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Bitcoin Creator Said Found as Enthusiasts Regret Unmasking

By Carter Dougherty, Olga Kharif and James Nash
March 06, 2014 3:16 PM EST 31 Comments
A twenty-five bitcoin in Tokyo.
Photographer: Tomohiro Ohsumi/Bloomberg
A twenty-five bitcoin in Tokyo.

The Bitcoin world reacted with a mixture of acceptance and resignation to a Newsweek magazine report that the creator of the digital currency is a 64-year-old Japanese-American man living in the Los Angeles area.

The magazine published the results of an investigation concluding that Dorian S. Nakamoto, a former defense industry and U.S. government employee, is the mysterious computer coding and cryptography expert who authored the seminal paper on Bitcoin and created the software that serves as the backbone of the currency’s system.

The initial Bitcoin paper carried the name of Satoshi Nakamoto. Since the author otherwise chose to remain private and anonymous, it had been widely assumed the name was a pseudonym. The Nakamoto living in Temple City used to be named Satoshi, Newsweek said.

“Fascinating,” Martti Malmi, a Finnish programmer who worked with Nakamoto on the Bitcoin code, wrote on Twitter. “Satoshi seems not much different than how I imagined him.”

No one answered the door today at the Nakamoto home, a split-level house in a suburban Temple City neighborhood where journalists gathered to seek his comment. Peter Lam, 53, a real-estate agent who has lived on the street since 2001, said he’d talked to Dorian Nakamoto and his parents a few times. He said Dorian wasn’t especially sociable.

Loose Group

Gavin Andresen, the chief scientist of the Bitcoin Foundation who had been one of the few people to communicate with Satoshi Nakamoto, didn’t immediately indicate whether he could identify Dorian Nakamoto as Bitcoin’s creator. Andresen said in a message on Twitter that he regrets talking to the magazine about Nakamoto. He said he was disappointed that Newsweek decided to “dox,” or document, the Nakamoto family.

Until now, Satoshi Nakamoto was thought to be a pseudonym for a programmer or group of programmers who wrote the paper and the initial source code for Bitcoin. The code has since been handed off to a loose group of experts affiliated with the foundation, a Seattle-based advocacy group.

The paper, first published in 2008, offered a proof of the basic concept of Bitcoin, which uses a public ledger and a network of voluntary computers, known as “miners,” to validate transactions that are signed with encrypted signatures. After the initial source code created the first batches of Bitcoin, it grew from an obsession of specialists into a global phenomenon.

Merchants around the world now accept Bitcoin for everything from kitchen appliances on Overstock.com to luxury goods listed on BitPremier, a website. It also trades for traditional currencies, and was priced at $648.27 at 1:57 New York time today, according to the CoinDesk Bitcoin Price Index.

‘Turned Over’

According to Newsweek reporter Leah McGrath Goodman, when Dorian Nakamoto was confronted at his home before publication and asked about Bitcoin, he responded, “I am no longer involved in that and cannot discuss it. It’s been turned over to other people.”

Some Bitcoin enthusiasts said they were skeptical that Newsweek had found the right person. Others said they were furious that the news media would try to violate his privacy.

“I would have thought every Satoshi Nakamoto on planet Earth had already been contacted and ruled out,” Stephen Pair, the chief technical officer at Atlanta-based BitPay, a payment processor. “If this person is the real Satoshi, it would be easy to for him to prove it if he wanted to.”

Jeff Garzik, one of the core developers on the Bitcoin software protocol and an employee of BitPay, said “the ‘real’ Satoshi” can prove his identity only through cryptography.

Digital Signatures

“We will know Satoshi by his digital signatures,” Garzik said in an e-mail, adding that the founder could either sign a message using his unique encryption key or make use of the Bitcoins that the creator is known to have kept.

Analysts who looked at the Bitcoin ledger have concluded that the creator of the system owns about 1 million coins, worth over $600 million at current prices, said Jered Kenna, a San Francisco Bitcoin investor. If the owner pledged never to sell or trade them, it would help add stability to what has been a volatile market, Kenna said.

Adam Draper, the chief executive officer of Boost, a San Mateo, California, company that incubates Bitcoin startups, called the Newsweek article “intrusive” and said he’s unconvinced.

“If Satoshi Nakamoto wanted to be anonymous the whole time, why would he use his real name on the paper?” Draper said. “He always used non-tracking e-mails and did everything he could to stay anonymous, so it’s difficult for me to understand why he would use his real name.”

FAA Job

Newsweek said Dorian Nakamoto, who was born in Japan, attended California State Polytechnic University, worked for defense contractors on classified military projects and eventually the Federal Aviation Administration. He adopted the first name Dorian in 1973, according to court documents cited by Newsweek.

Tim Lynch, a spokesman for California Polytechnic, confirmed that a Satoshi Nakamoto earned a bachelor’s degree in physics from its Pomona campus in 1973. He declined to provide any more information, citing privacy rules.

‘Extensive Rewriting’

The revelations will not affect the Bitcoin network, said Gregory Maxwell, one of the core developers on the project. The code is now out of Nakamoto’s hands, and can’t be changed except by broad consensus among the users of the network.

“There has been extensive rewriting and reorganization since the time when the creator of the system ended his involvement,” Maxwell said in an e-mail.

Jerry Brito, director of technology policy at the Mercatus Center of George Mason University, said that if Satoshi Nakamoto has been found it could be a good thing for the digital currency.

“I knew this day would come,” Brito said. “I’m sorry for Nakamoto, who seems like an upstanding -- if eccentric -- citizen who just wants to maintain his privacy. Maybe we can all just put to rest now the ‘mysterious origins’ story and focus on Bitcoin’s future.”

To contact the reporters on this story: Carter Dougherty in Washington at cdougherty6@bloomberg.net; Olga Kharif in Portland at okharif@bloomberg.net; James Nash in Los Angeles at jnash24@bloomberg.net

To contact the editors responsible for this story: Maura Reynolds at mreynolds34@bloomberg.net; Sarah Rabil at srabil@bloomberg.net

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