The crypto market is worth around one trillion US dollars and has more than 22,000 coins and tokens. These numbers are particularly astonishing if we remember that crypto is less than 15 years old, and there are already around 420 million people worldwide who own some crypto.
Despite the rapidly rising adoption rate and popularity of digital currencies, most people don’t know how crypto started and who invented cryptocurrency.
These are precisely some of the questions we will answer in this guide.
When Was Crypto Invented?
Cryptocurrency was invented back in 2009 by a mysterious, anonymous programmer called Satoshi Nakamoto.
This makes crypto an extremely young financial asset class compared to company stocks, not to mention fiat currency. It took fiat currency hundreds of years to reach full global adoption and become the go-to financial asset of the world’s population.
To this end, it’s not surprising that crypto is far from mainstream adoption, and most governments and financial institutions continue to hold a skeptical stance. Still, the fact that around 5.2% of the global population is already using digital currencies in one way or another speaks volumes about their potential and utility.
Bitcoin’s Predecessors
Bitcoin (BTC) was preceded by several attempts to launch digital currencies.
One of the earliest attempts was eCash in the 1990s, launched by a company called DigiCash. The concept didn’t work out well, and the company went bankrupt in 1998. However, some of the encryption models pioneered by eCash influenced later attempts to launch digital currencies.
E-Gold was another similar project from the late ‘90s. The idea behind it was to tie the currency to the market value of gold. Basically, users could send each other digital representations of gold through the E-Gold website. Unfortunately, the project had many loopholes, and it was found that malicious individuals used it for money laundering activities.
The Bit Gold idea of cryptographer Nick Szabo was one of the most influential digital currency concepts that later became part of Bitcoin’s architecture.
The use of a distributed blockchain ledger and peer-to-peer electronic cash transactions were both pioneered by Bit Gold, but the concept was never put into practice because Bit Gold couldn’t solve the double spending problem, which allows malicious individuals to spend the same digital coins twice.
Years later, Bitcoin solved this issue through its Proo-of-Work (PoW) consensus mechanism that uses rigorous double-checking and multiple validity confirmations for each transaction.
That’s why Bitcoin is considered the world’s first cryptocurrency, and January 2009, when the BTC blockchain was launched, is widely accepted as the birthtime of crypto.
Bitcoin: The First Cryptocurrency
Since Bitcoin is the world’s first functional digital currency, let’s take a look at how it was created and how it works.
In the Bitcoin whitepaper published in October 2008, Satoshi Nakamoto described the idea of BTC as a peer-to-peer digital cash that uses a blockchain network to operate.
The BTC blockchain is a digital chain comprised of data blocks that go from the first genesis block mined by Satoshi Nakamoto personally up to the latest Bitcoin block.
These blocks contain transaction data, and they’re immutable, which means once they’re approved and added to the blockchain, their contents can’t be changed. The Bitcoin blockchain has thousands of network nodes that verify transactions and process them to their final destinations.
All BTC coins are stored in crypto wallet public addresses, and when users send BTC to each other, they are just shifting coins from one public address to another through a cryptographic transfer mechanism. This mechanism requires network nodes, called Bitcoin miners, to use the power of their computers to find the correct hash that decrypts the content of a specific transaction.
After miners find the correct hash, the Bitcoin blockchain adds a new block of approved transfers. Users can check every Bitcoin data block and every transaction through a block explorer platform. All transactions and their public addresses are visible to everyone. However, these addresses don’t reveal the individual’s identity, which makes BTC transactions relatively anonymous or pseudonymous.
One of the most innovative characteristics of BTC is that it is fully decentralized, and no single authority controls the network nodes. Anyone can operate a node, and the nodes keep each other in order by checking every transaction hash to ensure it’s legit.
There’s no central control like in the case of fiat currency and central banks.
As such, the BTC blockchain became the operational blueprint for cryptocurrencies. However, newer crypto projects have invented more scalable and less energy-consuming consensus mechanisms. Still, the concept of a distributed, decentralized public ledger has remained.
Satoshi Nakamoto: The One Who Invented Cryptocurrency
At the time of its launch, Bitcoin created considerable turmoil because it was in total contradiction with fiat currency and the dominant banking system. Moreover, Bitcoin skeptics were quick to dismiss this new financial asset as a scam, with a particular focus on the fact that no one knew who Satoshi Nakamoto was.
On February 11, 2009, Satoshi Nakamoto wrote his first post on the Bitcoin forum, which is now called Bitcoin Talk. At the time, this forum was the main online space for discussions about Bitcoin, and it was Satoshi Nakamoto’s main communication channel with the public.
No one knew who Satoshi was, and many people doubted Satoshi Nakamoto was their real name. In fact, some community members even speculated that the name was a pseudonym for a team of anonymous developers who were behind the Bitcoin project.
Satoshi founded the Bitcoin forum, which has remained active ever since, and it’s still a key hub for crypto community members and developers alike.
Apart from publishing the Bitcoin whitepaper and launching the first cryptocurrency, Satoshi was also responsible for the maintenance and development of the Bitcoin network up until April 2011, when they publicly stated they were moving on to other projects.
However, Satoshi didn’t just abandon Bitcoin. By that point, they had built a dedicated community of Bitcoin developers and left the project’s development in their hands. As for the project’s management, Bitcoin already had numerous decentralized network nodes at that point, and it basically had a life of its own, which was Satoshi’s plan, according to the whitepaper.
Finally, in late 2011, Satoshi sent a final email to a Bitcoin Core developer expressing confidence that Bitcoin was in good hands and that they were moving on. Since then, no one ever heard from Satoshi Nakamoto ever again.
How TradFi Reacted to Crypto and Satoshi Nakamoto
During the early days of Bitcoin, apart from the Bitcoin community centered around the Bitcoin forum, the majority of reactions were skeptical toward crypto. For the traditional finance (TradFi) sector, Bitcoin seemed like an unsustainable concept or even like a scam to the harshest critics.
The main problem for many BTC critics has been the fact that Bitcoin isn’t backed by fiat currency and isn’t centrally controlled by banks like traditional currencies are. Bitcoin’s decentralized operational structure, with its numerous network nodes, has been seen as a very risky mechanism.
Even in the late 2010s, skeptics were still critical of Bitcoin and cryptocurrencies in general, but this has changed in the last several years with numerous banks, companies, and even some governments adopting a more crypto-friendly policy.
Another key criticism of TradFi toward Bitcoin in the early 2010s was that Satoshi Nakamoto remained anonymous. This was a huge red flag for TradFi, and it strengthened the industry claim that Bitcoin might be a scam since its founder is hiding their identity.
During the years following Bitcoin’s launch and its subsequent rise in popularity, various wild conspiracy theories appeared regarding the origin of BTC and the identity of Satoshi Nakamoto. Some even claim that Bitcoin was actually created by a rogue AI.
Why Did Satoshi Nakamoto Hide Their Identity?
Bitcoin is the first and largest cryptocurrency with an anonymous developer behind the project. Despite Satoshi’s identity remaining unknown ever since Bitcoin’s launch, BTC became the key player in the crypto market and is often referred to as digital gold because of its leading market position and high value.
Most of the developers of later cryptocurrencies, i.e., altcoins, had no problem publicly disclosing their identity and that of the teams behind their projects. Even those crypto projects that started out anonymously later revealed the identities of their team members to avoid community skepticism and suspicion and promote transparency.
The question of why Satoshi Nakamoto chose to hide their identity has multiple possible answers, but we can’t say there’s a right one.
Bitcoin grew exponentially in the two years between its launch, just before Satoshi abandoned the project. During this time, Satoshi mined 1.1 million of the maximum 21 million Bitcoin supply. This makes Satoshi the largest single Bitcoin holder, and it’s possible that they decided to remain anonymous to avoid unwanted attention from financial authorities and governments.
What’s more, Satoshi created a decentralized digital currency without a license from any government or central bank license. Revealing their identity might have brought them under the scrutiny of law enforcement agencies, causing unnecessary problems.
Who Is Satoshi Nakamoto?
Although Satoshi Nakamoto has decided to stay anonymous, this hasn’t stopped the crypto community from guessing their real identity.
Throughout the years, journalists and Bitcoin enthusiasts alike have tried to find out who Satoshi is.
Let’s take a look at some of the people who were “accused” of being Satoshi Nakamoto.
Nick Szabo
Nick Szabo is a computer engineer and cryptography expert who pioneered the concept of smart contracts back in 1994.
Smart contracts are implemented in numerous digital currency projects. The role of smart contracts is to automatically execute predefined operations such as crypto transactions. That’s why they are essential for operating blockchain networks.
A few years later, in 1998, Nick Szabo came up with the idea for Bit Gold, which is considered a predecessor of Bitcoin. Bit Gold had nearly identical key operational mechanisms as BTC, but it was never launched in practice.
Because of the resemblance between Bit Gold and Bitcoin, along with Nick Szabo’s key contribution to blockchain technology with the concept of smart contracts, many crypto enthusiasts claimed that he might actually be Satoshi. One blogger even did a stylometric analysis of Szabo and Satoshi’s writing styles and claimed that the analysis shows a strong similarity between the two.
However, the computer scientist dismissed these claims several times and stated that although he is fond of Bitcoin, he isn’t Satoshi.
Hall Finney
Hall Finney was the first user of Bitcoin apart from Satoshi Nakamoto. Finney was a cryptography enthusiast and active member of the Bitcoin forum who believed in this new type of financial asset.
Finney tirelessly propagated Bitcoin and participated in the BTC network as a transaction validator. He also claimed to be the first person to ever communicate with the actual Satoshi Nakamoto through email messages.
For a while, Finney submitted bug reports to Satoshi and was in constant email contact with them, discussing the direction in which Bitcoin was going. Finney’s claims didn’t stop people from thinking he was the real Satoshi, using a pseudonym to protect himself.
However, Andy Greenberg, a journalist from Forbes magazine who claimed Finney was Satoshi, reached out to him, and the two met to discuss this matter in person. Finney showed Greenberg his email correspondence with Satoshi, his Bitcoin wallet, along with the first BTC transaction that Satoshi sent him to test the network.
Dorian Nakamoto
Dorian Nakamoto is a physicist and computer engineer from California whose birth name is Satoshi Nakamoto. Nakamoto spent most of his career as a contractor for classified military projects for defense companies. Leah McGrath Goodman, a journalist from Newsweek, managed to find out about Dorian Nakamoto, interviewed him, and immediately published an article that claimed to reveal the identity of the founder of Bitcoin.
The article led to massive media attention on Dorian Nakamoto, and on several occasions, journalists even waited outside Nakamoto’s house for a chance to get an interview or take a photo of him.
However, it turned out that the Newsweek journalist misinterpreted Nakamoto’s words. Goodman claimed that Nakamoto confessed to being the founder of BTC by saying that he was no longer involved in it and couldn’t discuss it.
Nakamoto, on the other hand, explained that he was referring to engineering projects he worked on and not BTC. In fact, Nakamoto explained that he had never heard of Bitcoin before Goodman contacted him.
Craig Wright
Craig Wright, an Australian computer scientist, is one of the rare people who made the claim to be Satoshi Nakamoto himself.
Initially, the story about Wright being Satoshi was published in Wired magazine in 2015. Soon after the publication of the article, the Australian police came knocking on Craig Wright’s door as part of a tax evasion investigation. However, Wright wasn’t arrested.
Apart from Wired, a science-fiction website called Gizmodo also published an article about Wright being Satoshi Nakamoto. The website introduced alleged evidence they received from a hacker who managed to breach Wright’s personal computer and steal proof that Satoshi Nakamoto was the name Wright and his colleague David Kleiman used online. The story was vague, and David Kleiman couldn’t confirm or deny the allegations since he passed away in 2013.
Some of the early Bitcoin developers, such as Gavin Anderson, supported Craig Wright’s claim, but more members of the core BTC community were skeptical because there wasn’t any substantial proof. Wright introduced a Bitcoin transaction GPG signature that originated from the Satoshi Nakamoto BTC wallet. However, it later turned out that Wright had just copied a publicly available Satoshi transaction signature.
Adam Back
Adam Back is a prominent blockchain and cryptography expert credited as the creator of Hashcash, the first Proof-of-Work (PoW) mechanism during the 1990s.
Hashcash wasn’t designed for digital currencies. It was merely a solution for preventing denial of service cyber attack attempts and helping web platforms differentiate real users from spammers. Much later, in 2009, Satoshi Nakamoto launched Bitcoin with a very similar PoW operational model that resembled Hashcash in many aspects.
This is the main reason why some crypto enthusiasts suspect Adam Back of being Satoshi Nakamoto. Back has remained a prominent member of the blockchain development community and has since participated in various crypto projects, but there’s no record of his involvement in the development of Bitcoin.
Back is also known as an advocate of a cryptocurrency over the fiat finance system on the basis of privacy offered by blockchain technology. He has denied being Satoshi Nakamoto, and there’s no actual proof that ties him to the development of BTC besides his role in creating Hashcash.
Elon Musk
One of the latest theories about the identity of Satoshi Nakamoto is that it’s actually the SpaceX CEO and PayPal co-founder, Elon Musk. A former SpaceX intern Sahil Gupta published this theory in 2017, along with a string of circumstantial evidence.
Sahil Gupta claims that he found a striking resemblance in the way Elon Musk talks with the phrases used in Satoshi’s messages, such as the expressions “order of magnitude” and “bloody hard.”
Also, Gupta pointed out that Elon Musk is adept at writing computer code and that he was responsible for writing the coding essentials for his first companies, which explicitly dealt with P2P payment solutions. Additionally, the code of Musk’s first companies, Zip2 and X.com, was in C++, which is the same programming language Satoshi used to create Bitcoin.
Furthermore, Gupta mentions a leaked Satoshi Nakamoto IP address, which pointed to a location in Los Angeles. This location is in Van Nuys, the area where SpaceX is located, and he emphasizes that Elon Musk is frequently present at the SpaceX premises in Los Angeles.
Finally, Sahil Gupta mentions that the original mission of PayPal, as stated by company co-founder Luke Nosek was to create a sort of digital currency, but the company moved toward online payment services.
Elon Musk never confirmed that he is Satoshi, but he wasn’t too explicit in dismissing the allegations either. However, the theory of Elon Musk being Satoshi Nakamoto isn’t very popular among crypto enthusiasts.
Conclusion
Satoshi Nakamoto is, without a doubt, the creator of crypto because Bitcoin is the first functional digital currency that proved blockchain technology can work and be used for facilitating financial transactions. In fact, Bitcoin is so well designed that there haven’t been any hacks of the BTC blockchain since its launch.
Satoshi created Bitcoin not for themself but for the whole world as a new type of decentralized digital money independent from banks and governments. Satoshi’s identity remains a mystery, but essentially, the true identity of Bitcoin’s creator isn’t very important. What matters is his legacy, Bitcoin, which remains at the forefront of the crypto market, and its adoption is rapidly increasing on a day-to-day basis.