Bitcoin’s Big Bust: Unmasking The ‘Real’ Satoshi Nakamoto

Will the real Satoshi Nakamoto please stand up?

Yes, here we go again …

The biggest news that’s hit the bitcoin community since it became a thing hit the (virtual) news stands this week as bitcoin’s alleged creator was outed as the 44-year-old Australian Craig Steven Wright.

And in true bitcoin fashion, that’s starting to sound more and more like a Lifetime movie, the soap opera-like drama has unfolded exactly as anyone would have expected from a volatile currency like bitcoin. But first let’s step back with a few of the juicy details that emerged this week.

Wright was named in multiple reports as bitcoin’s most likely creator (again, never confirmed) after suspicions were raised when the Australian government raided his home. Why did they raid his home? Well, it was connected to an investigation initiated by the Australian Taxation Office, unrelated to bitcoin, but related to what, exactly, we still don’t know.

But from the start, there are a few red flags. This tale begins as a little more than fishy when the home of a bitcoin enthusiast with ties as deep as Wright gets raided by a government’s tax officials.

Red flag, No. 1.

And then red flag, No. 2.

Wright, speaking at a past bitcoin investor’s conference (via Skype) in October gave some really awkward hints that show he’s a little too deep into the digital currency world. He stopped short of admitting he was the creator of bitcoin, but, here’s how a little of that conversation went, according to a Wired report:

Wright chimes in and introduces himself as a “former academic who does research that no one ever hears about.”

Michele Seven (a bitcoin blogger) jumps in: “Who are you?… Are you a computer scientist?”

Wright: “I’m a bit of everything. … “I have a master’s in law … a master’s in statistics, a couple doctorates …”

Seven: “How did you first learn about bitcoin?”

Wright: “Um. I’ve been involved with all this for a long time … I — try and stay — I keep my head down. Um …”

But there wasn’t much chatter after that about who this Wright character was or what his connection to bitcoin actually was.

Until now.

The Cryptic Evidence

What’s most interesting about Wright is that he has never been named as a possible creator until this week. He hasn’t been involved in any of the past investigations and had, up until just a few days ago, kept a pretty low profile.  Yet somehow, as Wired’s investigation points out, he seems to fit the bill perfectly. And the evidence stacked up against him doesn’t help his case.

The conclusion of Wired is that “Either Wright invented bitcoin, or he’s a brilliant hoaxer who very badly wants us to believe he did.”

The report also concludes: “If Wright is seeking to fake his Nakamoto connection, his hoax would be practically as ambitious as bitcoin itself.”

Both plausible options.

The evidence is tipping the suspicion scales toward Wright heavily, which includes things like: Wright’s early involvement in bitcoin, including a blog post about the concept of bitcoin months before the initial bitcoin white paper was released in November 2008. Wright’s blog has since been taken down, but Wired already was tuned into past posts that indicate that Wright was too tuned into the bitcoin’s big launches for it to be a coincidence.

Like the fact that he wrote a post on Jan. 10, 2009 that reads: “e-gold is down the toilet. Good idea, but again centralized authority. The Beta of Bitcoin is live tomorrow. This is decentralized … We try until it works.” Bitcoin’s official launch data is Jan. 9, 2009. But Wired speculates that if he created in Australia time, the blog post would have been posted before anyone else really knew about bitcoin’s launch.

Dun dun dun…

Those posts were eventually deleted, but followed with this odd post: “Bitcoin – AKA bloody nosey you be … It does always surprise me how at times the best place to hide [is] right in the open.”

That, too, was deleted, Wired’s report shows. But the alleged leaked emails, transcripts and documents linking Wright to bitcoin’s birth is strong. The clues continue … as does the curiosity of those connected to the cryptocurrency world.

We’ll have to wait to see how this salacious drama unfolds. The bitcoin community hasn’t seen something this juicy since rumors swirled that Ross Ulbricht, the now imprisoned creator of The Silk Road, was accused of hiring hitmen to kill off people who were going to blow his cover. That was never confirmed, of course, but he’s paying the price in prison with a life sentence.

But back to Wright.

What We Do Know About The Alleged Creator

Fast forward to this week and you’ve got everyone in the media pretty much convinced that Wright is the creator of bitcoin. And if Wright isn’t the creator of bitcoin, he’s one unlucky sucker who is having his tax problems smeared across the headlines of dozens of media outlets.

But before you get too excited that the six-year-old mystery has been solved, there’s been another somewhat predictable wrench thrown into the mix.

The actual bitcoin creator(s) posted a message on a bitcoin developer mailing list that reads: “Not this again. I am not Craig Wright. We are all Satoshi.” That seems to play into the theory that many have speculated that bitcoin’s creator isn’t one person, but rather a group of people.

But then again, as a few articles point out, that message could be fake. In bitcoin land it’s never easy to tell. Or it could have been sent out by Wright himself to take attention away from him. This is at least the second or third time someone has been accused and denied being the creator of bitcoin.

Can you blame them? Bitcoin has also been synonymous with Dark Web crime, hacking, drug trafficking, etc.

And so the plot thickens.

But Why Care About Craig S. Wright Or Satoshi Nakamoto?

If you’re asking yourself by now “Why does it really matter who Satoshi Nakamoto is?”, you’re probably not alone. A lot of people have likely moved beyond caring just who created bitcoin. But why it does matter is the sheer fact that bitcoin’s creator (or creators) are believed to be holding a million bitcoins.

If you take Thursday’s (Dec. 10) midday price of $415.21, that means he, she or they have more than $415 million worth of bitcoin in possession. Having all those bitcoins under one person/group could eventually drastically impact the value of bitcoin if it was to disappear, be sold or even be given away. Tiny ripples in the bitcoin world already have proven to create a riptide effect on the market.

Unmasking the alleged creator has and would continue to have a massive impact on its worth. Linking Wright to the supposed “secret bitcoin trust fund” that’s floating around out there could unravel a whole slew of information about bitcoin itself and the anonymous trail that so many have tried to trace for years.

Staying Anonymous

But for those who want to research more on Wright and his online presence, they can’t anymore. A Gizmodo article attempted to do so and found out that his digital footprint had been nearly wiped (outside of the news about him). His blog has been taken down and so has his Twitter account.

But his profile: @Dr_Craig_Wright, gave a little more insight into who he is: “#Security nerd, economist and researcher … Forensics, banking and cryptography.”

And that’s potentially the guy who could win a Nobel Prize in Economic Sciences. And Wright didn’t stay quiet when that nomination occurred. After he saw a re-tweet about the news on Satoshi Nakamoto’s Nobel Prize nod, Wright got into a Twitter spat.

His series of tweets (that have since been taken down) read: “When that person has not authorized you. How bloody presumptuous! … He deserves to live without the disruption people desire for him … You should understand just how much shite one gets just being an early miner in 09.”

If Wright is the creator of bitcoin, he certainly doesn’t want any credit. But if he isn’t, he hasn’t quite done enough to cast the shadow of doubt upon the cynical mass media writers.

For now, it sounds like Wright — creator or not — has his hands full.

Bitcoin Tracker Week 103

Step Aside Bitcoin, Central Banks Want In (Sans Bitcoin)

Bitcoin certainly has a love-hate relationship with banks.

In recent months, they have tended to show some support for the technology that powers bitcoin (blockchain) but have dismissed bitcoin as being a legitimate option for the banking industry. But that hasn’t allowed them to ignore the attention that’s been placed on the rise of bitcoin.

That’s leaving central bankers across the globe looking into how they could implement their own virtual currency that would, unlike bitcoin, be regulated and embraced by governments. The benefits, of course, are the faster payments possibilities and more cost-effective systems that put the central banks more in control of transactions and how money moves. But then there’s the security issues.

As reported in a Wall Street Journal article, there hasn’t been a central bank that has formally devised a system to use or develop a digital currency, but there has been plenty of chatter going on in the industry.

“We have to envision a world in which people mostly use eMoney,” Carolyn Wilkins, senior deputy governor of the Bank of Canada, was quoted as saying in a speech last month. “We need to anticipate this and manage the risks and benefits that could arise.”

The trick for central banks is determining what system would be secure, efficient and able to get the backing of the government. But with the help of digital FinTech startups, there could be a changing tide for traditional financial service providers.

B Is For….Bitcoin

In case you missed it, MPD CEO Karen Webster took to the Internet this week to again give bitcoin its day in the sun.

Well, perhaps its very gloomy day in the sun. As she writes in her eBook this week, “if we kill bitcoin that means we will also kill and bury the blockchain since bitcoin is what keeps the blockchain alive.”

But keeping bitcoin alive isn’t a good idea, she asserts. But why?

“It’s a global currency alright, one used today around the world – by cybercriminals to finance their activities on the Dark Web. Want to buy stolen credit card credentials? Easy peasy. Get a whole big pile of them and pay using bitcoin. And just about everything else that’s unsavory that bitcoin now makes easier to pay for – and procure online,” Webster writes.

But there is hope for distributed ledgers, in her opinion.

“Distributed ledgers, on the other hand, could have some potential — think of them as blockchain without the bitcoin. Many are also bank friendly, many of them leveraging existing banking infrastructure, their well-developed risk, compliance and regulatory expertise and APIs to innovate the movement of money between these distributed ledgers around the world,” she continued.

And that’s where she brings us into looking toward 2016.

“If regulators are looking for something to add to their agenda in 2016, maybe regulating bitcoin out of existence could be top of their list. So far, bitcoin has been really good at doing two things: one good and one very bad. It’s opened up a whole new narrative around how we should be thinking about innovating the movement of money around the world. That’s good.”

Bitcoin Lands Another Fed Agent In The Slammer

Bitcoin has been beleaguered by skepticism and ties to illegal goods ever since it first launched in early 2009. And many have become enthralled in the Dark Web that bitcoin has woven.

Such is the case of former U.S. Secret Service agent Shaun Bridges, who stole approximately $350,000 in bitcoin from user accounts on the Silk Road while serving on a task force designed to investigate the online marketplace.

This week, a judge sentenced Bridges to 71 months in prison, as well as three years of supervised release post-prison. Bridges plead guilty to felony charges of money laundering and obstruction of justice.

Whoa.

While Bridges’ sentence pales in comparison to that of Dread Pirate Roberts, who is serving life in prison, the judge’s ruling did represent the maximum allowable sentencing. As part of his sentence, Bridges was also ordered to pay $1.1 million in restitution.

The judge in Bridges’ trial explained that he was determined to send a lesson to Bridges and others that would act similarly in his position.

“This, to me, is an extremely serious crime consisting of the betrayal of public trust from a public official,” U.S. District Judge Richard Seeborg told the court, as reported by Ars Technica. “From what I can see, it was motivated by greed. No departure or variance is warranted in this case. I seldom find myself in the position of imposing a high-end sentence, but I find this is warranted in this case.”