Why Hal Finney Is Not Satoshi Nakamoto

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He has invented an entirely new digital system of money with the potential to change the world as we know it. He has watched it grow to a market cap of over two trillion dollars, with as many as 100 million users worldwide, including actual nations, and the US President promising a strategic bitcoin reserve in his 2024 election campaign.

He has half the internet nosing about and trying to figure out who he is. His own coins are worth about $100 billion, making him one of the richest people on earth.

Yet he has managed to stay completely unknown and anonymous. It is almost unbelievable.

Never mind Big Foot, the Mary Rose or the Loch Ness Monster, the mystery of ‘Who is Satoshi Nakamoto?’ is perhaps the greatest mystery the world has ever known - or not known.

There have been thousands of investigative attempts, articles, blog posts and discussion groups involving probably millions of man hours dedicated to pinning down this man, with names bandied about from Elon Musk to little known computer scientists. They have all failed. Satoshi’s identity is as bulletproof as his code.

For my 2014 book, Bitcoin: the Future of Money?, from which today’s piece is taken, I ventured on the same doomed journey. I spent many months poring over the 80,000 words Satoshi wrote in the three years he was active online, looking for clues. What unusual words did he use? Does he make any spelling mistakes? Does he have any quirky grammatical habits? I analysed it in such detail I can tell you where he places brackets, how he uses hyphens, even how many spaces he uses after a full stop and how that changed – all in the hope of finding idiosyncrasies that appear in the writing of other Cypherpunks - clues which might lead me to him.

Profiling a genius – some broad brushstrokes

‘I’ve had the good fortune to know many brilliant people over the course of my life, so I recognize the signs.’ Hal Finney

Satoshi reached such high levels of expertise in so many different fields that many believe he can’t possibly be one person. He is a polymath. It is not just the breadth and depth of his knowledge, but, more importantly, its specificity that makes him unique.

In order to first conceive a new system of electronic cash, one would have to have thought extensively about the nature of money and its history. Money is a subject that has found more interest in the last few years with the emergence of bitcoin, the 2000s bull market in gold, the financial crisis and the growth of libertarianism, but, in 2007–8, when bitcoin was conceived and first introduced, books and academic papers on the subject were few and far between. The subject did not have broad appeal.

How many of those who cared actually had the ability to design a system like this? It is one thing declaring what needs to be done; it is another putting it into practice.

Satoshi must have had expertise in computer coding, mathematics, databases, accounting, peer-to-peer systems, digital ownership, law, smart contracts, cryptography and monetary history.

He had to have had experience in academia. The act of submitting a white paper, its presentation, the impeccable referencing – it all denotes academia, even government.

It’s also easy to infer from the way bitcoin was launched that Satoshi had experience in open-source tech start-ups.

The resilience of the code suggests he had computer hacking experience. Moreover, his ability to keep his identity hidden, despite the fact that half the internet is trying to figure out who he is, suggests significant practical experience in staying anonymous. It also means he has the trust of those who know him, if anyone did, to keep his secret.

Then there’s the matter of his prose. It is consistent and of such a high standard it seems he must have had experience as a writer – perhaps he was a blogger, an academic or an author. He was also quite humble and dismissive of his ability in this regard. ‘I’m better with code than with words’, he said.

It’s clear from his posts that he had the awareness to see shortcomings in his system, and the patience not to try to do too much too quickly. He had the foresight to perceive problems before they arose and the meticulousness to prepare for them. He appears to have remained calm and measured in the face of difficulty, but also of his own success. He treated those two imposters just the same. Signs of arrogance are hard to find.

Then there’s the way that bitcoin was introduced to the world.

PR, like economics, is not an exact science. Sometimes something gains traction, sometimes it doesn’t – and there’s no explaining why. Bitcoin has been a PR masterstroke. The coverage it has received has been enormous. It gets more publicity than gold, which is the oldest form of money there is. Satoshi cannot take all of the credit for this, but he has to take some of it. He understood when to make his ideas known, at what point to release his creation into the open-source world and he had the self-efacement to let go of it for others to develop. He promoted his idea with huge under-statement – but the scheduled creation of bitcoins meant there would be no shortage of bitcoin-holders to do the promoting for him.

So we can add an understanding of both PR and psychology to his list of qualities. His knowledge of how people on the internet, in the open source world and in large institutions work, allowed him to progress his creation.

Finally, he has a certain honesty. Despite Bitcoin’s similarities to a pyramid or Ponzi scheme, he never pumped-and- dumped his creation. Tempting though it must have been, he never sold the bitcoins he mined. That also suggests he already had money.

There are not many people like this.

From mathematics to computer programming to economics and monetary history to politics to PR and psychology to cryptography to business acumen and vision to plain old written English – in all of these fields he excelled. To cap it all, he’s probably good-looking too.

It’s early in history to be drawing this sort of comparison, I know, but there are many parallels between Satoshi and Isaac Newton. Newton was a brilliant scientist and mathematician, of course, and an alchemist. But he was also Master of the Royal Mint. He redesigned England’s monetary system, putting us onto the gold standard on which Britain’s colossal progress during the next 200 years was built.

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First instinct

Many believe that Satoshi was Hal Finney, the veteran programmer, who invented reusable proof of works, one of the models on which bitcoin was based. This was my first instinct. Often such “first instincts”, for reasons I cannot begin to explain, prove correct.

When Satoshi first announced bitcoin on the cryptography mailing list, nobody replied. The message was ignored for two days. In the short-attention-span land of the web, two days is a long time to wait for some feedback on something you’ve spent 18 months working on. Two days is a long time to wait when you might have nailed something Cypherpunks had been dreaming about for 20 years.

The first reply came from Finney. Was he replying to himself in order to generate some interest and discussion – to bump his thread? Replying to your own posts, known as ‘sock-puppeting’, is not uncommon.

Let us pursue this line of thinking a little further.

Finney was born in 1956 – in that same two-year golden window as so many computer-scientist geniuses that would change the world (from Bill Gates to Tim Berners-Lee to Steve Jobs) were born – and spent his life working on cryptographic systems. He was number two to Phil Zimmerman, the pioneer in the field, for many years at the Pretty Good Privacy (PGP) Corporation, where they developed the most widely used email encryption software in the world.

Such were his beliefs in privacy, freedom, and Cypherpunk, Finney was known to spend many nights writing and developing code for free, just because he believed in the work.

In 1993, he published the paper, ‘Detecting Double-Spending’. Solving the double-spending problem (ensuring the same money cannot be used twice) was, of course, the key problem with digital cash. It was what Satoshi was so excited about when he proposed Bitcoin. In 2004, Finney developed the ‘reusable proof-of-work’ (RPOW) system, which coders regarded as a brilliant step forward – but his system never saw any economic use until b itcoin.

Finney is one of the few people to have the background and expertise to have developed bitcoin – but he is also an obvious person to take an immediate interest.

In his very first reply to Satoshi’s announcement, he wrote:

“As an amusing thought experiment, imagine that Bitcoin is successful and becomes the dominant payment system in use throughout the world. Then the total value of the currency should be equal to the total value of all the wealth in the world. Current estimates of total worldwide household wealth that I have found range from $100 trillion to $300 trillion. With 20 million coins, that gives each coin a value of about $10 million.”

The comment shows extraordinary insight. Many now see this “amusing thought experiment” as inevitable. But could it also be somebody trying to get others excited? Very possibly.

(By the way, ‘thought experiment’ is an expression Satoshi himself uses – though it is not uncommon in coding circles).

Of the many names touted as Satoshi, Finney’s writing style is one of the few that match. The major difference is Satoshi used British spelling and Finney does not. There is a similar calm, understated tone, similar use of language, similar punctuation habits: two spaces after a full stop. In stylometrics tests carried out by John Noecker Jr., chief scientific officer at text analysis experts Juola & Associates, Finney consistently scored high. (However, veteran cypherpunk blogger, Nick Szabo, scored higher).

Then I noticed both Finney and Satoshi had ‘@gmx.com’ email addresses. (GMX is a free email provider based in Germany. Many Germans use GMX, while Americans and British tend to gravitate towards Gmail, Hotmail, or Yahoo. Today they would probably gravitate towards P rotonmail). Was this just coincidence – or was it a clue?

Why did Satoshi disappear?

In December 2010, Satoshi made his final post and then disappeared from the internet.

Why?

Perhaps to protect his anonymity in the face of rising interest from the media and, more significantly, the authorities: to protect his own safety as the WikiLeaks panic began to erupt. (After Wikileaks was shut out of the financial system, many began sending it bitcoin. The effect, ironically, was thus to make it an extraordinarily wealthy organisation).

But there is also the possibility that he disappeared because he was ill.

In 2009, Finney was diagnosed with Lou Gehrig’s disease – amyotrophic lateral sclerosis – the same disease from which Stephen Hawking suffered. It is, for the most part, fatal and claims its victims within two to five years. ‘My symptoms were mild at first,’ he says, ‘and I continued to work, but fatigue and voice problems forced me to retire in early 2011. Since then the disease has continued its inexorable progression.’ Finney, eventually died in August 2014.

In March 2013 he said, ‘Today, I am essentially paralyzed. I am fed through a tube, and my breathing is assisted through another tube. I operate the computer using a commercial eye-tracker system. It also has a speech synthesizer, so this is my voice now. I spend all day in my power wheelchair. I worked up an interface using an Arduino so that I can adjust my wheelchair’s position using my eyes. It has been an adjustment, but my life is not too bad. I can still read, listen to music, and watch TV and movies. I recently discovered that I can even write code. It’s very slow, probably 50 times slower than I was before. But I still love programming and it gives me goals.’

Could a terrible illness be the reason Satoshi withdrew?

Finney was one of the first to mine bitcoins. What did he do with them?

I mined several blocks over the next days. But I turned it off because it made my computer run hot, and the fan noise bothered me. In retrospect, I wish I had kept it up longer, but on the other hand, I was extraordinarily lucky to be there at the beginning. It’s one of those glass half full, half empty things.

The next I heard of Bitcoin was late 2010, when I was surprised to find that it was not only still going, bitcoins actually had monetary value. I dusted off my old wallet, and was relieved to discover that my bitcoins were still there. As the price climbed up to real money, I transferred the coins into an offline wallet, where hopefully they’ll be worth something to my heirs. Those discussions about inheriting your bitcoins are of more than academic interest. My bitcoins are stored in our safe deposit box, and my son and daughter are tech-savvy. I think they’re safe enough. I’m comfortable with my legacy.

Finney sold many of his bitcoins in order to pay for medical care, many at around $100. Satoshi never moved his.

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We are all Satoshi

Finney was a key player in the development of Bitcoin, no doubt. He was one of the first to ask real questions. He managed to understand from the start the inner workings of the Bitcoin protocol and its potential. He explored the weaknesses in the Bitcoin code – one of them is even named 'the Finney Attack'. He had many exchanges with Satoshi on the Bitcoin forums as they progressed the code and developed new versions. He asked question after question. But these very exchanges show there were two people talking. On January 10th, 2009, for example, Finney publicly complained to Satoshi that Bitcoin had crashed when he tried to receive a transaction. If it was his own code, and he was transacting with himself, he would surely have quietly fixed it himself.

Moreover, coders all agree that Finney's coding style – and the style of the comments written in the code – is different from Satoshi’s. Also, Finney preferred to code in the language C, whereas Bitcoin is coded in C++. This is something Finney himself confirms: 'I’ve done some changes to the Bitcoin code, and my style is completely different from Satoshi’s. I program in C, which is compatible with C++, but I don’t understand the tricks that Satoshi used.'

Shortly before the publication of this book, the Forbes journalist Andy Greenberg published an interview with Hal Finney. Finney was now too ill to even speak – he could only raise his eyebrows to say yes. His son showed Greenberg fifteen email exchanges between Satoshi and Finney from January 2009. They mainly focused on bugs Finney had found in the code, to which Satoshi replied with fixes - and notes of thanks.

Greenberg was also shown Finney's bitcoin wallet – with the transfers between Satoshi and Finney made back in 2009. As Greenberg notes, the wallet evidence and the Gmail timestamps in the emails would have been hard to forge.

To cap it all, there is the fact that in 2009, at precisely the same moment Satoshi sent time-stamped e-mails, Finney, a keen runner, was photographed in the middle of a ten-mile race. Nobody, not even Satoshi Nakamoto, can be in two places at once.

Bitcoin could not have happened without the work of Finney.

If Satoshi Nakamoto was several people, Finney might have been one of them. But if Satoshi is an individual, Hal Finney was not him.

This is an extract from my 2014 book, Bitcoin: the Future of Money?

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