Who Is Satoshi Nakamoto?
To this day, the identity of the man who invented the digital currency Bitcoin is enshrined in mystery. That’s right, Satoshi Nakamoto’s true identity has never been confirmed. According to NYTimes writer Nathaniel Popper, “someone using the name Satoshi Nakamoto released the software for Bitcoin in early 2009 and communicated with the nascent currency’s users via email – but never by phone or in person. Then, in 2011, just as the technology began to attract wider attention, the emails stopped. Suddenly, Satoshi was gone, but the stories grew larger”.
Many people in the Bitcoin community however, believe that Nakamoto’s desire for privacy should be respected. Yet that hasn’t stopped the world from speculating about the creator’s true identity. In March 2014, Newsweek published a cover article claiming that Satoshi was a 60 year-old unemployed engineer by the name of Dorian Satoshi Nakamoto who lived in suburban Los Angeles. Shortly after the article was published, more speculation started surfacing pointing to the fact that “the magazine had the wrong man”.
In 2017, Bruce Kleinman, the author of The Bitcoin Tutorial, makes a compelling case on an episode of Adventures in Finance arguing that Nakamoto is more likely to be represented by a group of individuals with expertise in both cryptography and network architecture: “We’ve got cryptography, cybersecurity, software architecture, and network architecture. If you look at those four elements, those are four distinct disciplines, and they tend to be somewhat siloed. So the likelihood of any one individual spanning all four of those silos? I put at zero”.
Fast forward a couple of years and we still don’t know much about the creator’s real identity, apart from the fact that Nakamoto owns up to 5 percent of the total supply of the currency. It’s hard to say exactly how many U.S. dollars that would be worth since Bitcoin’s exchange rate is extremely volatile, but you can multiple Bitcoin’s current price by 1 million and you’ll get a pretty good sense.
The Power Is in the Numbers
Why do people feel so strongly about revealing Nakamoto’s true identity? According to CNBC, since Nakamoto currently owns one million bitcoins he could flood the market at any point if he wanted to. “Because part of bitcoin’s value comes from its scarcity (only 21 million bitcoins can ever be mined), Nakamoto could cause the price of bitcoin to tank by selling a large piece of the stash in that million-bitcoin wallet.”
Ben Yu, a bitcoin investor living in San Francisco, also believes that Nakamoto’s stake in bitcoin can be dangerous for the economy: “If bitcoin fulfills its role of becoming a global currency, than Satoshi Nakamoto would likely be the richest person in the world and also hold a proportionately higher share of the ultimate supply of bitcoin than something like the U.S. government holds in gold today”.
That’s right – the U.S government currently owns 8.000 tonnes of gold, that’s just a little over 4% of the world’s total supply, which is still less than Nakamoto 5% stake in bitcoin. What’s more, the value of Bitcoin is estimated to hit $100,000 by 2027, according to CNBC.
Hard to say – while some believe that trading these cryptocurrencies is more akin to gambling than investing, not everyone is concerned about the volatile nature of this asset.
Financial advisor Ric Edelman, founder and executive chairman of Edelman Financial Services, believes that “digital currencies are the future” and that people should focus on the bigger picture and hold on to their cryptocurrencies – if they have the stomach for it. “If owning this asset is causing you to stare at the ceiling at night, you shouldn’t own it,” he said. “There’s more to life than money. I’ve watched it go from $1 to $1,000, back to $200 and then to $16,000”.
According to Willemien Kets, associate professor at the University of Oxford’s Department of Economics, this is exactly what makes Bitcoin so irresistible to investors – its volatility. Unlike other speculative investments, such as venture capital and private equity, where you can check your phone every five minutes, with cryptocurrencies you can “track the minute-by-minute value of it”. “We know from social psychology that the best way to get people hooked on something is to give them a reward on a very uncertain time frame,” Kets said.
Investment guru Warren Buffett on the other hand, is almost certain that cryptocurrencies will end badly. Buffet recently shared his thoughts on the matter in an exclusive interview with CNBC: “I get into enough trouble with things I think I know something about. Why in the world should I take a long or short position in something I don’t know anything about?”.
Bitcoin & the Future of Work
The establishment of Bitcoin ATMs in Australia raises an important question regarding the way in which employers will be able to (and might choose to) pay their employees. In Australia for instance, there are no express prohibitions preventing businesses from rewarding their employees with something other than cash – if the business engages the worker as an independent contractor. This means businesses should be able to pay employees in Bitcoin or other cryptocurrencies. Will this lead to a change in legislation to allow alternative payment methods? We’ll have to wait and see.