Who Is the Creator of Bitcoin?

Date Published
December 13, 2020
Written by
Deniz Saat
Reviewed by

Satoshi Nakomoto is the pseudonym for the creator(s) of Bitcoin and the identity of the individual or group is still unknown to this day. Currently, Satoshi could easily be placed in the top 350 richest people in the world with an estimated 700,000 to 1 million Bitcoin locked away. Here is one of his addresses with no withdrawals and a considerable amount of donations. None of the Bitcoin speculated to be owned by Satoshi have ever been moved, but there are many outlets that continue to create a sense of fear by reminding the public that Satoshi could sell all of his holdings in order to “crash” the market price at any time. Even if that were the case, his Bitcoin would then be redistributed to current buyers at lower prices until the price recovers. Fear, uncertainty, and doubt have caused crashes in the past and another major selloff of Bitcoin would not be surprising. It would simply be another temporary hiccup added to the list of many other Bitcoin incidents.

Another fear tactic used to dissuade the public from learning more about Bitcoin are headlines that claim Satoshi to be a “criminal”, “drug dealer”, or “con artist” even though there is no evidence to support these accusations. The main takeaway we hope to provide for our readers is that it does not matter who or what Satoshi Nakamoto is. In fact, it is better that we don’t know and hopefully we never find out Satoshi’s true identity. We are of course extremely grateful that Satoshi was able to bless us all with Bitcoin, but he disappeared from the space for a reason. Let’s go over some history before we delve into why we do not need to know the true identity of Satoshi.

Learning from the past

We have to consider the first attempt at implementing a digital currency that was not controlled by a government or large entity. E-gold was founded in 1996 with operations in Melbourne, Florida which provided vendors with an API that enabled their services to be built on top of it, much like how Bitcoin is today. With over a million accounts by 2004, the company was considered a success. Unfortunately, because it was a centralized platform and the creators were publicly known, they fell under the scrutiny of law enforcement to provide information about their users. The vetting process for E-gold customers at the time did not require identification and did not adhere to KYC or AML regulations. Because of this lack of foresight from the creators, E-gold remains in legal perpetuity until agreements can be made between the founders and the federal prosecutors.

If Bitcoin’s creator was known

Satoshi was aware of products like E-gold and other websites creating their own currencies. Each company’s attempt to achieve international commerce were being bottlenecked or shut down completely by their local governments. Having a centralized platform to distribute funds while actively maintaining accounts would not be the solution for a digital currency. In an email thread, Satoshi explains that peer-to-peer networks have proven to circumvent large entity enforcement. The network would require a decentralized method that could be available to anyone with a computer. In the circumstances that the main contributors for this digital currency were jailed or put in danger, others would be able to take over the project and continue maintaining the network. Thus, solving the issues involved in the E-gold debacle.

Why an anonymous creator slows down institutional adoption

Hedge funds and large investment institutions are required to know who are operating the companies they invest in. Granted, Bitcoin is far from a company but that is how many in traditional finance view Bitcoin. They do not know how to determine the value of the digital currency because there has never been anything else quite like it.

When a fund manager proposes his or her investment thesis to clients, they will pitch Bitcoin the same way they would advertise a stock pick. They will first go over the basic metrics and ratios compared to other companies in the same industry. They will then highlight the discrepancies in pricing and claim their pick to be a bargain. If the client is still interested, the fund manager will then discuss the track records of leadership. By having a CEO, president, or board of directors for a company, there is a large amount of accountability placed on that particular group of people. Performance is based on past results, hoping for similar outcomes in the future. Credibility is determined by values that the executive team instills in themselves and the company they help run. If a plan is executed properly, shareholders know who to thank. If profits go down, everyone is aware of who to blame for those mistakes. No accountability is required from investors and all efforts are expected to increase shareholder value in one way or another. The government is also expected to take responsibility for the mistakes of a company’s leadership team in the event that there is a problem too large for management to handle. Essentially, one would be able to benefit from Corporate Welfare if they were invested in a Wall Street favorite. These “favorites” are consistently propped up through cash injections when the economy begins to underperform substantially in the event of a recession.

If Satoshi’s identity was known, he would need to be well connected in order for the network to thrive. Otherwise, Bitcoin is subject to suffer the same fate as E-Gold along with other cryptocurrency projects with identified founders. Most fund managers would prefer to have a known leader for the currency, but Bitcoin continues to excel without one. The lack of education in traditional finance is still apparent whenever a fund manager or venture capitalist is asked for their opinion on Bitcoin.

The benefits of keeping Satoshi anonymous

However, there is hope for mass adoption. As more Bitcoin resources become available, the lack of interest in Bitcoin from most large institutions is having less to do with the identity of Satoshi and more to do with the size of Bitcoin’s market capitalization or size. Bitcoin will need to surpass a few more price targets before it can be added to investment portfolios and held as a reserve asset for companies. The anonymity of Bitcoin’s creator will still play a role in deciding whether or not a firm will invest in Bitcoin, just not as much as most think.

Other benefits of not knowing the true identity of Satoshi include; volunteers from around the world who are committed to marketing, educating, developing and investing in the space. A majority consensus is required to implement updates in the Bitcoin Core software. It cannot be influenced or controlled by any one individual or group unless they have the knowledge to do so with the backing of hundreds of billions of dollars. The network will continue to operate after the death of Satoshi as long as value is still being extracted. And a growing benefit is that progress for improving Bitcoin is not slowed down by political or social pressure.

Anyone can view the source code for Bitcoin here while downloading Bitcoin Core to run their own node. This allows any individual to store their Bitcoin and verify each transaction on the network without a third-party. There is no need to hire a team of auditors or receive permission to perform an audit. One’s investment is purely based on the amount of research done by an individual and does not rely on “insider” information or connections to know exactly what they are investing in. Having Satoshi stay anonymous contributes to keeping Bitcoin as the purest peer-to-peer digital currency.

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WRITTEN BY
Deniz Saat
Deniz Saat is an IT services specialist and technical writer.
REVIEWED BY

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