After the popularity of my essay on Satoshi and micropayments, I had the idea of continuing down the historical rabbit hole for a while and looking further at some questions about Bitcoin’s history that I’ve found interesting for years.
This next essay in the series is about the question of Nick Szabo’s involvement in the creation of Bitcoin. I find the question interesting not strictly as a question of who Satoshi actually is, but more because the implications that might follow from the answer.
Szabo is a widely respected individual in Bitcoin and much of his writings, particularly on the origins of money, have been used as justification for the small blocks + Lightning Network approach to scaling Bitcoin. Although people rarely say it outright, there’s a subculture in Bitcoin that really wants to believe he is Satoshi because it lends more credibility to their position, despite the fact that he has denied it.
Though they might say the thoughts of Satoshi are irrelevant when they appear to clash with their view of scaling Bitcoin, there’s little doubt they would readily use the “Szabo is Satoshi therefore we’re right” argument if they ever got definitive proof that he was indeed Satoshi.
So the question of whether or not Szabo is Satoshi I think carries a good deal of practical weight for the future of Bitcoin, even if nobody will admit it now.
Unfortunately for this camp, the evidence we have suggests he’s very likely not Satoshi and in fact had no involvement whatsoever in the creation of Bitcoin. For my own part, I do not believe he is after putting this all together.
Before we review the evidence, let me just note that I’m not making an argument for small or larger blocks here. I hope this essay can be interesting and informative to anyone who wants to better understand the history of Bitcoin.
First, Satoshi probably didn’t know about BitGold (or the other cypherpunk writings). In my work archiving all the known emails from Satoshi, I came across his communications with Wei Dai, the author of b-money, the first reference in the Bitcoin White Paper.
…I believe it was me who got Wei Dai’s b-money reference added to Satoshi’s bitcoin paper when he emailed me about hashcash back in 2008.
Although Satoshi would go on to reference Wei Dai’s b-money in the Bitcoin White Paper, it seems clear he invented Bitcoin independently of b-money and did not know about it until later, whereas Szabo himself was already familiar with Wei Dai and b-money and would not have needed Adam Back to tell him about it.
Dai himself questions b-money’s influence on Bitcoin:
…my understanding is that the creator of Bitcoin, who goes by the name Satoshi Nakamoto, didn’t even read my article before reinventing the idea himself. He learned about it afterward and credited me in his paper. So my connection with the project is quite limited.
And although Satoshi would later reference BitGold and b-money in a forum post,
Bitcoin is an implementation of Wei Dai’s b-money proposal […] on Cypherpunks […] in 1998 and Nick Szabo’s Bitgold proposal
Satoshi was only crediting BitGold after the fact, just like Wei Dai believed he was crediting b-money after having already created Bitcoin. It is not evidence Satoshi was familiar with BitGold before creating Bitcoin, only that he learned about it at some point in the future.
Indeed, Wei himself corroborates this when he said in an interview in the Sunday Times
In Satoshi’s early emails to me he was apparently unaware of Nick Szabo’s ideas…
To which the reporter adds the following:
Wei forwards me the relevant emails, and it’s true: Satoshi had been ignorant of Szabo’s bit-gold plan until Wei mentioned it.
Of course, Wei could simply be wrong or Satoshi could have deliberately played ignorant, but looking at the second piece of evidence suggests even more clearly that Szabo is not Satoshi, namely that Szabo’s view of Bitcoin is the complete opposite of Satoshi’s view of Bitcoin.
To understand this, we need to go back to the roots of the Bitcoin scaling conflict, which began in November 2008 only hours after Satoshi announced Bitcoin on the Cryptography Mailing List.
Not many people know that the very first reply to Satoshi came from someone named “James A. Donald” who criticized Bitcoin for not being able to scale.
We very, very much need such a system, but the way I understand your proposal, it does not seem to scale to the required size.
Satoshi’s reply to this email is informative about his view of how Bitcoin could scale:
Long before the network gets anywhere near as large as that, it would be safe for users to use Simplified Payment Verification (section 8) to check for double spending, which only requires having the chain of block headers, or about 12KB per day. Only people trying to create new coins would need to run network nodes. At first, most users would run network nodes, but as the network grows beyond a certain point, it would be left more and more to specialists with server farms of specialized hardware. A server farm would only need to have one node on the network and the rest of the LAN connects with that one node…
The bandwidth might not be as prohibitive as you think.
So Satoshi was clear from the moment Bitcoin was announced that he believed Bitcoin could scale as electronic cash on-chain. Whether he was right or wrong, that was his position.
Donald would go on in later emails to disagree with this and argue that Bitcoin would need a layer of account money built on top of it, a sort of early argument for off-chain scaling.
we will need a layer of account money on top of the bitcoins, supporting transactions of a hundred thousandth the size of the smallest coin, and to support anonymity, chaumian money on top of the account money.Let us call a bitcoin bank a bink. The bitcoins stand in the same relation to account money as gold stood in the days of the gold standard…So a relatively small amount of bitcoins infrequently transacted can support a somewhat larger amount of account money frequently transacted.
Whether this argument is correct or not, it isn’t Satoshi’s vision. In fact, it much better aligns with Szabo’s views. Compare Donald’s vision for Bitcoin to Szabo’s vision of Bitcoin and the picture becomes clear:
My bit gold design in 1998 was 2-layer: bit gold for settlement, Chaumian e-cash for a privacy-enhanced payments layer. I’ve always thought of Bitcoin as evolving into a settlements-and-large-payments layer that in the long term needed a layer 2 for consumer payments.
— Nick Szabo⚡️ (@NickSzabo4) June 28, 2018
They are almost identical. In fact, looking at these emails alone, we could more easily conclude that Szabo is James A. Donald than he is Satoshi Nakamoto. The vision for Bitcoin that Satoshi had simply doesn’t match that of Donald or Szabo and the only means by which we can salvage the Szabo = Satoshi claim is if this was all some elaborate ruse by Satoshi to argue for a position he didn’t actually believe.
This seems unlikely, especially given the last piece of evidence. Szabo’s apparent methodology and skillset is the opposite of Satoshi’s.
You’re both right, Satoshi wasn’t a cypherpunk. We know this because:
1) He didn’t know about b-money or bit-gold
2) He wrote for MS Windows
3) He made a practically useful system, which is strictly forbidden in cypherpunk culture, hence subsequent attempts to fix this
— Edmund Edgar (@edmundedgar) September 13, 2018
In the same Cryptography Mailing List thread, Satoshi would write the following:
I actually did this kind of backwards. I had to write all the code before I could convince myself that I could solve every problem, then I wrote the paper.
This is the exact opposite of the process by which Szabo apparently attempted to make BitGold a reality around the same time, in which a paper is first developed and then someone tries to put it into practice.
[bit gold] would greatly benefit from a demonstration, an experimental market (with e.g. a trusted third party substituted for the complex security that would be needed for a real system). Anybody want to help me code one up?
Part of the reason I think Satoshi was successful while so many before him failed was precisely because he took a practical approach to solving the problems, not a theoretical, academic one. Satoshi’s methodology is totally different than the cypherpunk movement which Szabo has contributed so much too.
And we also shouldn’t miss the fact that Satoshi wrote the code while Szabo was asking for help writing the BitGold code. Satoshi himself would write in an email:
I’m better with code than with words though.
Taken together, I think we should meet any claim to Szabo had something to do with the creation of Bitcoin with skepticism. He has denied being Satoshi, people who communicated with Satoshi have claimed he did not know about BitGold, b-money, or much of the rest of the cypherpunk literature, his vision of scaling Bitcoin runs contrary to the vision outlined by Satoshi, and his methodology is the total opposite.
As for how Bitcoin should scale, well that is a question being played out in real-time now with BCH and BTC. Like Satoshi, I prefer practical testing to theoretical arguments, and we should all be very excited to watch it happen.