The man wrote in an e-mail
to one of Wences’s friends in
Argentina that his life had
been turned upside down by
the event:
I’ll tell you that the
collapse of Mt. Gox,
where I had put
absolutely all of my
savings, left me more
than demoralized. Not
only because of the
money, which was a
lot, but because it
destroyed the hopes I
had created for using
it as my wife and I got
older. Each time this
comes up it really
hurts my health.
The same week as the
collapse, lawyers in Chicago
and Denver filed a lawsuit
seeking class-action status to
represent all the victims, and
federal
prosecutors
were
sending out subpoenas to aid
in the criminal investigation
they launched.
Even many of the victims
blamed Mt. Gox rather than
Bitcoin. Nothing had gone
wrong
with
the
Bitcoin
protocol. In fact, Mt. Gox had
long been held up as an
example of the dangers that
arose when Bitcoin users
relied on central institutions,
rather than the system of
private keys and personal
wallets that Satoshi had
designed.
And
yet,
Bitcoin’s
standing
as
a
universal
money, answerable to no
government—and beyond the
reach of any one government
—had opened the way for
companies like Mt. Gox,
companies
that
took
advantage of the fact that in
the Bitcoin industry, each
person could make up his
own rules. This wasn’t a
problem with the protocol but
it was an issue with one of the
central
ideas
that
had
motivated
Bitcoin:
the
supposed benefit of releasing
money from all the outdated
rules and regulations that
governed
the
existing
financial system. Mt. Gox
was, of course, not the first
example of the dangers that
arise in a system in which no
one
is
responsible
for
providing
oversight.
An
academic study in 2013 had
found that 45 percent of the
Bitcoin exchanges that had
taken money had gone under,
several taking the money of
their customers with them.
One of the most trenchant
critics
of
Bitcoin,
the
Financial
Times
writer
Izabella Kaminska, put it well
in the days after the collapse:
The only way to
stabilise the system is
to rid it of the
“cheating
incentive”—that being
the incentive that
encourages the
“prisoner” to take the
high-risk selfish
strategy. Most of the
time that depends on
establishing a system
of enforced protocols
or regulations that
penalise rulebreakers
above and beyond the
potential benefit of
cheating.
Some
of
the
recent
converts to Bitcoin were not
opposed to some sort of
government oversight for this
fledgling
market.
Ben
Lawsky in New York used
the incident to push ahead
faster with his BitLicense.
But it was somewhat unclear
whether there would be
anything left to license.
CHAPTER 30
March 6, 2014
It was early in the morning,
but a scrum of reporters had
already gathered outside an
unassuming
three-bedroom
house in Temple City, one of
the many featureless towns
that sprawled along the inland
freeways heading east from
Los Angeles, serving as
magnets for upwardly bound
Asian immigrants.
The
reporters
were
chasing a story that would
provide the Bitcoin world
with a break from all the hard
questions it had been facing.
That morning, Newsweek had
posted its first issue under
new owners. On the cover
was a dramatic mask, against
a black background with the
title “BITCOIN’S FACE: THE
MYSTERY MAN BEHIND THE
CRYPTO-CURRENCY.”
Satoshi
Nakamoto’s
identity had been a recurring
fascination for journalists, but
all the previous searches had
ended
with
inconclusive
results. Given Satoshi’s skill
in
using
anonymizing
software, many assumed that
Satoshi would never be found
until he, she, or they decided
to come forward.
The Newsweek reporter,
Leah McGrath Goodman, had
seemingly cracked the nut in
the most unexpected way.
The man she found was
named Dorian Nakamoto, but
the papers recording his
immigration from Japan to
the United States in 1959, at
age ten, showed that his
name, at birth, had been
Satoshi.
This
Satoshi
Nakamoto
had
gotten
a
degree
in
physics
from
California State Polytechnic
University and had worked
on
classified
engineering
projects before his retirement.
He lived with his mother and
liked model trains, but his
oldest
daughter
told
Goodman that her father was
a libertarian; his brother said
Dorian loved his privacy.
Dorian Nakamoto generally
refused
to
speak
with
Goodman during the course
of her reporting. But when
she
briefly
confronted
Nakamoto in front of his
house to ask him about
Bitcoin, he seemed to confirm
the circumstantial evidence.
“I am no longer involved
in that and I cannot discuss
it,” Goodman reported that
Nakamoto told her. “It’s been
turned over to other people.
They are in charge of it now.
I
no
longer
have
any
connection.”
It
was
a
completely
unexpected outcome to the
hunt
for
Satoshi—so
unexpected that it almost
seemed to make sense. A
master of encryption would
have
used
the
most
misleading disguise of all,
hiding in plain sight with a
number in the phone book.
When some of the early
Bitcoin developers who had
corresponded with Satoshi
talked with journalists that
morning, they acknowledged
that the story seemed to fit
together.
“It’s probably the best
theory yet,” Mike Hearn, the
programmer
in
Switzerland,
told
one
reporter.
When Nakamoto refused
to come out of the house for
much of the morning—
despite being at home—it
only seemed to confirm that
he wasn’t going to refute the
story. For Hearn and many
other Bitcoiners this was a
terribly sad outcome. Satoshi
had valued his privacy above
all else and now that had been