Adam Back On Satoshi Emails, Privacy Concerns And Bitcoin’s Early Days
Eleven years after Bitcoin’s release, Cointelegraph caught up with Adam Back to discuss the early years of Bitcoin, his emails with Satoshi Nakamoto, privacy and much more. Adam Back On Satoshi Emails, Privacy Concerns And Bitcoin’s Early Days
The Blockstream CEO, who spoke to Cointelegraph at the Latin American crypto event LaBitconf in Uruguay, is a developer and cryptographer known for inventing Hashcash, a predecessor of the proof-of-work system used by Bitcoin.
Back also dismissed the idea that he is the father of Bitcoin and said he didn’t help Satoshi create the world’s first cryptocurrency, despite confirming he was probably the first person Satoshi talked to about Bitcoin when he sent an email to Back introducing his idea.
“There were many other things that paved the way for Bitcoin, like digital money experiments driven by cypherpunk ideals. In the 1990s, when the movement really started, I was in Europe, so I only attended one of these San Francisco Bay area in-person cypherpunk meetings.
“However, the cypherpunks not only discussed e-cash but many other privacy-related topics. At that time, there was not only The Cryptography Mailing list — where Nakamoto first published — but many other lists where Nick Szabo, Wei Dai, Hal Finney and others frequently talked about e-cash. Some were physically in the Bay Area — I think Szabo, for example, may have attended the cypherpunks’ face-to-face meetings in the Bay Area along with Cypherpunks mailing list co-founders Eric Hughes, John Gimore and the late Timothy May.
“Back in 1981, David Chaum had already created the foundation for anonymous communication, and in 1983, he launched blind signature schemes. Privacy, anonymity, individual freedom and digital control were hot topics for cypherpunks, along with math and programming.”
“Digital money was also a hot topic, and it was discussed on the Cypherpunks list and other lists like Coderpunks, Cryptography and Bluesky.”
Adam Back was one of the most active posters on the Cypherpunks list, with over 700 published posts.
“There was a lot of debate about creating digital money. Besides Chaum’s most famous DigiCash, B-Money (developed by Wei) and Bit-Gold (developed by Szabo), there are many other obscure papers on the subject, and I sent Satoshi references to a couple of them related to proof-of-work in 2008.
“At that time, in 1998, Wei and Szabo were already discussing their ideas about digital money and sharing their proposals on B-Money and Bit-Gold among themselves and other participants on these lists.
“There was also my 1997 contribution of Hashcash as well as many later proof-of-work articles — dozens of them after Hashcash and before Bitcoin, and a few others after Bitcoin launched. I mentioned a few in my 2002 paper about Hashcash and some earlier proof-of-work papers like Cynthia Dwork and Moni Naor’s and even earlier related papers. We can’t forget that there was also Hal Finney’s reusable proofs-of-work, or RPoW, that predates Bitcoin from 2004.
“There were also anonymous people looking to create virtual money like MagicMoney from Product Cipher and other privacy tools like Heinry Hastur’s ‘pgp stealth,’ which I later took over maintenance of.
“So, if he was on the Cypherpunks list, Satoshi wouldn’t be the only ‘anonymous’ on these lists nor even the only one trying to launch a paper about virtual money. There were many anonymous and pseudonymous people discussing topics on the Cypherpunk lists, including the e-cash topic.
“Myself, Finney and Peter Todd, who was only 15 back then in 2001, were discussing Hashcash and digital money also on the Bluesky list, with Todd also interested in creating decentralized digital money.”
The “first” virtual money transaction
“Decentralized. This is perhaps the main word about Bitcoin arising from the proposals that came before it.
“Chaum had launched the first version of a ‘digital money’ back in 1989. And some of us on the Cypherpunk lists tried to bootstrap value into Chaum’s DigiCash demo server, where it was possible to get coins by email and was promised not to issue more than 1 million units of it.
“On the demo server, I even sold some t-shirts (exported RSA t-shirts) and all of us who were using the DigiCash demo thought that if enough people did that it could start up with a stable value as long as it was just 1 million coins.
“Unfortunately, DigiCash went bankrupt during this experiment, and the double-spend centralized database was also a problem — because if you had coins, it was impossible to prove to anyone if they were spent after they were gone.
“The lesson learned from DigiCash was that we needed a decentralized, peer-to-peer approach, and that was part of the discussion about Hashcash, B-Money, Bit-Gold, RPoW, and other bootstrapping ideas.
“You had to create digital money in a decentralized way, without a bank interface, without permission or partnership with a bank.”
“This is why the concept of Hashcash and mining was attractive — as some people could mine it to create coins, and others could buy and sell them in the decentralized secondary market because there was no centralized database nor bank partnership needed.
“There were also gaps in B-Money and Bit-Gold, so they were not fully complete projects or had players and human markets fulfilling functions that Bitcoin is able to automate within the protocol.
“Hashcash was widely reported at the time in computer magazines and online publications because spam was an increasingly hot topic and there was a hassle with the arms race for which some IT people and IETF groups were trying to find solutions.
“So, Satoshi could have learned about Hashcash without ever debating anything in the cypherpunk groups.”
Emails With Satoshi
“In August (or July) 2008, I received an email from Satoshi Nakamoto with an e-cash white paper (there was no name ‘Bitcoin’ yet) and it seemed interesting.
“The questions at that time were: Will he start this? What are the principles? I suggested Satoshi should look into B-Money, which he didn’t seem to know about at that time, and this is how I think B-Money was added to the paper.
“There were a few more emails, and I also sent Satoshi Ron Rivest’s 1996 paper on MicroMint, which extracts k-way hash collisions instead of partial pre-images used by Bitcoin. It is a bit centralized, but interesting.
Probably not so many people were aware of the MicroMint paper and even less so the B-Money write-up digital currency proposal. Although I was aware of Szabo’s work, I happened to not send him a reference to Bit-Gold.”
“I didn’t help to create Bitcoin, I didn’t program anything nor participate in any programming task. Around the time the software came out, Satoshi sent it to me, but I didn’t help him with that.
“Hal Finney could have reviewed the early Bitcoin code. I have never met Hal in person, but I really liked his inventiveness and enjoyed discussing topics on the cypherpunks list or in email with him. If ‘cypherpunks write code,’ Hal was a code writer, for sure.
“There has been some speculation about who may have helped Satoshi review the Bitcoin code prior to release because of the email that he sent to the list in November 2018. But it seems that Satoshi programmed Bitcoin first before writing the paper and probably he, himself, made several revisions to the code, and later others — like Hal, for example — may have helped review comments or bug reports or doing small bug fixes, just as when you write text and ask someone to review the grammar.”
Bitcoin Released With Privacy Issues
“Unlike Hal Finney and others, although Satoshi sent me the software before the official release, I didn’t start running it at the very beginning. Shortly after its release, Hal tried using Bitcoin and wrote a summary of how it worked on the mailing list, and after that I went back to analyzing Bitcoin.
“It seemed to me that Bitcoin had serious privacy limitations compared with Chaum’s 1981 protocol.
“I am interested in privacy tech, encryption and protocols, so I was interested in improving Bitcoin’s privacy and fungibility. So, I later proposed confidential transactions and Schnorr signatures and also some other ideas.
“Gradually, Bitcoin was gaining momentum and was no longer just a proposal but a real decentralized digital money actually working. To solve the privacy issues not implemented in Bitcoin, we then proposed the creation of sidechains such as Liquid in 2013 to help features be implemented, to gain experience and confidence with them, and to validate tradeoffs. And later I founded Blockstream with Greg Maxwell, Pieter Wuille and others to develop that technology and make it end-to-end usable.”
Cointelegraph asked if we could see the emails between Back and Satoshi, but Back was hesitant. Instead, he referred us to a tweet he sent last year stating his belief that Satoshi’s anonymity is “a Bitcoin feature” and that if he had any pieces of evidence that could help deduce Satoshi’s true identity he would “delete/shred them.”
Bitcoin Code Reveals Satoshi Nakamoto Used A Russian Proxy
Bitcoin code from 2009 indicates that Satoshi Nakamoto likely was hiding behind a Russian proxy.
Satoshi Nakamoto may have relied on a Russian proxy as early as January 2009, when Bitcoin v0.1.0 was first released.
Telltale signs appear in the file ‘irc.cpp’ on line 212, though this seems to be obfuscated with a simple cipher.
This cipher seems to work by removing all the zeros and then converting the numbers from hexadecimal notation to decimal. That gives you what looks like an IP address: 87.251.146. At the time the proxy was provided by Anders Telecom, it had apparently been defunct since 2016.
Experts disagree on the validity of such interpretation. Dr. Javier Estrella, CTO of GeoDB told Cointelegraph:
“The whole story reminds me a little ‘you can make statistics say anything you want’. For me it’s a simple reminder about the expected format of some variable in order to know how to process it later and take it at random.”
However, Alexander Chepurnoy, co-founder of Ergo blockchain platform disagrees, he believes this decoding method to be quite intuitive.
Hiding From Five Eyes In Russia?
Proxies are similar to VPNs, they help obfuscate the location of one’s computer. The place in the code where this comment line is placed deals with the connection to the Internet Relay Chat, or IRC. Satoshi himself discusses it in a few posts on Bitcointalk.
The surrounding context of this comment line also supports the interpretation of it being an encrypted proxy.
Chepurnoy believes that if indeed Satoshi was from one of the countries that formed The Five Eyes, or FVEY, intelligence community (Australia, Canada, New Zealand, United Kingdom and United States), it would make perfect sense for him to use a Russian proxy. Since it would be unlikely that the FVEY intelligence agencies would have a backdoor to a Russian service.
Sergey In Vietnam
Searching for this IP address yields results in Iran; however, due to the IPv4 address exhaustion, the global IP addresses have been reassigned since 2009. We did find a user named Sergey, posting reviews of hotels in Vietnam in December 2008 and January 2009, logging into the site with the same proxy as Satoshi.
It should be noted that Vietnam is a destination for Russian developers looking to escape harsh Russian winters.
Was Satoshi Russian?
The fact that Satoshi might have been using a Russian proxy does not necessarily imply that he or any members of the alleged team had Russian ties. Although there is evidence that the Russian-speaking individuals were involved in the Bitcoin (BTC) community almost from the beginning. In fact, the Russain language forum was the first non-English section on Bitcointalk.
Joseph Vaughn Perling, known on the forum as NewLibertyStandard, was active in the Russian language chats. He does not seem to have any Russian roots and his Russian is imperfect, yet generally fluent. He registered on the forum on January 19, 2020 and was user number 26.
In a post from July 28, 2010, he suggests the Russian spelling of Bitcoin should not just be a Russified version of the name, but should be a literal translation of Bit-Coin. His suggestion has not gained much traction.
However, Chepurnoy, applying the same logic as before, says it is unlikely that if Satoshi were Russian that he would use a Russian proxy, more likely he would be using a Western proxy in order to hide from the Russian intelligence services. He suggests alternative explanations:
“It’s possible that this proxy was being used in the office where Satoshi worked at the time or that someone of Russian origin had shared it with him.”
Further research may help uncover more clues about the early history of Bitcoin and Satoshi’s identity.
Previously Unpublished Emails Of Satoshi Nakamoto Present A New Puzzle
Newly discovered emails between Satoshi Nakamoto, Bitcoin’s pseudonymous creator, and the late Hal Finney deepen the mystery around the cryptocurrency’s origins.
The three emails come from Bitcoin’s earliest days, when its future was uncertain. They show how closely Satoshi collaborated with early supporters at the time of Bitcoin’s launch.
While anything written or coded by Satoshi is intrinsically valuable to the community, perhaps the most intriguing parts of these messages are neither words nor code, but something seemingly prosaic: the timestamps, which present a new riddle.
Michael Kaplikov is an adjunct professor at Pace University in New York; since discovering Bitcoin, he has been interested in its origin story.
They were shared with me by journalist and author Nathaniel Popper, who during his work on “Digital Gold: Bitcoin and the Inside Story of the Misfits and Millionaires Trying to Reinvent Money” was provided access to Finney’s correspondence.
Finney, who died in 2014, was the recipient of the first Bitcoin transaction. A legend in his own right, he developed the first reusable proof-of-work system, among other achievements.
[Editor’s note: In preparing this article for publication, CoinDesk contacted Fran Finney, Hal’s widow, who confirmed she had provided his correspondence to Popper, who in turn confirmed sending the messages to the author. “In March of 2014 we sent Nathaniel Popper those files, documenting email exchanges between Hal and Satoshi,” Fran Finney told CoinDesk. “The files were retrieved from the computer Hal was using for personal email in 2009 and were provided with Hal’s consent.”]
November 2008 was when Satoshi opened Bitcoin to public scrutiny. Until then, the project Satoshi had spent a year and a half coding was only shared privately with a select few. On Aug. 22 of that year, he emailed Wei Dai, the author of “b-money” and, sometime before that, Adam Back, the creator of Hashcash (whose proof-of-work function is used in Bitcoin).
The initial reception was less than ecstatic, Finney later recalled.
“When Satoshi announced Bitcoin on the cryptography mailing list, he got a skeptical reception at best,” he wrote in 2013 in his penultimate post on the Bitcointalk forum. “Cryptographers have seen too many grand schemes by clueless noobs. They tend to have a knee-jerk reaction.”
Sometime around Nov. 16, 2008, Satoshi shared a pre-release version of the Bitcoin code with several members of the Cryptography Mailing List, including James A. Donald, Ray Dillinger and Finney. The first of Satoshi’s emails I received from Popper was sent a few days later.
‘How Large Do You Envision It Becoming? Tens Of Nodes? Thousands? Millions?’
In that first email from Nov. 19, Finney thanks Satoshi for some corrections and asks about the aspired-to size of the Bitcoin network as it would affect scalability and performance. Notably, Donald, the first person to respond to Bitcoin’s public announcement on the mailing list, had raised the same concern.
“It does not seem to scale to the required size,” he wrote. This was a harbinger of the scaling debate that eventually led to the creation of splinter cryptocurrencies including bitcoin cash and so-called layer 2 solutions such as sidechains and the Lightning Network.
For Finney, this was not just a technical issue. Apparently in his mind, it has a bearing on Bitcoin’s future monetary value. A couple of months later, he stated that if Bitcoin became the world’s dominant payment system, then its value “should be equal to the total value of all the wealth in the world.” Extrapolating this logic further, he arrived at $10 million per bitcoin.
In a 2018 interview, Dillinger said the discussion that started on the public mailing list moved to private emails and eventually led to Finney and himself helping Satoshi with certain parts of the Bitcoin code:
“It was when we started talking about floating-point types in accounting code that I learned Hal was involved in the effort. Hal was reviewing the transaction scripting language, and both the code he had and the code I had interacted with the accounting code.”
Also, soon after the Nov. 19 email (sometime in the first half of December 2008), Satoshi added Finney to Bitcoin’s repository on Sourceforge, a site for managing open-source projects similar to GitHub.
‘Thought You’d Like To Know’
Although the Bitcoin Genesis block is dated Jan. 3, 2009, Bitcoin’s public network did not go live until five days later when the source code was released to the public and the first few blocks were mined.
It is assumed that in the first few months of Bitcoin’s existence, most of the hash power was provided by Satoshi. However, Bitcoin’s creator was fully aware that if his peer-to-peer electronic cash were to succeed, he needed others to join.
The following two emails are from Satoshi to Finney. In the first one, from Jan. 8, 2009, Satoshi notified Finney about the release of version 0.1 of the Bitcoin software. It was sent just a few hours after Satoshi made an analogous public announcement on the Cryptography Mailing List.
It appears that Finney had replied to Satoshi, letting him know that he would try to look at the code over the weekend (Jan. 8 happened to fall on a Thursday).
The following day, Jan. 10, Satoshi also updated Wei Dai (whom he had emailed a few months earlier to inquire about the proper citation format for Dai’s “b-money”):
“I think it [Bitcoin] achieves nearly all the goals you set out to solve in your b-money paper.”
On the same day, a discussion between Satoshi and Finney ensued on Bitcoin’s own recently created mailing list on Sourceforge and through private emails that Finney later provided for publication to the Wall Street Journal.
(In that exchange, uncharacteristically, Finney used his Gmail account instead of email@example.com; also worth noting, most of the email header data was stripped, the significance of which will become apparent later). In the middle of these technical discussions, on the eve of Jan. 11, the first-ever bitcoin transfer occurred, transferring 10 BTC from Satoshi to Finney. Interestingly enough, it is not referenced in any of the emails or contemporaneous public posts.
In the January 2009 emails, Satoshi’s time zone appears to be eight hours ahead of Greenwich Mean Time (GMT). If you assume he actually was Japanese as his handle suggested, one might assume this reflects his ancestral land. However, Japan was nine hours ahead of GMT at the time. Even more intriguing is that somehow Finney’s email server had received both emails before Satoshi’s email server, which presents a conundrum.
Derek Atkins, a long-time colleague and friend of Finney, who was also a member of the Cryptography Mailing List, helped us compare these emails to Satoshi’s other emails to the list that Atkins happened to preserve in his archive. Atkins suggested the issue might be attributed to the way Satoshi’s computer was configured:
“Let’s assume the sender’s system is set in local time instead of GMT (which is/was common for Windows), but also assume there is a misconfiguration in the local timezone of the sending computer. That could explain the discrepancy.”
Then, we compared it to the first email Satoshi sent to the Cryptography Mailing List. While the headers of that email are generally consistent with our emails, its timestamps are also internally consistent. Atkins suggested the discrepancy could arise from the clock change:
“However, if the system is set up for local time and NOT set up for DST [Daylight Saving Time], then that would also explain the discrepancy. On Oct. 31, 2008, there was a 12-hour difference from EDT to ‘GMT+8,’ whereas in January there would be a 13-hour difference because the [U.S.] returned back to standard time.”
In the United States, the clock was moved one hour back on Nov. 2, 2008. Thus, the difference between the U.S. and Japan increased by one hour (Japan does not do clock changes). At first, this appeared to be a plausible explanation (assuming that Satoshi was not actually based in Japan), yet Satoshi’s emails to the Cryptography Mailing List from Nov. 8, 2008, and Jan. 8, 2009, do not have contradictory timestamps either.
It is possible Satoshi had initially set his computer’s clock to Japan time based on the pre-DST time difference and later forgot to make the adjustment. But it would not explain why his other post-DST emails do not exhibit the same abnormality.
Based on Satoshi’s email to Finney from Jan. 12, we know that at around this time he was at some place with limited connectivity, so perhaps his computer’s internal clock was out of sync:
“Unfortunately, I can’t receive incoming connections from where I am, which has made things more difficult. Your node receiving incoming connections was the main thing keeping the network going the first day or two.”
It is possible that immediately after sending out an email with “normal” timestamps on Jan. 8, Satoshi had travelled to a location in a different time zone with limited connectivity from which he emailed Finney the following day.
Another possibility is that Satoshi Nakamoto (or the various team members behind the moniker) used several computers, some of which were configured accurately while some were not. But none of these theories feels quite satisfactory.
A more outlandish theory hinges on the popular hypothesis that Finney himself was Satoshi. If we assume he had connected Satoshi’s email to his main email account (firstname.lastname@example.org) for convenience, so he would not have to log in into his Vistomail account every time, then this might explain why the Finney.org server would receive it before the Anonymousspeech.com server.
This would also explain why Finney chose not to share these emails with the Wall Street Journal and why those he did share were missing most of the header data. But we must admit that just like the other theories mentioned above, we do not have any hard evidence to support it.
Satoshi Remains Ever-Mysterious
These emails do not turn Bitcoin’s genesis story inside out, nor do they introduce any new, unlikely characters to the cast. They do not appear to resolve the eternal mystery surrounding Satoshi’s identity either.
At the same time, they present us with a new little puzzle. It has taken Sergio Demian Lerner seven long years to figure out the famous “Patoshi” pattern. Hopefully, it will take a bit less time for the community to suggest a better explanation for the odd timestamps.
The emails also provide additional insights about the close collaboration between Satoshi and early adopters like Finney during Bitcoin’s launch. Later on, understandably, Finney chose not to highlight his early involvement. “When Satoshi announced the first release of the software, I grabbed it right away. I think I was the first person besides Satoshi to run bitcoin,” he wrote in his final post to the Bitcointalk forum, without mentioning their communications before the release.
Yet, almost seven years later, we must agree with Finney’s other remark from the same farewell post:
“Today, Satoshi’s true identity has become a mystery.“
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