Part One – Some background on the development of Bitcoin by Satoshi Nakamoto and the claims made by Craig Wright.

By: Dr Tristan Jenkinson

Introduction

I have followed the Kleiman v Wright case for some time – it is a perfect combination of several topics which interest me: digital forensics, cryptocurrencies and the law. Prior to that I followed the reports on Craig Wright’s claims with interest, for the same reasons.

The Kleiman case is currently set for a jury trial, starting on 6 July 2020, in Florida. A trial which, if it happens, is likely to be fascinating and one that I will certainly follow with interest. Many believe that the case will not make it to court – if so, then based on the legal arguments thus far, we are likely to see some interesting brinksmanship prior to any potential settlements.

Before the jury trial begins, I thought that I would lay out some of the background and history, and show why the case is likely to be of so much interest.

I will discuss further details of the case throughout this series of articles but for now it suffices to say that the dispute centres partly on who was responsible for the original development of Bitcoin, but mostly on a large amount of Bitcoin mined in Bitcoin’s infancy, generally believed to be owned by Bitcoin’s creator. For that reason, the history of Bitcoin is a good place to start.

Bitcoin and Satoshi Nakamoto

Bitcoin is well known as being the world’s first decentralised cryptocurrency. The basis for Bitcoin was laid out in a white paper published on 31 October 2008 on a cryptography user group called Cypherpunks. The paper “Bitcoin: A Peer to Peer Electronic Cash System” (available here) was written by Satoshi Nakamoto.

One of the features of Bitcoin is that Bitcoins are “mined”. This is the process by which Bitcoins are created. Essentially if your computer is the first to solve a specific complex problem, you are awarded with a number of Bitcoin – a process referred to as mining.

Satoshi mined the first Bitcoins when the system was set up on 3 January 2009 and he continued to be heavily involved in the mining of new Bitcoins in the early years of the cryptocurrency. Technical analysis by Sergio Demian Lerner in 2013 estimated that Satoshi holds around 1 million Bitcoin (see the article here). At the time of writing, these Bitcoin would currently be worth more than £7.5 billion.

It is universally accepted that Satoshi invented Bitcoin. There is still room for plenty of dispute, however, because Satoshi Nakamoto was a pseudonym.

Who Is Satoshi Nakamoto?

In no small part due to his apparent net worth, there has been much media speculation as to the real identify of Satoshi Nakamoto.

Potential Satoshis included:

• Nick Szabo (see for example this article)
• Dorian Satoshi Nakamoto (see for example the Newsweek article here)
• Hal Finney (see for example the Forbes article here)

Then, on 8 December 2015, joint articles in Wired and Gizmodo suggested that Craig Wright (together with Dave Kleiman according to the Gizmodo article) was Satoshi.

• Gizmodo
• Wired

Craig Wright is an Australian born computer scientist. Dave Kleiman was an American digital forensics expert who worked in computer security. Kleiman was a member of the Cypherpunks mailing list, where the original Bitcoin whitepaper was published. He sadly passed away in April 2013.

The Wired and Gizmodo Articles

Both Wired and Gizmodo pointed to evidence that had been “leaked” to them. The evidence included emails, PDF files, and other information that suggested that Craig Wright was indeed Satoshi.

The evidence provided to Wired and Gizmodo reportedly included a copy of a blog post from Wright’s blog talking about the launch of Bitcoin, and an email from Kleiman to Wright, which was signed with Kleiman’s PGP signature which, Wired reported, was “a cryptographic technique that ensured it couldn’t have been altered post signature”.

Much of the evidence leaked to Wired and Gizmodo has been called into question. I will discuss in detail the above two pieces of evidence to explain why questions have been asked about their legitimacy in future blog posts – watch this space.

In a further article published on Gizmodo the following day (9 December 2015), more apparent evidence of Wright and Kleiman’s involvement in Bitcoin was reported.

Gizmodo’s evidence included:

• Gizmodo’s tipster provided an unfinished legal draft that shows Kleiman and Wright forming a Seychelles-based Bitcoin trust with 1,100,111 Bitcoin. (The oft-estimated number of bitcoin Satoshi has stashed: 1 million.)
• One of Kleiman’s business partners, Patrick Paige, told Gizmodo that Wright had admitted at first that Kleiman invented Bitcoin, and then clarified that a group of people had invented it, Kleiman among them.
• Ira Kleiman, Dave’s brother, told Gizmodo that Wright had contacted him after Dave’s death, telling him that he and Dave had been involved in inventing Bitcoin.

(All quoted directly from the original page as at 10 December 2015.)

Craig Wright – “I am Satoshi”

On 2 May 2016, Craig Wright claimed to three mainstream media outlets that he was Satoshi. The three media outlets were the BBC (here). The Economist (here) and GQ (where the article has now been removed and replaced with a smiley face).

Wright provided, what he declared to be, technical proof of his claim. The BBC stated that “Mr Wright said he planned to release information that would allow others to verify that he is Satoshi Nakamoto”, providing a link to a page on Craig Wright’s blog at the time (“drcraigwright.net”). The blog page was entitled “Jean-Paul Sartre, Signing and Significance”.

Wright’s blog (“drcraigwright.net”), which included the post which apparently was to provide proof of his claims, has also since been deleted. The “Jean-Paul Sartre” post can no longer be viewed there. However, using internet archives (which I will also write a future article on), a copy can be found here.

The proof offered up by Wright in the Jean-Paul Sartre post has been criticised as significantly flawed and, in the eyes of many (such as Nicholas Weaver and Dan Kaminski), “provably fraudulent”. See for example the Guardian article here and for a more technical discussion see Nicholas Weaver’s blog post or this blog post from Dan Kaminsky.

“Extraordinary Claims Require Extraordinary Proof”

In response, Wright posted a blog post on “drcraigwright.net” the following day (3 May 2016) titled “Extraordinary claims require extraordinary proof”. As noted above, this blog has since been deleted, but copies of the pages are available from internet archives – you can find a copy of this article as at 3 May 2016 here.

In the post, Wright says that he will be posting independently verifiable proof. Most importantly to many, he said that he would transfer Bitcoin from an early block.

“So, over the coming days, I will be posting a series of pieces that will lay the foundations for this extraordinary claim, posting independently-verifiable documents and evidence addressing some of the false allegations that have been levelled, and transferring Bitcoin from an early block.”

The transfer of Bitcoin from an early block (one associated with Satoshi) is what many Bitcoin enthusiasts had been calling for as proof that Wright was Satoshi, as it would have demonstrated that he did indeed have access to Satoshi’s wallets.

Extraordinary Proof Is No Proof At All

Despite the claims that he would provide proof and transfer Bitcoin from one of the early blocks, just days later Wright performed a complete U-turn. His blog, (drcraigwright.net – an archived copy is here), displayed just a single message on the main page:

“I’m Sorry

I believed that I could do this. I believed that I could put the years of anonymity and hiding behind me. But, as the events of this week unfolded and I prepared to publish the proof of access to the earliest keys, I broke. I do not have the courage. I cannot.

When the rumors began, my qualifications and character were attacked. When those allegations were proven false, new allegations have already begun. I know now that I am not strong enough for this.

I know that this weakness will cause great damage to those that have supported me, and particularly to Jon Matonis and Gavin Andresen. I can only hope that their honour and credibility is not irreparably tainted by my actions. They were not deceived, but I know that the world will never believe that now. I can only say I’m sorry.

And goodbye.”

A Note on Wright’s Blogs

Wright has used at least three different blogs.

• Wright’s current blog page (“craigwright.net”) states that he is “Creator of Bitcoin – Satoshi Nakamoto”.
• Wright’s previous blog (“drcraigwright.net”) which contained the above “Jean-Paul Sartre” and “Extraordinary Proof” articles, has since been deleted and redirects to Wright’s current blog (“craigwright.net”)
• Wright also had another previous blog (“gse-compliance.blogspot.com”). It was this blog that included the post about Bitcoin which was leaked to Wired. This blog site was deleted in its entirety, apparently sometime between 15 December 2015 and 2 May 2016.

Coming Up

Hopefully you are now up to speed on some of the background to the origins of Bitcoin and Craig Wrights claim that he is Satoshi. In part two I will get into details of the Kleiman case itself.