Looking for the coin in the haystack

Yesterday, the BBC, The Economist and lifestyle magazine GQ reported the same story. They revealed that Australian businessman and computer scientist Craig Steven Wright was behind Satoshi Nakamoto, the pseudonym the inventor of Bitcoin had been using since the digital currency first surfaced in 2008. Wright made the proof of his identity publicly available in a lengthy and at times rather technical blog post published yesterday. Other self-styled experts and technology media have since then come out to endorse him: Dominic Frisby, author of a bestseller on Bitcoin, wrote an article for the Guardian; Time published a piece about his ‘unmasking’; and Gizmodo seems to at least partly believe that Wright is the man (after their initial revelation in December 2015 and their doubts three days later). In short, Wright – in the presence of the Bitcoin Foundation’s chief scientist Gavin Andresen, and Jon Matonis, one of BF’s founders – demonstrated the ‘proof’ of his direct link to Nakamoto by signing messages with early cryptographic keys. Over the coming days, further ‘proof’ is supposedly going to be provided. Wright claimed that he will ‘move’ one of the early coins, securely linked to Nakamoto’s identity, as the BBC reported earlier today.

Craig Steven Wright. Source:
Craig Wright.

This isn’t the first time Wright name has been linked to Nakamoto; he was outed already in December 2015. Doubt can be cast on his most recent disclosure just by looking back at events which occurred over the last six months:

Already in December 2015, Wright was proved to be a fraudster on Forbes. He neither owned the supercomputers necessary to engage in the blockchain network underlying Bitcoin as he claimed he did nor did he have a PhD title from Sydney’s Charles Sturt University, as stated on his LinkedIn page.

Also in December 2015, Emin Gün Sirer, who had been in direct contact with Wright since 2010, wrote a guide on why Wright could not be Nakamoto: “Entries in his blog that discussed Bitcoin, dated 2008, were inserted in 2013. They contain words like cryptocurrency which were coined in 2010 at the earliest. […] It was clear from my direct PM correspondence with Craig that he was not a protocol or system designer. Perhaps he knew how to set up servers, perhaps a bit more, but this was not Satoshi.“

In January 2016, Wright was additionally under investigation by the Australian Tax Office resulting in a police raid on one of his former homes. Australian authorities believe that the December 2015 revelation was simply a distraction from his very real tax issues.

As of yesterday, new doubts have been added, directly related to both Wright’s proof of identity and the surrounding circumstances.

In Forbes, three leading cryptocurrency experts refute Wright’s claims:

  1. “He claims to be displaying proof that he has the private key for some early transactions – principally I think he is claiming the first to Hal Finney – but no one seems to be able to decode the key to prove it independently.“ –– Surrey’s Professor Alan Woodward
  2. What Wright did in his blog post was “like photocopying someone else’s signature on a publicly available document and claiming it’s proof you are them”. –– Peter Todd
  3. “Even with cryptographic proof, there’s still the possibility that the real Satoshi’s keys may have been compromised or reverse engineered. “ –– Cornell’s Emin Gün Sirer

Vox’s Timothy Lee immediately followed these critical claims debating them on two levels – the cryptography and the performance of the proof as such:

  1. “What Wright appears to have done is to find an old digital signature generated by Nakamoto years ago, reformatted it, and then presented it as a new signature generated by Wright.”
  2. “This verification process leaves lots of room for a hoaxster to trick a gullible observer. The key question is whether Wright tampered with the software used to verify the digital signature — if he did, then obviously this verification is meaningless.”

On Reddit, the /r/Bitcoin community debated Wright’s outing and came to a relatively clear conclusion:

  1. The neutral answer: “I don’t know if Craig Wright is SN. I don’t care and I don’t want to know. This is not a telenovela. Bitcoin is a neutral framework of trust that can bring financial empowerment to billions of people. It works because it doesn’t depend on any authority. Not even Satoshi’s.“  –– andreasma
  2. The strong negative case: “The signature on Craig Wright’s blog post is not a signature of any “Sartre” message, but just the signature inside of Satoshi’s 2009 Bitcoin transaction. It absolutely doesn’t show that Wright is Satoshi, and it does very strongly imply that the purpose of the blog post was to deceive people.“ –– theymos “Aside from zero cryptographic proof; I’ve read a book of all Satoshi’s quotes, and not one of them makes him sound like an arrogant arsehole. Listen to Craig talk about how he will never accept a Nobel prize as its beneath him.” –– robbonz

Github community members (Patrick McKenzie before all others) are similarly rejecting Craig’s claims: “I’m reasonably confident that I could have sold the same story, with approximately two hours of preparation […] Wright’s post is flimflam and hokum which stands up to a few minutes of cursory scrutiny, and demonstrates a competent sysadmin’s level of familiarity with cryptographic tools, but ultimately demonstrates no non-public information about Satoshi.“

They just share a name. Dorian S. Nakamoto listens during an interview with the Associated Press, Thursday, March 6, 2014 in Los Angeles. Source: Financial Post.
They just share a name. Dorian S. Nakamoto listens during an interview with the Associated Press, Thursday, March 6, 2014 in Los Angeles. Source: Financial Post.

FT Alphaville’s Izabella Kaminska is particularly directly negative in her piece yesterday:

  1. Wright’s treatment of PR and the press was rather dodgy: “We were alive to the fact that Craig and his team were canvassing specific reporters, cutting media coordination deals and attempting to get known experts in the field to endorse his claim and his crypto proofs, all the while insisting that those in the know signed NDAs.” (Vox strengthens this claim even further: “Wright chose to give his scoop to the BBC, the Economist, and GQ. These are all excellent publications, but none of them are known for their in-depth coverage of computer security. The real Satoshi Nakamoto should have anticipated that no one would give much weight to a GQ scoop about his identity.“)
  2. Other experts ”were approached by the Wright team, pre the Big Reveal, but […] refused to endorse him, claiming the proofs weren’t convincing enough to do so. Some, for example, were expecting and/or demanding a transfer of the original Satoshi funds as a demonstration of a legitimate claim to the Satoshi moniker.”

At the same time, non-authoritative polls on Twitter are going crazy – and none of them is in favor of Wright:

Bildschirmfoto 2016-05-02 um 21.43.41 Chd5uDEU4AA-yxh.jpg-large

What is in the end more interesting than the question whether Wright is or is not Satoshi, is why anyone would come out to make this claim. Several hypotheses persist:

  1. “Satoshi Nakamoto dies with this moment. Satoshi was more than a name, it was a concept, a secret, a team, a vision. Now Satoshi lives on in a new form – changed. Much of the secret is gone, but the vision is still there.“ (Financial Cryptography). Hypothesis I: The founding myth behind Bitcoin had to become more concrete in order to make the currency survive. Wright cares about the project and wants it to be revived – potentially also by some publicity. But as Brett Scott claims: “[The revelation] will damage the soul of Bitcoin probably, which relied upon a mysterious symbolic entity to hold it together.”
  2. “It was his growing frustration at not being properly recognised and potentially passing up on a Nobel Prize that was inspiring him to confirm his identity.” (FT Alphaville). Hypothesis II: Wright is ultimately just a self-centred, attention-seeking guy who couldn’t hold back any longer and wants to finally be recognised.
  3. “Expect radically-new solutions that address specialized nodes and on-chain scalability, smart contracts that exploit a Turing complete Bitcoin, the impotence of tokenless blockchains, and a systematic decline in the quantity and value of alt-coins. […] Of course, overall scalability of the Bitcoin network will continue to evolve and improve, with a decided bias towards efficient on-chain scaling as further advancements in mining and node specialisation are realized.” (Jon Matins). Hypothesis III: Bitcoin is in a crisis (mainly because people want to make it bigger to earn more money with it) and a gap opened for an authority to make decisions. Who would be a more natural authority than the founder? Customer-facing companies, such as Blockchain (which already raised more than $30mil in venture capital) want to make Bitcoin – and this is Bitcoin as a currency and not as a blockchain technology – grow. There is a lot of money involved ($880mil have been invested in Bitcoin companies since 2014 alone according to Pitchbook), some of which is currently on the verge of leaving the community altogether.


So what?  

So while the identity-game might go on for a little longer now that Wright has announced that he will “move some coins”, there are more important potential effects to consider. Hypothesis III gives us the most to speculate about in this direction. The outing might have ultimately been about money, and making more of it. Wright has for quite a while been interested in testing how much one could increase Bitcoin’s scale. With this interest, he is on Blockchain CEO Peter Smith’s side; Smith and his company are interested in making Bitcoin a more scalable and speedy platform able to deal with more than the 7 transactions it can currently process in a second. A bitcoin wallet, such as Blockchain is rather naturally interested in increasing this number; more transactions would mean the potential of more happy clients for themselves. Interestingly, Andresen, one of the main experts now endorsing Wright, was proposing a solution (BitcoinXT) to fix this exact problem himself last year. With BitcoinXT, users are able to adopt bigger ‘block’ sizes, i.e. higher capacity. Andresen himself is on BitcoinXT’s payroll. And so was Mike Hearn who happened to be the main expert put forward by the BBC, now the main news outlet for Wright’s coming out, on Bitcoin in January 2016. Hearn has by now left behind the world of Bitcoin – because most importantly the lack of consensus about how to increase the block size and – as he claimed in March – Bitcoin’s current ‘leader’ Gregory Maxwell (who is both very sceptical of Wright and against a radical block-increase). Obviously, all of these guys – Wright, Andresen, Hearn and also Matonis – have been part of a tightly knit community for a while. But is it really chance that they are all involved in this revelation at a time when their business interests are at stake, not to say in serious danger?

Wright has stepped forward to become the fix-all solution, which certain parts of the community, and surely the community around applications such as Blockchain and BitcoinXT, were waiting for. I’m inclined to say that, considering all of the evidence so far, he is not the original creator of Bitcoin. This might not matter, because the authority he can gather through this bold move might still be enough to solve his own tax issues as well as the business troubles that some of his co-fighters are currently facing.



Andresen has started to take his initial endorsement back: “I was as surprised by the ‘proof’ as anyone, and don’t yet know exactly what is going on. It was a mistake to agree to publish my post before I saw his– I assumed his post would simply be a signed message anybody could easily verify.”

Johannes Lenhard is currently a post doctoral researcher at the Max Cam Center for the Study of Ethics, the Economy and Social Change at the University of Cambridge and a College Research Associate at King’s College, Cambridge. His work is focused on the intersection of alternative economics, social theory and the ethnographic study of homelessness and mental health. His new project is discovering the ethics of venture capital investing and is the current editor-in-chief of KR.