By Kurt Johnson
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CRYPTOCURRENCY
The Mysterious Mr Nakamoto
Benjamin Wallace
Atlantic, $45
In 2008, a white paper was published entitled Bitcoin: A Peer-to-Peer Electronic Cash System. It explained how existing technologies like proof of work, public key encryption and peer-to-peer network architecture could be assembled into a decentralised digital currency - the Bitcoin. The author, whose name was given only as Satoshi Nakamoto, had been active on internet forums and had built an implementation of the so-called Bitcoin - leaving clues to his identity - in code and word.
Then one day he disappeared. Over the past 16 years, the identity of the paper’s author has been the matter of widespread speculation - with possible candidates running in the hundreds, mostly nerds, freaks and weirdos, along with a few starry-eyed optimists. It’s generally assumed that Nakamoto is a mister but could be a group. And owing to Nakamoto’s use of British English, this rogues’ gallery even includes a few Australians - a bigot and a conman, most likely a serial liar.
The Mysterious Mr Nakamoto, by former WIRED writer Benjamin Wallace, journals a 15-year search for Nakamoto’s true identity. From the beginning, his book shines less as a hunt than as an excuse to tell Bitcoin’s florid history.
The general idea of cryptocurrency emerged from an online group called the Cypherpunks, of which Nakamoto was a member. These were a mix of crunchy Bay Area hippies who somehow found common cause with their ideological opposites: Randian libertarians. Both could agree that the post-global financial crisis bailouts were proof of rot in an antiquated system that new technologies could replace.
A statue depicting Satoshi Nakamoto, unveiled in El Zonte, El Salvador, in February.Credit: Bloomberg
Today it takes an effort to cast one’s mind back to an era of tech utopianism when technology was a solution to, rather than an entrenchment of, societal problems.
The belief was that recent advances in cryptography would provide anonymity while decentralisation would avert concentration of power and limit the financial corruption that had led to the crisis. Wallace notes similar efforts existed to Bitcoin but failed to catch on. Bitcoin was unique in its intuitive understanding of market and human psychologies.
Craig Wright, the Australian-born tech entrepreneur who claims to be bitcoin inventor Satoshi Nakamoto.Credit: Getty
From these early days, the author’s quest tracks cryptocurrency’s decline to its present state: an open-air cesspit of predation, zero-sum speculation, rug pulls, “shitcoins” and money laundering by organised crime. Whoever Mr Nakamoto is, if still alive, he would be disgusted at what came of his vision, the author notes. Bitcoin never delivered on decentralisation or anonymity, nor has it been used as actual currency. But the author notes that Bitcoin’s failure is more social than technological: the group fragmented into bitter sects, splitting over architectural decisions, the unified utopian vision collapsing to become easy prey for cynical opportunists. The lesson is important, if cliched: technology will never fix human nature.
Yet this history remains buried in Wallace’s book while the author focuses on finding out the identity of Nakamoto. Possible reasons for anonymity are offered. One flimsy notion is that Nakamoto still holds vast reserves of Bitcoin, so he would be immensely wealthy and concerned about security. More interesting is Wallace’s ideological suggestion: Bitcoin is decentralised by design and so needs to be “headless” to remain true to its original premise.
Unfortunately, The Mysterious Mr Nakamoto becomes bloated, with Wallace chasing his tail and rarely discovering anything irrefutable. We churn through one prospect then another, using a range of techniques that promise identification but uncover only more smoke and mirrors. He seems particularly taken with stylometry as a means of discovering common characteristics of coding or writing style, but every specialist returns a different set of candidates.
To his credit, Wallace has plenty of skin in the game: he learns to code and tries scraping the internet, he flies to Australia for a three-minute conversation. He uses gumshoe reporting, knocking on doors which slowly stop opening as the crypto world seizes up in the face of growing scepticism.
By page 300, the identities of candidates begin to bleed into one another - with only the most roguish and noble retaining a place in the memory. And in the end, we return to the original set of suspects, none the wiser.
The problem is that real mysteries rarely have the pace and final reveal of their fictional counterparts. No single thread ever undoes the entire jumper. The mystery surrounding Nakamoto ends up being like Bitcoin itself: a promising start that loses direction within a cloud of speculation.