Satoshi
Nakamoto stands at the end of his sunbaked driveway
looking timorous. And annoyed.
He's
wearing a rumpled T-shirt, old blue jeans and white gym socks, without shoes,
like he has left the house in a hurry. His hair is unkempt, and he has the
thousand-mile stare of someone who has gone weeks without sleep.
He
stands not with defiance, but with the slackness of a person who has waged
battle for a long time and now faces a grave loss.
Two
police officers from the Temple City, Calif., sheriff's department flank him,
looking puzzled. "So, what is it you want to ask this man about?" one
of them asks me. "He thinks if he talks to you he's going to get into
trouble."
"I
don't think he's in any trouble," I say. "I would like to ask him
about Bitcoin. This man is Satoshi Nakamoto."
"What?"
The police officer balks. "This is the guy who created Bitcoin?
It looks like he's living a pretty humble life."
I'd
come here to try to find out more about Nakamoto and
his humble life. It seemed ludicrous that the man credited with inventing Bitcoin - the world's most wildly successful digital
currency, with transactions of nearly $500 million a day at its peak - would
retreat to Los Angeles's San Bernardino foothills, hole up in the family home
and leave his estimated $400 million of Bitcoin
riches untouched. It seemed similarly implausible that Nakamoto's
first response to my knocking at his door would be to call the cops. Now face
to face, with two police officers as witnesses, Nakamoto's
responses to my questions about Bitcoin were careful
but revealing.
Tacitly
acknowledging his role in the Bitcoin project, he looks
down, staring at the pavement and categorically refuses to answer questions.
"I
am no longer involved in that and I cannot discuss it," he says,
dismissing all further queries with a swat of his left hand. "It's been
turned over to other people. They are in charge of it now. I no longer have any
connection."
Nakamoto refused to say any more, and the
police made it clear our conversation was over.
But
a two-month investigation and interviews with those closest to Nakamoto and the developers who worked most frequently with
him on the out-of-nowhere global phenomenon that is Bitcoin
reveal the myths surrounding the world's most famous crypto-currency are
largely just that - myths - and the facts are much stranger than the
well-established fiction.
Far
from leading to a Tokyo-based whiz kid using the name "Satoshi Nakamoto" as a cipher or pseudonym (a story repeated
by everyone from Bitcoin's rabid fans to The New
Yorker), the trail followed by Newsweek led to a 64-year-old Japanese-American
man whose name really is Satoshi Nakamoto. He is
someone with a penchant for collecting model trains and a career shrouded in
secrecy, having done classified work for major corporations and the U.S.
military.
Standing
before me, eyes downcast, appeared to be the father of Bitcoin.
Not
even his family knew.
There
are several Satoshi Nakamotos living in North America
and beyond - both dead and alive - including a Ralph Lauren menswear designer
in New York and another who died in Honolulu in 2008, according to the Social
Security Index's Death Master File. There's even one on LinkedIn who claims to
have started Bitcoin and is based in Japan. But none
of these profiles seem to fit other known details and few of the leads proved
credible. Of course, there is also the chance "Satoshi Nakamoto"
is a pseudonym, but that raises the question why someone who wishes to remain
anonymous would choose such a distinctive name. It was only while scouring a
database that contained the registration cards of naturalized U.S. citizens
that a Satoshi Nakamoto turned up whose profile and
background offered a potential match. But it was not until after ordering his
records from the National Archives and conducting many more interviews that a
cohesive picture began to take shape.
Two
weeks before our meeting in Temple City, I struck up an email correspondence
with Satoshi Nakamoto, mostly discussing his interest
in upgrading and modifying model steam trains with computer-aided design
technologies. I obtained Nakamoto's email through a
company he buys model trains from.
He
has been buying train parts from Japan and England since he was a teenager,
saying, "I do machining myself, manual lathe, mill, surface
grinders."
The
process also requires a good amount of math, something at which Nakamoto - and his entire family - excels. The eldest of
three brothers who all work in engineering and technical fields, Nakamoto graduated from California State Polytechnic
University in Pomona, Calif., with a degree in physics. But unlike his
brothers, his circuitous career path is very hard to trace.
Nakamoto ceased responding to emails I'd
sent him immediately after I began asking about Bitcoin.
This was in late February. Before that, I'd also asked about his professional
background, for which there is very little to be found in the public record. I
only received evasive answers. When he asked about my background, I told him
I'd be happy to elaborate over the phone and called him to introduce myself.
When there was no response, I asked his oldest son, Eric Nakamoto,
31, to reach out and see whether his father would talk about Bitcoin. The message came back he would not. Attempts
through other family members also failed.
After
that, Nakamoto disregarded my requests to speak by
phone and did not return calls. The day I arrived at his modest, single-family
home in southern California, his silver Toyota Corolla CE was parked in the
driveway but he didn't answer the door.
At
one point he did peer out, cracking open the door screen and making eye contact
briefly. Then he shut it. That was the only time I saw him without police
officers in attendance.
"You
want to know about my amazing physicist brother?" says Arthur Nakamoto, Satoshi Nakamoto's
youngest sibling, who works as director of quality assurance at Wavestream Corp., a maker of radio frequency amplifiers in
San Dimas, Calif.
"He's
a brilliant man. I'm just a humble engineer. He's very focused and eclectic in
his way of thinking. Smart, intelligent, mathematics, engineering, computers.
You name it, he can do it."
But
he also had a warning.
"My
brother is an asshole. What you don't know about him is that he's worked on
classified stuff. His life was a complete blank for a while. You're not going
to be able to get to him. He'll deny everything. He'll never admit to starting Bitcoin."
And
with that, Nakamoto's brother hung up.
His
remarks suggested I was on the right track, but that was not enough. While his
brother suggested Nakamoto would be capable of
starting Bitcoin, I was not at all sure whether he
knew for certain one way or the other. He said they didn't get along and didn't
speak often.
I
plainly needed to talk to Satoshi Nakamoto face to
face.
Bitcoin is a currency that lives in the
world of computer code and can be sent anywhere in the world without racking up
bank or exchange fees, and is then stored on a cellphone or hard drive until
used again. Because the currency resides in code, it can also be lost when a
hard drive crashes, or stolen if someone else accesses the keys to the code.
"The
whole reason geeks get excited about Bitcoin is that
it is the most efficient way to do financial transactions," says Bitcoin's chief scientist, Gavin Andresen, 47. He
acknowledges that Bitcoin's ease of use can also lead
to easy theft and that it is safest when stored in a safe-deposit box or on a
hard drive that's not connected to the Internet. "For anyone who's tried
to wire money overseas, you can see how much easier an international Bitcoin transaction is. It's just as easy as sending an
email."
Even
so, Bitcoin is vulnerable to massive theft, fraud and
scandal, which has seen the price of Bitcoins whipsaw
from more than $1,200 each last year to as little as $130 in late February.
The
currency has attracted the attention of the U.S. Senate, the Department of
Homeland Security, the Federal Reserve, the Internal Revenue Service, the
Treasury Department's Financial Crimes Enforcement Network, the Securities and
Exchange Commission and the Federal Bureau of Investigation, which in October
shuttered the online black market Silk Road and seized its $3.5 million cache
of Bitcoin. "The FBI is now one of the largest
holders of Bitcoin in the world," Andresen says.
In
recent weeks, a revived version of Silk Road as well as one of Bitcoin's biggest exchanges, Tokyo-based Mt. Gox, shut down and filed for bankruptcy after attacks by
hackers drained each of millions of dollars.
Andresen,
a Silicon Valley refugee in Amherst, Mass., says he worked closely with the
person "or entity" known as Satoshi Nakamoto
on the development of Bitcoin from June 2010 to April
2011. This was before the rise of today's multibillion-dollar Bitcoin economy, boosted last year by the unexpected, if
cautious, endorsement of outgoing Federal Reserve chair Ben Bernanke, who said
virtual currencies "may hold long-term promise."
Since
then, Bitcoin ATMs have been cropping up across North
America (with some of the first in Vancouver, British Columbia; Boston; and
Albuquerque, N.M.) while the acceptance of Bitcoin
has spread to businesses as diverse as Tesla, OkCupid,
Reddit, Overstock.com and Virgin Galactic, Richard
Branson's aviation company, which has said it will blast people into space if
they cough up enough Bitcoin.
"Working
on Bitcoin's core code is really scary, actually,
because if you wreck something, you can break this huge $8 billion
project," says Andresen. "And that's happened. We have broken it in
the past."
For
nearly a year, Andresen corresponded with the founder of Bitcoin
a few times a week, often putting in 40-hour weeks refining the Bitcoin code. Throughout their correspondence, Nakamoto's evasiveness was his hallmark, Andresen says.
In
fact, he never even heard Nakamoto's voice, because
the founder of Bitcoin would not communicate by
phone. Their interactions, he says, always took place by "email or private
message on the Bitcointalk forum," where
enthusiasts meet online.
"He
was the kind of person who, if you made an honest mistake, he might call you an
idiot and never speak to you again," Andresen says. "Back then, it
was not clear that creating Bitcoin might be a legal
thing to do. He went to great lengths to protect his anonymity."
Nakamoto also ignored all of Andresen's
questions about where he was from, his professional background, what other
projects he'd worked on and whether his name was real or a pseudonym (many of Bitcoin's devotees use pseudonyms). "He was never
chatty," Andresen says. "All we talked about was code."
Andresen,
an Australian who graduated from Princeton with a Bachelor's in computer
science, eventually became Nakamoto's point person on
a growing team of international coders and programmers who worked on a
volunteer basis to perfect the Bitcoin code after its
inauspicious launch in January 2009.
Andresen
originally heard about Bitcoin the following year
through a blog he followed. He reached out to Nakamoto
through one of the Bitcoin founder's untraceable
email addresses and offered his assistance. His initial message to Bitcoin's inventor read: "Bitcoin
is a brilliant idea, and I want to help. What do you need?"
Andresen
says he didn't give much thought to working for an anonymous inventor. "I
am a geek," he says simply. "I don't care if the idea came from a good
person or an evil person. Ideas stand on their own."
Other
developers were driven by "enlightened self-interest," profit or
personal politics, he says. But nearly all were intrigued by the promise of a
digital currency accessible to anyone in the world that could bypass central
banks at a time when the global financial system was on life support. In this
respect, the launch of Bitcoin could not have been
better timed.
In
2008, just before Bitcoin's official kickoff, a
somewhat stiffly written, nine-page proposal found its way onto the Internet
bearing the name and email address of Satoshi Nakamoto.
The
paper proposed "electronic cash" that "would allow online
payments to be sent directly from one party to another without going through a
financial institution," with transactions time-stamped and viewable to
all.
The
masterstroke was replacing the role of banks as the trusted middlemen with Bitcoin users, who would act as sentinels for the integrity
of the system, verifying transactions using their computing power in exchange
for Bitcoin.
Bitcoin production is designed to move
at a carefully calibrated pace to boost value and scarcity and remain inflation
proof, halving its quantity every four years, and is designed to stop
proliferating when Bitcoins reach a total of 21
million in 2140. (Bitcoins can be divided by up to
eight decimal places, with the smallest units called "satoshis.")
"I
got the impression that Satoshi was really doing it for political
reasons," says Andresen, who gets paid in Bitcoins
- along with a half-dozen other Bitcoin core
developers working everywhere from Silicon Valley to Switzerland - by the Bitcoin Foundation, a nonprofit working to standardize the
currency.
He
doesn't like the system we have today and wanted a different one that would be
more equal. He did not like the notion of banks and bankers getting wealthy
just because they hold the keys," says Andresen.
Holding
the keys has also made early comers to Bitcoin
wealthy beyond measure. "I made a small investment in Bitcoin
and it is actually enough that I could now retire if I wanted to,"
Andresen says. "Overall, I've made about $800 per penny I've invested.
It's insane."
One
of the first people to start working with Bitcoin's
founder in 2009 was Martti Malmi,
25, a Helsinki programmer who invested in Bitcoins.
"I sold them in 2011 and bought a nice apartment," he says.
"Today, I could have bought 100 nice apartments."
Communication
with Bitcoin's founder was becoming less frequent by
early 2011. Nakamoto stopped posting changes to the Bitcoin code and ignored conversations on the Bitcoin forum.
Andresen
was unprepared, however, for Satoshi Nakamoto's
reaction to an email exchange between them on April 26, 2011.
"I
wish you wouldn't keep talking about me as a mysterious shadowy figure," Nakamoto wrote to Andresen. "The press just turns that
into a pirate currency angle. Maybe instead make it about the open source
project and give more credit to your dev
contributors; it helps motivate them."
Andresen
responded: "Yeah, I'm not happy with the 'wacky pirate money' tone,
either."
Then
he told Nakamoto he'd accepted an invitation to speak
at the Central Intelligence Agency headquarters. "I hope that by talking
directly to them and, more importantly, listening to their questions/concerns,
they will think of Bitcoin the way I do - as a
just-plain-better, more efficient, less-subject-to-political-whims money,"
he said. "Not as an all-powerful black-market tool that will be used by
anarchists to overthrow the System."
From
that moment, Satoshi Nakamoto stopped responding to
emails and dropped off the map.
Nakamoto's family describe him as extremely
intelligent, moody and obsessively private, a man of few words who screens his
phone calls, anonymizes his emails and, for most of his life, has been
preoccupied with the two things for which Bitcoin has
now become known: money and secrecy.
For
the past 40 years, Satoshi Nakamoto has not used his
birth name in his daily life. At the age of 23, after graduating from
California State Polytechnic University, he changed his name to "Dorian
Prentice Satoshi Nakamoto," according to records
filed with the U.S. District Court of Los Angeles in 1973. Since then, he has
not used the name Satoshi but instead signs his name "Dorian S. Nakamoto."
Descended
from Samurai and the son of a Buddhist priest, Nakamoto
was born in July 1949 in the city of Beppu, Japan,
where he was brought up poor in the Buddhist tradition by his mother, Akiko. In
1959, after a divorce and remarriage, she immigrated to California, taking her
three sons with her. Now age 93, she lives with Nakamoto
in Temple City.
Nakamoto did not get along with his
stepfather, but his aptitude for math and science was evident from an early
age, says Arthur, who also notes, "He is fickle and has very weird
hobbies."
Just
after graduating college, Nakamoto went to work on
defense and electronics communications for Hughes Aircraft in southern
California. "That was just the beginning," says Arthur, who also
worked at Hughes. "He is the only person I have ever known to show up for
a job interview and tell the interviewer he's an idiot - and then prove
it."
Nakamoto has six children. The first, a
son from his first marriage in the 1980's, is Eric Nakamoto,
an animation and 3-D graphics designer in Philadelphia. His next five children
were with his second wife, Grace Mitchell, 56, who lives in Audubon, N.J., and
says she met Nakamoto at a Unitarian church mixer in
Cherry Hill, N.J., in the mid-1980s. She recalls he came to the East Coast
after leaving Hughes Aircraft, now part of Raytheon, in his 20s and next worked
for Radio Corporation of America in Camden, N.J., as a systems engineer.
"We
were doing defensive electronics and communications for the military,
government aircraft and warships, but it was classified and I can't really talk
about it," confirms David Micha, president of
the company now called L-3 Communications.
Mitchell
says her husband "did not talk much about his work" and sometimes
took on military projects independent of RCA. In 1987, the couple moved back to
California, where Nakamoto worked as a computer
engineer for communications and technologies companies in the Los Angeles area,
including financial information service Quotron
Systems Inc., sold in 1994 to Reuters, and Nortel Networks.
Nakamoto, who was laid off twice in the
1990s, according to Mitchell, fell behind on mortgage payments and taxes and
their home was foreclosed. That experience, says Nakamoto's
oldest daughter, Ilene Mitchell, 26, may have informed her father's attitude
toward banks and the government.
A
libertarian, Nakamoto encouraged his daughter to be
independent, start her own business and "not be under the government's
thumb," she says. "He was very wary of the government, taxes and
people in charge."
She
also describes her father as a man who worked all hours, from before the family
rose in the morning to late into the night. "He would keep his office
locked and we would get into trouble if we touched his computer," she
recalls. "He was always expounding on politics and current events. He
loved new and old technology. He built his own computers and was very proud of
them."
Around 2000, Nakamoto
and Grace separated, though they have never divorced. They moved back to New
Jersey with their five children and Nakamoto worked
as a software engineer for the Federal Aviation Administration in New Jersey in
the wake of the September 11 attacks, doing security and communications work,
says Mitchell.
"It was very secret,"
she says. "He left that job sometime in 2001 and I don't think he's had a
steady job since."
When the FAA contract ended, Nakamoto moved back to Temple City, where for the rest of
that decade things get hazy about what kind of work he undertook.
Ever since Bitcoin
rose to prominence there has been a hunt for the real Satoshi Nakamoto. Did he act alone or was he working for the
government? Bitcoin has been linked to everything
from the National Security Agency to the International Monetary Fund.
Yet, in a world where almost
every big Silicon Valley innovation seems to erupt in lawsuits over who thought
of it first, in the case of Bitcoin the founder has
remained conspicuously silent for the past five years.
"I could see my dad doing
something brilliant and not accepting the greater effect of it," says
Ilene Mitchell, who works for Partnerships for Student Achievement in
Beaverton, Ore. "But I honestly don't see him being straight about it. Any
normal person would be all over it. But he's not totally a normal person."
Nakamoto's middle brother, Tokuo Nakamoto, who lives near
his brother and mother, in Duarte, Calif., agrees. "He is very meticulous
in what he does, but he is very afraid to take himself out into the media, so
you will have to excuse him," he says.
Characteristics of Satoshi Nakamoto, the Bitcoin founder,
that dovetail with Dorian S. Nakamoto, the computer
engineer, are numerous. Those working most closely with Bitcoin's
founder noticed several things: he seemed to be older than the other Bitcoin developers. And he worked alone.
"He didn't seem like a young
person and he seemed to be influenced by a lot of people in Silicon
Valley," says Nakamoto's Finnish protégé, Martti Malmi. Andresen concurs:
"Satoshi's style of writing code was old-school. He used things like
reverse Polish notation."
In addition, the code was not
always terribly neat, another sign that Nakamoto was
not working with a team that would have cleaned up the code and streamlined it.
"Everyone who looked at his
code has pretty much concluded it was a single person," says Andresen.
"We have rewritten roughly 70 percent of the code since inception. It
wasn't written with nice interfaces. It was like one big hairball. It was
incredibly tight and well-written at the lower level but where functions came
together it could be pretty messy."
Satoshi Nakamoto's
2008 online proposal also hints at his age, with the odd reference to
"disk space" - something that hasn't been an issue since the last millennium
- and older research citations of contemporaries' work going back to 1957.
The Bitcoin
code is based on a network protocol that's been established for decades. Its
brilliance is not so much in the code itself, says Andresen, but in the design,
which unites functions to reach multiple ends. The punctuation in the proposal
is also consistent with how Dorian S. Nakamoto
writes, with double spaces after periods and other format quirks.
In the debate between those who
claim Nakamoto writes curiously "flawless
English" for a Japanese man and those who contend otherwise, writing under
both names can swerve wildly between uppercase and lowercase, full spellings
and abbreviations, proper English and slang.
In his correspondences and
writings, it has widely been noted that Satoshi Nakamoto
alternates between British and American spellings - and, depending on his
audience, veers between highly abbreviated verbiage and a more formal, polished
style. Grace Mitchell says her husband does the same.
Dorian S. Nakamoto's
use of English, she says, was likely influenced by his lifelong interest in
collecting model trains, many of which he imported from England as a teenager
while he was still learning English.
Mitchell suspects Nakamoto's initial interest in creating a digital currency
that could be used anywhere in the world may have stemmed from his frustration
with bank fees and high exchange rates when he was sending international wires
to England to buy model trains. "He would always complain about that,"
she says. "I would not say he writes flawless English. He will pick up
words and mix the spellings."
Eric, Nakamoto's
oldest son from his first marriage, says he remains torn over whether his
father is the founder of Bitcoin, noting that
messages from the latter appear more "concise" and "refined than
that of my father's."
Perhaps the most compelling
parallel between the two Nakamotos are their
professional skill sets and career timeframes. Andresen says Satoshi Nakamoto told him about how long it took him to develop Bitcoin - a span that falls squarely into Dorian S. Nakamoto's job lapse starting in 2001. "Satoshi said
he'd been working on Bitcoin for years before he
launched it," Andresen says. "I could see the original code taking at
least two years to write. He had a revelation that he had solved something no
one had solved before."
Satoshi Nakamoto's
three-year silence also dovetails with health issues suffered by Dorian S. Nakamoto in the past few years, his family says. "It
has been hard, because he suffered a stroke several months ago and before that
he was dealing with prostate cancer," says his wife, who works as a
critical-care nurse in New Jersey. "He hasn't seen his kids for the past
few years."
She has been unable to get Nakamoto to speak with her about whether he was the founder
of Bitcoin. Eric Nakamoto
says his father has denied it. Tokuo and Arthur Nakamoto believe their brother will leave the truth
unconfirmed.
"Dorian can just be
paranoid," says Tokuo. "I cannot get
through to him. I don't think he will answer any of these questions to his
family truthfully."
Of course, none of this puts to
rest the biggest question of all - the one that only Satoshi Nakamoto himself can answer: What has kept him from
spending his hundreds of millions of dollars of Bitcoin,
which he reaped when he launched the currency years ago? According to his
family both he - and they - could really use the money.
Andresen says if Nakamoto is as concerned about maintaining his anonymity as
he remembers the answer might be simple: He does not want to participate in the
Bitcoin madness. "If you come out as the leader
of Bitcoin, now you have to make appearances and
presentations and comments to the press and that didn't really fit with
Satoshi's personality," he says. "He didn't really want to lead it
anymore. He was pretty intolerant to incompetence. And he also realized the
project would go on without him."
On the other hand, it is possible
Nakamoto simply lost the private security keys to
unlock his Bitcoin and cash in on his riches.
Andresen, however, says he doubts it. "He was too disciplined," he
says.
If Nakamoto
ever sells his Bitcoin fortune, he would likely have
to do so at a legitimate Bitcoin bank or exchange,
which would not only give away his identity but alert everyone from the IRS to
the FBI of his movements. While Bitcoin lets its
users conduct transactions anonymously, all transactions can be viewed
transparently online - and everyone is watching Nakamoto's
Bitcoin to see if he spends it, says Andresen.
For his part, Andresen says he is
inclined to respect Nakamoto's anonymity. "When
programmers get together, we don't talk about who Satoshi Nakamoto
is," he says. "We talk about how we should have invested in more Bitcoin. I mean, we're curious about it, but honestly, we
really don't care."
Calling the possibility her
father could also be the father of Bitcoin
"flabbergasting," Ilene Mitchell says she isn't surprised her father
would choose to stay under cover if he was the man behind this venture,
especially as he is currently concerned about his health.
"He is very wary of
government interference in general," she says. "When I was little,
there was a game we used to play. He would say, 'Pretend the government
agencies are coming after you.' And I would hide in the closet."