ColdFusion - Satoshi Nakamoto and the Civil-War Within Bitcoin

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Starting point is 00:00:30 Hi, welcome to another episode of Coldfusion. Before we get started, I just want to say thank you to everyone who joined the Discord. I know it was a bit chaotic to begin with, but we've got some moderators in there now and it's calm down. Thanks to those of you who are willing to help. Alright, so on to the video. In the previous episode, we took a look at how cryptocurrencies were born in the 1980s, and then we followed their underground struggle in the 1990s. A group of individuals risked prison time because they believed in total financial freedom from the

Starting point is 00:01:00 the government. Today we'll dive into the civil war in the modern Bitcoin community and see how some believe that the cryptocurrency has been co-opted by banking interests. And lastly, we'll take a look at some theories into who Satoshi Nakamoto may be. Let's begin. You are watching Tull Fusion TV. One of the first things you need to understand to grasp the modern state of Bitcoin is the block size wars. As we discussed in the last episode, Bitcoin is mined in blocks. These blocks contain a record of all the most recent transactions. The size of these blocks, measured in megabytes, have a meaningful impact in the way that

Starting point is 00:01:42 Bitcoin functions. Satoshi originally placed a 1 megabyte block size limit on Bitcoin. So why did he do this? Well, Satoshi didn't want some miner on the network to create a huge block, terabytes and size that could clog up the entire system. As time went on, this 1 megabyte block size. limit made Bitcoin hard to scale as more users came online. As more people used the Bitcoin system, payment times became longer and fees became higher. Even to date, Bitcoin can only do

Starting point is 00:02:15 about seven transactions per second. For context, PayPal does about 15 and Visa 2000 transactions per second. But Satoshi knew this was coming and in his original writings, he remarked that Bitcoin would be updated with larger block size as it scaled. So here's where the issue arises. There was a fundamental split in the community. It was over the question of if Bitcoin was a long-term store of value like gold, or a quick medium of exchange, like cash. Within the Bitcoin developer community, so-called big blockers wanted bigger block sizes so more transactions could take place. This would make Bitcoin function closer to a method of payment and electronic cash.

Starting point is 00:03:02 On the other side of the aisle was the small blockers. They saw Bitcoin as a store of value, so transaction speed and efficiency didn't matter as much. In their eyes, the original one megabyte limit was fine. Why risk messing with it? According to the small blockers, having large blocks would make it hard for some computers to handle. They stated that eventually only large companies with powerful computers. At Desjardin Insurance, we know that when you own a nail salon, everything needs to be perfect from tip to toe.

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Starting point is 00:04:40 Their solution was the release of Bitcoin XT. Equipped with a 2 megabyte block size that was set to increase over time, and capable of 24 transactions per second, it looked promising and the miners in the community were on board. If the majority of the Bitcoin community downloaded the Bitcoin XT software and decided to run it on their nodes, the community, the community, would have voted with their machines and the issue would have been settled. But there was strong opposition. The small blockers saw this as a betrayal. The technical experts should determine the direction of Bitcoin and not a populist campaign. From here, things got bizarre.

Starting point is 00:05:18 Strangely, due to a multitude of reasons and some possible fail play, Bitcoin XT ultimately didn't reach mass adoption. Garnered a lot of support. A lot of miners especially were like, hey, this is great. I would love to mine bigger blocks. There's more money in a bigger block for me. So why would I not go that direction? Well, all of a sudden, DOS attacks.

Starting point is 00:05:40 Tons of data is pushed across a network, forcing a node to crash. Mike's entire regional ISP was DOS attacked for days. All of these XT nodes got pushed off the network. Only ISPs where XT nodes existed were DOS attacked. Strangely, online, the main Reddit Bitcoin Forum would ban anyone that talked about Bitcoin XT. Mike Hearn in 2016 stated, quote, Why has Bitcoin failed?

Starting point is 00:06:10 It has failed because community has failed. What was meant to be a new, decentralized form of money that lacked systematically important institutions and too big to fail, has become something even worse. A system completely controlled by just a handful of people. End quote. There was now some obvious contention within the Bitcoin community. Within the community of Bitcoin developers, the search to fix the scaling problem was still taking place. The idea of a Segwit or Segregated Witness was introduced.

Starting point is 00:06:45 Activated in 2017, its aim was to store transaction data in a smarter way so more data could fit onto a given block. Basically, they removed the cryptographic signature from the block only leaving the receiver and sender information. This process made room for more data. In August of 2017, some Bitcoin developers weren't happy with the proposed Segway method, so they worked on a new version of Bitcoin and split it off from the main chain, a process known as a hard fork. The result was Bitcoin Cash. Bitcoin Cash had none of the data-saving techniques of Segwit and an increased block size of 8 megabytes.

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Starting point is 00:08:26 After some time, the developers of Bitcoin Cash wanted to include even more changes. A man by the name of Craig Wright thought that this would cause Bitcoin to stray from its original purpose. Interestingly, some people believe that Craig Wright is Satoshi, but more on him later. In 2018, Craig led the charge to split from Bitcoin cash into what would be called Bitcoin Satoshi Vision, or Bitcoin SV for short. It has no block size limit and features super low transaction fees. There is a belief among the Bitcoin Satoshi Vision community that Bitcoin SV is the real Bitcoin.

Starting point is 00:09:06 According to them, Bitcoin SV is technically superior to the mainstream Bitcoin. and it can do more than 2,000 times the amount of transactions per second. It's more flexible, yet only trades at a small fraction of the price. On the other side of the fence, the entity CoinGeek currently controls over 51% of the computing power available for mining Bitcoin SV, which critics say can lead to manipulation. Others such as Vitalik, the creator of Ethereum calls Bitcoin SV a complete scam. Like, obviously, BSB is a complete scam. So as it stands today, due to infighting and differing opinions, Bitcoin is split into three,

Starting point is 00:09:49 the mainstream Bitcoin, Bitcoin Cash, and Bitcoin Satoshi Vision. But what if all of this fracturing should have never happened? What if there was more going on behind the scenes? In 2014, while the scaling problems were being discussed in full swing, a company by the name of Blockstream was founded. The stated purpose of Blockstream was to, quote, sell sidechains to enterprises, charging a fixed monthly fee and taking transaction fees. In other words, its aim was to relieve the stress on the Bitcoin network

Starting point is 00:10:25 by doing transactions off-chain and pocketing the fees instead of miners. It's important to note that a side chain is not a blockchain at all. Side chains are typically used to patch holes in the capabilities of the underlying protocol. Therefore, the better Bitcoin becomes, the more obsolete companies like Blockstream get. In my opinion, it was on Blockstream's interest to keep Bitcoin slow and therefore with a small block size. It's worth noting that Blockstream isn't a foundation but a for-profit corporation. Interestingly, Blockstream's CEO is Adam Back, who some also believe is Satoshi Nakamoto, but more on this later. During the researching for this video, I could see that a large part of the Bitcoin

Starting point is 00:11:12 community was suspicious of Blockstream. Many take issue with Blockstream's Lightning Network, for example. It promises to boost Bitcoin's transactional speeds to faster than... Hear that? It's your money calling. It wants a promotion. Elevate your savings with the Scotia high-interest savings account. Always earn high regular interest rates that grow the more you save and invest. Conditions apply. Visit Scotiabank.com slash H-I-S-A to learn more. Scotia Bank, you're richer than you think. Hey y'all, it's Kelly Clarkson with Wayfair.

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Starting point is 00:12:03 Visa. But at what cost? The original Bitcoin system promised no middlemen and no trust required. Suddenly, the Blockstream Corporation had broken these promises. So, the Lightning Hubs will require to be set up for financial regulation and reporting laws. Require massive amounts of liquidity to keep multiple well-funded open channels. Offer fraud departments to watch the blockchain constantly and prevent theft, all while taking small fees for every transaction you route through them.

Starting point is 00:12:36 Does this system sound familiar? Just replace the term. open channel with checking account. These lightning network hubs will be ran by the same financial institutions the Bitcoin was made to challenge. The banks aren't fighting Bitcoin because Bitcoin will be the new banking system.

Starting point is 00:12:57 Bitcoin needed no middleman. There was no fraud to detect, no permission to give, no transaction to reverse, no fees to collect, so it had to be broken to need them. The truth is the one megabyte blocks restricting Bitcoin are purposely kept there by the developers. The absurdly high fees and long weights create a demand for a solution. And the solution they give us is the banking industry.

Starting point is 00:13:26 To make things worse, the entities funding Blockstream are antithetical to the original Bitcoin Vision. Blockstream has received $55 million of investment from Axa insurance. The CEO of Axa at the time was Henri de Castries, a French billionaire and the president of the Bilderberg Group at the time, a group known to have global banking and corporate ties. Critics also point out that Blockstream has received funding from the digital currency group. Many higher-ups within the company have ties to the Federal Reserve, World Bank, and Mastercard. Not exactly the crowd who you would expect to spearhead a grassroots movement. They also own CoinDesk, one of the biggest news outlets in the crypto space.

Starting point is 00:14:12 Adam Back has also been criticized for hiring all the early Bitcoin devs into Blockstream to reshape the Bitcoin protocol. To many, it seems that Blockstream has crippled Bitcoin's full potential through their group of developers only to seek to fix its shortcomings for a profit. So through Blockstream, have the banks taken over Bitcoin? It's not quite a smoking gun, but it's all very curious. Satoshi Nakamoto, the pseudonym for the inventor of Bitcoin, has gone to great lengths to high-endixing identity. He created an anonymous email account and never shared any personal details. He's left such few clues that the best one can do is point out the facts that lead to the most likely candidates, and then I'll leave it up to you to make up your own mind.

Starting point is 00:15:04 This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of Bad sales, using automation, analytics, and smarter workflows to simplify campaign delivery and access better data across the business. The result? Less time spent on operations, more time connecting brands with the moments and fandoms that matter most. Learn more at Accenture.com slash Spotify. Hear that?

Starting point is 00:15:37 It's your money calling. It wants a promotion. Elevate your savings with the Scotia high-interest savings account. Always earn high regular interest rates that grow the more you save and invest. Conditions apply. Visit scotiabank.com slash h-I-S-A to learn more. Scotia Bank, you're richer than you think. Firstly, for Nakamoto, we need to lay some groundwork with two basic clues.

Starting point is 00:16:05 Number one, Bitcoin's original code was written in the programming language C++. Number two, Satoshi had two language quirks. He would use British English over a... American English and consistently used two spaces after a period. This common writing style hints that Satoshi is not a group but a single person. Our first candidate isn't the most serious, but he's worth mentioning because he ties into our second candidate. The least likely candidate is Dorian Nakamoto, a Japanese American physicist and engineer.

Starting point is 00:16:41 In 2014, a Newsweek article published a photo of him as well as his home, which could be easily found via a Google search. The article claimed that he was the founder of Bitcoin solely due to his name. Basically, lazy journalism. When accused, Nakamoto stated that he had never heard of Bitcoin before, and it would seem completely strange that someone as obsessed with cryptography and anonymity would just go ahead and use their legal name as an alias. But the main reason I'm here is to clear my name that I have nothing to do with Bitcoin,

Starting point is 00:17:17 Nothing to do with developing. I was just an engineer doing something else. That's not me. I never communicated with Bitcoins. The media attention Dorian received was unnecessary and dangerous. Thankfully, the Bitcoin community came to Dorian's aid and collectively donated 102 Bitcoins, a donation now worth close to $5 million.

Starting point is 00:17:41 As we saw in episode one, Satoshi didn't work alone. He worked closely with Hal Finney. a cryptographer and part of the cypherpong movement. Before going public, Satoshi spent a year and a half coding, sharing his work privately among a select few. Hal Finney would also receive the very first Bitcoin transaction. Coincidentally, Howe lived just down the road from Dorian Nakamoto. Perhaps they had bumped into each other and Howe decided to use Nakamoto's name as an alias. In 2009, Howe was diagnosed with ALS. This coincides with when Satoshi would slow down posting in email forums.

Starting point is 00:18:24 On the flip side, if he was testing code for Satoshi, why would he put bugs on his own code and then solve them himself? In hindsight with Bitcoin's popularity, one might think that it was a sophisticated ploy to throw people off the scent. But you must remember, these were the earliest days of Bitcoin, and it could have flopped over and disappeared a week from then for all they knew. This would suggest that it wasn't him. How would post as himself on other forums,

Starting point is 00:18:49 and even on his deathbed, he denied being Satoshi and even stated that he didn't really understand Bitcoin at first. Sadly, Hal Finney died in 2014. This episode is brought to you by Accenture. When your advertising operations fall out of sync, everything else follows. Spotify and Accenture are working together to reinvent the rhythm of ad sales, using automation, analytics and smarter workflows to simplify campaign delivery and access better data across the business. The result, less time spent on operations, more time connecting brands with the moments and fandums that matter most.

Starting point is 00:19:26 Learn more at Accenture.com slash Spotify. At Desjardin Insurance, we know that when you own a nail salon, everything needs to be perfect from tip to toe. That's why our agents go the extra mile to understand your business and provide tailored solutions for all its unique needs. You put your heart into your company, so we put our heart into making. sure it's protected. Get insurance that's really big on care. Find an agent today at Dejardin.com slash business coverage. It was cryogenically frozen. He decided that he wanted to be cryogenically frozen because one day he still wanted to see the future, since we're still talking about him today. In a way, he's made it. The next candidate is our old friend, Nick Zabo.

Starting point is 00:20:17 He's a first-generation Hungarian and his father fought in the 1956 Hungarian Revolution, Nick would have a unique perspective on governments abusing their power. He has a computer science degree from the University of Washington and was proficient in law and economics. As he saw throughout the previous episode, Nick has been an active participant in almost every stage of cryptocurrency history and was close to a complete breakthrough with his invention of bit gold. Zabo had also worked for David Charles.

Starting point is 00:20:47 DIGCash, an early attempt to bring cryptocurrency digital payments. He has the knowledge, experience, and a decades-long passion for cryptography-based money. He's even credited with pioneering the concept for smart contracts in the 1996 paper. Before Bitcoin wallets were used, the protocol was to use IP addresses to send Bitcoin to each other. Satoshi's IP address was in California, and Nick did indeed work in the area. What I find most interesting is that there was an exchange. between Satoshi and another cryptographer. In the exchange,

Starting point is 00:21:20 Satoshi remarked that his Bitcoin address also happened to have his initials in it, looking through all of the initials combinations, out of all the candidates that could be Satoshi, only one of the initials match. N-S. Although these initials could just be Satoshi Nakamoto reversed. On the opposing side, though,

Starting point is 00:21:41 Nick Zabo has denied Satoshi claims. In addition, Bitcoin was coded in C++, and Wei Dai, the inventor of B Money, states that Nick didn't code much in C or C++. Nick also doesn't match the British linguistic clues. Craig Wright is probably the most controversial of the bunch. He's a well-accomplished Australian scientist. He also holds a bunch of other degrees. He was first accused of being Nakamoto in 2015.

Starting point is 00:22:11 The difference between him and the other suspected founders is that while denying it first, he eventually claimed the accusations to be true. Greg Anderson, who worked closely with Satoshi, believed Craig was the real deal after Craig performed a digital signature on an address known to be owned by Satoshi. Craig would also fit the British English clue because both Australian and British English are pretty much interchangeable. Wired magazine had collected a number of interesting coincidences that led them to their conclusion.

Starting point is 00:22:42 They include posts on Wright's blog that coincide and predict the release of the initial Bitcoin paper. There is also said to be elite correspondences between Wright and attorneys, where he states that he's been running Bitcoin since 2009. On the flip side, it wasn't long before Wired and the crypto community began pointing out inconsistencies in Craig's story. The timeline became even more blurry when new evidence seemed to prove that Craig's blog posts had been backdated. And I don't work and invent and write papers and code by coming and forth. of TVs. I don't want money. I don't want fame. I don't want adoration. I just want to be left alone. You come in front of the camera once and I will never ever be on a camera ever again

Starting point is 00:23:31 for any TV station or any media ever. I'm very insane. I don't ever want to be in the public again. You know you've bothered my family. You've bothered me. You've bothered the people I've worked with. This will be the last time that you ever see me. Those words from your mouth. Now, actually, I didn't want to go on a television paper. Please know. One, that was an hour interview that was cut and changed, which you'll find out important. Are you Satoshi? Yes.

Starting point is 00:24:01 Okay. So you wrote a Satoshi white paper? Yes. You're only a public figure because you cosplay a Satoshi, right? No. No. No. It also seems unlikely that Nakamoto would spend seven years being anonymous just to take credit when accused.

Starting point is 00:24:29 Further, in 2020, Craig Wright had provided a list of early Bitcoin addresses which he claimed to own in an ongoing court case. These addresses were briefly inadvertently made public. 145 of these addresses were used by an individual who did own them to sign a public message to prove that Craig was not the owner. The message read, quote, Craig Stephen Wright is a liar and a fraud. He doesn't have the keys to sign this message. This was a major blow to the theory that Craig was Satoshi, but many Bitcoin SV supporters wholeheartedly believe that Craig is Satoshi. Thanks to a 2020 documentary by the YouTube channel, Barely Sociable, the most recent candidate

Starting point is 00:25:16 doing the rounds is Adam back. Adam ticks the majority of the boxes and seems almost a perfect match apart from one thing. But more on this later. Adam was an early pioneer in digital currency research, along with everyone in everyone in episode one, Wei Dai, David Chalm and Hal Finney. Adam has a PhD in distributed computer systems, a perfect match. In 1997, he invented hash-cash. A similar system is used in the proof-of-work mining algorithm in Bitcoin. Both Satoshi and Adam wrote in British English and used the unique double spacing in writing. This can be seen by comparing Adam's writings and forums with

Starting point is 00:25:55 Satoshi's papers. Satoshi never showed any emotion or clues into his personality, but in one post in July of 2010, he described that Bitcoin was, quote, bloody hard to describe, and that's a very British thing to say. Other evidence that points to Adam as Satoshi is the fact that messages between the creator of Bitcoin and Adam are not available to the public. There exists email exchanges between Satoshi and almost everyone else apart from Adam. In addition, Adam codes very well in C++, the same language that Bitcoin was written in. In the first episode, we saw that the first block of Bitcoin included a headline from the Times paper.

Starting point is 00:26:38 The Times is a British publication, which would make sense because Adam was from London. Adam was also known for starting the trend of making political statements in code. You printed it on a T-shirt, and then so if people flew internationally with that T-shirt on, then they were breaking this law. Is that the case? I don't know. I mean, if you can export a book and you export a T-shirt, it's a bit of a gray area, I guess. but at least it people thought it was an amusing kind of way to protest something that they were quite unhappy about.

Starting point is 00:27:08 In 2013, when the wealth of Nakamoto was revealed in a blog article, Adam registers to sign up to the Bitcoin Forum on the very same day. In forum posts, Adam states that the blog authors are, quote, getting too close to the dealings of Nakamoto. Despite only just joining the forum, he knows obscure details of early Bitcoin bugs that were never public in change logs. If you're interested in digging more into Adam, check out Barely Social's YouTube documentary. It has some compelling arguments, but Adam would deny all claims made in the video.

Starting point is 00:27:40 And for me, though, there's one thing that stops me from believing Satoshi is Adam. If Satoshi's vision for Bitcoin was to have ever-increasing block sizes, why would Adam, through Blockstream, be actively trying to keep Bitcoin's block size small for a profit? Why would Adam want any money at all? He'd probably be one of the richest people in the world, if he was Satoshi? Am I missing something here? The only thing I can think of is maybe Adam worked extremely close with Satoshi, but for one reason or another, ended up selling out to the big banks.

Starting point is 00:28:13 So, who is Satoshi? I'll be honest, I'm stumped for this one. If you guys think you have any clues for me, hit up my Discord. Maybe we can crowdsource this thing together and figure it out. I've set up a new text channel for the discussion around Satoshi. In truth, discovering the identity of Satoshi Nakamoto is not necessary for the success of Bitcoin. He, or she, could be one of these candidates, or just someone who is truly unknown till this day. And with that, that pretty much brings us to the end of our Bitcoin series.

Starting point is 00:28:48 In Part 1, you saw how Freethinkers took digital cryptography seriously in the 80s and 90s. Their efforts allowed Bitcoin to exist. In this episode, you saw that the story of Bitcoin was, Bitcoin may not be as simple as it first seems. In the end, another cryptocurrency may come and take its place as the global leader. No matter what happens, Bitcoin will always be known as the pioneer. If you enjoyed learning some new things in this episode, then you'd probably like today's sponsor, Skillshare, and online learning community.

Starting point is 00:29:23 I've been watching Real Productivity Create Your Ideal Week by Michael Kahn-Janipakorn, the co-founder and CEO of Skillshare. He has a lot of simple but great tips to get the most out of your day and keep your motivation high. For an example, putting an imaginary cost on the things that you do often so you can prioritize your time. If you just want self-improvement or are keen on expanding your creativity, Skillshare is a great place to do that.

Starting point is 00:29:49 The first 1,000 people to click the link below get a free trial of a Skillshare premium membership. So thanks for watching the whole way through this episode. Be sure to check out the first part of this series if you haven't already. I'll leave a link for that below. Anyways, my name is DeGogo, and you've been watching Cold Fusion. Next time, we'll take a look at the rise and fall of Atari. Cheers, guys. Have a good one. Hey y'all, it's Kelly Clarkson with Wayfair.

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ColdFusion - Satoshi Nakamoto and the Civil-War Within Bitcoin

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