The Satoshi Paradox

By Felix Salmon
March 7, 2014

Newsweek wanted a scoop for its relaunch cover story, and boy did it deliver: it uncovered the identity of Satoshi Nakamoto, the inventor of bitcoin. Who then promptly came out and denied everything. Which means that one of the two is wrong: either Nakamoto is lying through his teeth, or Newsweek has made what is probably the biggest and most embarrassing blunder in its 81-year history.

But before we try to work out what the answer is, it’s important to separate out the various different questions:

  1. Is Dorian Nakamoto the inventor of bitcoin, Satoshi Nakamoto?
  2. Do we, and/or Newsweek, have enough evidence to conclude, with certainty, that Dorian Nakamoto is the inventor of bitcoin?
  3. Is it reasonable to believe that Dorian Nakamoto is the inventor of bitcoin?

My tentative answers to the three questions are “we don’t know”; no; and yes.

One way to look at this problem is to try to calculate probabilities, and do some kind of Bayesian analysis of the question, given that either Dorian is Satoshi, or he isn’t. (To make matters even more complicated, Dorian’s given name is, actually, Satoshi. But you know what I mean.) But here’s the problem: if you believe either of the two possibilities, you have to believe in a reasonably long series of improbable propositions. Call it the Satoshi Paradox: the probability that Dorian is Satoshi would seem to be very small, and the the probability that Dorian is not Satoshi would seem to be just as small — and yet, somehow, when you add the two probabilities together, the total needs to come to something close to 100%.

The place to start is the Newsweek article, which brooks no doubt about the matter, and which is told using all the power of narrative journalism. The author, Leah McGrath Goodman, has constructed her 4,700-word article as a case for the prosecution, taking us with her on her quest for evidence and ultimately trying to persuade us that there can be no doubt: Dorian is Satoshi.

Goodman adduces lots of evidence, starting with the crazy coincidence of Satoshi’s name. Dorian’s name is Satoshi Nakamoto. He is an accomplished engineer and mathematician: “brilliant”, according to his brother. He was happy to correspond with Goodman until she asked him about bitcoin — at which point he stopped replying to emails and even called the cops on her. Dorian’s brother even predicted his response to Goodman’s article: “He’ll deny everything. He’ll never admit to starting Bitcoin.”

Goodman says that Dorian, “for most of his life, has been preoccupied with the two things for which Bitcoin has now become known: money and secrecy”. He’s a libertarian, whose daughter says that he is “very wary of the government, taxes and people in charge”. He’s 64, which would help explain slightly old-fashioned aspects of Satoshi, like his use of reverse Polish notation and his worrying about saving disk space. And then there’s the smoking gun — the quote that he gave to Goodman when she arrived at his doorstep.

“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.”

This fits exactly with what we know about Satoshi: that he was deeply involved in bitcoin at the beginning, but has had basically nothing to do with it in recent years. It’s well short of an outright confession, of course — but if you add up all of the circumstantial evidence, it’s pretty hard to believe that everything is some bizarre coincidence. Goodman has presented a lot of pieces of the puzzle — and they fit elegantly together, at least at first glance.

On the other hand, even within the article there are signs that it’s not as clear cut as all that. There’s Goodman’s admission, in the article, that she “plainly needed to talk to Satoshi Nakamoto face to face” — something she never really did, except for a few quick words spoken in front of police officers while he was trying to make her go away. Goodman also quotes Gavin Andresen, the person most publicly associated with the development of bitcoin, as saying that even in the early days, Satoshi “went to great lengths to protect his anonymity”. Which hardly squares with the thesis that he was using his real name.

Then there are the duff notes in the piece. “This is the guy who created Bitcoin? It looks like he’s living a pretty humble life.” That, supposedly, is a verbatim quote from a Temple City cop: it’s possible that a cop uttered those words, but that doesn’t stop them from sounding like very bad expository dialogue. And Goodman can certainly overstretch, as for instance here:

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.

Remember that the pseudonym theory was not a mere theory, up until yesterday — it was almost universally accepted as the truth. In terms of Bayesian priors, you need very strong evidence to be persuaded that “Satoshi Nakamoto” is not a pseudonym. And this argument doesn’t even come close.

There’s also the whole question of Satoshi’s English, where Goodman can be seen placing a very hard thumb on the scales. Dorian’s English is not good: you can see that in his Amazon reviews, or in the letter he sent about a proposed Los Angeles rail project: “good secruity system against usage of rail as a get away means from the low income generated theives/criminals from area of east LA et. al must be also put in place regardless of the rail passage chosen.”

That kind of language can be seen too in Dorian’s email correspondence with Goodman: “I do machining myself, manual lathe, mill, surface grinders.” Goodman uses this as evidence for her case: she characterizes Satoshi’s original bitcoin proposal as being “somewhat stiffly written”. She also says, reading the original bitcoin paper, that “the punctuation in the proposal is also consistent with how Dorian S. Nakamoto writes, with double spaces after periods and other format quirks.”

But in fact the proposal is written in deeply fluent English:

Merchants must be wary of their customers, hassling them for more information than they would otherwise need. A certain percentage of fraud is accepted as unavoidable. These costs and payment uncertainties can be avoided in person by using physical currency, but no mechanism exists to make payments over a communications channel without a trusted party.

What is needed is an electronic payment system based on cryptographic proof instead of trust.

How is it possible that Goodman would notice double spaces after the periods, here, but would not notice that the sheer fluency of the language is quite incompatible with everything we know about how Dorian writes and speaks? She even quotes an email from Satoshi to Andresen: “I wish you wouldn’t keep talking about me as a mysterious shadowy figure. The press just turns that into a pirate currency angle. Maybe instead make it about the open source project.” This is breezy, colloquial English — and it’s entirely incompatible with Dorian’s language. The discrepancy is hard to square — and is all the more glaring for the fact that Goodman doesn’t even attempt to address it directly.

Then there’s the whole question of finances. Dorian “fell behind on mortgage payments and taxes” in the 1990s, reports Goodman, and lost his home to foreclosure; what’s more, he doesn’t seem to have had a steady job in well over a decade. And yet, famously and notoriously, he has never sold a single one of the million bitcoins he’s credibly assumed to own, despite the fact that, according to Goodman, he and his family “could really use the money”.

Because all bitcoin transactions are public, and because the specific coins Satoshi owns have been identified, selling or spending those coins would give the world a huge clue as to Satoshi’s identity. But with hundreds of millions of dollars at stake, it begs credibility to believe that Dorian couldn’t have found a way to sell at least some of his coins.

Even within Goodman’s piece, then, there are reasons to doubt her thesis. And in the wake of Dorian’s interview with the AP, there are more. His lack of fluency in English is clearly real; he has a credible explanation for the words he said in front of Goodman; and he has a guilelessness to him which would be very hard to fake, especially over the course of many hours with a skeptical reporter.

Put all that together, along with various other problems surrounding things like the time zone of Satoshi’s postings, and there would seem to be a lot of doubt that Dorian is, in fact, Satoshi.

At this point, it’s easy to fall down a rabbit hole of second-order second-guessing. It’s not particularly credible, for instance, that a libertarian engineer named Satoshi Nakamoto would never have heard of bitcoin until three weeks ago, and would, even after today’s news, “mistakenly” call it “bitcom”. What’s more, Dorian’s deny-everything reaction (and the official denial from Satoshi) is entirely consistent with Goodman’s article.

But the fact is that if you believe that Dorian is Satoshi, you have to accept that there are still a lot of things which don’t really add up. And conversely, if you believe that Dorian is not Satoshi, then you at the very least have to wonder at the astonishing number of coincidences that Goodman has uncovered.

Which means that the responsible thing to do, from Newsweek’s perspective, would have been to present a thesis, rather than a fact. For instance, when Ted Nelson attempted to reveal Satoshi’s identity last May, he put together a video where he put forward a theory which he said was “consistent, plausible, and, I believe, compelling”. He then took a step back, and let the bitcoin community more generally come to their own conclusions about whether or not to believe him; in the end, they (generally) didn’t.

Newsweek could have done that. It could have said “here’s a theory”, and then let the world decide. Many people would have believed the theory; others wouldn’t. And lots of us would probably have changed our minds a few times as we weighed the evidence and as Dorian’s own words came out.

But Newsweek didn’t want a theory, it wanted a scoop. And so, faced with what was ultimately only circumstantial evidence, it went ahead and claimed that it had uncovered Satoshi — that, basically, it was 100% certain.

That decision was ill-advised. Newsweek certainly got lots of buzz for its return to print — but it’s now getting just as much buzz for going to press with what is looking increasingly like a half-baked theory. Personally, I don’t know whether Dorian is Satoshi — but I think I can be pretty safe in saying that the probability is somewhere in the range of, say, 10% to 90%. In other words, it’s possible; it might even be probable; but it’s not certain. And anybody who says that it is certain is wrong.

I believe that Goodman believes that Dorian is Satoshi. I believe that Jim Impoco, my ex-boss, who’s now the editor of Newsweek, also believes that Dorian is Satoshi. But belief is not enough. Dan Rather believed that the Killian documents were genuine; Hugh Trevor-Roper believed that the Hitler diaries were genuine; Lara Logan believed that Dylan Davies was telling the truth about Benghazi. Big scoops are dangerous things.

It would have been less satisfying, for Newsweek, to leave a bit of wiggle room — to present the Dorian-is-Satoshi theory as just a theory, rather than as fact. But it is only a theory. And ultimately, it’s always better to be Ariel Dorfman than it is to be Paulina Salas.


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I have read the Newsweek article and had my doubts. I can count on Felix to articulate much better then me what is wrong with some interpretation of current events.

Posted by traian | Report as abusive

beggars credibility, not begs
or perhaps begs credulity

Posted by SrslyDadY | Report as abusive

Excellent points and analysis.

One minor note–I’ve exceeded my monthly quota somehow (this is the only newsweek article I’ve read this month, so that’s puzzling, but, ah the economics of paywalls), but I seem to recall a note from his wife mentioning that this Satoshi Nakamoto would switch between fluid and halting prose. So that issue wasn’t just dropped on the floor. But, as I said, that’s minor.

Posted by nhradar | Report as abusive

This is such a fair, informed, balanced, in short: intelligent article & analysis, it makes me suspect there has to be a catch. Seriously though, this is _the_ reference article on the topic, in my opinion. Thank you.

Posted by zanglebert | Report as abusive

He is not Satoshi Nakamoto. Dorian’s English is very good for a Japanese educated person but poor by academic standards. Satoshi’s is erudite and articulate.

Posted by aubreykohn | Report as abusive

Two spaces after a period isn’t a quirk, but proper typing for anyone as old as this dude. It’s usually people in the typesetting business — newspapers, book publishing, etc. — that use a single space after a period because they’re often proportionally spacing type. Two spaces after a period is hardly evidence to base a cover issue on.

Posted by RogerA | Report as abusive

Maybe…Dorian’s the one who took the ~$370 million from Mt.Gox!

Posted by Twinkbait | Report as abusive

Is it possible the truth is somewhere in the middle?
It seems strange that the bitcoin creator would randomly choose Satoshi Nakamoto as a pseudonym.
Perhaps Dorian was involved in some way early on and someone else took his name on. Perhaps he had part of the initial idea but doesn’t own any coins.

Posted by NativeNYer | Report as abusive

The hype from all this propaganda is great for bitcoin. With all of the bad news as of late, deaths and thefts, why wouldn’t the founders of bitcoin ride this non-sense wave. They even took the time to add to it by creating a falsified key signature seen here &fingerprint=on&search=0x18C09E865EC948A 1 . Goodluck catching one person when we all know its a group effort.

Posted by lostcoast | Report as abusive

I like the way you frame the issue but please: if “I am no longer involved in that and I cannot discuss it,” is an accurate quote, Newsweek had MUCH more than merely circumstantial evidence.

I’ll also observe that the coincidences Newsweek found, could be found by almost any conspiracy theorist worth his paranoia. And on the other side (more importantly, methinks), it seems you ascribe your personally-only-sensible motivations to a man who wanted to change the world in a radical way. And not to himself become a plutocrat, so his choice to dissociate from the Andreesens and Winklevii, who, to some eyes are looking for banker-scale wealth, would fit right in with the narrative of his being a modest man espousing old-fashioned values, especially regards integrity. (This also would make totally irrelevant the fact that Nakamoto had financial challenges well before Bitcoin started, because his personal situation obviously had changed thereafter, even if his view of banks and authorities had not.)

This all leaves us, as you say, with some uncertainty. Still to be looked at, I think, is the high furor at the challenge to Bitcoin’s Founding Anonymyth. To my mind the response is much more telling about what fuels Bitcoin advocacy today than the claim that some very bright, introverted libertarian-minded man was involved years ago.

Posted by WaltFrench | Report as abusive

Interestingly, the facts seem to be consistent w/ a theory that the person behind Satoshi knows Dorian, but that Dorian may or may not know the person behind Satoshi. (e.g. a former co-worker who picked Satoshi because of how improbable it seemed to him that Dorian would ever do what Satoshi has done.)

Posted by libor | Report as abusive

Has anyone entertained the possibility that Dorian is a patsy or a fall guy?

It would have been simple for Dorian to be scouted out beforehand as someone who could plausibly be the creator of Bitcoin. If anyone traced the threads back they would then run into this old man.

Posted by kingjoevii | Report as abusive

The best way I can think of to reconcile Dorian’s lack of command of the English language is that Dorian had help with the paper. Someone did a writing analysis a few months back and concluded that the writing style fit best with Nick Szabo who had been developing his ideas on “BitGold” for many years. Perhaps Dorian connected to Nick through his research and asked him to read the paper prior to release? Then Nick (a professor of Economics) cleaned it up and sent it back with Satoshi’s name still on the paper. If this were true, it would also square that analysis with Nick’s subsequent denials that he is Satoshi.

Posted by SilentP | Report as abusive

His problems with English are kind of weird. The Newsweek article said he came to the US when he was ten. I don’t think I’ve known any immigrants that came to the US that young who don’t speak close to fluent English.

Posted by simplicio | Report as abusive

“Amid Embarrassment, Newsweek Seeks DNA Test on Bitcoins to Determine Real Father.”

Posted by AlkalineState | Report as abusive

Leah is rather prone to hyperbole it seems: leah-goodman-and-her-visa.html

Posted by horatiob | Report as abusive

“I am no longer involved in that and I cannot discuss it. It’s been turned over to other people. They are in charge of it now. I no longer have any connection.”

That’s not bad English at all. It sounds a lot like the white paper actually (which someone could have helped him write, anyway). If he really said the quote above, I don’t attach much weight to his poor English in Amazon reviews or ranting letters. Did the reporter record him saying this? I’d say Pr(He’s the guy|Reporter didn’t fabricate evidence) is extremely high. I don’t know how to assess my subjective Pr(Reporter fabricated evidence).

Posted by singleton1 | Report as abusive

What is the real evidence? If you add it up the overlap consists of:

1. Computer Science background
2. Libertarian leanings
3. Japanese who speaks English
4. Same name

Now, for obvious reasons, neither 3 nor 4 can really count as evidence: We have no reason to believe Bitcoin’s Satoshi would have been truthful about either his nationality or name.

That leaves us with 1 and 2. I fit the profile and so do ~10 people in the building I work in, ~150 in just my city and probably 100′s of thousands of people in the world, if not more.

Moreover, consider what isn’t present:

5. Work on cryptography or some related topic.
6. Match in writing style (beyond double spaces after commas).

We have at least a half dozen people who match 1,2,5 and 6. Dorian does not.

Posted by cbiocca | Report as abusive

The quote “I am no longer involved in that and I cannot discuss it,” was taken out of context. He said that about his engineering, not about bitcoin. Newsweek took it out of context because it was the best thing they had.

The nail in the coffin? The real Satoshi broke his 5 year silence on the P2P Foundation forum to post that he was not Dorian. De-bunked. End of story.

Posted by goat-on-a-stick | Report as abusive

The simplest explanation is that Satoshi chose Dorian’s name as his pseudonym. Dorian knows Satoshi by another name. They know one another because of their similarities. They probably share a common interest in model trains.

Satoshi is on the autistic spectrum. He hard partitions his life. He sets up his relationships so as to retain ultimate control. This allows him to completely walk away at a moment’s notice, which is exactly what he did. It sounds callous, but it’s only a defensive strategy. He posted on the Internet at all hours. The disordered sleep often associated with autistic spectrum disorder can carry on into adult life.

I think Satoshi was blind to the consequences of choosing someone else’s name. It could even have been a misguided tribute.

Bitcoin is a paradox. Everything is topsy-turvy; a contradiction. Its supply is inelastic, so its users can’t use it as a currency only a commodity, with a volatile price. But the Bitcoin protocol is sound.

It’s billed as a solution to the Byzantine Generals’ Problem, but it’s fault intolerant from the perspective of its users. Bitcoin has already had one accidental hard fork of the block chain. If you’re part of the minority user group with a different world view, you can’t just snap back to the majority world view and forget everything you saw after the fork. These are supposed to be financial transactions. Increasing the number of independent implementations of the Bitcoin protocol used by miners won’t help. That would make hard forks more likely. But the Bitcoin protocol is sound.

It goes against all of computer science, which looks for efficiency and flexibility. It is deliberately inefficient and inflexible. It’s an open source project, but the program’s source code has almost no value. Nearly the entire value resides in the program’s state, which is why the source code can be distributed under one of the most permissive licences. It’s fault intolerance at a practical level, inflexibility and worthlessness of source code have been causing the core developers to complain loudly of late. But the Bitcoin protocol is sound.

It’s built around a trust model that can be summarized simply as “might is right.” And, with irrevocable and difficult to trace movements of a weightless commodity, it’s impractical to keep holdings of bitcoins secure on anything but the smallest of scales. But the Bitcoin protocol is sound.

Bitcoin is money on computers… for use by computers.

Posted by ChrisLIngram | Report as abusive

There are 300 million people in the US alone.

If you rate the odds of Newsweek’s entire collection of evidence being plausible but wrong at a million to one, those odds say there are 300 such candidates in the US.

Flipping the numbers around, given a candidate pool of 300 million individuals, it would be amazing if a strongly motivated and well funded investigator could *not* assemble a collection of plausible but circumstantial evidence around at least one person.

Posted by mstone-yawp | Report as abusive

Wait a tick… if there is a way to detect which bitcoins belong to Satoshi, and if Dorian is not Satoshi, then why hasn’t the real Satoshi sold or transferred any of those coins?

It absolutely makes more sense for a strange man like Dorian to sell *none* – if you assume that some other person or entity controls ~$400m in funds, wouldn’t they have already at least sold some of them?

Additionally, the language used in the Bitcoin proposal isn’t far off from the Dorian examples. It’s written in a very technical style. Felix, I’m sure you write emails colloquially when you are not writing for Reuters. If we analyzed this article and some of your outgoing email’s i’m sure we could apply false conclusions that you are not the same person, who writes this article and writes emails to friends and others.

Posted by teknokracy | Report as abusive

The language evidence is quite interesting. Is there any thought to the notion that the original “Satoshi Nakamoto,” or whoever authored the papers and the email you cite, was not one person, but several? Perhaps a group, including Dorian, but also including one or more people with better English?

I have to say though that your assumptions about the unlikelihood of Nakamoto holding onto unsold bitcoins despite unemployment and financial woes is not definitive at all. Surely it’s not purely cultural, but I know several Japanese-Americans of Nakamoto’s vintage who are incredibly frugal, to the point of miserly pathology. One family, despite owning properties and being quite well-off, collects fast food ketchup packets and re-usable chopsticks, and steals toilet paper from public restrooms. These are habits born out of a post-war generation that had nothing, moved to America and had to live that way to make a better life for their future families. It’s also pretty weird by most standards, but not unheard of at all.

Posted by singerb | Report as abusive

I’d say Newsweek messed up royally and Dorian should sue the bejeezus out of them. Because really, it was pretty libelous if untrue. And the onus would be on Newsweek to prove it was true, which so far they can’t seem to. That’ll help with Dorian’s money woes.

Not only does Dorian write English like a non-native speaker (unlike the real Satoshi), it makes my head explode to imagine the inventor of Bitcoin spending time on reviewing razor blades, butter cookies, and bicycle mirrors. Absurd. Dorian’s just a confused, reclusive old man!

Posted by sezme | Report as abusive

Goat on a Stick, how does that conclusively debunk it? That still leaves us with the paradox Salmon was writing about. If Dorian *is* Satoshi, he could have logged on and left that message — arguably, for him to do so would absolutely fit Newsweek’s narrative.

It seems likely that the only way this is *conclusively* debunked is if the real Satoshi calls up a reporter and says, “Let’s have coffee. I have a really interesting story for you.”

Posted by ChipotleCoyote | Report as abusive

Excellently balanced, well-reasoned article, except for all of the probability stuff, which was unnecessary in light of your arguments. As you point out a few times, all the probability theory shows is that it can’t contribute anything to verifying this story’s veracity.

Posted by HellsKitchenGuy | Report as abusive

Excellently, well-reasoned article, but the probability theory stuff doesn’t add anything to the discussion of the story’s veracity.

Posted by HellsKitchenGuy | Report as abusive

Journalism leaves much to be desired – even Bloomberg has become a rag

Posted by jackdanielsesq | Report as abusive

RPN is old-fashioned? Count me in that category. Did you never own an HP calculator?

Posted by Curmudgeon | Report as abusive

I love that this is about Bayesian probability theory now. Just in case the whole origins-of-bitcoin thing hadn’t been a wonkish enough discussion before, now an 18th century mathematician has been brought into the mix.

Posted by Christofurio | Report as abusive

No tape, no shorthand, reporter and one of the cops desperately wanting to believe, other cop trusting his partner, all add up to the probability that those weren’t his exact words. “Cannot,” rather than “can’t,” for instance.

Maybe something like this:

“I’m not involved int that, can’t say anything about it. Other people are doing it, in charge of it, I have no connection with it.”

And the mind modifies that to what it wants to hear, unencumbered by voice recorders or stenography skills.

By the way, read the reporter’s blog for accounts of her U.K. visa troubles. She’s a little fast and loose with things and inclined towards expediency and conspiracy theories.

Posted by Reginald87 | Report as abusive

I’m not sure what to think about the claim in general, but I was unimpressed about the comment on double spacing. Double spacing after a period is a fairly common practice. Wikipedia has an article on “sentence spacing” that discusses it specifically. While it is not recommended today, it used to be very common in the typewriter days. Some editing software ignores it, while other software forces it.

At most, it suggests an older writer (I’d guess the habit is more common with people taught before the ’90s), but from what I can gather when I google it, that’s not at all certain. I absolutely don’t think it was worthy of note in the Newsweek article.

Incidentally, as you can probably tell, I still have the double spacing habit. I almost edited it out, in case somebody would start hunting after me just for that.

Posted by VIII | Report as abusive

I have just a small question. Why do you want to know? if he is trying to remain undercover is because he does not want to be a target of prying eyes. Its his right as a human.

Posted by Salvado | Report as abusive

This case on deeper examination looks very much like a journalist who is so far out of her depth that she can’t appreciate how laughably outlandish her logic appears to anyone with decent technical chops and even a rudimentary understanding of cryptograhy — or just basic profiling, for those with a criminology bent. The guy she’s looking for has complete mastery of the many stakeholders involved in making a cryptocurrency ecosystem function, but her target can barely manage to interact with her over email, much less in person. For me the most painful forced error on her part is how she completely fails to appreciate and make sense of the interaction that took place when she finally met her target. This is someone who likely dealt with a regular stream of non-disclosure agreements during the normal course of work who was just trying to explain why he can’t talk about his past work, yet she manages to find an admission in there that he was working on the exact thing she happened to be researching. Most of us that deal with journalists regularly enough know that this kinds of mistakes are typical early on when engaging with an unfamiliar story, but the depth of this reporters self-deception is impressive indeed.

Posted by JadedApprentice | Report as abusive

Felix, present the issues in an elegant manner regarding Dorian Satoshi Nakamoto -Newsweek magazine’s claim of finding the real Satoshi, inventor of Bitcoin.

Posted by JChunn | Report as abusive

Sorry, what are duff notes? I can’t find a definition of duff or duff notes that makes sense.

Posted by zem | Report as abusive

It’s hard to say who created BTC. In time, I think we’ll get the true answer.

Bitcoin Faucet List

Posted by FreeBitcoins | Report as abusive