1
00:00:01,070 --> 00:00:02,990
In this final portion of the lecture,

2
00:00:02,990 --> 00:00:07,810
we'll look about what if anything we can
determine about Satoshi Nakamoto himself.

3
00:00:07,810 --> 00:00:12,540
And also the ideas that he
had in the design of BitCoin,

4
00:00:12,540 --> 00:00:17,100
by looking at the history of the ideas
that lead up to invention of BitCoin.

5
00:00:18,310 --> 00:00:21,760
So first off, just as a refresher,
who is Satoshi Nakamoto?

6
00:00:21,760 --> 00:00:24,598
A lot of people know him as
the creator of Bitcoin, and

7
00:00:24,598 --> 00:00:26,566
that's sort of an abstract notion.

8
00:00:26,566 --> 00:00:30,438
Okay, we can be a little bit more specific
about what was done in the name of

9
00:00:30,438 --> 00:00:32,130
Satoshi Nakamoto.

10
00:00:32,130 --> 00:00:36,820
So, according to Satoshi Nakamoto,
and I'll note as an aside that

11
00:00:36,820 --> 00:00:40,590
when Satoshi asserts that something is
true, I'm going to take him at his word.

12
00:00:40,590 --> 00:00:43,490
Okay, I don't think just because he
is anonymous there's a reason that he

13
00:00:43,490 --> 00:00:45,360
is going to lie about certain things.

14
00:00:45,360 --> 00:00:48,350
So if he says that I started
BitCoin in May 2007,

15
00:00:48,350 --> 00:00:52,350
let's believe him and
believe that that's true.

16
00:00:52,350 --> 00:00:57,270
So at least according to him, around May
2007 is when he started coding BitCoin.

17
00:00:57,270 --> 00:01:02,130
He registered the domain
bitcoin.org in August 2008 and

18
00:01:02,130 --> 00:01:06,360
at that time he started sending private
emails to a few people who were

19
00:01:06,360 --> 00:01:09,530
he thought might be
interested in the proposal.

20
00:01:09,530 --> 00:01:10,220
Okay?

21
00:01:10,220 --> 00:01:13,420
Then a little later in October 2008,

22
00:01:13,420 --> 00:01:17,330
he released publicly a white paper
that described the protocol, and

23
00:01:17,330 --> 00:01:19,970
then soon after he released the code for
it, as well.

24
00:01:21,020 --> 00:01:23,320
Then he stuck around for about two years.

25
00:01:23,320 --> 00:01:29,000
And over these ensuing two years, he
posted lots of messages on message forums.

26
00:01:29,000 --> 00:01:30,340
He emailed with lots of people.

27
00:01:30,340 --> 00:01:32,200
He responded to people's concerns.

28
00:01:32,200 --> 00:01:35,150
On the code side,
he submitted patches to the code.

29
00:01:35,150 --> 00:01:38,120
He fixed it up in conjunction
with other developers.

30
00:01:38,120 --> 00:01:41,183
And basically maintained the source code.

31
00:01:41,183 --> 00:01:44,270
In December 2010,
he then left the project.

32
00:01:45,620 --> 00:01:48,200
Now I'm referring to
Satoshi Nakamoto as a he,

33
00:01:48,200 --> 00:01:51,400
I have no reason believe he
is a he as opposed to a she,

34
00:01:51,400 --> 00:01:57,040
it's just since he assumed a male name,
it's the easiest pronoun to use.

35
00:01:57,040 --> 00:02:00,390
Another thing I'm doing is I'm referring
to him as a single individual.

36
00:02:00,390 --> 00:02:05,170
There is a theory that maybe Satoshi
Nakamoto is a collection of individuals.

37
00:02:05,170 --> 00:02:06,200
I don't buy this theory.

38
00:02:06,200 --> 00:02:08,480
I think that he is probably an individual.

39
00:02:08,480 --> 00:02:12,660
The reason why is if we think about what
was done in the name of Satoshi Nakamoto,

40
00:02:12,660 --> 00:02:17,300
if we start at the end and we think about
the two years somebody spent replying to

41
00:02:17,300 --> 00:02:20,610
emails and patching code, it would be
really hard to think that this would be

42
00:02:20,610 --> 00:02:26,660
multiple people sharing user accounts and
passwords and responding in similar style,

43
00:02:26,660 --> 00:02:30,340
a similar voice, and making sure
they didn't contradict each other.

44
00:02:30,340 --> 00:02:33,400
It just seems a much simpler
explanation that at least this

45
00:02:33,400 --> 00:02:38,980
portion of what Satoshi did was
done by a single individual.

46
00:02:38,980 --> 00:02:43,234
Now, if you look at what he writes and
what he says and the patches that he makes

47
00:02:43,234 --> 00:02:46,900
to the code, it's clear that he
understood, whoever this single

48
00:02:46,900 --> 00:02:51,305
individual is, that individual did
understand the full code base of Bitcoin.

49
00:02:51,305 --> 00:02:56,269
So it's very reasonable that they're also
the person that created the original piece

50
00:02:56,269 --> 00:02:57,563
of Bitcoin software.

51
00:02:57,563 --> 00:03:02,078
It is also clear from the writings that
they understood all the design aspects

52
00:03:02,078 --> 00:03:06,950
of Bitcoin, and so they're probably the
person who wrote the whitepaper as well.

53
00:03:06,950 --> 00:03:09,470
There's no reason to assume otherwise.

54
00:03:09,470 --> 00:03:13,740
Now all of this isn't to say that Satoshi
didn't have help with the original design.

55
00:03:13,740 --> 00:03:17,780
However, we know that Satoshi's very
quick to attribute any help he receives

56
00:03:17,780 --> 00:03:21,500
after Bitcoin is released to the people
that contributed to the project.

57
00:03:21,500 --> 00:03:25,240
And there's no reason to think that he
would lie about inventing something

58
00:03:25,240 --> 00:03:28,530
by himself when he actually had
help from other individuals.

59
00:03:30,660 --> 00:03:33,836
Now we might ask ourselves what did
Satoshi know about the history of e

60
00:03:33,836 --> 00:03:34,338
e-cash?

61
00:03:34,338 --> 00:03:38,290
And to understand this better, we can
look at what he cites in his white paper.

62
00:03:38,290 --> 00:03:42,400
And also the references that existed on
early versions of the BitCoin website.

63
00:03:42,400 --> 00:03:43,921
So, if we look at his white paper,

64
00:03:43,921 --> 00:03:48,215
we see that he sites some papers on basic
cryptography and probability theory.

65
00:03:48,215 --> 00:03:54,045
He also cites the time-stamping work
that we saw in the previous slides and

66
00:03:54,045 --> 00:03:58,865
it's very natural to think that he
based the design of the blockchain on

67
00:03:58,865 --> 00:04:02,875
these references,
since the similarities are so apparent.

68
00:04:02,875 --> 00:04:05,415
He also cites the Hashcash proposal,

69
00:04:05,415 --> 00:04:09,710
which has a proof of work that's very
similar to the one that's used in Bitcoin.

70
00:04:09,710 --> 00:04:12,150
And he has a reference to b-money.

71
00:04:12,150 --> 00:04:15,345
Later, on the website,
he added references to Bitgold, and

72
00:04:15,345 --> 00:04:18,672
as well to Hal Finney's
reusable-proof-of-work schemes.

73
00:04:20,612 --> 00:04:24,938
Now, if we look at the history of email
transactions that were made public by

74
00:04:24,938 --> 00:04:28,725
people who corresponded with
Satoshi Nakamoto in the early days,

75
00:04:28,725 --> 00:04:32,646
we see that the b-money proposal was
actually added after the fact at

76
00:04:32,646 --> 00:04:34,368
the suggestion of Adam Back.

77
00:04:34,368 --> 00:04:38,640
Satoshi then e-mailed Wei Dei
who created b-money and

78
00:04:38,640 --> 00:04:44,550
apparently Wei Dei was the one that told
him about Nick's proposal about BitGold.

79
00:04:44,550 --> 00:04:49,580
So these proposals weren't probably
inspirations for the original design.

80
00:04:49,580 --> 00:04:53,270
He later corresponded a lot with
Hal Finney and that's quite a reasonable

81
00:04:53,270 --> 00:04:57,700
explanation for why he cites reusable
proof of works at least on the website.

82
00:04:57,700 --> 00:05:00,590
So based on just the citations
in the white paper,

83
00:05:00,590 --> 00:05:03,760
it seems reasonable that maybe the only
things that he knew or thought were

84
00:05:03,760 --> 00:05:09,550
relevant about the history of E-cash was
Hashcash and the time-stamping proposals.

85
00:05:09,550 --> 00:05:13,270
In the early days of BitCoin,
BitCoin had a Wikipedia article, and

86
00:05:13,270 --> 00:05:17,380
at some point it was flagged for deletion
by the moderators of Wikipedia because

87
00:05:17,380 --> 00:05:19,790
they thought it wasn't relevant or
noteworthy.

88
00:05:19,790 --> 00:05:22,562
And so
there some discussion between Satoshi and

89
00:05:22,562 --> 00:05:26,358
others about how to get this article so
Wikipedia would accept it.

90
00:05:26,358 --> 00:05:29,690
And what Satoshi did is he
actually suggested a stub article,

91
00:05:29,690 --> 00:05:32,370
a single sentence that describes BitCoin.

92
00:05:32,370 --> 00:05:34,390
And the way he phrased
it was the following.

93
00:05:34,390 --> 00:05:37,200
Bitcoin is an implementation
of Wei Dai's b-money

94
00:05:37,200 --> 00:05:41,930
proposal on Cypherpunks in 1998 and
Nick Szabo's Bitgold proposal.

95
00:05:41,930 --> 00:05:46,020
So Satoshi at this point did see
positioning Bitcoin as an extension of

96
00:05:46,020 --> 00:05:49,770
these two ideas, or an implementation
of these two prior systems,

97
00:05:49,770 --> 00:05:52,620
as a good explanation of how it worked.

98
00:05:52,620 --> 00:05:56,540
However, from the previous slide,
it seems that Satoshi actually didn't know

99
00:05:56,540 --> 00:05:59,750
about these two systems when he came
up with the original design of Bitcoin.

100
00:06:01,440 --> 00:06:04,900
Now, what about everything else,
the Chaumian e-cash,

101
00:06:04,900 --> 00:06:09,180
all the credit card proposals that we
looked at, all the microtransctions.

102
00:06:09,180 --> 00:06:10,200
What about all of that stuff?

103
00:06:10,200 --> 00:06:12,000
Did he know any of that history?

104
00:06:12,000 --> 00:06:14,820
Well the answer is we don't know what
he did know or what he didn't know.

105
00:06:14,820 --> 00:06:17,648
But he didn't give any indication
really of knowing that history.

106
00:06:17,648 --> 00:06:21,320
And it's just as likely that he didn't

107
00:06:21,320 --> 00:06:23,970
reference this because it just
wasn't relevant to Bitcoin.

108
00:06:23,970 --> 00:06:26,410
Bitcoin used a completely different model,
and so

109
00:06:26,410 --> 00:06:29,640
there's no reason to talk about
these old systems that failed.

110
00:06:29,640 --> 00:06:33,710
He does mention in passing Chaumian
e-cash in one of his blog posts

111
00:06:33,710 --> 00:06:37,200
when he's talking about another
proposal called opencoin.org and

112
00:06:37,200 --> 00:06:41,770
he notes that they seem to be talking
about the old Chaumian central mint stuff,

113
00:06:41,770 --> 00:06:44,290
but maybe because that was
the only thing available.

114
00:06:44,290 --> 00:06:47,000
Maybe they would be interested
in going in a new direction.

115
00:06:47,000 --> 00:06:50,500
A lot of people automatically
dismiss e-currency as a lost cause

116
00:06:50,500 --> 00:06:53,630
because of all the companies
that failed since the 1990's.

117
00:06:53,630 --> 00:06:57,170
I hope it's obvious that it was only
the centrally controlled nature

118
00:06:57,170 --> 00:06:59,110
of those systems that doomed them.

119
00:06:59,110 --> 00:07:01,745
I think this is the first time
we're trying a decentralized,

120
00:07:01,745 --> 00:07:04,490
non-trust-based system.

121
00:07:04,490 --> 00:07:09,080
So this gives a really nice idea or
a nice view of what Satoshi thought of

122
00:07:09,080 --> 00:07:13,030
the earlier proposals and specifically
how he felt Bitcoin was different.

123
00:07:13,030 --> 00:07:15,600
Which is that Bitcoin moved
in a decentralized manner.

124
00:07:15,600 --> 00:07:19,430
And from our study of all the previous
systems we can see that this is true.

125
00:07:19,430 --> 00:07:22,500
That this is a defining feature of
Bitcoin that is not present in a lot of

126
00:07:22,500 --> 00:07:23,520
the systems that we looked at.

127
00:07:25,370 --> 00:07:29,630
Another interesting quote from Satoshi
suggests that maybe he's not an academic.

128
00:07:29,630 --> 00:07:33,600
A lot of academics think about ideas and
write them down immediately.

129
00:07:33,600 --> 00:07:36,120
Satoshi says that he took
an opposite approach.

130
00:07:36,120 --> 00:07:38,150
He says I actually did
BitCoin kind of backwards.

131
00:07:38,150 --> 00:07:41,080
I had to write all the code before I
could convince myself that I could solve

132
00:07:41,080 --> 00:07:43,830
every problem, then I wrote the paper.

133
00:07:43,830 --> 00:07:47,790
I think I will be able to release the code
sooner than I could write a detailed

134
00:07:47,790 --> 00:07:48,670
specification.

135
00:07:49,870 --> 00:07:53,030
A final question we may ask ourselves
colored by what we understand

136
00:07:53,030 --> 00:07:57,460
from the history of e-cash is why
does Satoshi maintain his anonymity?

137
00:07:57,460 --> 00:07:59,940
The first reason might be it's just for
fun.

138
00:07:59,940 --> 00:08:02,430
There's lots of people that
write novels that are anonymous.

139
00:08:02,430 --> 00:08:06,690
There's graffiti artists like Banksy
that maintain their anonymity.

140
00:08:06,690 --> 00:08:09,510
And at that time in the community
that he was involved in,

141
00:08:09,510 --> 00:08:12,450
the cyberpunk community and
the cryptography mailing list, there

142
00:08:12,450 --> 00:08:16,650
were lots of people that were posting to
that mailing list in an anonymous fashion.

143
00:08:18,230 --> 00:08:22,110
The second that ties a little
closer to what we've seen

144
00:08:22,110 --> 00:08:26,710
maybe there were legal reasons that he was
concerned about revealing his identity.

145
00:08:26,710 --> 00:08:30,530
There were a couple events in particular
that led up to the release of BitCoin

146
00:08:30,530 --> 00:08:34,350
where two other proposals, one was called
Liberty Reserve and the other e-Gold

147
00:08:34,350 --> 00:08:38,630
which we talked briefly about ran into
legal trouble for money laundering.

148
00:08:38,630 --> 00:08:40,960
In particular, in 2006, the CEO or

149
00:08:40,960 --> 00:08:45,840
the founders of Liberty Reserve actually
fled the United States because they

150
00:08:45,840 --> 00:08:49,110
were afraid they were going to be
indicted on money laundering charges.

151
00:08:49,110 --> 00:08:52,560
And for e-Gold, the founders
stayed in the United States and

152
00:08:52,560 --> 00:08:57,220
they were actually indicted and
eventually pled guilty to the charges.

153
00:08:57,220 --> 00:09:01,870
And this guilty plea was registered
just right before Satoshi

154
00:09:01,870 --> 00:09:06,490
started the BitCoin website and started
emailing people about his proposal.

155
00:09:07,740 --> 00:09:11,280
That said, there is lots of people
that invented eCash systems and

156
00:09:11,280 --> 00:09:14,480
nobody else was scared of
the legal implication.

157
00:09:14,480 --> 00:09:17,190
And no one else remained
anonymous as well.

158
00:09:17,190 --> 00:09:19,420
So this may have been a reason and
may not have been the reason.

159
00:09:21,350 --> 00:09:25,650
Another thing is that we mention that
certain aspects of eCash were patented.

160
00:09:25,650 --> 00:09:29,320
And if you go back to the culture
of the cypherpunk movement,

161
00:09:29,320 --> 00:09:33,680
they were concerned about
implementing e-cash systems

162
00:09:33,680 --> 00:09:39,170
because they may violate the patents of
some of the technology that was patented.

163
00:09:39,170 --> 00:09:44,680
And so here's a post proposing that,
for example, they launch a project

164
00:09:44,680 --> 00:09:48,640
to implement David Chaum's e-cash system,
which was subject to a patent.

165
00:09:48,640 --> 00:09:52,100
And they do it under
the guides of anonymity so

166
00:09:52,100 --> 00:09:54,380
that no one knows who they are.

167
00:09:54,380 --> 00:09:56,660
And then if they get sued for
violating the patent,

168
00:09:56,660 --> 00:10:00,820
no one can find them to
actually issue the lawsuit.

169
00:10:02,760 --> 00:10:06,310
A final reason that's often cited
is that because Bitcoin was so

170
00:10:06,310 --> 00:10:10,680
successful and Satoshi has a lot of
Bitcoins that are worth a lot of money,

171
00:10:10,680 --> 00:10:13,350
that maybe he's doing this for
personal security reasons.

172
00:10:13,350 --> 00:10:17,420
And this could very well be the reason
why he maintains his anonymity.

173
00:10:17,420 --> 00:10:19,900
Choosing to be anonymous isn't
a decision you make once,

174
00:10:19,900 --> 00:10:22,380
it's something that you continually
make on a continuing basis.

175
00:10:23,520 --> 00:10:26,680
That said,
it probably wasn't the original reason.

176
00:10:26,680 --> 00:10:31,400
At the original reasons, the first time
Satoshi used the name Satoshi Nakamoto,

177
00:10:31,400 --> 00:10:34,920
he hadn't even released the white paper or
the codebase for Bitcoin.

178
00:10:34,920 --> 00:10:39,360
And it's hard to imagine that he had
any idea that it would be as successful

179
00:10:39,360 --> 00:10:40,370
as it was.

180
00:10:40,370 --> 00:10:43,530
It's clear that he understood
the potential of it, he understood that it

181
00:10:43,530 --> 00:10:47,620
could be successful, but
he wasn't a perfect oracle of the future.

182
00:10:47,620 --> 00:10:50,990
He made mistakes just like everyone else,
both in the code.

183
00:10:50,990 --> 00:10:54,340
He had some features that he added
to BitCoin like sending money to

184
00:10:54,340 --> 00:10:57,780
IP addresses that never caught on,
no one thought they were useful.

185
00:10:59,170 --> 00:11:02,510
When he described what BitCoin
was useful for he gave a bunch of

186
00:11:02,510 --> 00:11:06,470
use cases that were very centered on
the idea of using it across the Internet.

187
00:11:06,470 --> 00:11:09,690
Which of course is a huge, huge case for
BitCoin but it's not the only one.

188
00:11:09,690 --> 00:11:12,910
He didn't really envision it being used
by stores, going into a coffee and

189
00:11:12,910 --> 00:11:15,970
using BitCoin to pay for
your coffee, for example.

190
00:11:15,970 --> 00:11:20,020
But last, but not least,
he was generally adopted the tone of being

191
00:11:20,020 --> 00:11:23,610
optimistic about the future of BitCoin,
but also being cautious.

192
00:11:23,610 --> 00:11:28,325
He understood that previous companies had
failed, and that BitCoin may fail as well.

193
00:11:28,325 --> 00:11:32,935
And so he supported a very conservative
approach, especially in the early days

194
00:11:32,935 --> 00:11:38,105
when a lot of attention was perhaps
going to be applied to Bitcoin,

195
00:11:38,105 --> 00:11:42,435
should Wikileaks choose to
start accepting Bitcoins after

196
00:11:42,435 --> 00:11:47,190
credit card companies shut down people's
ability to donate to that project.

197
00:11:47,190 --> 00:11:51,820
He warned the other developers that
this could have bad consequences for

198
00:11:51,820 --> 00:11:56,665
the project and the Bitcoin project might
not succeed, if they went ahead and

199
00:11:56,665 --> 00:11:59,650
got WikiLeaks to start accepting Bitcoin.

200
00:11:59,650 --> 00:12:03,385
WikiLeaks by the way did do that and
the Bitcoin project survived that, but

201
00:12:03,385 --> 00:12:06,242
that was right at the time
that Satoshi left the project.