In class, we’ve discussed the Fed and its position as the central bank of the US. Central banks can regulate currency and its value by simply producing more of it. To introduce this newly created money to the public, this central authority bank ends up purchasing financial assets or offers the money as a loan to financial institutions. This is coined as fiat money or money that has its value derived by a governing entity.
But there is a new type of currency system (that I’m sure we’ve all heard about by now) called cryptocurrencies. The first and most notable cryptocurrency is Bitcoin. “Bitcoin is designed to bring us back to a decentralized currency of the people,” said Gavin Andresen, chief scientist at the Bitcoin Foundation, “this is like better gold than gold.”
But Andresen isn’t responsible for this marvelous “better gold. Someone who goes by Satoshi Nakamoto created Bitcoin. Yes, this is to say that Nakamoto true identity is unknown. Many have gone through hurdles trying to pin point Satoshi Nakamoto’s identity. Many interesting facts have been uncovered and plenty of theories exist out there. A handful of people have been accused of being Nakamoto (see my tongue-in-cheek tweet). I particularly like the idea that he is a team of people for reasons that the code is ‘too good’.
Dan Kaminsky, a security researcher who read the Bitcoin code,said that Nakamoto could either be a “team of people” or a “genius”; Laszlo Hanyecz, a former Bitcoin core developer who had emailed Nakamoto, had the feeling the code was too well designed for one person.
I’m more interested in the underlying reasons on (1) why we (or at least a large number of people/media) care and (2) why does Nakamoto decide to remain anonymous. I see one reason behind both these questions: unwanted attention from being a celebrity type figure. I’ll quickly tackle this point.
People are fascinated by geniuses. While I don’t believe there is anyone who is a ‘perfect genius’, the people behind Bitcoin are clearly a group of very intelligent forward thinkers. Perhaps too forward for their own good. World governments aren’t pleased with competing untraceable currencies that can be used for illegal transactions. People also believe Nakamoto has in his/her/its/their possession roughly one million bitcoins. To put that in perspective, in December 2013 when Bitcoin valuation peaked that was worth over $1,000,000,000 USD! It’s unclear whether Nakamoto’s identity will became public news, but it is clear that Bitcoin and its offspring cryptocurrencies has brought us to a new age for currency that the next “The Ascent of Money” will include in their history of financial systems.