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The Day Bitcoin Became Electronic Money

The Day Bitcoin Became Electronic Money

Ten years ago, coder and cryptographer Harold Thomas Finney II, more commonly known as Hal Finney, posted the first known Tweet about Bitcoin, telling the world that he was “running Bitcoin”.

Running bitcoin

— halfin (@halfin) January 11, 2009

The Bitcoin genesis block was mined on 9 January 2009 by Satoshi Nakamoto, bringing the first 50 Bitcoins into existence. It took 3 full days before the first Bitcoin transaction took place on 12 January in block #170, when Satoshi Nakamoto sent 10 Bitcoins to Finney, who was one of the earliest, if not the first, to start running a Bitcoin node.

This 10 Bitcoin tip is worth USD 36,500 today. Notably, the first Bitcoin transaction included a zero transaction fee, since the block size was 0.49 kb and had only 1 transaction, as opposed to modern-day blocks that often exceed 1,000 kb and have thousands of transactions competing to get into the block.

During the time between the genesis block and the first Bitcoin transaction, 169 blocks were mined, generating 8,450 Bitcoins worth USD 30.8 million at the current exchange rate. Back then, Bitcoin had no exchange value. Some people have called this a pre-mine, but Satoshi did give sufficient warning of Bitcoin’s launch by releasing the white paper to the CypherPunk mailing list months earlier on 31 October 2008.

Many people know about the first Bitcoin transaction between Satoshi and Finney, but little is said about the second Bitcoin transaction, which occurred in block #181 about 3 hours later. Based on the blockchain record, Satoshi sent 10 Bitcoins to another wallet, from the same wallet which he sent the first Bitcoin transaction with.

A 1 Bitcoin transaction was then sent in block #182 from the same wallet. This was the first time there were transactions in successive blocks, and the 3rd Bitcoin transaction in history. The 4th Bitcoin transaction was sent in block #183, and was very similar to the 3rd. The 5th Bitcoin transaction, which occurred in block #187, involved sending the Bitcoin from the 4th transaction to another address. Likewise, the 6th transaction in block #221 sent the Bitcoin from the 3rd transaction to another address. It seems like these transactions were simply done to test that Bitcoin was working properly.

The Bitcoin address 12cbQLTFMXRnSzktFkuoG3eHoMeFtpTu3S holds an important place in Bitcoin history, since it is the address that sent the first 4 Bitcoin transactions in history. This address sent its last transaction at block #248, and Satoshi left 18 Bitcoins worth USD 114,000 in the address that sit there to this day. Due to the importance of this Bitcoin address, people have sent numerous transactions into it over the years, adding up to 0.4305 Bitcoins worth USD 2,700.

After this flurry of activity on 12 January, Bitcoin went quiet until block #496 on 14 January, when 61 Bitcoins were sent. This shows how quiet the Bitcoin network was in the early days, with entire days without transactions, unlike currently where several Bitcoin transactions occur per second.

There are numerous Bitcoin birthdays, 31 October 2008 was when the white paper was published, 9 January 2009 was when the Bitcoin network activated, and 12 January 2009 can be considered the first day Bitcoin became electronic money, since that is when the first transactions occurred.


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Is Stylometry the Key to Discovering Satoshi Nakamoto’s Identity?

It seems a popular pastime for crypto enthusiasts to speculate on the identity of the Bitcoin’s founder who goes under the pseudonym of Satoshi Nakamoto, but another approach has emerged for such individuals to while away their research time on.

The most recent revelation came in the guise of a biography, neither proven or otherwise to be the founder of the flagship digital technology, but there have been many. Without Sherlock Holmes or Columbo on the case, the most popular method of tracking and identifying just who might be the actual big name in crypto is stylometry. Wikipedia perhaps puts it best when it refers to the method as:

“…the application of the study of linguistic style, usually to written language, but it has successfully been applied to music and to fine-art paintings as well. Stylometry is often used to attribute authorship to anonymous or disputed documents.”

So how does one apply the application of written linguistic style to Satoshi Nakamoto and what are the results of those who have made the effort? In fact, why is it actually important, apart from simply wanting to know who owns Satoshi’s alleged stash of BTC 1 million?

The list of people associated with the name is growing, including Dorian Nakamoto, Ian Grigg, Nick Szabo, and Craig Wright and, as puts it, “a man from Hawaii”, not to forget that writer of the first chapter of he-who-shall-been-known-as-Satoshi’s memoirs.

In terms of having a hard copy on hand to study his/her linguistic style for unique phrasing, or a tendency to use a certain lexical selection, not to mention handwriting, there doesn’t seem to be a lot available. The aforementioned “autobiographical” piece was given the expert stylometrist critical eye and reportedly was short of tell-tale double spacings and misspellings and thus thought to be a likely contrived piece of text.

Some of the writing quirks and phrases identified from Satoshi’s white papers and emails are apparently hard to duplicate, reportedly found in only 0.8% of studied written texts. Some have apparently come close to a similar writing style, the five closest being Nick Szabo, Ian Grigg, Hal Finney, Wei Dai, and Timothy May. Szabo rated high on the comparison front due to algorithmic similarities in his early papers when studied side by side with the Bitcoin white paper. Data scientist Michael Chon tries to shed some further light on this:

“According to the classification algorithms, [stylometric analysis], all predicted that Nick Szabo is linguistically similar to Satoshi who had written the Bitcoin paper and Ian Grigg is linguistically similar to Satoshi who had exchanged the emails. The word ‘would’ is used by Hal Finney 28 times and the word ‘one’ is used by Nick Szabo 199 times. There is one unigram, the word ‘contract’, commonly used by Ian Grigg and Nick Szabo.”

Helpful? There is more…

“Wei Dai has the highest similarity score to the Bitcoin paper and Hal Finney has the highest similarity score to Satoshi’s email exchanges. From gensim, Timothy C May has the highest similarity score to the Bitcoin paper and Ian Grigg has the highest similarity score to Satoshi’s email exchanges. An unusual result is that Ian Grigg has a similarity score of .99996 to Satoshi’s email exchanges.”

Finally, as one thing that is transparently clear is that this is an open-ended case of missing identity that may go on for many years to come, a non-profit company in the UK has said that the search is over. They have the real Satoshi, and his name is Bitcoin Cash developer Gavin Andresen. Apparently, that went down like a damp squib and was quickly forgotten and all respect for stylometry seemed to go out the window.

Watch this space… seems the only appropriate way of finishing this particular piece of writing, until the next suspect comes along.


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‘Satoshi Nakamoto’ is Writing a Book About the Origins of Bitcoin

On 29 June 2018, an author claiming to be Satoshi Nakamoto published a website called the ‘Nakamoto Family Foundation‘ that gives details about how a book explaining the origins of Bitcoin may eventually be released.

The author says there is no guarantee that the book will come into existence but published a 21-page paper on the website titled ‘Duality: an excerpt‘ that is essentially a book including in-depth details about the personal interactions and technology that led to Bitcoin. If what the author claims is true, it will be the first time in many years that Satoshi Nakamoto has surfaced publicly.

The author clarifies that Satoshi Nakamoto is not a real name, rather it is a pseudonym. He discusses how there has been a debate about whether Satoshi Nakamoto is a pseudonym for a group of people that developed Bitcoin. He says he spent lots of time alone developing Bitcoin in the beginning but eventually, a group of people consisting of Hal Finney, Gavin Andresen and Mike Hearn became essential collaborators. Therefore, Satoshi Nakamoto could be thought of as a pseudonym for the collective of early developers.

The author took privacy very seriously even though there was no threat in the beginning and, ultimately, as Bitcoin drew attention, privacy ended up being essential. He went to great lengths to mask his IP address with Tor, register and pay for his website domains anonymously, and to use anonymous email accounts. After some time, he says he was no longer needed since a skilled Bitcoin development team was in place, and he had no desire to continue, especially since there were some serious but undisclosed reasons he had to leave for his own safety. He deleted everything linking him to the Satoshi Nakamoto pseudonym, but says he did save a series of files as proof.


Mainstream financial technology news outlets seem to be taking in the announcement positively, with both Bloomberg and Fortune publishing stories that indicate acceptance of Duality’s author’s claims. Tech publication Wired reports to have been contacted by someone on behalf of the author but admits that its own initial findings are inconclusive on the issue of his true identity.

However, despite what appears to be a high level of detail in Duality’s content, most of the cryptocurrency community have not been convinced that Satoshi Nakamoto has resurfaced. Skeptics of these sort of claims typically believe that the true Nakamoto would be able to prove ownership and private keys of the 1 million odd dormant Bitcoins supposedly mined by Nakamoto, for example. Craig Wright – himself a past Nakamoto candidate – has also denounced the claim as a fraud, saying that Duality’s author made mistakes in the chronological order of events.

If you are cult worshipping enough, you will ignore that
Nakamotofamilyfoundation cannot get the dates nor technical details correct.

And Mike was after Gavin…

I would say small things, but no, it is not even as good as Scronties lies.

— Dr Craig S Wright (@ProfFaustus) July 1, 2018 also reports that amateur stylometrists – who study and analyze patterns in writing style – generally found the writing style of Duality to be incongruent with Satoshi Nakamoto’s past publications and correspondence.


Satoshi Nakamoto says he was basically one of the only Bitcoin miners for the first year after the launch of Bitcoin, and set up the first Bitcoin mining farm consisting of many computers to rack up as many Bitcoins as possible while difficulty was low. He and Mike Hearn foresaw that eventually specialized mining machines would be developed to mine Bitcoin more rapidly. He doesn’t say how much he mined, but past studies indicate Satoshi Nakamoto mined around 1 million Bitcoins.

Hal Finney was the only reason the Bitcoin network survived according to Satoshi Nakamoto, and he says Finney should be credited with Bitcoin’s success. Finney launched one of the first Bitcoin nodes and for a time his node was the only one receiving incoming connections. Also, Finney worked intensively with Satoshi Nakamoto to fix critical bugs in early versions of the software. It is well known that Finney received the first Bitcoin transaction.

Bitcoin aggregated existing technology, such as proof of work and hash functions, and also considered previous ideas like Hashcash, Digicash, b-money, Electronic Cash, and Bit Gold. Nakamoto was careful to reference previous digital forms of money in the Bitcoin whitepaper to appear more reputable to the cypherpunk community but was also careful to focus on positive aspects rather than past disaster stories. Nakamoto had been in the cypherpunk community for years before creating Bitcoin.

Some interesting tidbits from the Duality paper include that originally, the blockchain was called timechain and that forks were called the branch point. Nakamoto considered using 42 as the block reward in reference to the Hitchhiker’s Guide To The Galaxy’s answer for life, the universe, and everything but thought that would make people take the project less seriously.

Ultimately, Nakamoto says he created Bitcoin so the world would have an anonymous and decentralized currency. The message included in the genesis block, “The Times 03/Jan/2009 Chancellor on brink of second bailout for banks”, indicates how centralized forms of currency were failing. He says the main problem Bitcoin solved versus past forms of digital currency is the double spend problem via verifying transactions through all nodes on a single immutable ledger.


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