Nick Szabo, The Real Satoshi Nakamoto: The Definitive Case Study

The birth of Bitcoin

The 2008 financial crisis sparked a revolutionary invention: Bitcoin, the world's first peer-to-peer digital cash system, developed by a visionary computer scientist who utilized cutting-edge asymmetric cryptography. Bitcoin's enigmatic creator shrouded himself in the pseudonym "Satoshi Nakamoto" to maintain anonymity.

Embracing a profound commitment to the principles of decentralization, Satoshi left the project in 2011. My extensive research on Satoshi points to renowned computer scientist Nick Szabo, the inventor of smart contracts and Bitcoin's precursor, Bit gold.

Who is Nick Szabo?

One of the most influential computer scientists of all time, Nick Szabo is an American polymath with expertise in economics, libertarianism, cryptography, programming, law, and science. Szabo's friend, Donald McIntyre, describes Szabo as a "quiet master of cryptocurrency" and states:

"I think his work and insights are comparable to Einstein, Heisenberg, Bohr, Born, and Schrödinger..."

In 1989, Szabo earned a bachelor's degree in computer science at the University of Washington, later returning to California (his birthplace), where he became more involved in extropy (futurology). Along with fellow extropians Wei Dai and Hal Finney, he joined the Cypherpunk movement in the early 1990s due to the overlapping libertarian ideas of extropianism.

A leading voice in the movement, Szabo played an important role in hosting real-life Cypherpunk gatherings alongside Hal Finney, whose early involvement helped shape Bitcoin's future direction.

Notably, Szabo worked at the NASA jet propulsion laboratory, demonstrating his strong math skills. In 2006, Szabo graduated from George Washington Law School with a Juris Doctor. For his many contributions to various academic disciplines, Szabo was awarded an honorary doctorate in the social sciences along with a professorship from Francisco Marroquín University in 2017.

The most ambitious cypherpunk

On many occasions, Szabo has stated that he was inspired by David Chaum, the recognized inventor of digital cash, and Tim May, a cypherpunk, who in 1988, wrote the "Crypto Anarchist Manifesto," outlining the movement's goals. In 1995, Szabo began working as a consultant for Digicash, the first ecash attempt started by none other than David Chaum.

Szabo's groundbreaking 2001 paper, "Trusted Third Parties are Security Holes," laid out the foundational arguments behind distributed networks functioning without trusted intermediaries. This influential work shapes the thinking of many Bitcoin advocates across the world.

Bit gold: Bitcoin's predecessor

Nick Szabo invented Bit gold in 1998, a sketch for a decentralized cryptocurrency using "bit gold miners" to solve "complex mathematical puzzles." The design utilized Adam Back's Hashcash for its proof-of-work algorithm, which Bitcoin uses a variation of. Importantly, Szabo refers to Bit gold as Bitcoin's "predecessor design."

Bit gold was first drafted on a private mailing list Szabo started, known as "Libtech." Compellingly, the recipients were Hal Finney, Wei Dai, Tim May, as well as economists George Selgin and Larry White. Many don't know that Wei Dai invented B-Money on this list, and went to the same university as Szabo.

Szabo has an impressive blog known as Unenumerated, where he displays his expertise. He decided to publish Bit gold in 2005 after Hal Finney encouraged him to.

In a 2005 blog post, "Antiques, Time, Gold and Bit gold," Szabo passionately stated:

"There are some problems involved with implementing unforgeable costliness on a computer. If such problems can be overcome, we can achieve bit gold. This would be the first online currency based on highly distributed trust and unforgeable costliness rather than trust in a single entity and traditional accounting controls. Hal Finney has implemented a variant of bit gold based on a tamper-evident computer plug-in card, for which remote users can verify what code is running on the card."

This passage shows Szabo's dream of Bit gold being the first P2P, decentralized online currency. It also demonstrates that Hal Finney's RPOW was one of Szabo's key inspirations.

Additionally, in a famous 2011 blog post titled, "Bitcoin What Took Ye So Long," Szabo equates the early ideas of Bitcoin to Bit gold:

"The short answer about why [Bitcoin] took so long is that the bit gold/Bitcoin ideas were nowhere remotely close to being as obvious [as] gwern suggests."

For context, Gwern is a Satoshi researcher and programmer. The timing of Szabo's blog post is fascinating. May 2011 was the same month Satoshi sent has last emails to core developers — according to Nathaniel Popper, a former New York Times journalist, who described this in a 2015 article about Szabo being the likeliest candidate:

"In 2011, when the currency was still struggling to gain traction, [Mr. Szabo] wrote about it again at greater length, noting the similarity between bit gold and Bitcoin.... May 2011 was also the last time Satoshi communicated privately with other Bitcoin contributors. In an email that month to Martti Malmi, one of the earliest participants, Satoshi wrote, “I’ve moved on to other things and probably won’t be around in the future.”

Szabo asked for Bit gold contributors 6 months before the whitepaper

In the months leading up to Bitcoin's release, Szabo penned an important blog post titled "Bit gold Markets" where he clarified the design. The date and URL are mismatching because Szabo later backdated the blog post for it to appear after the publication of the Bitcoin whitepaper (listed as December 27th on the new version).

Interestingly, he wrote in the comments:

"[Bit gold] would greatly benefit from a demonstration, an experimental market (with e.g. a trusted third party substituted for the complex security that would be needed for a real system). Anybody want to help me code one up?"

6 months later, the Bitcoin whitepaper was released, raising intriguing questions about whether Szabo received any private messages. The above revelation is outweighed by a far more intriguing comment that Szabo made in the same comment section (discussed next).

Bitcoin's early draft appears to be Bit gold

Logically, it is unlikely that Satoshi wouldn't have an early draft of some type. As such, the early draft of Bitcoin appears to be Bit gold based on a number of important factors such as the design, name, and vocabulary.

Szabo's description is noticeably similar to Bitcoin's privacy model. Curiously, when a user asked Satoshi in 2010 about Bitcoin's development, Satoshi admitted that he began in 2007:

"Since 2007.  At some point I became convinced there was a way to do this without any trust required at all and couldn't resist to keep thinking about it.  Much more of the work was designing than coding. Fortunately, so far all the issues raised have been things I previously considered and planned for."

6 months before the whitepaper's publication, Szabo indicated a similar notion regarding trust when discussing possible Bit gold improvements:

Byrne (blog commenter): "Why do the puzzling at all, rather than issuing a fixed amount of currency inflated at a predictable rate, with unique identifiers for each unit of currency?"

Szabo: "This is an interesting idea, something like the idea that the Fed should follow a simple algorithm rather than trying to outguess markets. But the real question for beating bit gold is how do we do this without having to put full trust in third parties? If we can figure that out, we've come up with something better than bit gold. ("We" as usual on this blog being just whoever wants to explore the possibility, not "the government" :-)"

Bitcoin's inflation rate happens to be algorithmically predictable through its halvings. Szabo's idea of a non-government entity creating a better, predictably-inflated currency is similar to Bitcoin. Subsequently, in the same comment, Szabo explains a critical security flaw of Bit gold:

"Byzantine security is far from perfect. In layman terms it just means that when everybody sends everybody else the same message, far more people have to be corrupted in order to fake the message than if the message is sent through one or a few people. Thus any given party is trusted only to a very small degree, but there is still that small degree of trust."

As shown, Szabo's security concern about Bit gold is its vulnerability to Sybil attacks. Puzzlingly, he sought contributors despite this issue, while foreseeing a superior alternative. Sensationally, Szabo explained in his May 2011 blog post how Satoshi improved upon the same security flaw from April 2008:

"Nakamoto improved a significant security shortcoming that my design had, namely by requiring a proof-of-work to be a node in the Byzantine-resilient peer-to-peer system to lessen the threat of an untrustworthy party controlling the majority of nodes..."

Furthermore, Szabo invented a blockchain predecessor in 1998 known as the title registry (which didn't quite have blocks). It was Bit gold's decentralized database, which used public key cryptography based on a chain of digitally signed hashes, as described in his exemplary paper "Secure Property Titles with Owner Authority."

Interestingly, secure property titles can also be used for the transfer of political titles, security devices, and more, as Szabo wrote in a May 2009 blog post, "Liar-resistant government." Further, Szabo curiously spelled Bitcoin in the incorrect way (capitalizing coin), while briefly discussing its immense similarities with Bit gold:

"Bit gold, my sketch of an electronic currency that minimally relies on trust in any one person or organization, achieves this minimal vulnerability by using secure property titles. Satoshi Nakamoto has implemented BitCoin which very similarly uses a dense Byzantine fault tolerant peer-to-peer network and and cryptographic hash chains to ensure the integrity of a currency."

Szabo further described Bit gold in a comment 6 months before the whitepaper's publication; stressing its open source nature, like Satoshi did with Bitcoin:

"The entire value chain from puzzle to solution, and all transfers of title, are available for all bit gold and can be audited by anybody at any time."

Perhaps, the best summary of Bit gold comes from a 2018 Bitcoin Magazine piece, "The Genesis Files: With Bit Gold, Szabo Was Inches Away From Inventing Bitcoin," where Aaron van Wirdum brilliantly encapsulates the project:

"Indeed, it's not difficult to see Bit Gold as an early draft of Bitcoin. Apart from the shared database of ownership records based on public-key cryptography, the chain of proof-of-work hashes has an eerie resemblance to Bitcoin's blockchain."

Satoshi avoided Bit gold's discussion until 2010

We already know Bit gold's name and design are noticeably close to Bitcoin, but wasn't cited it in the whitepaper. Manifestly, Satoshi's activity shows that he wanted to avoid discussion of the project until no longer possible.

The Bitcoin whitepaper is a remarkable computer science achievement. Importantly, Bitcoin is a modified implementation of Bit gold (as per Szabo's assessment), which raises the possibility of Szabo being the whitepaper's primary author.

Captivatingly, when speaking with Satoshi one week after the whitepaper's release, Hal Finney mentioned:

"Nick Szabo wrote many years ago about what he called "bit gold" and this could be an implementation of that concept."

In Satoshi's response, he ignored Bit gold. He could have given proper credit to Nick Szabo, but strangely chose not to. However, Satoshi backtracked immensely in 2010, admitting that Bitcoin was an implementation of B-Money and Bit gold.

A Satoshi Easter egg was a motivation for Szabo

Mystifying references by Satoshi support the narrative that he was motivated by gold. Namely, Satoshi listed his birthday on the P2P Foundation forum as April 5, 1975.

April 5th, 1933, happens to be the day US President Franklin D. Roosevelt signed Executive Order 6102, making it illegal for Americans to hoard gold. In a change of heart, the US government reversed this policy in 1975.

Remarkably, Szabo mentioned FDR's gold ban on his blog 10 days before Satoshi registered the bitcoin.org domain, stating:

"Due to personal cash flow needs, I am selling some of my collection. Nobody is printing any more of this kind of money and it is a great hedge against inflation. As a collectible it is subject to less political risk than gold (recall FDR's confiscation of gold in the U.S., for example)..."

The timing of Szabo's decision to sell his private note collection is particularly noteworthy, given its close proximity to Bitcoin.org's registration date. In addition, Szabo has mentioned FDR's gold ban in many speeches.

Remarkable timing

As my research indicates, Szabo displayed unique timing in the months leading up to Bitcoin's release and throughout its early days. Although, the most impressive part of his timeline is the week of Bitcoin.org's registration.

Curiously, Szabo interacted with a perplexing folder on his web server called "anotherszabo" two days before Satoshi registered the Bitcoin.org domain.

The timing, name, and other circumstantial evidence raise interesting questions about what the contents of the folder were and why it was referred to as "anotherszabo."

Additionally, Szabo mysteriously put his blog into "reruns" two days after Bitcoin.org's registration on August 20. "Reruns" signified Szabo only reposting for part of 2008 and 2009. Strikingly, two of the reposted papers were Bit gold and "Bit gold Markets," making them appear like they were published after the whitepaper (as previously noted).

Stunningly, I discovered that Satoshi sent his first email to Adam Back on that same day. After further analysis, I found that Satoshi sent the email roughly 3-4 hours before Szabo's important "Reruns" post based on a conversion of UTC time to Pacific time.

Szabo's ideas match Satoshi's early code

As part of my research, I examined the motivations behind Bitcoin's pre-release code. Satoshi's most notable change was a virtual poker game that was removed from the final version. Fascinatingly, Szabo has an interest in virtual poker. On the Cypherpunks mailing list, he stated in October 1993:

"My own vision of cypherpunk evolution runs along the following lines... online markets: Internet video poker... etc."

Further, Satoshi programmed an unfinished digital marketplace, which he later described as an "eBay style marketplace:"

"I was trying to implement an eBay style marketplace built in to the client."

In continuation of this trend, I found that Szabo displayed a high respect for eBay in his revolutionary paper, "Shelling Out: The Origins of Money:"

"It is no coincidence that markets in rare objects and unique artwork... have enjoyed a renaissance during the last century. One of our most advanced high-tech marketplaces, eBay, is centered around these objects of primordial economic qualities."

Satoshi appeared to be using Szabo's economic theory

Evidently, Satoshi was motivated to ensure scarcity and a lack of government involvement in Bitcoin. For example, he embedded a British newspaper headline into the Genesis block stating, "Chancellor on Brink of Second Bailout for Banks."

Similarly, Szabo resolutely desired to stifle inflation and remove the need for government in Bit gold:

"The problem, in a nutshell, is that our money currently depends on trust in a third party for its value. As many inflationary and hyperinflationary episodes during the 20th century demonstrated, this is not an ideal state of affairs."

Satoshi echoes Szabo in his first forum post:

"The root problem with conventional currency is all the trust that's required to make it work. The central bank must be trusted not to debase the currency, but the history of fiat currencies is full of breaches of that trust."

Importantly, in Szabo's famous 2011 blog post, he suggested that his important paper about money's origins should be required reading for people debating Bitcoin's economics:

"Gold couldn't work as money until it was already shiny... or something else besides money, they told me... This common argument coming ironically from libertarians who misinterpreted Menger's account of the origin of money as being the only way it could arise (rather than an account of how it could arise) and, in the same way misapplying Mises' regression theorem. Even though I had rebutted these arguments in my study of the origins of money, which I humbly suggest should be required reading for anybody debating the economics of Bitcoin."

Szabo proves in his economic theory that "unforgeable costliness" and scarcity enable objects like precious metals to be reliable as money. For example, one cannot forge (fake) the grueling physical labor (cost) associated with mining gold, of which a finite amount exists. Thus, it is gold's unforgeable costliness and scarcity that enable it to be exchangeable in a trust minimized way, not aesthetics.

Regarding fiat money, trust is placed in a central authority (a government) to issue the money. With gold and Bitcoin, the currency can't be hyperinflated since a central authority isn't relied upon. Satoshi implemented Szabo's economic theory in Bitcoin through digital mining (establishing unforgeable cost), and the 21 million limit, proving that intrinsic qualities like gold's luster are not necessary for Bitcoin to be the best money in history.

These factors explain why Szabo thinks his work should be required reading for debating Bitcoin's economics. As a matter of fact, Szabo stated in a 2018 interview at Francisco Marroquín University:

"Well, the term mining came about with the analogy to gold mining... so, my economic theory that I applied to Bit gold, and that I... or some people at least applied to Bitcoin."

Additionally, a researcher published a well-written piece in 2017 showing how Satoshi appeared to be utilizing Szabo's unique economic arguments through his description of a non-aesthetic metal:

"There are very few economic philosophers in the world today that can be caught giving an academically based argument for WHY Bitcoin should have value. Szabo and Satoshi each give essentially an identically unique explanation."

You can see Satoshi again using the same economic philosophy. In Szabo's work, shells are a frequent example of a trust minimized, scarce form of money in the ancient world.

Extremely similar personalities and skills

Interestingly, Satoshi had experience with smart contracts:

"The design supports a tremendous variety of possible transaction types that I designed years ago. Escrow transactions, bonded contracts, third party arbitration, multi-party signature, etc."

As previously noted, Nick Szabo invented smart contracts. Daniel Nagy, the cryptographer whose 2007 ecash design interested Szabo, even noted that Bitcoin's formal language, Script, utilizes smart contracts in Szabo's 2011 blog post:

"Strokes of genius include:
- The formal language used to describe transaction details. Smart contracts right there!"

As previously stated, Satoshi was motivated by scarcity when designing Bitcoin, much like how Szabo was with Bit gold. What's more, Satoshi appeared to support the existence of altcoins in writings such as below.

Szabo likes certain altcoins in addition to Bitcoin (such as Monero), which is explained by him being the inventor of smart contracts, while also having researched monetary history. Crucially, he understands that many types of scarce money existed historically, utilized by diverse groups — a scenario that he supports in the digital world.

Intriguingly, Szabo knows Japanese, and, of course, Satoshi chose a Japanese name for his pseudonymous identity. Also, two researchers showed in a detailed analysis of Satoshi's newly released emails that Satoshi was likely an American on the West Coast.

Immensely similar writing and coding styles

Nick Szabo is often shown as having very similar writing mannerisms to Satoshi. A group of 40 final-year Aston University stylometry students, led by Professor Jack Grieve, stated in a 2014 study of the whitepaper:

"The number of linguistic similarities between Szabo’s writing and the Bitcoin paper is uncanny, none of the other possible authors were anywhere near as good of a match. We are pretty confident that out of the list of people regularly referred to as possibilities, Nick Szabo is the main author of the paper, though we can’t rule out the possibility that others contributed."

Interestingly, the study concluded that Szabo was the main author, while mentioning others possibly were involved. Further, a 2017 analysis about Satoshi's linguistics resulted in Szabo's style being most similar.

Shifting to computer science, a researcher conducted an analysis in 2016 of various leading candidates' code and found that Szabo utilized a highly similar commenting style to Satoshi, which appeared unique at the time. Later research has shown James Donald also shares this similarity. However, Donald famously spoke to Satoshi under his public identity, while there is no known correspondence between Szabo and Satoshi.

Szabo's OPSEC is extraordinarily strong

By examining the principles of Occam's Razor, it's easy to understand why Nick Szabo was the first person suspected to be Bitcoin's creator. Showing his strong OPSEC, many people theorized in 2011 that Szabo didn't exist and suggested his name was an alias for famous mathematician John Nash.

Fascinatingly, Szabo is an experienced user of pseudonyms. In 1993, while communicating on the Cypherpunk mailing list, Szabo described his use of pseudonyms:

"In my limited experience creating Internet pseudonyms, I've been quite distracted by the continual need to avoid leaving pointers to my True Name lying around -- excess mail to/from my True Name, shared files, common peculiarities (eg misspellings in written text), traceable logins, etc.... The hazards are everywhere."

There is evidence potentially indicating Satoshi faked his British linguistics. A group of researchers determined in 2020 that Satoshi's language use was erratic, with both British and American English being used often, contrary to popular belief. In fact, Satoshi used American English alongside British English in the same posts and emails at times.

Given this evidence and Satoshi's many other precautions, it is likely in my opinion that his linguistics were another red herring.

"bit coin" appeared in a comment on Szabo's blog 6 months before the whitepaper

Six months before the Bitcoin whitepaper's release, on Szabo's important blog post, "Bit gold Markets," a user named "Eddie" used the term "bit coin" multiple times in a remarkable comment.

It is unclear why Eddie suddenly used that stunning term, but since this was Szabo's blog, there is a reasonable chance he saw Eddie's comment before Bitcoin existed.

Eddie's comment appears to be 6 months before the whitepaper's release because Szabo skipped the comment and replied to others with responses that contained pre-Bitcoin dialogue. If the comment was after Bitcoin's creation, there would be no logic behind Eddie speaking this way; he would simply bring up Bitcoin's design.

Satoshi had a deep respect for Hal Finney, Szabo's good friend

Satoshi Nakamoto sent the first Bitcoin transaction to Hal Finney, showing Finney's high interest in the software, despite not being part of its creation. Interestingly, Finney stated in 2010:

"I'd like to hear some specific criticisms of the code. To me it looks like an impressive job, although I'd wish for more comments. Now I've mostly studied the init, main, script and a bit of net modules. This is some powerful machinery."

Satoshi replied:

"That means a lot coming from you, Hal.  Thanks."

The deep respect expressed by Satoshi implies that he likely knew of Finney before the creation of Bitcoin, lining up with Szabo's friendship with Finney. It was revealed in Satoshi's newly released emails with Martti Malmi that he knew about Finney's RPOW and its influence like Szabo:

"[Hal] helped me a lot defending the design on the Cryptography list, and with initial testing when it was first released.  He carried this torch years ago with his Reusable Proof Of Work (RPOW)."

Some crypto leaders share the same conclusion

Many knowledgeable people in the crypto space understand a great deal about Nick Szabo since he invented smart contracts and Bit gold, but some take it a step further.

Litecoin's creator, Charlie Lee, stated in 2017:

As Litecoin's creator, Lee is highly familiar with Bitcoin's technology. Unsurprisingly, he isn't the only one to think this way.

Elon Musk famously stated in December 2021:

"[Nick Szabo] seems to be the one more responsible for the ideas behind Bitcoin than anyone else."

Musk's statement is strongly supported by Szabo having published over 20 research papers on Bitcoin-related ideas, while most other candidates haven't come close.

These statements match reporting by respected journalist, Jeff Roberts, who mentioned in a well-written 2018 Fortune piece how veterans of the industry privately were convinced Szabo was involved in Bitcoin's creation.

Common opposing arguments

When you look at the many internet discussions speculating on who Satoshi is, Nick Szabo consistently ranks at the top. However, there are arguments against this theory.

Critics argue that Szabo lacks programming experience, citing no public C++ code. While this is the most plausible argument against Szabo being the main participant, there are opposing factors, such as his expert-level open source web code.

Additionally, in a 2017 Tim Ferriss podcast interview with entrepreneur Naval Ravikant, Szabo denied the notion that he was inexperienced at programming after Ravikant questioned his ability to program Bit gold:

Ravikant: "Nick, you only had the theory of Bit gold, but you're not a serious enough programmer to create Bit gold."

Szabo: "Well, I am a serious programmer, but.... I.... didn't get around to programming Bit gold."

Like other times, Szabo gave no concrete reason as to why he didn't program Bit gold. These details, including Szabo's strong computer science education, show that him not being able to program Bitcoin doesn't appear to match the evidence.

Additionally, when a Twitter user asked Szabo why Bit gold failed, Szabo curiously replied:

"It's much easier to run actual software than a design for software."

Author Dominic Frisby famously revealed in his popular 2014 book, Bitcoin: The Future of Money?, that Szabo said to him privately:

"C++ is a great language for implementing cryptographic primitives because of its efficiency."

Szabo's statement implies that he has C++ experience. Based on his full analysis, Frisby concluded that Szabo was Satoshi. Additionally, the real Satoshi would hide his C++ code from the public due to obvious reasons. Still, someone else could have written the code.

Finally, some argue that Szabo stopped using double spaces at the start of sentences after the 1990s, but this is false. Szabo has never used double spaces on his blog, which many incorrectly think is the only work he published after the 1990s. The above 2005 email shows Szabo using double spaces while discussing how RPOW is a working version of Bit gold.

Szabo is Hungarian-American, and Satoshi's first statue is in Hungary

Hungary was peculiarly chosen as the location for Satoshi Nakamoto's first statue. Interestingly, Szabo's father was a Hungarian who opposed the communist regime in the 1950s and immigrated to America for freedom. This has inspired Szabo throughout his life, especially for his work to create a secure financial system untethered from government.

Conclusion

Bitcoin has revolutionized the global financial landscape, providing millions of previously unbanked individuals with access to trust minimized financial services. Satoshi Nakamoto is a visionary who did a phenomenal job hiding his identity. The evidence presented in this article demonstrates that "Satoshi" appears to be a motivated key person with possible contributors.

When people discuss the identity of Satoshi Nakamoto, he is often referred to as a humble genius with a mastery of economics, cryptography, and computer programming. Based on the above research, Nick Szabo appears to be the only candidate to closely resemble the unique personality of Bitcoin's inventor.

*This article is based on extensive research using public resources. The conclusions reached by the author are opinions, not established facts. Readers should evaluate the material independently. Note: Mr Szabo has denied being Satoshi Nakamoto.

* Please respect Mr Szabo. Additionally, beware of malicious individuals promoting crypto scam tokens in the name of Szabo and other Satoshi candidates like Len Sassaman.