When it comes to math, 2+2 equals 4. Always and unequivocally. But when it comes to investing, 2+2 does not always equal 4. What I mean is that you may have put together the perfect investment thesis, you may have even calculated all the complex numbers correctly, current and future revenues, profits and loss, EBIDTA and all the other fancy financial jargon and acronyms. But the one thing you can’t account for…you can’t predict the future. Your thesis can quickly run aground due to a Presidential Act, a Congressional Act, or even an Act of God (that’s an insurance term essentially saying “we didn’t factor that into our calculations, so we might cover it or we might not, we’ll see”).
A Juicy Dividend and an Inconsistent Narrative
So how did I pick Pepsi stock “at the bottom”? To be clear, it wasn’t the perfect exact bottom. I aggressively purchased Pepsi stock last year over the course of a month and half for many of my income-seeking clients as well as for myself from May 16th to June 30th between the prices of $128 to $132. I used a variety of fundamental and technical analyses to come to the conclusion that it appeared to be an excellent opportunity to get in. Looking back an entire year, that month and a half stretch clearly shows Pepsi at its lowest price range since the COVID crash 6 years ago. Why Pepsi of all stocks, especially with all the high tech flyers outperforming the S&P 500? I recommend all sorts of investments, but this particular one in this particular moment just felt too compelling to pass up. Pepsi is a Dividend King and it was paying out its largest percentage dividend by historical record, about 4 times the size of the S&P’s dividend. At the time, the news headline narratives for why it was performing poorly felt inconsistent. As in, Pepsi was synonymous with unhealthy foods so therefore they were now performing poorly as people switched to healthier options. Yet if you read between the lines, during this time period that Pepsi stock was dropping, Coca Cola stock was climbing, and there was no mention of them being unhealthy. There was so much bad news surrounding Pepsi that I believed any good news could potentially give the stock a boost. Pepsi started their annual streak of raising dividends since before I’ve even been alive, it’s a resilient business and I was willing to bet on it. This is what I saw as a potential “buy low” opportunity. The nice thing is, if I was wrong, I could still sit back and collect my dividend while waiting for my investment thesis to play out. 2 + 2 doesn’t always equal 4, but it sure felt like it would be as close to 4 as any opportunity I saw last year.
What does this have to do with identifying Satoshi Nakamoto, the anonymous creator of Bitcoin? I’m going to use the same style of analysis step by step, I’m also going to look at it from a psychological angle, to show you how I put 2 and 2 together to come to my conclusion of who I believe Satoshi Nakamoto is.
Before I get into the “technical” aspects, I want to first mention that I am a finance person at the core, and not a technology expert by any means. So I’m certain I will not be precise in how I describe what I’m about to describe when it comes to any forms of technology. But I’m going to view this through the lens of a financial advisor and describe everything as conceptually as possible.
A Few of the Usual Suspects
Adam Back initially created Hashcash in 1997 as a tool for blocking email spam. Hashcash was created not to identify spam, but to identify the spammer. If a normal person sends a few emails, there would be a trivial computation to let the email through. But if a spammer sent a million emails, there would be tremendous computational cost (think electricity, the time and energy it takes to run the computer endlessly which creates wear and tear on the hardware, time spent computing, etc) to slow down and discourage the would-be spammer. This is essentially the basis of the Proof of Work concept that Bitcoin now uses for mining bitcoin. What Adam was creating was a cyber security tool that didn’t necessarily have to the power to become a currency.
Nick Szabo initially created Bit Gold in 1998, which in name is essentially what Bitcoin was designed to mimic, digital gold. It is widely considered as the direct precursor of Bitcoin due to its public ledger and chain of time-stamped proofs, which were the first steps toward the creation of the Blockchain. However, Bit Gold never quite got off the ground because it had not yet solved certain aspects such as mining incentives or inflation adjustments as computers got faster and smarter. But Bit Gold is universally considered the closest prototype to Bitcoin that exists. It’s kind of like the days of a horse and buggy, there’s a concept of a car but no one’s quite figured out how to build a car engine yet.
Hal Finney was known as an elite programmer using the C++ computer programming language, the language used to create Bitcoin. He created RPOW in 2004, which was an expansion off of Adam Back’s Hashcash single use proof of work algorithm into something that could be reusable and have transferable value. However, Finney built this on a centralized server, and if Finney’s RPOW server ever went offline for any reason, the entire currency would stop working.
Survival of the Fittest Technology
Szabo, Back, and Finney each had ideas and a shared passion valuing anonymity, less Big Brother government involvement, and computer programming. All 3 joined the CypherPunks group in the early to mid 1990s. Over time, the best ideas that come up will stick, and the rest of the ideas get tossed. The group will slowly come to a consensus on which ideas will eventually make the most real world sense. It is the natural streamlining of technology, from nascent stage with bugs and conflicts, to polished stage where the dominant idea wins and is now ready for launch.
Bitcoin took the Bit Gold concept, merged it with Hashcash’s Proof of Work idea for mining incentives, as well as RPOW’s reusable but centralized token, and added the creation of the Blockchain. At its core, it was basically the years-long merging and evolving of Nick Szabo’s best ideas with Adam Back’s best ideas. And coincidentally, Back’s ideas had been somewhat evolved already by Hal Finney’s ideas. Finney also happened to be the first person to ever receive a Bitcoin transfer from Satoshi.
But who is the Elusive Keyser Söze / Satoshi?
Some people seem to believe it's a government agency, like the CIA. You can remove your tin foil hats, because government agencies would want more centralization, not less.
A recent article from the New York Times strongly suggests it’s Adam Back, primarily through the use of matching style of writing to prove the point. I think it’s an excellent, well researched piece with many convincing points. But it feels like there’s just something missing. Back only really contributed one (albeit major) core component to Bitcoin’s overall code, as opposed to someone who could oversee the entire operation. Sure, he had many other similar ideas as was the likely consensus among the CyperPunks group. But you can also hand a brilliant group of people all the pieces to a jigsaw puzzle, it doesn’t mean any of them can actually fit all the pieces together. If we were to dive into a different style of writing analysis, Satoshi's forum posts place Back as a strong candidate, however Back's writing doesn't match Bitcoin’s white paper mastermind at all. And when reading through his current X (Twitter) account, Back sounds much more like someone trying to drive profits off of Bitcoin, rather than someone who wanted to create Bitcoin for the benefit of everyone. So if he was actually Satoshi, why didn't he just tap some of that massive Bitcoin stash? He also seems more emotional and contentious, less like Bitcoin’s more stoic founder.
Some believe it’s Nick Szabo, his writing and educational style seem more in line as the author of the Bitcoin white paper. He is an expert on the history of gold, and Bitcoin was essentially designed to be digital gold. Looking at his personal blog and his X account, his personality seems consistent enough to fit well with being the architect of Bitcoin. He even holds a law degree to go with a computer science degree, an exceptionally rare combination of education due to two completely different styles of cognitive thinking. However, despite also having a computer science background, he is not considered strong when it comes to computer programming, so could he actually have been the one to write Bitcoin’s code?
Others say it’s Hal Finney, he could be considered the strongest computer coder of all the CypherPunk Satoshi candidates, and seemed to speak from an educational standpoint, much like Satoshi. But he suffered from ALS or Lou Gehrig’s disease, a physical ailment that would probably make typing out prolific forum posts difficult to do. Before his ALS diagnosis, he was in the middle of a marathon while Satoshi was sending out an email, which makes it unlikely to be him. Another report suggested it’s a combination of Len Sassaman and Hal Finney together, but some may think otherwise. Conveniently and sadly, Sassaman and Finney are both already deceased. In summary, of the usual suspects, there really doesn’t seem to be any one person who could fully fit what Satoshi was able to accomplish in all aspects of original coding, mining, troubleshooting and maintenance, educating, writing emails and forum posts, etc. Could there simply be someone else entirely that no one to this day even knows existed, someone who never spoke in any forums and just secretly watched and then brilliantly put everything together?
Satoshi is…the 12th Person on the Bench??
I doubt it could be an as yet unknown and silent individual. Someone who is on an anonymous forum with like minded individuals, who has brilliant ideas to share with the world, is likely going to be a big participant in the CypherPunk chat rooms. Yes, there will be many smart individuals who will be quiet and lurk in the chat rooms and never say anything. But more than likely, the smartest of the smartest people are the ones throwing their ideas out there and seeking feedback and improvements. It’s like on a basketball team, the biggest 2 or 3 stars carry the bulk of their team’s minutes on the court, and make the most impact on winning. The 12th person on the bench never sees court time, never makes a statistical impact on the game, they’re mostly just really athletic cheerleaders that were never good enough to crack any meaningful playing time. They’re virtually invisible, and they don’t turn into star players overnight.
The same can be said with Bitcoin. A totally invisible individual all of sudden happens to understand all the ins and outs of the best ideas of Bit Gold and Hashcash and RPOW together, and implement a few more of their own ideas, and magically create Bitcoin? That sounds like more of a fairy tale.
There’s a way we can tell that the anonymous Satoshi was actually a significant figure in the CypherPunk community. In 2010, after Bitcoin's release, at one point Hal Finney compliments the Bitcoin code. Satoshi responds to Finney within hours by replying “That means a lot coming from you, Hal. Thanks.” This signifies 3 major things. The first thing is that Satoshi clearly holds Finney in high regard, especially when it comes to writing code. That suggests there was already some type of prior history between the two people. What it doesn't suggest is that Satoshi was relatively new to the CypherPunk community, as he had been initially viewed as. The second thing is that when he specifically says "that means a lot coming from you", it sounds like Satoshi doesn't care too much about most people's opinions, whether they be compliments or criticisms. This suggests he carries some type of status or elevated reputation among his peers. And the third, most important thing in regard to what is on the minds of Satoshi hunters: it also clearly shows that Hal Finney is NOT Satoshi.
Is Adam Back the Michael Jordan (or Scottie Pippen) of Crypto?
Who could be close enough to Hal Finney with good enough coding skills to put the Bitcoin code together? Adam Back has previously spoken glowingly about Hal Finney and the close long term friendship they had. Back had previously messaged that the safest way to publish software is to do it anonymously. But in his X profile, he actually lists himself as “inventor Hashcash (Bitcoin mining)”. It literally sounds like he is saying that he himself invented Bitcoin mining. As if he was looking at an unfinished car, saw that the engine was missing, and plugged in the engine he designed himself right into the car and turned it into the finished product. Would any pure cryptographer be bold enough to say they actually invented a major piece of Bitcoin’s characteristic, unless they know they actually were the one to do it?
Nick Szabo, the Yin to Adam Back’s Yang
So Adam Back practically acknowledges inventing Bitcoin mining, but what about “the rest” of Bitcoin? Well Bitcoin could be described as the evolution of Bit Gold and Hashcash. So could Nick Szabo be the inventor to “the rest” of Bitcoin? Wouldn’t that be the simplest answer? Hypothetically speaking, let’s plug in Nick Szabo as the initial Satoshi Nakamoto, and then follow this potential timeline. I will mention clearly that I have no definitive proof.
- Satoshi emails Adam Back in August 2008 to cite his work on Hashcash for his upcoming Bitcoin white paper. At this time, Back is already a "CypherPunk Legend", and Hashcash is clearly important to Satoshi. But Back blows him off as just another newbie developer, since he's seen many digital cash ideas already crash and burn over the years. He doesn't bother to read the white paper, and tells Satoshi to google Wei Dai's b-money proposal. Dai was another early member of the CypherPunk community.
- Satoshi follows the trail and emails Wei Dai in August 2008, showing (or feigning) ignorance around b-money. After exchanging emails, Wei Dai introduces Satoshi to Bit Gold, and again, Satoshi shows ignorance around Bit Gold as well. But this time, Satoshi does not follow the trail. He doesn't email Nick Szabo. When the Bitcoin white paper launches, b-money is cited while Bit Gold, which is much closer in design to Bitcoin than b-money is, is strangely completely left out.
- This could be Nick Szabo using the moniker of Satoshi Nakamoto to release the Bitcoin white paper. The writing of the Bitcoin white paper stylistically has been frequently discussed as matching up with Szabo's style of writing the closest. If it actually is him, it makes sense why because he wouldn't email himself for citation. And as the architect of the Bit Gold and Bitcoin concepts, he may not have wanted to cite himself in his own paper anyway. He may have thought that it could seem pretentious, or more likely with Bit Gold being literally steps away from Bitcoin, it could possibly be something that he was worried would draw unwanted comparisons to himself.
- Adam Back has deep expertise with C++, and Szabo and Back have known of each other’s works since the CypherPunk days of the mid to late 1990s. Szabo, no slouch himself, was also already a "living legend" in pre-Bitcoin times.
- Since there is very little if any actual public coding work of Szabo, Szabo might be someone who was a profound scholar but with relatively rudimentary coding skills. After all, his computer science degree is from 1989 and his law degree was obtained in 2006. Maybe he needed a higher-level expert to step in and get his work to the finish line.
- Jeff Garzik, an early contributor to the Bitcoin project, said that even though Satoshi's code was brilliant at knowing how to solve the problem, it lacked the "basics that 'computer science majors learn' ". This wouldn't sound like Adam Back's work but could fit Nick Szabo, someone who is still smart enough to write code, but knows that his skills might be outdated and are not his best strength. He most likely ran into roadblocks before he could turn all his thoughts into software reality. When Satoshi reached out to Back in August, he said he was "nearly finished" with the Bitcoin code. But everyone who writes software knows what that really means. "The first 90 percent of the code accounts for the first 90 percent of the development time. The remaining 10 percent of the code accounts for the other 90 percent of the development time." Bitcoin won't go live for another 4 months.
- With his white paper released and the actual code nearing completion but possibly hitting a snag, the pressure is on to get the code to launch. Knowing that Back doesn't take Satoshi seriously, Szabo reveals himself as Satoshi and gets Adam Back involved on his project to review his code, and possibly to help properly implement Hashcash’s features into Bitcoin’s mining.
- Back may have seen a rough draft of convoluted code, but understood the overall concept of what Szabo was trying to create and has his eureka moment
- Like many CypherPunks, Back likely saw all the jigsaw pieces before, over many years being part of the group, but recognizes the genius in the concept that finally puts all the pieces of the puzzle together. There must have been excitement that Hashcash would actually play a major role in what will be Bitcoin’s “engine”
- Back essentially proofreads and then fixes what he can, and like a highly skilled and talented programmer, he would mimic the unique style of the original code writer to make it functional and consistent while helping to maintain as much fluidity as possible
- Due to it not being his original code, there would understandably be many bugs and mistakes. Completion over perfection.
- Since Adam Back takes credit for inventing Bitcoin mining, since Adam Back probably had the expertise to get the Bitcoin code to the finish line, it makes sense that he would then be the one to do the Bitcoin mining from the beginning, starting with the Genesis block. If the year is 2009, and you have a brand new car, and a 20 year old car from 1989, which car would you rather drive?
- Szabo turns over the Satoshi moniker to Adam Back, knowing that with Back's technical expertise and experience, he would be more qualified to publicly answer questions and do troubleshooting once the Bitcoin code goes live.
- There is probably an agreement that the Bitcoin they mine is for educational and troubleshooting purposes because otherwise they would have a massive unfair advantage over everyone else if Bitcoin indeed takes off in value and they ponder the temptations. In a way, they would have “centralized power” by having such a lopsided proportion of the early Bitcoin (as well as a significant percentage of all total Bitcoin) before anyone else, so it must never be touched or used for profit, and they probably ensure this by splitting their private key, or by sending the Bitcoin to a wallet or wallets that can never be accessed. Back probably agrees with little pushback. After all, the majority of the work was not done by him up until this point. Any Bitcoin being mined had no monetary value as of yet. There was no guarantee this project would become a success. And who would think at that time that every single Bitcoin mined then would eventually be worth about $80k each today?
- Bitcoin goes live in January 2009. Since Back has a long history with Finney going back to the early 1990s, since he deeply admires Finney’s “coding chops”, since Finney has helped with early Bitcoin coding, Back sends the first Bitcoin transaction to Finney. It's useful because of Finney's expertise and relative familiarity with the Bitcoin code already, but it's also symbolic.
- Around August 2009, roughly 7 months after Bitcoin goes live, on Nick Szabo's Unenumerated blog, Szabo changes the dates of his 2 Bit Gold blog entries, from December 2005 (Figure 1) and April 2008 (Figure 2), to December 2008. The December 2008 date is after the Bitcoin white paper is released, but before the Bitcoin code goes live. This is significant. He did not cite Bit Gold in the Bitcoin white paper and probably now realizes this error will raise questions in the future, so he dated it after the Bitcoin white paper to give Satoshi an excuse for why it was never cited. He can't date the blog entries after the Bitcoin launch, because Bitcoin is now out and already better than Bit Gold. While the changing of the dates may seem a bit sloppy, completely deleting and reposting the blogs would've permanently deleted all the blog comments and raised even more suspicions. It's almost as if...he were thinking as Satoshi.
- With the alias switch completed, Back as Satoshi probably talks conceptually similar to how Szabo would talk, since at this time they’re probably in frequent contact with each other. Their missions aligned. But as time passes, Back probably starts to see that Bitcoin’s profit potential is real and bigger than he could've imagined. Szabo as the money historian and architect sees that his ideas are doing exactly what is supposed to happen, that he has quite literally created digital gold, and that is satisfaction enough. Szabo possibly never intended to profit from it. But Back has other thoughts, since it’s hard to simultaneously work tirelessly for free, unable to soak in the glory of public merit and praise due to having to remain anonymous, while watching all others around him making money off his (co)creation. The strain and stress of watching everyone else benefit from your life’s greatest achievement while you yourself cannot do the same, that may have been too much to bear.
- This could have led to fundamental disagreements between Szabo and Back about what to do with the roughly 1 million bitcoin that has been mined. Bitcoin also starts to attract government scrutiny when WikiLeaks begins accepting Bitcoin to bypass financial blockades. This scrutiny is the exact opposite of what Szabo and Back would’ve wanted during Bitcoin's early years. Since Back as Satoshi can’t profit off of Bitcoin, there’s no real benefit to himself to stick around, but now the liability and risk have skyrocketed. “WikiLeaks has kicked the hornet’s nest, and the swarm is headed towards us.” Back loses motivation in being Satoshi and drops the alias in April 2011. “I’ve moved on to other things” Satoshi says to Mike Hearn, a well known early Bitcoin developer.
- Back later confirms he didn’t actually own Bitcoin until 2013. That year and a half gap could have been Back’s burnout with his involvement in Bitcoin and the events revolving around it.
- Shortly after Satoshi pens his farewell emails, Szabo finally makes his first comments on Bitcoin. He acknowledges that only 3 people including himself would have thought of this concept "until Nakamoto", and even alludes to the fact that Nakamoto could be one of them when he says "assuming Nakamoto is not Finney or Dai". The entire blog entry reads almost like a puff piece, of a man beaming with pride and triumph after Nakamoto's (Szabo's) long and difficult journey filled with doubts and criticisms, and then finally the breakthrough and completion of the masterpiece. His part (2) is essentially an I Told You So to his doubters. If Szabo isn't Nakamoto, he sure seems to know exactly what is going on through Nakamoto's mind. Process of elimination: Finney never wrote anything like this about bitcoin, and Dai had fundamentally different beliefs in part due to Bitcoin's price volatility.
- Shortly after dropping the Satoshi alias, Back joins Bitcoin forums and asks questions about Bitcoin that appeared to show he struggled to understand certain concepts on Bitcoin. This could be a way for him to now reveal himself after Satoshi’s exit, while making it look like he doesn’t have Bitcoin expertise, to throw everyone off the scent. It could also be a way for him to start throwing some of his new ideas around, to explore if there are any holes that Bitcoin might have, or so that he could consider creating something different. Coincidentally, the first alt coins start launching in 2011 as people come out of the woodwork looking to capitalize on Bitcoin's success.
- As Bitcoin shows resiliency and continues to grow, it’s possible Back comes to the conclusion that no other alt coins seem able to compete with the thoughtfulness and elegance that Bitcoin beautifully captures. He realizes he should have just been accumulating Bitcoin for himself since the beginning of Bitcoin’s launch. Back dives back into Bitcoin with unabashed exuberance, and he’s been all in ever since as a Bitcoin “maximalist”
- Via the NY Times article, in 2015, Adam Back is arguing with major developers over a fundamental philosophical difference of Bitcoin opinion. All of a sudden Satoshi pops up with an email to defend Back's position. Satoshi had practically completely disappeared for over 4 years, and after this peekaboo 2015 email, has never been heard from since. The next day, Back posts that he believes the Satoshi email sounded real, downplaying opinions that the email address may have been hacked. This sounds incredibly like someone who logs in under "someone else's" account to pad their own arguments.
Nick Szabo Unenumerated Blog, Figure 1
Nick Szabo Unenumerated Blog, Figure 2
I am Negan. I am also Negan. We are all Negan
There is a law firm in Los Angeles called Paul Hastings. There is no one there named Paul Hastings. It is a partner group made up of Lee Paul and Robert Hastings. That’s 2 separate founders. So if you ask someone at the law firm, “Are you Paul Hastings?” Wouldn’t that be a ridiculous question to ask? If they were still alive, wouldn’t Lee Paul or Robert Hastings deny being Paul Hastings no matter what you say or think?
Now let’s look at it another way. There are roughly 1500 lawyers at Paul Hastings. If you ask them, “Are you Paul Hastings?” Technically, they can say “yes, we are!”
So who is Satoshi Nakamoto? I believe the most obvious conclusion is that it’s not one person, but two. I believe it was Nick Szabo and Adam Back. THEY are Satoshi Nakamoto. And that’s why when questioned, each of them have individually consistently denied being Satoshi. You are not lying and you have plausible deniability if technically you are only 1/2 of Satoshi.
Did you know chocolate milk comes from brown cows?
When people argue why it can’t be Szabo or why it can’t be Back, they point to Satoshi's sleeping patterns not matching up, or their inadequacies or incompetence on technical Bitcoin aspects, or how they didn’t know certain things until years after Bitcoin’s launch. These things can all be true and at the same time they can still be Satoshi. Time clocks can be spoofed on computers quite easily, especially by computer experts who breathe computer programs for a living. Or maybe they just have unusual sleeping habits - is that really that uncommon, especially among people who spend a lot of time in front of a computer screen? Szabo has been criticized for not understanding some of Bitcoin’s code as a reason why he can’t be Satoshi. That could be easily explained if he needed Back to help him with it. Back has been dismissed for saying he was still learning about Bitcoin years after it launched. But anyone could pretend not to know something they actually knew. Come on, these people are the masters of anonymity. Their job is to literally deny everything. You can’t just take everything everyone says at face value, or if you do, I’ve got a bridge to sell you.
Have you ever known the correct answer but purposely tried to defend the wrong answer, just to see how well you can play the devil’s advocate, while someone else will fervently try to defend the correct answer? It can be quite entertaining, and as a matter of fact, I do it to my kids all the time, just to see if they can tell whether I’m joking or whether I’m serious. For a short while, they believed regular milk came from regular cows and chocolate milk came from brown cows. For technologically inclined people, this could be their way of playing jokes on unsuspecting people. They’re the creators of Bitcoin, the “parents”, and everyone else has differing levels of knowledge. Some have the literate computer knowledge of a 3 year old, like myself (if I’m lucky). It wouldn’t be fun for them to mess with me because I’m technologically clueless. But someone else with just a deep enough level of computer programming expertise, well they could be fun to mess with. Plus, the added bonus is they could throw you off the Satoshi scent to show you that it’s really not them.
More importantly, these debates while standing on the opposite side of your own argument could be a great way to see if someone can identify weaknesses in Bitcoin’s code. Could something better be added to enhance Bitcoin, or created as a newer, better cryptocurrency? These can be the types of debates that push critical thinking and further innovation, and the opportunities are endless.
Of all the things I’ve read and researched, there isn’t a perfect match for any one of these individuals to stand out as the sole creator of Bitcoin. So logically the best fit is that it would be multiple people. Yes, it’s extremely challenging for one person let alone multiple people to maintain anonymity in the public eye for over a decade and a half without any slip-ups. The odds of this being a possibility are probably like finding a needle in a thousand haystacks. But then again, the odds of something like Bitcoin being created and becoming as successful as it has, well the odds are probably even slimmer than that. It’s highly, remarkably, incredibly difficult. But it’s not impossible.
In the broad world of finance, 2+2 rarely perfectly equals 4, when there’s no definitive “proof”. But if Satoshi Nakamoto walked and talked like a duck, that duck would be Nick Szabo and Adam Back.