Satoshi Nakamoto, whoever that is, will not rescue Bitcoin

The mystery of Satoshi Nakamoto’s identity has had all the hallmarks  of a classic thriller. A secretive genius develops a technology that  changes the world, develops a cult-like following and becomes fabulously  wealthy in the process, without a soul knowing who he, or she, is. Bitcoin, unveiled by the pseudonymous Nakamoto (more commonly known  as Satoshi) to an obscure internet mailing list eight years ago, now  fascinates the world. An independent, decentralised virtual currency, practically  impervious to fraud or theft and with no transaction fees, it promised  to liberate money in the same way that the world wide web made  information free. The technology is widely accepted as brilliant: the  value of all the bitcoins in circulation now totals almost £5bn, and the  blockchain technology that backs it up is being studied by every major  bank. Since Bitcoin truly entered the popular consciousness three years  ago, thousands of hours have been put into unmasking its creator, with  several false reckonings. The frenzy peaked in 2014, when Newsweek’s claim to have outed a 64-year-old Japanese American man, Dorian Nakamoto, as Satoshi culminated in a high-speed car chase along a California motorway, with the exposé’s unsuspecting subject fleeing a media scrum. From Bitcoin’s earliest days, whoever created the technology clearly  had no intention of becoming a public figure: despite the promise of  instant fame and recognition, the last we heard from Satoshi was an  internet post back in 2011. That is unless you believe the word of an Australian computer scientist named Craig Wright, who last week came forward  claiming he was Satoshi. Wright presented his apparent proof to the  BBC, The Economist and GQ, and to two experts – the Bitcoin Foundation’s  chief scientist Gavin Andresen and Jon Matonis, a founding director.

 For a few minutes, Wright’s story  seemed plausible, but almost immediately it began to unravel. His  rockstar unveiling, stage-managed with the help of the PR firm The  Outside Organisation (other clients include The Who and David Beckham),  raised a few eyebrows, especially since Wright said he wasn’t seeking  publicity and simply wanted to set the record straight. His “proof” – a cryptographic signature supposedly linked to Satoshi –  was then shown to be nothing of the sort; enough to convince a handful  of reporters to publish a story too good to ignore, but quickly torn to  shreds by the zealous online community of Bitcoin fanatics. In response, Wright promised to provide new evidence, but a day later, he backtracked.  He replaced his website with a short message headlined “I’m Sorry”, and  while maintaining that he was Bitcoin’s inventor, said he would not be  coming forward with any proof. “I know now that I am not strong enough  for this,” his sign-off said, although Wright curiously omitted any  explanation for his U-turn. By the end of last week, it seemed like the only person who believed  Craig Wright invented Bitcoin was Craig Wright. Even those who had  initially supported  his claims appeared to backtrack. When Satoshi has previously been falsely unmasked, the prospective  candidate has quietly faded away. The same may happen to now happen to  Wright. 

 The curious thing about the cult  of Satoshi is this: idol worship is utterly counter to the principles of  Bitcoin. The currency is dependent on the activity of people using it,  and its technical code requires a consensus among its users to change.  It can’t be controlled or exploited by one person; in fact this is  precisely part of Bitcoin’s appeal. We are fascinated by Satoshi Nakamoto because of the layers of  intrigue around his identity and the currency’s genesis, not what it  would mean for Bitcoin’s future. While the £300m Bitcoin fortune owned  by Satoshi could swing the currency’s value, that is pretty much the  extent of his hard power, even if he were to come forward. As for Bitcoin, it could do with a leader. Before Wright came along,  the community was consumed by a stand-off that threatened to destroy it,  one that Wright’s intervention has done little to resolve. Put simply, Bitcoin is getting too big for the network Satoshi  designed. As it grows, many of the exchanges that process Bitcoin  payments are seeing transactions delayed, with the network’s building  blocks filling up with data. A floated solution is to increase the network’s capacity,  but purists argue that this would centralise power: Since Bitcoin  relies on users’ computers to keep it afloat, increasing capacity would  mean a network run by a smaller group of computers that are capable of  keeping up with it. 

The debate over this has been  rumbling along for months with few signs of a conclusion. Vested  interests have prevented much real progress, and it is unclear that  Satoshi – should Bitcoin’s near-mythical creator ever really be revealed  – would actually hold much sway. The impasse saw Mike Hearn, a  prominent Bitcoin developer, declare it a “failed project” earlier this year. Meanwhile, central banks and financial giants are picking some of the  Bitcoin’s best parts and copying them for their own systems. The Bank  of England has helped design RSCoin – a rival based on the Bitcoin  technology – while Nasdaq is piloting the underlying technology to  record share transactions. Satoshi Nakamoto, whoever they are, has  changed the financial order, but perhaps not in the way that was  intended.