amazing detail, in fact, as you’re about to find out). The system of mining bitcoins was designed to replicate gold, as was the deliberate deflationary scarcity. But Bitcoin is not gold. The technology – the cryptography – was born somewhere else. So was the anonymity. They were born in the world of Cypherpunks.
As Szabo would later say to me, ‘Only a handful of people cared about this kind of thing before Satoshi.’
There really aren’t many people who Satoshi could be.
The Easter eggs that Satoshi left hidden
When some curious souls looked at the code of Bitcoin’s genesis block (the first bitcoins that were mined), they found a quotation. It had deliberately been left there, where Satoshi knew people would, sooner or later, find it.
It said: The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
This was the headline from The Times – and it came on the same day the first bitcoins were mined. The UK Chancellor Alistair Darling was bailing out the banks again.
Why did Satoshi write that in?
Satoshi has a habit of letting his statements and his code do more than one job at once. The Bitcoin mining process, for example, disseminates coins but it also maintains the block chain.
The obvious practical reason for the hidden quotation was to add additional verification that those coins were mined on or after that day.
The Times was once the world’s best-known paper, which makes it an obvious choice. But why not choose The New York Times, say?
The main stories in The New York Times that day related to Israeli ground offences in the Gaza Strip and what Obama was going to do about the Guantánamo Bay detainees. There was nothing relevant to Bitcoin. By inserting The Times, there was now the inference that Bitcoin was some kind of comment on what was happening in the financial markets at the time.
Citing an English paper also re-enforced the British identity he was keen to create in people’s minds – rather like the British spelling he used. It added another layer to the disguise.
But that Times headline wasn’t the only Easter egg he would leave hidden.
When you register on the P2P Foundation, you have to give your birthdate. Satoshi gave April 5th 1975.95 There might, at first, seem nothing unusual about that.
It’s easy to look through history, find some event that took place on April 5th and then attach some kind of significance to it. Pharrell Williams was born that day – perhaps Satoshi was a Pharrell Williams fan and wanted him to sing the theme tune in the Bitcoin movie, should there ever be one.
But, for those who study their money, April 5th was one of the most significant dates in history. On that day in 1933, President Franklin D. Roosevelt signed Executive Order 6102, which made it illegal for American citizens to own gold.
Roosevelt confiscated Americans’ gold, gave them dollars in exchange, then de-valued those dollars by 40%, pushing the gold price upwards from $20 to $35. He did this to devalue US debt as a means to deal with the Great Depression – but some say he effectively stole 40% of Americans’ wealth.
There are many who regard this action as one of the most unconstitutional things the US government has ever done. It was direct theft by government from the people with no democratic process. While the American constitution clearly states that only gold and silver should be money, suddenly those who owned gold faced imprisonment of five to ten years if they did not hand theirs over to the government.
Perhaps this is too small of a straw to clutch. After all, Satoshi didn’t say he was born in the year 1933. He gave the year 1975.
He could have put 1933 as his birthdate – but that would mean he was an unlikely 75 when he designed Bitcoin. 1975 made him a rather more believable 33 in 2008.
So what happened in 1975?
1975 was the year it became legal for American citizens to own gold again.
Such is Satoshi’s meticulousness and his knowledge of monetary history, I’m sure this is no coincidence.
By combining the two dates – April 5th and 1975 – he gives himself a credible age and manages a dig at what some regard as one of the US government’s most unconstitutional actions of the past century.
It’s an obscure but brilliant reference. It is also extremely political.
As we’ll see, Satoshi was not outspoken in his political beliefs. Then again, Satoshi Nakamoto was just a vehicle to design and develop a product. Judging by the Easter eggs he has left us, the man behind Satoshi, it seems, was rather more political than we realise.
How many people are there who have the knowledge of monetary history to make a reference like that?
Again, the answer is: not many.
Particularly if you confine the search to Cypherpunks.
The pernicious tax that Satoshi so loathed
Satoshi was remarkably understated in his political pronouncements.
Unlike other, more vocal Cypherpunks, there were no crypto-anarchist manifestos or declarations of the independence of cyberspace.
A currency without government is inherently political, but for the most part he avoided the anti-government rhetoric common among some Bitcoin enthusiasts.
‘You will not find a s
olution to political problems in cryptography,’96 he was told shortly after proposing Bitcoin. ‘Yes,’ he replied, ‘but we can win a major battle in the arms race and gain a new territory of freedom for several years.’97 This is pretty strong libertarian stuff – but that was the most extreme comment he would make in the 80,000 words he published online over two years. Most of what he wrote was dedicated to coding.
He did say that Bitcoin is ‘very attractive to the libertarian viewpoint if we can explain it properly’98 – but, again, that was about as far as he went. It was more important to him to get his product right than it was to market it. He would let others do that for him. His product could change the world in a way that his words could not.
In July 2010, when discussing the writing of Bitcoin’s Wikipedia entry, he said, ‘We don’t want to lead with “anonymous (currency)”…(or) “currency outside the reach of any government.” I am definitely not making such a taunt or assertion.’ He just wanted to briefly explain what Bitcoin did.
This is not just understatement. It was, I am sure, also tactical.
At this early stage he didn’t want loud, antagonistic proclamations. It was more important to get Bitcoin working. The more belligerent the tone of the publicity, the more likely it was to invite attack. He needed to get the code as resilient as possible, and Bitcoin widely disseminated and established, before the aggressive attacks came in. The bigger and more established Bitcoin was, the harder it would be to take down.
But he did make one very telling comment on announcing the release of an early version of Bitcoin. Inviting people to try it out, he said, ‘Escape the arbitrary inflation risk of centrally managed currencies!’99
Inflation – and deflation – are troublesome words that mean different things to different people. This is one of the reasons why there are so many arguments about them. Inflation originally meant the expansion of the supply of money and credit; deflation meant the reduction of the supply of money and credit. But now – to central banks, at least – inflation means rising prices, while deflation means falling prices. To others inflation means government manipulation of money.
Under a fiat money system, inflation – however you define it – of some kind or other is inevitable. Money supply has grown at an average rate of 11.5% per annum since 1989 and will continue to grow as long as lending systems remain as they are. As for rising and falling prices – prices of some things will rise (collectibles, houses in prime areas, stock markets) and others will fall (consumer goods, workers’ wages), depending on circumstances. But the broader trend is upwards – CPI has averaged just below 3% since 1989. And of course government manipulation of money of some kind is everywhere and inevitable – it begins with central banks setting interest rates.
Bitcoin is as anti-inflationary an entity as has ever been invented. It was deliberately designed to combat inflation.
First, the supply of bitcoins is clearly scheduled, transparent and finite. ‘It is known in advance how many new bitcoins will be created every year…the money supply increases by a planned amount,’ says Satoshi.100 We know the maximum number of bitcoins will be 21 million.
As for rising or falling prices, if more people start using bitcoins at a faster rate than they are mined, then prices of things, measured in bitcoins, will fall. This is the dynamic we have seen so far – as the price of a coin has risen from pennies to hundreds of dollars, the relative price of goods has fallen. If the reverse happens – and Bitcoin sees fewer users – then prices of goods will rise.
This system does dramatically favour early adopters, which is why there are so many rags-to-riches stories. Pyramid and Ponzi schemes share this trait. But, as Satoshi says, ‘Coins have to get initially distributed somehow, and a constant rate seems like the best formula.’101 (And I’ll bet that for all the people who have made millions, there are many times more early-adopters kicking themselves for selling too soon.)
Finally, of course, as an open-source currency with no central issuer, Bitcoin is outside government purview. Governments can’t issue bitcoins. They can’t declare what bitcoin interest rates are. They can’t manipulate bitcoin inflation statistics. So, Bitcoin is anti-inflation – however you define it and whatever form it takes.
We have another clue, then, about Satoshi. He hated inflation.
Bitcoin is ‘more typical of a precious metal,’ Satoshi says. ‘Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes. As the number of users grows, the value per coin increases.’102
Satoshi was a bit of a gold bug as well, then.
He might have coded the new money system of the world, but he didn’t have much of a computer
Let’s look for a moment at some of the things we know for sure.
We’ll start with his computer.
Satoshi used Windows. Windows is the most common computer operating system in the world: nothing remarkable there. Bitcoin was compiled using Microsoft Visual Studio.
What is remarkable is that the original Bitcoin code was not multi-platform – it was Windows only. That is unusual for a high-level coder; they usually prefer Linux or Macs.
Steve Jobs will be turning in his grave, but Satoshi did not have a Mac. He always had to ask others – usually the 10,000-bitcoin-pizza-buyer Laszlo – to test the system on Macs and would rely on them to make it work. ‘Good, so I take it that’s a confirmation that it’s working on Mac as well,’ he said when a new bit of tech was being tried out.103
Despite having a Windows machine, we also know Satoshi did not have an Intel Core i5 processor or an AMD processor. He said, ‘I hope someone can test an i5 or AMD to check that I built it right. I don’t have either to test with.’104
But by August 2010 he was using the operating system Linux. He says, ‘I could only get this working with Linux’.105
We also know he was using the operating system GNU,106 and he used Open Office to write the Bitcoin white paper. It is interesting how he favoured open-source software in both cases.
It’s also worth noting that his computer might not have been top drawer. Though one theory says he was running a powerful 64-core cluster, another says the opposite. At BitcoinTalk, Moonshadow writes: ‘it’s pretty obvious that his machine wasn’t particularly powerful, as in the very beginning (looking at the charts from blockexployer) it would take hours between blocks…even at the minimum difficulty of 1.’107
Satoshi might have programmed the new money system of the world, but he didn’t have much of a computer.
Where in the world is Satoshi?
What about where Satoshi lives – any clues there?
Yes – he left two clues.
First, the times when he used to post online.
Over the two years that Satoshi posted, he was most active between the hours of 3pm and 2am Greenwich Mean Time (GMT), according to a survey put together by Stefan Thomas, a Swiss computer scientist. After 3am GMT posting was light and there was barely an entry in the six hours between 5am and 11am. Then from 11am to 3pm posting would start gradually increasing again. This pattern was consistent during the week and at weekends.
The first observation here is that he maintained regular hours – unusual for a computer hacker. We can come to a tentative conclusion here. On the basis that young men tend to keep more irregular hours, this also suggests someone who is older than, say, 30, rather than younger.
The next observation is that Satoshi’s posts were time-stamped at GMT. (He would have known how to change this setting, if he wanted.) People wrongly assume GMT is UK local time, when in fact it is only so for the five months of the year between October and March – for the rest of the time the UK is an hour ahead of GMT. It appears to me that the use of GMT was just another, slightly erroneous, part of the British disguise.
Then we must ask – what was he doing in the time that his posting disappeared – in the hours between 5am and 11am GMT? Perhaps he was in an environment where he couldn’t post – at
school or at work, maybe, but the more likely explanation is that that was when he slept. In the ‘low-posting’ hours on either side, he was either going to sleep or waking up.
But if he was in the UK, 5/6am to 11/12am is a rather odd time to sleep.
But 5am to 11am GMT equates to 1am to 7am Eastern Standard Time (EST) or 10pm to 4am Pacific Standard Time (PST).
There are numerous ways to interpret the data. The obvious interpretation is that he was based in the EST zone and kept normal working and sleeping hours. Activity would peter out at around ten at night and start to pick up at nine or ten the following morning, with peak activity being between the normal working hours of 9am and 6pm.
And, of course, there are a number of people in other time zones – particularly on the West coast of the US – who keep EST working hours.
There was another clue.
After an early crash in January 2009 when just Satoshi and Finney were mining, Finney posted a very detailed log of debugging information.108
It showed Satoshi was running a computer in California.
The next time there was a crash, Satoshi asked for the log to be emailed to him privately, off-list. Was he protecting information about his whereabouts?
The name that is no more real than Elton John or Michael Caine
At first, everyone took Satoshi at face value.
‘I thought I was dealing with a young man of Japanese ancestry who was very smart and sincere,’109 said Finney.
‘It didn’t occur to me that he was anonymous or that it was a pseudonym at the time,’ Adam Back remarked about Satoshi’s early emails to him.
There are not many Satoshi Nakamotos in the world.
Bitcoin Page 10
