Newly Revealed, Could Satoshi Nakamoto, Worth $400M In Bitcoin, Be In Danger?

By March 6, 2014Bitcoin Business
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Newly Revealed, Could Satoshi Nakamoto, Worth $400M In Bitcoin, Be In Danger?

Though Bitcoin is just a few years old, the person or entity behind it, who went by the name Satoshi Nakamoto, was already a legend.

In 2009 he launched the digital currency, which has now skyrocketed in value and, in the process, minted many millionaires, inspired a rash of startups and prompted a number of thefts, such as the recent $400 million heist at Bitcoin exchange Mt. Gox.

But despite his creation’s wild ride, the man himself had vanished into the ether. In 2011, he said in an email to one of the developers who helped him refine the code for Bitcoin that he was moving on to other things. He was never heard from again.

Until today, when in the new issue of the revived Newsweek, he was finally revealed.

Writer Leah McGrath Goodman knocked on his door outside Los Angeles, and after he called the police, the 64-year-old Japanese-American, whose name really is Satoshi Nakamoto and who has done classified work for both corporations and the United States military, told her, implying that he was the creator, “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.”

As the Internet digested some of the more interesting details about him, such as that his frustration with high bank fees and poor exchange rates when sending international wire transfers to England to buy model trains may have been the inspiration behind Bitcoin, Reddit users immediately began speculating about the privacy and security issues the man, estimated to be worth about $400 million in Bitcoin, will now face.

One user said, “Shame that they didn’t bother to respect his privacy at all. This article reveals so much about him that he’s now easy to find. In just a few minutes on Google Google, you can get the house up on Google Maps.”

Another responded, “This guy, whether he is or is not Satoshi needs to hire bodyguards ASAP. People are going to break into his house to try and get his keys…”

Goodman responded to the privacy concerns via Twitter:

@EntropyExtropy Good question. Pictures and info people are asking about (including residence and car) already public. His name too.#Bitcoin

— Leah McGrath Goodman (@truth_eater) March 6, 2014

So, is he really in danger? Well, it depends.

If someone, like, say, cyber criminals with the Russian mafia, wanted to steal his Bitcoin, there are two ways they might go about doing it: “They would have to get ahold of the private keys he holds,” says Jerry Brito, senior research fellow at the Mercatus Center at George Mason University and director of its Technology Policy Program. “This is essentially getting a password from him. I imagine there might be people out there who are now targeting his computer systems. If he is as smart as he is — as smart as someone who could create a Bitcoin should be — his Bitcoins are safe. They aren’t going to be online, or saved on a computer accessible to the Internet.”

The other way someone could steal his Bitcoins is slightly more Hollywood thriller. “You could get kidnapped and the kidnappers tell you, ‘Give me your password, give me your private key or else,’” says Brito. “That’s a possibility, but this could happen with cash. The difference is, with Bitcoin, you could move a lot of money with just one password.” (Brito is only aware of one instance in which someone tried to use physical force to obtain Bitcoins — in the Silk Road case, in which Ross William Ulbricht, the Dread Pirate Roberts behind the illicit drug marketplace, hired a third party to beat someone up and force them to type in their password to send back Bitcoins they stole.)

There is one big hitch, though: having one of Nakamoto’s Bitcoins would be like having a stolen painting. All transactions in the Bitcoin network are completely public — and people think that they’ve already identified which Bitcoins to belong to Nakamoto.

“We think we know what are some Bitcoin addresses with large balances that belong to Satoshi, because they were the earliest Bitcoins mined, when there were only a few people on the network, and Satoshi was mining the most, and we believe these belong to him. So if we see any of these Bitcoins associated with these very early addresses move, then we can keep following that trail,” says Brito.

If someone did get his key, they could send those Bitcoins to another address that they control, and the public would know that those Bitcoins were now at this new address. But, they would not know the identity of the person who moved them. In order to conceal his or her identity, the thief could try something called tumbling, in which a bunch of people pool their Bitcoins together and then each take out the same number of Bitcoins from the pile. However, Brito says that no tumbling pools are big enough to handle the amount of Bitcoins that Nakamoto has.

Brito imagines some people will not accept Bitcoins that came from an obvious theft. “But at some point, somebody might accept it for payment. And it’s like — all the $20 in our wallets have cocaine residue. The money in your wallet today was, probably at some point, part of an illicit transaction. But it’s put back in circulation.”

However, Brito personally thinks that theft is the least of Nakamoto’s worries. “Just by his behavior to date, if he indeed has access all to this money and it’s been untouched, I don’t think he cares. I don’t think he was ever going to come forward on his own, so that means he was never intending to touch this money. I think he just wants to maintain his privacy.”

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