Satoshi Nakamoto’s identity is one of this century’s biggest mysteries. Who was Satoshi? How was Bitcoin created? Why did Satoshi leave the project so early? This article goes through the early years of Bitcoin when Satoshi was still involved.
Table of Contents
It all started with a mailing list
Satoshi Nakamoto revealed himself to the world on October 31, 2008. This is one of the most important dates in Bitcoin’s history. On this date, Satoshi sent the famous email to the metzdowd.com mailing list titled “Bitcoin P2P e-cash paper.”
Satoshi began his e-mail with the following words:
I’ve been working on a new electronic cash system that’s fully peer-to-peer, with no trusted third party. The paper is available at: http://www.bitcoin.org/bitcoin.pdf
Next, Satoshi briefly described the main features of Bitcoin.
The Bitcoin white paper can still be found at the same URL. Satoshi registered the domain a few months earlier, using an anonymity service to conceal his identity during the registration process. Whois.com reveals that bitcoin.org was registered on August 18, 2008.
According to Satoshi, he began the development of Bitcoin in 2007. This is what Satoshi wrote on the 17th of November, 2008:
I believe I’ve worked through all those little details over the last year and a half while coding it, and there were a lot of them. The functional details are not covered in the paper, but the sourcecode is coming soon.
Why did Satoshi choose this particular channel? It was a popular mailing list in cryptography. The list included all the biggest visionaries and gurus of the field, also known as cypherpunks.
Note that cyberpunk and cypherpunk are not the same things.
Satoshi’s style of writing
Was Satoshi already an active member on the mailing list with another pseudonym? Is Satoshi one of the world’s best-known cypherpunk gurus? We don’t know for sure. There are some clues, though.
Satoshi wrote dozens of e-mails to the list besides the one announcing Bitcoin. These are archived at the Nakamoto Institute. He also posted 575 messages to the Bitcointalk.org discussion forum.
If you go through Satoshi’s messages, two things stand out.
- Satoshi was using mostly British English
- Satoshi used two spaces after periods
The first point used to be one of the cornerstones in defining Satoshi Nakamoto’s identity. However, new studies have overruled this theory. Satoshi also used American English.
There’s even a debate about whether certain words (“optimize” vs. “optimise”) are only used in British English. There is a grey area there. Here are examples of Satoshi’s messages where he has used two different versions of the word optimization.
I guess recent CPU optimizations must have concentrated on things like I/O and branch prediction. (Source)
Laszlo figured out that enabling some more optimisation increased performance about 20%, so 0.3 hashes 20% faster than 0.2.0, but I assume he used that in his own build. (Source)
The second point is present in all of Satoshi’s messages. Two spaces after a period is a style that dates back to typewriters and is also used in the academic world.
Does this mean that Satoshi Nakamoto is an academic who started producing content before personal computers existed? Typewriters became electric in the 1980s, and personal computers started to become popular in households in the early 1990s.
Bitcoin historian Pete Rizzo said Satoshi’s writing style was factual, no-nonsense, and technical. He didn’t fool around and never told jokes.
Satoshi could also use two spaces after a period as a distraction. Maybe he wanted to build an image of an academic person.
The mixed-use of British and American English has raised the possibility that more than one person is behind the pseudonym.
The genesis block of Bitcoin
Bitcoin’s birthday is celebrated on January 3rd. This is when Satoshi Nakamoto started the Bitcoin blockchain (in 2009) and mined the first block, known as the genesis block or block 0. You can view its contents from here.
There are a few things you should know about this block. First is the message, which Satoshi included in the raw data of the block. It goes as follows:
The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.
This is a reference to the front page of The Times magazine. (Source).
In 2009, the world was recovering from the financial crisis of 2007-2008. Financial institutions were being bailed out everywhere, which is what the headline refers to.
The second specialty is the block reward. The 50 bitcoins received from the genesis block are unusable. They were sent to the first-ever address created on the Bitcoin blockchain.
The genesis block, as the first block in existence, cannot be linked to a previous block, which gives it some weird properties. This likely led to Satoshi’s decision to not submit the 50 BTC reward to Bitcoin’s transaction database. (Source)
This doesn’t apply to other bitcoins in the address, which received the first-ever block rewards, at least in theory. No one has ever used any of the bitcoins in that address. It belongs to Satoshi Nakamoto (presumably).
The weird thing is that the genesis address has incoming transactions to this date! Are they sent by analytics companies trying to reveal Satoshi’s identity? Could they be from Bitcoin billionaires who are saying thank you to Satoshi?
There is also a third unique feature related to the genesis block. As you might know, new blocks are created every 10 minutes on the Bitcoin blockchain. The second block, however, was created after six days. Some argue that this is a reference to the Genesis creation narrative.
Satoshi, Hal Finney, and Martti Malmi
A note to the reader. We have used this fantastic article by Pete Rizzo as a source for the early years of Bitcoin. You should also check his interview with Peter McCormack.
As mentioned earlier, Bitcoin was born in January 2009. In hindsight, this was an exciting and historical year. Satoshi had created something that would change the world of finance forever! Banks had controlled the money for centuries. Now, it was time for a digital revolution!
The reality was something else. Satoshi didn’t precisely set the world on fire with his invention. He wasn’t bombarded with emails by cryptography and game theory professionals. Barely anyone paid attention, but one of those who did was Hal Finney.
Finney wrote his famous tweet about one week after the genesis block was mined.
Running bitcoin
— halfin (@halfin) January 11, 2009
After Satoshi’s announcement, Finney was among the few interested in Bitcoin. He contacted Satoshi Nakamoto in November 2008 and was also the first person to receive a Bitcoin P2P transaction.
Just a few days after mining the genesis block, Satoshi Nakamoto sent ten bitcoins to Hal Finney. You can view the transaction from this link.
One of the early Bitcoin enthusiasts was Finnish. He was Martti Malmi, who used the nickname sirius. This is how Malmi tweeted in December 2020.
I'd be a *billionaire* now if I hadn't sold the 55,000 bitcoins I mined on my laptop in 2009-2010 way too early (mostly before 2012). That is regretful, but then again, with the early bitcoiners we set in motion something greater than personal gain.
— Martti Malmi (@marttimalmi) December 18, 2020
Malmi contacted Satoshi as early as April 2009. He wrote the following message:
I would like to help with Bitcoin if there is anything I can do.
Malmi was building the very first Bitcoin online merchants and helped set up the famous Bitcointalk forum, which is still running. However, after 2012, Malmi stepped out of Bitcoin development.
So, there wasn’t much going on in 2009. Pete Rizzo found only a couple of hundred transactions unrelated to mining. One of the most essential financial inventions had been done, but nobody paid attention.
The cypherpunk community was also skeptical. These people had witnessed failed digital money attempts since the late 1980s, so it wasn’t easy to believe that Satoshi had succeeded. Most people still don’t understand the value of Bitcoin.
There was someone who did, though. Satoshi Nakamoto. It’s safe to say that Satoshi knew what he had created. Knowing what he was thinking in those days would be extremely interesting. Probably, even Satoshi couldn’t imagine how far Bitcoin would go in just ten years.
Gavin Andresen and the Bitcoin community
In 2010, things started to happen. The Bitcoin community grew to thousands (tens of thousands) of members. According to Pete Rizzo, this was the period when Satoshi Nakamoto’s status started to change. Before this point, he was a god-like character who updated the Bitcoin program code alone.
Once the community grew, many started to question Satoshi’s role. His decisions were also debated more frequently. The community was even discussing a possible hard fork. The nickname ShadowOfHarbringer wrote to Bitcointalk.org:
There is no single mastermind in open source. It’s more of a brain where a single human is just a cell. If one day Satoshi says, ‘OK guys, it was just a joke with this Bitcoin thing, I’m closing down the project,’ we would simply fork the code.
The word fork was used more and more. Gavin Andresen wrote the following message:
If Satoshi goes rogue, then the project forks.
These were all valid points. How could Bitcoin be a decentralized currency if Satoshi was responsible for all code updates?
Gavin Andresen rose in the ranks in 2010 and built the first-ever Bitcoin faucet, a web app that gave out free bitcoins.
Laszlo Hanyecz made history in 2010 by using bitcoins to purchase real-world products for the first time. He paid 10,000 bitcoins for two pizzas. This day (22nd of May) is still celebrated globally as Bitcoin Pizza Day.
The year 2010 was nothing like 2009. The Bitcoin community was growing fast, and there was much discussion surrounding governance.
Wikileaks and the famous Bitcoin bug
Let’s move forward to the second half of 2010. The drama was just getting started. Gavin Andresen’s role grew even more prominent, allowing him to update the Bitcoin program code.
A historical event took place in August 2010. An unknown person took advantage of a vulnerability and created 184 billion bitcoins out of nowhere. The community spotted this quickly, and Satoshi updated the program code in just five hours.
After this event, Satoshi made more improvements to Bitcoin’s security.
Satoshi would move swiftly to bolster the codebase, adding and removing parts as if boarding for a storm. He took action to throttle perceived attack vectors, disabling commands for complex transaction, hard-coding checkpoint blocks into the software and installing an alert system allowing him to broadcast critical warnings to all clients. (Source)
The community realized that Bitcoin had become famous, and there were people in the world who wanted to destroy it. This increased the discussion over Bitcoin’s governance and Satoshi’s role in updating the code.
Another major event occurred in December 2010. A few months earlier, Wikileaks was attacked and lost its PayPal accounts. See the video below for Julian Assange’s comments in 2010.
PC World Magazine published a story in early December where Bitcoin was named as a solution to Wikileaks’ funding issues. Satoshi didn’t like this attention at all. He wrote the following message to the Bitcointalk forum.
It would have been nice to get this attention in any other context. WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us.
Two days later, version 0.3.19 of the Bitcoin program code was released. It was Satoshi Nakamoto’s last update. In practice, he said goodbye to the community by changing the copyright texts from Satoshi Nakamoto to Bitcoin Developers.
About a week later, a change of power was officially announced. With Satoshi’s blessing, Gavin Andresen became the front figure of Bitcoin. Andresen wrote the following messages to the Bitcointalk forum.
With Satoshi’s blessing, and with great reluctance, I’m going to start doing more active project management for bitcoin. Everybody please be patient with me; I’ve had a lot of project management experience at startups, but this is the first open source project of any size I’ve been involved with.
Andresen’s announcement didn’t cause any drama. The community had already expressed its desire to limit Satoshi’s power, and people were happy to see this kind of development. In the background, Satoshi also pushed more developers to step up and take a more significant role in the development.
The last messages of Satoshi
Satoshi didn’t disappear entirely after December 2010. He was still discussing with key people behind the scenes. However, this happened via e-mail and less frequently. Satoshi hasn’t written a single message to Bitcointalk.org after the 13th of December 2010.
The situation was confusing because Satoshi never wrote an official goodbye message anywhere. Some community members thought he had taken a vacation.
The last confirmed message from Satoshi was an email to Gavin Andresen on April 26, 2011. Satoshi asked Andresen not to make him a mysterious shadowy figure.
I wish you wouldn’t keep talking about me as a mysterious shadowy figure, the press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your dev contributors; it helps motivate them.
Andresen replied to Satoshi and discussed his plans to participate in a conference organized by the CIA. Satoshi never wrote back. A day later, Andresen wrote an official announcement to Bitcointalk.org about his plans titled “Gavin will visit the CIA.”
Was the previously mentioned email the last one Satoshi ever wrote? According to inbitcoinwetrust.com, Satoshi also sent some emails to Martti Malmi regarding the ownership of the bitcoin.org domain.
It’s interesting how little drama is related to Satoshi’s exit. It’s probably because Satoshi had been more or less gone for months already. The Bitcoin community has also grown much bigger than its founder. Satoshi just quietly moved back to the shadows where he came from.
The Return of Satoshi
Satoshi Nakamoto disappeared in 2011. Or did he? Many would agree that Satoshi wrote two more messages after that. However, we can never be 100% certain it was Satoshi.
The first message was written in April 2014, almost three years after his disappearance. Satoshi wrote to the discussion board of the P2P foundation:
I am not Dorian Nakamoto.
The reason behind the message was a story titled “The Face Behind Bitcoin.” Newsweek magazine revealed Satoshi Nakamoto’s identity in this story. According to Newsweek, the inventor of Bitcoin is a retired engineer living in California named Dorian Satoshi Nakamoto. Interestingly, Dorian lived just a couple of blocks away from the previously mentioned Hal Finney. Many conspiracy theorists feel this is too big of a coincidence.
Dorian Nakamoto is likely not the real Satoshi. However, there is a theory that sounds more probable. What if the real Satoshi had Dorian as an inspiration for his pseudonym? It would be possible for the real Satoshi to be one of Hal Finney’s friends or someone living in the neighborhood.
Unfortunately, we cannot ask Hal Finney about this theory because he died after a severe illness in 2014.
The second alleged message from Satoshi was written in August 2015. Due to the scaling debate, the Bitcoin community was about to split into two groups. A group led by Gavin Andresen wanted to create a new version called Bitcoin XT, which would gradually increase the blockchain block size.
Satoshi came out of the shadows to express his disappointment.
If two developers can fork Bitcoin and succeed in redefining what “Bitcoin” is, in the face of widespread technical criticism and through the use of populist tactics, then I will have no choice but to declare Bitcoin a failed project. Bitcoin was meant to be both technically and socially robust. This present situation has been very disappointing to watch unfold.
You can read his entire message from this Reddit thread. It was sent from an e-mail address Satoshi had used, but we can’t be 100% certain it was Satoshi Nakamoto.
Satoshi’s bitcoins
Satoshi Nakamoto’s identity is the puzzle of this century. So many people have tried to solve the mystery. We don’t go deeper into this topic to keep the article shorter.
There is also another big mystery surrounding Satoshi: bitcoins. We are not talking about pocket change here because many analysts agree that Satoshi has about one million coins. This number is based on a study published by Sergio Lerner in 2013.
Whether the number is one million or hundreds of thousands, Satoshi’s bitcoins are worth much money. They were acquired by mining. Few people were mining Bitcoin in the early days. The block reward was also extremely high, 50 BTC per block (now it’s 6.25).
The exciting thing is that none of these bitcoins have ever been moved. Satoshi hasn’t spent a single bitcoin of his vast fortune.
Some argue that this proves Satoshi is no longer with us. He’s either dead or, at least, in prison. The value of these coins is so high that it’s difficult to imagine a person who wouldn’t sell even a tiny portion of them.
There is also the argument that Satoshi protects his privacy by not touching the coins. Many entities certainly track Satoshi’s wallets 24/7. What if Satoshi lost his private keys or they were destroyed? There are dozens of potential explanations.
You could also say that Satoshi is wealthy and doesn’t need the money. Even if this was true, why wouldn’t he donate those bitcoins? A million bitcoins could change the world in so many ways.
At this point, it seems unlikely that Satoshi’s bitcoins will ever be spent. This most likely would have happened if Satoshi had ever touched his fortune.
Final words
Is Satoshi Nakamoto a British academic? Is Satoshi dead? What happens to all those bitcoins? There are so many questions left unanswered.
One thought stands out when you look at Bitcoin’s history: It’s incredible what Satoshi created in such a short time. Satoshi was actively involved with Bitcoin for just a few years.
Satoshi was an incredible visionary who irreversibly changed global economics. Bitcoin is already “too big to fail.” Now, it’s also legal tender in El Salvador. What kind of role could Bitcoin have in the future?
Even if Satoshi is credited with inventing Bitcoin, he is standing on the shoulders of other giants. Wei Dai’s B-money, Adam Back’s HashCash, Nick Szabo’s bit gold, and many different projects and technologies built the foundation for Bitcoin.
One thing is sure: The early years of Bitcoin will be studied even more when a larger population understands its significance. There will be debates over Satoshi’s time in charge. Whatever made Satoshi leave the project was the most critical decision in Bitcoin’s history. After that, Bitcoin became genuinely decentralized.
Money Electric: The Bitcoin Mystery
In October 2024, HBO released a sensational documentary about Satoshi Nakamoto called Money Electric: The Bitcoin Mystery. The director, Cullen Holback, highlights Peter Todd, who has not been seen before in Satoshi speculations. Holback presents some interesting theories but no substantial evidence to support his claims.