Did Nick Szabo solve Nick Szabo's biggest bit gold problem?

in bitcoin •  last year

Who is Satoshi Nakamoto?
Has another time-stamped puzzle tranche been pieced together in the great "Who is Satoshi?" quest?

When talking about the difference between Nick Szabo's (his own) theoretically proposed "bit gold" and Satoshi Nakamoto's bitcoin (released as version 0.1 in the first week of January 2009), Szabo typically credits Nakamoto for implementing a solution to bit gold's problem of ensuring bit gold never ends up in the hands of a single controlling entity. In a post on Nick's blog he is answering a commenter's question in December 1998 about why bit gold would make money creation rely on arbitrary puzzle solutions by miners in the first place. In Nick's reply to this question, posted below, does he have a "Eureka!" moment? (irony of "Eureka" is intended, as Nick is a big study of Native Americans just north of Eureka, CA) Read it for yourself....

source: Nick Szabo's blog
A commenter named "Byrne" asks...

Why do the puzzling at all, rather than issuing a fixed amount of currency inflated at a predictable rate, with unique identifiers for each unit of currency?

nick said... (replies)
" This is an interesting idea, something like the idea that the Fed should follow a simple algorithm rather than trying to outguess markets. But the real question for beating bit gold is how do we do this without having to put full trust in third parties? If we can figure that out, we've come up with something better than bit gold. ("We" as usual on this blog being just whoever wants to explore the possibility, not "the government" :-)

Real trusted third parties, whether central banks or private note issuers, have always been tempted to overextend and overinflate, although occasionally the reverse happens. They are also vulnerable to government takeoever. Any algorithm, like the gold standard of old, is likely to be modified in a "crisis": a trusted third party cannot make a strong credible commitment to keep running the same algorithm.

Possibly the money issuing algorithm could be run by many parties in parallel manner, a technique known as Byzantine agreement. Indeed, this is the same technique used to run the bit gold title registry. All participats would agree to (1) generate a fixed number of unique (large random) numbers each week, (or a number inflated by some predictable algorithm), and (2) assign each by some fair algorithm to one of participants. Each timestamped random number becomes a rare collectible, like postage stamps. I can see where this would work! It will take quite a bit of thinking over, though, as we've eliminated one of things that bit gold users can approximately prove, i.e. the original cost of the gold.

Byzantine security is far from perfect. In layman terms it just means that when everybody sends everybody else the same message, far more people have to be corrupted in order to fake the message than if the message is sent through one or a few people. Thus any given party is trusted only to a very small degree, but there is still that small degree of trust. There is a much stronger temptation here than with bit gold to inflate the currency, since it can now be costlessly "printed" instead of "mined": it's much more likely that a sufficiently large number of people could be corrupted. Still, it's an intriguing idea worth developing even if for no other reason than it gives us another concrete plan to compare bit gold to. "

Read the paragraph again where he starts with "Possibly...". This suggestion by himself, is exactly what he credits Nakamoto as doing to solve the last "problem" with bit Gold, and credits as the biggest difference between bit Gold and bitcoin. Don't these type of Eureka! moments happen frequently? During communication with a minion or listener, one finds an inner truth or solves a long-running problem inside one's own head simply by conversing with someone who doesn't quite understand everything. In short, perhaps it is human nature for every Alexander Graham Bell to have his "Watson"?

In the words of Szabo while listing reasons he is not Satoshi:
"3) Nakamoto improved a significant security shortcoming that my design had, namely by requiring a proof-of-work to be a node in the Byzantine-resilient peer-to-peer system to lessen the threat of an untrustworthy party controlling the majority of nodes and thus corrupting a number of important security features. Yet another feature obvious in hindsight, quite non-obvious in foresight."-- Nick Szabo

Please note, Szabo's comment (inside his own blog post, and copy/pasted above) answers his own problem! More importantly, the time stamp for this possible "Eureka!"-moment occurs December 27, 2008, a full week prior to bitcoin's storied release. Nick might argue that altho he might have discovered the same solution which "Satoshi" later used to make bitcoin leakproof vs Nick's bit gold, he wouldn't have had enough time to implement it? If Szabo already had a running system using Byzantine Agreement to solve his double-spending problem (ledgers), could he simply have ported that same code into the mining algo? In other words, if you were already using a similar algo for something else within bitcoin development, you wouldn't need to completely re-invent the wheel to patch up bitcoin code-- ASSUMING "Satoshi" had already completed the programming for most of bit gold by then.

Are you asleep? What we are supposing, is Nick Szabo's PRIMARY excuse for why he's not Satoshi, might be contradicted inside his very own blog. Szabo suggested using a "Byzantine Quorum System" as far back as 1998:
That's more than a full DECADE before bitcoin used same concept to secure its mining system for coin creation.

We leave it to the readers, and the comments section, to answer the following questions:

#1 Would Nick Szabo have enough time from December 28, 2008 until January 3, 2009 (first bitcoin "genesis" block created by Satoshi) to implement this new thought about securing his mining network into his source code? Remember, Nick during 2008 constantly uses the phrase "we", so it's likely he's not coding alone-- and this is possibly a very important piece to the "Who is Satoshi" puzzle (pun intended, again, as bitcoin is ALL about puzzles)

#2 Has anyone ever asked Nick directly how much bitcoin he might own. Literally EVERYONE in crypto has their own unique crypto story, and whose would be more incredible than Nick's? Here's a guy who according to himself wrote the prototype for bitcoin, but never got to "cash in" on the concept bc some unknown entity supposedly coifed the idea away from him and printed tens of millions of bitcoins for himself before the first bitcoin PAYMENT (to Hal Finney) was even made!

#3 The last piece of Szabo's "Who is Satoshi" puzzle:
Instead of my automated market to account for the fact that the difficulty of puzzles can often radically change based on hardware improvements and cryptographic breakthroughs (i.e. discovering algorithms that can solve proofs-of-work faster), and the unpredictability of demand, Nakamoto designed a Byzantine-agreed algorithm adjusting the difficulty of puzzles. I can't decide whether this aspect of Bitcoin is more feature or more bug, but it does make it simpler.
We do not pretend to have as much proof for this solution to a bit gold problem, as the one Nick Szabo seemingly solved himself before bitcoin release, but we DO know that Szabo WAS thinking HEAVILY about this problem BEFORE bitcoin was released. In fact, the GREAT IRONY of how one KNOWS Nick was thinking hard about this last problem, is in the very blog post we're referencing here (albeit via the comments, not the article Nick wrote). Here's the full article, the ENTIRE PREMISE of which is talking about how to measure varying "hashcash-y" tokens as equal commodities, rather than become a problematic system of "collectibles" (like cryptokitties for instance) which cannot run accounts simply:
If you read his post, he's brainstorming for a solution to his own problem. Later he claims Satoshi solved this problem, and therein lies the last piece of the "Who is Satoshi" puzzle. We propose his closest confidantes, or he himself in the final critical days, solved their own problem here. After all, solutions are mostly found closest to crunch time, no? "Just Do It" Nike says, as practically the 3-word simplification between the difference of good ideas and EXECUTED good ideas. Wanna work out the kinks to something, put a date on final product, and then scramble to patch up all possible flaws. This is how Apple inventions all happened, no? Steve Jobs, standing over shoulders asking when it will be done, and delivering critical feedback on whether solutions are good enough as chief visionary of how technology SHOULD work.

#4 Social experiment
If solutions to all the problems a finished product might have, occured randomly, they would span the entire life of the idea-to-implementation timeline. But do they? Don't MOST problems get solved closer to the final product date? Just look at bitcoin, the beginning seeds for a de-centralized cryptocurrency were sown in the 1990s with CypherPunks and perhaps even earlier with the invention of large prime number crypto. But as Nick points out, there were hard-to-see problems which had to be solved to make everything work right. What is the probability those small solutions which make up the whole of bitcoin system, were solved closer to the date of release for bitcoin 0.1?

Again, we leave these questions for your solutions in the comments.

"We are all Satoshi"

We propose Satoshi Nakamoto is a team of coders, under the guiding spirit of Nick Szabo who checks off EVERY box for credentials (which Nick actually listed in his blog) a Satoshi would need to have....

#1 Libertarian mindset, check.
#2 Crypto expert, check.
#3 Didn't believe gold or e-gold was good enough, due to central-authority problem, check.
#4 Understood what "MONEY" is, at a deep enough level to establish one from scratch and impose it on earth's entire society of humans. No small task, one would mostly likely need to be a deep study of human history.
#5 Has coding chops to not have wool pulled over the eyes (like, eh hem, the WINKLEVOSS'S) by anyone working with him. check, Szabo had a programming undergraduate degree from Univ. of Wash.
#6 And this is specifically Nick's: A potential Satoshi would likely have read and accepted Nick Szabo's bit gold publishing. Nick himself defines this small group as Hal Finney, Wei Dai, and himself!

Satoshi Nakamoto is likely all three of these gentlemen; after all, who do you think made the first phone call? Bell called Watson, his trusted "Chumley" to Satoshi's "Tennessee Tuxedo". This is our strong supposition, and we think the circumstantial evidence has piled up to the point of no return.

Hal Finney is Satoshi Nakamoto
Wei Dai is Satoshi Nakamoto
Nick Szabo is Satoshi Nakamoto
I am Satoshi Nakamoto

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Well organized assertion, very compelling. We add that this is rather damning as well ->

"Dr Grieve said: “The number of linguistic similarities between Szabo’s writing and the Bitcoin paper is uncanny, none of the other possible authors were anywhere near as good of a match. We are pretty confident that out of the list of people regularly referred to as possibilities, Nick Szabo is the main author of the paper, though we can’t rule out the possibility that others contributed.

“Our study adds to the weight of evidence pointing towards Nick Szabo. The case looks pretty clear-cut. Szabo is an expert in law, finance, cryptography and computer science. He created ‘bit gold’, a precursor to Bitcoin, and was looking for collaborators in 2008. Did Nick Szabo create Bitcoin? We’re not sure, but we think he probably wrote the paper so it’s certainly worth a closer look.”



Thanks, for sending me the link to this discussion. I just want to share some thoughts of mine regarding this topic. Fankly it doesn't matter who is Satoshi Nakamoto, but a few things are for sure in my opinion.

  1. The guys, who invented bitcoin are a group!
  2. Those guys are well connected to the main IT companies and the main universities in the US.
  3. Those guys, intent voluntary or not the digitalization of fiat money, which is the next step in human development and society.
  4. Regarding the fact, that bitcoin is banned in china and the yuan is removing the US (Petro-Dollar), bitcoin will be replacing the US (Pertro Dollar) with the Bitcoin (Internet based currency), because this will still give the US government the power to controll the cash flow as they have it always done since WW2.
  5. Bitcoin aka the digitalization of the fiat currency give the government the power to controll the economy in a more efficient way like the federal funds rate (banning the fiat cash out of society as it is planned and already done around the globe).

fell free to criticize...



  1. we mostly agree w you. but for every idea has a fountainhead, it sure seems like that fountainhead would come from one of those 3: Dai, Finney, or Szabo. Szabo seems to be heaviest in history of money, so the biggest influence. "Who is Satoshi" really comes down to who controls the early minted coins, and maybe that's 1 2 or 3 of them. Finney seemed forthcoming in how much bitcoin he owned, so sure seems like it's narrowed down to Dai and Szabo. The "accreditation" of Wei Dai but without same for Szabo seems damning, if Szabo is Satoshi he'd not be worried about referencing his OWN work, bc he trusts himself to not sue/accuse himself for plagiarism. So that points to Szabo acting alone. That's why we focus on Szabo. If it was a group, there also should have been more than one entity pre-mining it. So if Dai or Finney isn't Satoshi, what did he/they get?

  2. It's funny you say that, we're thinking Sillycon Valley seems to have been late in sanctioning all this. As Szabo indicates, it WAS very tough to find people who were all of 1) Libertarian 2) in cryptoworld and 3) believe gold wasn't the answer. So Silicon Valley seems to have only glommbed-on in the end, as bitcoin was considered tech-geekie enough to arouse their interest-- and as bitcoin survived and became more resilient. Johnny come-latelies?

  3. Not convinced blockchain solves anything other than de-centralization. De-centralization is the opposite of what countries and accepted currencies want. So blockchain, and more accurately the Byzantine Quorum method of verification, seems destined to serve the "dark side" of the force, not the legal side.

  4. Again, we wouldn't jump to conclusions on bitcoin as acceptable currency yet. And China is having a hard enough time convincing the world to accept the Yuan as the medium of payment for oil, much less ANOTHER switch to cryptocurrency. Crypto would need to survive the first attack by large governments first, and we suspect the odds of survival are quite low in the "white shoe" world (but better in the black markets-- of which oil is not)

  5. Not sure exactly what you mean, but fiat is just dandy for government control. No real great reason to use crypto. The US Fed's system of money is quite honed by this point, as evidenced by all the money-printing during the latest crisis. The gov'ts of the world reallly don't need a better system. Crypto, again, seems destined for black markets.

Perhaps more interesting on this last point, is the fact that the Spanish dolares became the accepted coinage of the US colonies, hence the "dollar"'s name chosen officially in 1795. so maybe if we see another new Empire rise up in the next several hundred years, THEY will adopt crypto? Again, it's hard to say, as it really isn't that clear bitcoin and cryptocurrencies offer much as compared to the digitized currencies we already have. Bitcoin REALLY comes down to de-centralization. Will the next great Empire after the US believe in de-centralization? Extremely hard to say, as we're talking many many years into the future.

thanks so much for spurring the conversation!


Yep, also very compelling. Our stuff builds another brick in the wall, next to analysis such as you posted.

Szabo is also FAR too content to shill for bitcoin and ether, instead of starting another crypto to take advantage of his own extensive knowledge on the subject. Normal human nature would have him quickly seizing on the opportunity at SOME point in the past 7 years; additionally, like Finney he SHOULD have been an early transactor in the process, in terms of mining or other forms of taking advantage of bitcoin. No one on earth had a longer view of this crypto-currency stuff than Szabo, it's virtually impossible to believe he got left behind. So again, where's the questions dropped on him, about how much bitcoin or ether he owns? If he says nothing on record, one has to assume he owns a lot, no?

A great piece of organizing circumstantial evidence, @harpooninvestor, and I buy your conclusion, for a reason (adding to all of yours). From Day One the code code could not be so buggy that everybody would laugh at the loopholes. It was not, and that was probably because a bunch of guys were checking it out carefully before allowing it to go public.

Very nice, and cheers!

P.S. I am an experienced programmer, and know from long experience that once you let your program to go "work in the wild" it is likely to encounter combinations of data structures (or data volume) and logic quirks in your code that will give you heartache. So when they first went public a lot of testing was probably already done.


Good points all. Yes, it seems very likely they ran a lot of tests out amongst friends before releasing to the wild. Also, the hidden nature of "Satoshi" seemed all too-well planned, and that's something that alludes to Libertarians crossing with Cryptopunks crossing with those who think e-Gold might not be the answer. We remember reading about e-gold way back during the beginning days of the internet bubble (so 1998-2000 timeframe) and what turned us away, ironically, was the mistrust of a central authority who you'd have to send your hard-earned cash to participate. These particular guys would've thought long and hard about this problem, and it bares out in what Szabo et all wrote.

Szabo makes an excellent point, in that the intersection of the groups of people who COULD have designed bitcoin the way it was done, is very small. He practically names the people himself in his blogs.
Perhaps they realized that it would be easy to deny, even if the evidence piled up, and were comforted by the fact they could simply continue denying and no one would really care that much anyway due to the de-centralized nature of bitcoin itself.

Just think the most important thing, is just asking maybe Szabo and Dai what their bitcoin histories are. Not so much to determine who Satoshi is, but just bc it would be REALLY interesting. Finney, to our knowledge, has already answered this question (for instance, he says he no longer has that first payment). Just think it would be a REALLY interesting story if the guy who's proto-bitcoin idea sparked the whole thing didn't even have any bitcoin. We think Szabo has a LOT of bitcoin, and the reason is bc he alone more than anyone really believed in it from the getgo. With all his historical researching, it would be VERY odd indeed if he wasn't fat in bitcoin, thinking it would really take off. Also think he was shilling a bit in maybe 2011 doldrums and maybe again in early/mid 2015 when bitcoin was taking some flack. not so much for personal gain, but like Mr Lee, bc it was his baby (whether he's Satoshi or not).

Truthfully, we don't see any real way Szabo wasn't either Satoshi (sending payment to Hal, and writing to bitcoin.org after creation), or part of a small group calling themselves Satoshi (which most likely would have included Wei Dai and maybe Finney too).

We'd do a much bigger piece, to make it comprehensive, but don't think that's necessary bc incremental information keeps it small and limited to those who are still interested in the "big question"; and also bc we'd simply have to reference other's work which isn't ours and that takes a lot of time and doesn't really add too much value bc that work is already posted into the borg.

Glad you appreciated it, it's hard to know if you're just one of many assembling a piece of data, or if our work is original.


Speaking of deniability, one of the things that must of concerned was whether there was something buried deep in the laws which says that only government is allowed to create legal currency, and people offering alternatives would be faced with fines and/or jail terms! Even today we need to be concerned about this issue in various countries, some of which have already gone public to remind people that only the government is allowed to create currencies.

RE: “Just think it would be a REALLY interesting story if the guy who's proto-bitcoin idea sparked the whole thing didn't even have any bitcoin …”
COMMENT: That’s me. I was studying the technology, and even gave books to friends back in 2015, and all the time I never thought of buying any (for one thing I was "all in" at the stock market). My only wish was to use some bitcoin to send remittance payments to relatives and escape Western Union’s heavy fees. That was my only interest in Bitcoin; despite having a much better understanding of what was being promised than most people (due to my background). It’s only late 2017, i decided to get some!

However, as an old-time stock market trader, i know full well that even people buying in at $20,000+ today may get very rich off bitcoin in years ahead! So I’me very happy with just a few hundred already "thrown away" into buying some bitcoin!

Re. Szabo, it is a real lesson in history to hear him talk about money thousands of years ago. So he must have thought very deeply about what was involved.

What would be cute is someone making a movie (or even a documentary) in which Szabo (and the few around him) ARE fingered as being “Satoshi”; but with no legally binding trace from the documentary/movie to those particular guys. Max Keiser is also “rotten rich” with coins, so he might want to make such a movie.



The government is fungible, they will act in their own best interests always (which means their campaign-donors' interests). So expect them to rule bitcoin as they see fit, which means eventually bitcoin will be outlawed if it becomes too powerful.

So much for escaping Western Union fees; back then, yes, but now it's like $50 to send a dollar.

Our guess is the crypto-run is nearing its conclusion, so tread carefully!

Would happily watch that movie, bring it on.


RE your remark: “ … nearing its conclusion”, two points please.
Keep in your head the new rules that every transaction is a taxable event (I exaggerate but not by much), the forthcoming requirement that if you own as much as 1 bitcoin (or any cryptos valued at 10K+) you must report that “at the border”, and then revisit this video: .
What you see is incarceration for doing unregistered money trading when what the person was trading was officially declared to be not money.
It looks as if the Emperor has decided that I will be “death by 1000 small cuts”, instead of by a declared “exile to outer Siberia”, China having chosen the latter route.
So, your warning about “treading carefully” is 100% solid, in my view. It reinforces my decision to totally write off as a 100% financial loss the few dollars I have in cryptos. (Notice the word “financial”. There’s absolutely no learning or experience or networking loss here! It is a sure thing, I think, that the countries going this route are going to end up behind the technology eight-ball in due course. That is, unless we haven’t been all sent to the Great Beyond in the coming war.)
Second point, and more troubling. No matter who invented the block chain technology (and the linked applications of cryptography), its capture by The Powers will tighten our collective slavery big time. So I say that if God allows us to enjoy a few minutes each day, let’s go at it as much as feasible because “our days are numbered”.

This was a great article. I have written a post about the mystery of Satoshi and some of my ideas on who he/she/they are;


P.S. I have up-voted and followed you.



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I've followed your advice and read this entire piece. You've raised some really important points that I personally never knew about, and I guess that we'll never get a confirmation about Satoshi's identity. But now you've made me think that Nick Szabo also deserves a Nobel Prize for his groundbreaking and pioneering economic thought :)

While I'm still myself considering Nick Szabo the prime candidate from a knowledge perspective, possibly with one or two others in mind, here's something to consider.

The answer to #1 is actually irrelevant, because the design draft and even the final white paper had both been published far before Nick made the comment you are referring to here. The draft as early as August 22.

So while it's possible that Nick was Satoshi, he would have already known the solution.

Nevermind, I had forgotten that Nick edited his post and the comment was actually not made neither in 1998 as you said or in December of 2008 as the blog post says. Rather the post and comment is from April, giving him plenty of time to code up the solution after which Satoshi claims he wrote the paper.

As I said, there is a lot pointing to Szabo. What throws me off is how disagrees with Satoshi on certain technical aspects post-Bitcoin. It might be a genuine change of mind (for good or bad reasons), it might be a way to disguise himself, or it might still be that he never actually was Satoshi.


Well Szabo is almost certainly Satoshi or a PART of Satoshi. Wei Dai might be his "better half", but so private it's impossible to gain any real evidence on him (which is very Satoshi-like).

Another factor is Szabo doesn't really work anymore. How's that possible?