Why Satoshi's Identity Doesn't Matter

When people talk about Bitcoin, one popular theme is the speculative nature of the cryptocurrency. On Thursday, when Newsweek relaunched its print edition with a cover story that claimed to unmask the inventor of Bitcoin, the magazine threw in a bit of speculation of its own. But after a day of excitement, recriminations, a car chase, and two denials, we still don't know Satoshi's true identity.

No doubt, Satoshi’s mystique is a big part of the mythos and the intrigue surrounding Bitcoin. And the true identity of the creator of Bitcoin is certainly a matter of human interest. Even before Newsweek’s messy splash, Satoshi Nakamoto was perhaps the most famous pseudonymous individual on the planet. But in the context of the Bitcoin community, his true identity has already proven immaterial to the operation of what has now become a robust global internet protocol and a billion dollar currency.

None of Bitcoin's serious developers or the people who are otherwise enthusiastic about the currency were very enthusiastic to know Satoshi Nakamoto's true identity. In the Newsweek piece, Bitcoin lead developer Gavin Andresen says that nobody really talked about Satoshi's identity in the developer discussion channels because they were more interested in his creation. (Andresen later said in a tweet he regretted speaking to Newsweek reporter Leah McGrath Goodman.) While most media reports about Bitcoin have always been about crime and hacking, the price of bitcoins, or Satoshi's identity, those sexy headlines tend to gloss over the importance of the actual technology behind the world's first decentralized cryptocurrency.

The interest in the real Satoshi is understandable—and the speculation on his links to a number of people in the crypto community isn’t likely to cease here. But it’s important to realize why the Bitcoin community is often frustrated by attempts to unmask the currency’s creator. It's not just about the oft-heard notion on Bitcoin forums that "he wants to be left alone." Decentralization is a core principle behind Bitcoin, which means Bitcoin doesn't need Satoshi to continue. Nakamoto may have attained cult-like status among bitcoiners for his breakthrough in financial cryptography, but it's not as if he's behind a laptop somewhere controlling the entire Bitcoin network.

Those who have worried that Satoshi has some kind of backdoor in Bitcoin misunderstand the design of the network: the code is open source, free to peruse on GitHub. Dan Kaminsky and two separate teams of security experts all failed when they spent months trying to find a flaw in the source code. Anyone can make a contribution to that code, and it’s thought that 70 percent of Satoshi's original code has by now been thrown out or rewritten.

Some have pointed out the risk of Satoshi selling all his bitcoins as an argument for knowing his true identity. A similar argument can be made for any stock where 8 to 9 percent is owned by one person or entity. Sure, that person could crash the market if they wanted, but it wouldn't make sense for them financially. It would be better for them to lower their exposure to the asset over time.

Meanwhile, more centralized systems present their own risks. BlackRock, the world's largest asset manager (read: investor), also has $4 trillion in assets of its own. And Aladdin, Blackrock's risk management platform, helps its customers and investors keep their eyes on almost 7 percent of the world’s entire $225 trillion of financial assets. (There is no proof the real Satoshi even has $500 million in bitcoins. He might have thrown out the private keys, for instance. But that wouldn't make sense—at least no more sense than Satoshi using his own name while attempting to remain anonymous.)

The effect of outing Satoshi on the Bitcoin market would depend on who is behind the currency. If a government were revealed to be Satoshi, that could be a death knell for the entire market. Or it could merely be a temporary blip: that the US government was behind the Internet and Tor hasn't invalidated those systems. If Satoshi were an independent cryptographer or a group of cryptographers, there could be some short term volatility with the price at first (as we've seen many times in the past), but it wouldn't necessarily matter over the long term.

Bitcoin is completely transparent, and there is nothing wrong with its mechanism, even if the NSA created it. Knowing who he or she is wouldn't change the calls for regulation or the push to tax it like other currencies. The person who created Bitcoin simply has nothing to do with its functioning as a currency/payment system or with the technology behind it, which creates the possibility of many systems of decentralized trust.

The "responsible thing to do, from Newsweek’s perspective, would have been to present a thesis, rather than a fact," Felix Salmon wrote in his column today. Newsweek has simply thrown a theory out there to put on top of many of the others (some of which actually implicate real financial cryptographers). The story here is the media and the public's obsession with identifying the inventor of Bitcoin when it really doesn't matter.

The beauty of Bitcoin is that, at the end of the day, there really is no Satoshi Nakamoto pulling the strings behind the scenes. The protocol, payment system, and currency will last as long as people want to use it and develop applications on top of it. No one is pushing Bitcoin in a certain direction, which seems to be a narrative that some people don't want to accept. As Bitcoin Developer Jeff Garzik wrote yesterday, the point of the Bitcoin blockchain is decentralized trust. Satoshi's true identity doesn't matter because the point of Bitcoin is you don't need to trust any company, government, institution, individual, or even a respected newsmagazine when you use Bitcoin. By Bitcoin's logic, you only need to trust the blockchain.