Satoshi Nakamoto, Craig Wright and a bitcoin mystery in America (2024)

In Budapest, there is a bust by the Danube River. The face is bronze, and blank, so people can see their own faces reflected back at them. It is wearing a hoodie, with the bitcoin logo on the chest.

It is a statue of the mysterious Satoshi Nakamoto. Nakamoto is the person or persons who developed bitcoin. They are anonymous and pseudonymous.

They created a decentralised, digital commodity which is now worth more than a trillion dollars globally. It is a peer-to-peer way of transferring money, skipping the banks. It’s encrypted with blockchain technology, which creates digital signatures to prove where the bitcoin has come from.

You may have heard about Australian Craig Wright, who has been in the news recently thanks to a court case in the US.

Wright is an influential entrepreneur. He might be Nakamoto. But he also might not. It is a mystery he could, in theory, solve in seconds (more of that later).

This week Wright was fighting claims from the family of his deceased business partner, David Kleiman, that the pair co-created bitcoin. Therefore, they argued, half of more than $50bn of the original bitcoin belonged to them.

Wright won the battle – a Florida jury found he did not owe the money. His lawyers said the pair were friends who worked together, but that their partnership was nothing to do with bitcoin’s creation.

But behind that court case is a bigger story. Those bitcoin could only be owned by someone who was involved with the venture from the beginning – Nakamoto.

Wright says he is Nakamoto, and Nakamoto is accepted as the creator of bitcoin. And to prove he is Nakamoto, Wright needs to show he controls some of those original bitcoin.

Bitcoin expert Dr David Glance, a University of Western Australia computer scientist, says such a feat would be akin to King Arthur pulling Excalibur from stone. A proof of rightful ownership.

“If you’re going to prove you are who you say you are, you just have to prove you have that key (to the bitcoin),” he says.

“You don’t have to spend it, just move it from one account to another.”

Of course, he says, it’s possible that Wright, or Nakamoto (or whoever he/she/they is/are) could have lost that key.

Earlier this year the New York Times reported that as much as $140bn worth of bitcoin is lost to people who have forgotten or misplaced their keys. A UK man, Stefan Thomas, is one person who forgot his password, which would unlock hundreds of millions of dollars.

When you create bitcoin, Glance says, it’s there, it’s available, it’s owned by the person who “mined” it. (Essentially huge amounts of computer power are used to solve algorithms to create new bitcoins.)

That person then has the key to that bitcoin.

Who is Satoshi Nakamoto?

Up until 2010, Nakamato was active online, discussing the development of bitcoin.

They published their workings from the time of bitcoin’s conception, the bitcoin “white paper”, in 2008.

Nakamoto shared plenty of their work, then went to ground just over a decade ago, only to pop up occasionally.

Since then, around the world, amateur sleuths and computer experts and many others have been trying to work out who Nakamoto was – or is. Because whoever created bitcoin is an extremely rich person, and the enigma is an appealing story.

In 2014, a triumphant media pinpointed Japanese-American man Dorian Satoshi Nakamoto as the Nakamoto, tailing him through Los Angeles. Cornered by reporters outside his home, the slightly disheveled man said he hadn’t heard of bitcoin before being contacted by the media, and asked about a free lunch.

Later a post by a “Satoshi Nakamoto” popped up online, declaring they were not Dorian. Then they disappeared again.

In 2015 various reports pointed to 45-year-old Australian Craig Steven Wright as being Nakamoto. “Probably”. Journalists had traced Wright’s online history back to 2008, and found various links that hinted Wright was set to release a cryptocurrency back then and an email that used the Nakamoto name but had Wright’s phone number.

The Guardian reported the email discussed the possibility of lobbying then Australian senator Arthur Sinodinos about bitcoin regulation.

Nakamoto made another appearance, saying he wasn’t Wright.

Other names have been bandied about, including that of entrepreneur Elon Musk, whose tweets about cryptocurrency have the ability to see its value rise and fall.(Musk denied it.)

But it’s still Wright who is the most-oft-speculated-about candidate for Nakamoto. And the recent court case centred around the claims of Kleiman’s family, who say Kleiman – who died in 2013 – was the co-creator of bitcoin.

Glance says whoever Nakamoto is, it is someone who has mined a lot of the early bitcoin, which now just sits there on the blockchain, gathering metaphorical digital dust.

Who is Craig Wright?

Wright is a computer scientist.

A website purporting to be his says he is the “creator of bitcoin – Satoshi Nakamoto”.

It describes him as: “(An) eternal student and researcher. (Blockchain company) nChain chief scientist. Lawyer, banker, economist, pastor, coder, investor, mathematician, stats, and world-curious.”

A 2015 Guardian article points to his LinkedIn page, which shows he has a PhD from Charles Sturt University, and a host of other academic qualifications. He was involved in various computer firms, and was the director of more than a dozen companies.

He has had his share of previous legal trouble, and in 2016 his rented Sydney home was raided by the Australian federal police in a tax-related matter. At the time a police spokesperson said it was not related to any claims he was behind bitcoin.

He was reportedly moving to London with his wife.

That same year (2016) Wright promised he would offer proof that he was Nakamoto by transferring bitcoin from early in its creation, something only the creator of the entire cryptocurrency could do, because of the way the digital signature shows the history of the bitcoin transactions. He said he would present “extraordinary proof”.

Just days later, he wiped that pledge from the internet, and replaced it with a message that said: “I’m sorry.”

He did not have the courage to leave the shelter of anonymity, he said, but he didn’t say he wasn’t Nakamoto.

What happened in court?

In Florida, Kleiman’s family brought a civil case against Wright, claiming it was owed half of 1.1m bitcoin created at the start of the bitcoin enterprise. That bitcoin had to have been mined by someone who was there at the beginning, such as Nakamoto. And the family says Kleiman was with him at the beginning.

That 1.1m bitcoin is now worth about $50bn.

Experts testified that Wright owned the bitcoin, and he successfully defended himself against Kleiman’s family, although he had to pay out $100m in intellectual property rights.

If the jury had found that Wright owed half to Kleiman, Wright would have had to transfer the bitcoin to Kleiman’s family, which would have proven he was Nakamoto.

But they didn’t find that, so it remains a mystery (unless Wright uses the earmarked bitcoin to pay the $100m).

Why does everyone care so much about bitcoin, and its origin?

Many banks are starting to offer cryptocurrency trades, which is unsurprising considering the interest in them, but also seemingly contradicts the notion of having a currency that bypasses financial institutions.

Even the Reserve Bank of Australia governor, Philip Lowe, has signalled an interest in a retail form of cryptocurrency, although he doesn’t foresee them being used in general purpose payments.

Bitcoin is the most widely used and well-known cryptocurrency. Once a fringe idea, more than 100 million people worldwide now use it. But bitcoin, and other cryptocurrencies, are extremely volatile. Their value fluctuates wildly, so Glance says you won’t be able to buy a cup of coffee with them because the price would go wildly up and down.

“The cryptocurrency world is full of colourful people with big imaginations,” he says.

“The idea of it taking over the world hasn’t transpired.”

It has, however, found a couple of niches.

“It’s fuelling most of the cybercrime we’re seeing today,” he says. “And you can use it to buy drugs online, to extort people, to hire contract killers.”

But you can speculate on it, as you would with shares, although Glance says it’s effectively gambling.

The other reason he steers clear is the environmental impact needed for the immense computer power that creates it.

Research shows creating bitcoin alone could create a carbon footprint the size of London’s.

“(And) it has absolutely no intrinsic value,” Glance says. “It’s just a lot of people subscribing to a Ponzi scheme.”

Most people will happily live their lives never using bitcoin. But it’s still an extraordinary mystery that somewhere out there is a person (or there are persons) who have shifted financial markets, and helped people make enormous fortunes.

Or sent them bust.