Benjamin Wallace is the New York Times bestselling author of The Billionaire’s Vinegar. He has been a features writer at New York magazine and a contributing writer at Vanity Fair.
What’s the big idea?
Someone created Bitcoin…but no one actually knows who. The identity of the genius who came up with cryptocurrency remains one of the greatest unsolved mysteries of our time. In The Mysterious Mr. Nakamoto, journalist Benjamin Wallace chronicles his attempt to unmask the figure behind the currency and the world it wrought.
Below, Benjamin shares five key insights from his new book, The Mysterious Mr. Nakamoto. Listen to the audio version—read by Benjamin himself—in the Next Big Idea App.
1. Rare coincidences aren’t rare.
Over the years, the conversation around any Satoshi Nakamoto candidate followed a predictable course. Something would prompt a reporter or hobbyist sleuth to alight on a new suspect. A young Elon Musk enthusiast became convinced that Musk was Satoshi, mostly because Musk had shown brilliance in other areas. Newsweek fingered a guy named Dorian Nakamoto after making the discovery that his birth name was Satoshi Nakamoto. Wired and Gizmodo hit on an Australian computer scientist named Craig Wright because they’d received leaked documents claiming he was Satoshi.
Once an investigator had a candidate in mind, he’d start stacking up circumstantial parallels to Satoshi. Maybe they both used British spellings, were cryptographers, or used two spaces after a period when typing. Once an investigator locked in on someone, it was easy to find coincidences and hard to acknowledge that those might be all they were. I, too, found many of the theories persuasive.
But all of them were probably wrong. It wasn’t that the facts were meaningless, only that they could describe hundreds (if not thousands) of different people. As I delved into the mystery and fell into this habit myself, I kept seeing two kinds of distortion. One was long-distance pattern recognition: If you were far enough away from the subjects involved, such as cryptography and network architecture and game theory, two things that, to an expert, were obviously different could appear similar. The other was a near-sighted equivalent: If you looked closely at anyone, you’d find enough details to be able to cherry-pick the ones that matched up with Satoshi.
Coincidences are a starting point for an investigation but not the end point.
2. Money is just a story we agree on.
When people ask, “Why is Bitcoin worth anything?” I respond, “Why is gold worth anything?”
Bitcoin’s value evolved. At first, a bitcoin was priced at the cost of the electricity needed to mine it. Once there were exchanges where you could trade other currencies for it, then the value was determined by supply and demand. In Bitcoin’s infancy, when early adopters were experimenting with it and trying to turn it into a real currency, a guy named Laszlo Hanyecz paid 10,000 bitcoins for two Papa John’s pizzas. At the time, those bitcoins were worth $41. Today, they’d be worth $1 billion.
“Bitcoin is worth something because other people are convinced it’s worth something.”
You can argue that Satoshi Nakamoto’s invention is valuable because it’s a better mousetrap. Bitcoin improves upon gold. You don’t need a vault to hold it. You can send it anywhere, instantaneously. It’s infinitely divisible. If you maintain custody of it, it can’t be seized by a government. Its supply is capped, so it can’t be deflated by monetary policy. Your account can’t be shut down by a meddlesome corporation.
Ultimately, though, Bitcoin is worth something because other people are convinced it’s worth something.
3. Fresh output requires fresh input.
By the time I dove headlong into researching The Mysterious Mr. Nakamoto, the investigative trail was strewn with journalistic corpses. I began my search with unearned hubris. I thought everyone just hadn’t looked hard enough or closely enough. I was sure that I’d hear things they hadn’t and catch things they couldn’t. What quickly became apparent, though, was that, as Albert Einstein is said to have once said, “No worthy problem is ever solved within the plane of its original conception.” If I made the same assumptions prior investigators had, limited myself only to the usual suspects of rich, famous, technical people, and used the same methods that had been tried already, then I would end up with the same handful of names, all of whom had proved unconvincing.
I needed to try something new. As a former English major, I was at a stark disadvantage in the technical world, so I learned to code; I wanted to spread a wider net by automating my trawling and sifting of internet archives. There was expertise I lacked that I knew might help surface fresh candidates, so I relied on pros in other fields to do things I couldn’t. These included a pair of AI experts in prose stylometry, a machine-learning PhD who did code stylometry, and a private investigator. I tried to keep in mind the Sherlock Holmes maxim: “When you have eliminated all which is impossible, then whatever remains, however improbable, must be the truth.”
4. Utopias are doomed but can inspire greatness.
One of the groups that paved the way for Bitcoin was a 1990s band of rebel technologists called the cypherpunks. The most radical of them envisioned a libertarian paradise where cryptography would enable information and money to flow with pure privacy, disempowering corporations and governments. Ultimately, the group dispersed, but not before defeating the government’s monopoly on strong cryptography and seeding the ideas that would come together in Bitcoin.
Another of the groups from which Bitcoin seemed to spring was the extropians. They believed in extreme life extension. I spent a morning in Arizona with Max More, who cofounded the extropians and, for many years, ran Alcor, a cryonics organization. He sounded wistful as we stood looking at a roomful of giant steel vats in which more than two hundred frozen futurists, including a leading Satoshi candidate, were suspended in liquid nitrogen. He’d thought that aging would be solved in his lifetime. But the extropians had led the way in popularizing the ideas that preoccupy Silicon Valley today, from memes to Mars colonization to network states.
“Bitcoin’s popularity has forced it to integrate with the very institutions and regulatory regimes it was created to bypass.”
Bitcoin itself began as a dream of electronic money that would exist apart from banks and nations. In many ways, that dream hasn’t panned out. Bitcoin became more digital gold than practical currency. It was overrun by hackers, scammers, and criminals. It was less private than many assumed. The very ethos of decentralization that Bitcoin was supposed to embody, where no one was in charge, led to decision-making paralysis and ossification. And Bitcoin’s popularity has forced it to integrate with the very institutions and regulatory regimes it was created to bypass.
But Bitcoin birthed a new asset class. It inspired people to think about what money was. It launched a revolution.
5. Satoshi Nakamoto taught by example.
1) To start a religion, disappear. Satoshi was Bitcoin’s faceless creator. By not basking in fame or wealth, as he could have, or installing himself as the project’s ongoing leader, he let his decentralized creation remain decentralized. By accident or design, these decisions set him up as a quasi-divine legend, which was much more inspiring to the imagination than the humdrum reality of a mere person and helped spread Bitcoin’s adoption. There’s now a statue of Satoshi Nakamoto in Budapest and a real-estate development in the South Pacific named Satoshi Island. People like Jack Dorsey and Kanye West wear hats and T-shirts with Satoshi’s name on them. Humility can be a potent marketing strategy.
2) Great Man history is real. We’re told that events are flotsam on the tides of history. But one man or woman or group can change the world. Satoshi launched Bitcoin without investors, without a promotional budget, with only an idea and a computer. Sixteen years later, the value of Bitcoin is approaching $2 trillion, making it the 8th most valuable asset in the world, ahead of silver, Meta, and Wal-Mart. There’s no nation-state leader who hasn’t had to think about the impact of cryptocurrency.
3) You don’t have to invent something to invent something. Bitcoin was a mash-up of existing technologies. It required “no major breakthroughs of a mathematical/cryptographic kind,” as a pseudonymous coder named Gwern Branwen wrote. Instead, it combined libertarian economic ideas with public-key cryptography, peer-to-peer networking, spam-filtering, and a few other technologies that had been around for a while. Satoshi’s feat was to combine these things into something revolutionary. That’s not a knock against it. Innovations are often remixes.
To listen to the audio version read by author Benjamin Wallace, download the Next Big Idea App today:
