Satoshi Nakamoto: To Be or Not to Be

The dormant P2P Foundation account of Satoshi Nakamoto – the man, or group of people, who invented Bitcoin – sprang back to life early December, with a single mysterious, and so-far undefined, word: “nour”.

Nakamoto, or the person using his account, also responded to a Brazilian user of Japanese descent who had sent a friend-request more than a year ago. That’s about it.

Nakamoto watchers believe the P2P Foundation account may have been hacked, and the mystery remains intact. Editors at news aggregator Reddit (known as “Redditors”) are convinced they have identified the elusive inventor in a YouTube user with the nickname davincij15, who uploaded videos on precious-metal trading in 2009. davincij15 went on to make a series of accurate predictions on cryptocurrencies in general, and Bitcoin in particular. In 2013, the YouTuber advised his followers to withdraw their virtual cash from Mt Gox, at the time the world’s largest Bitcoin exchange. Mt Gox suffered a virtual heist (or malfunction) in February 2014 – during which 850,000 Bitcoins (BTC), valued at $450m, disappeared. Only BTC 200,000 have since resurfaced, and Mt Gox is currently in liquidation.
Nakamoto is said to own BTC1m, which he mined in 2009 from the Genesis Bloc. This represents a paper value of over $3bn, though cashing-in such a sum could wreak havoc in a jittery and sensitive market. However, the Bitcoin ledger shows that none of Nakamoto’s bitcoins have been traded. Satoshi Nakamoto has been listed as missing since at least 2010, two years after he launched the software that drives Bitcoin. The name sounds Japanese, but the Bitcoin white paper that was distributed among cryptographers in 2008 is written in flawless English. Nakamoto could be British. Or Finnish. Even Elon Musk has been suggested as the genius behind Bitcoin.

Conspiracy theorists believe Nakamoto to be a consortium of four large corporates, and find a clue in the names Samsung and Toshiba for the first name, and Nakamichi and Motorola for the surname. Other identities suggested include Dorian Nakamoto (an unemployed physicist), Hal Finney (a cryptographer and early Bitcoin miner), Craig Wright (an Australian businessman and self-styled inventor of Bitcoin), and Nick Szabo (the creator of Bit Gold, a precursor of cryptocurrencies). Then there is that worker at a media company who analysed the original Bitcoin white paper for unique phrases and chanced upon “computationally impractical to reverse” – a technological term employed, and reportedly patented by, a group of three senior programmers – who also registered the domain bitcoin.org, three days after the release of the original white paper.

Whatever Nakamoto’s identity, there is no doubt that he is/was a visionary and a gifted programmer. However, he was not well versed in economics or the world of finance. Though an interesting proposition from an ideological standpoint, Bitcoin’s entire setup spells economic doom and gloom should BTC ever become a common currency. Bitcoin is squarely aimed at exposing the evils of fiat money, and seeks to reintroduce a gold standard of sorts by limiting BTC to a hardwired ceiling of 21 million. Bitcoin is by definition a deflationary currency.

Despite hints of a Ponzi scheme, Bitcoin’s built-in scarcity should, in theory, ensure steady appreciation. As such, why spend a Bitcoin now, if it is likely to be worth more in future? Deflation is one of the most haunting and disconcerting spectres in all of economics. The European Central Bank has created and floated a few trillion extra euros to keep deflation at bay.

There is a reason for that – one that Nakamoto and his followers have failed to understand.