The Breakdown - 11 Years Ago Today, Satoshi Disappeared

Episode Date: December 14, 2021

This episode is sponsored by NYDIG. Eleven years ago, on Dec. 13, 2010, Satoshi Nakamoto posted on the BitcoinTalk forum for the last time. He would pop up in emails here and there for a few more months, but for the majority of the Bitcoin community, he was gone. In today’s episode, NLW explores how the Bitcoin community was changing, and how the legacy of that period remains with us today.  Read more about the transition to the post-Satoshi era from Pete Rizzo on Bitcoin Magazine: https://bitcoinmagazine.com/technical/what-happened-when-bitcoin-creator-satoshi-nakamoto-disappeared - NYDIG, the institutional-grade platform for bitcoin, is making it possible for thousands of banks who have trusted relationships with hundreds of millions of customers, to offer Bitcoin. Learn more at NYDIG.com/NLW. Enjoying this content?   SUBSCRIBE to the Podcast Apple:  https://podcasts.apple.com/podcast/id1438693620?at=1000lSDb Spotify: https://open.spotify.com/show/538vuul1PuorUDwgkC8JWF?si=ddSvD-HST2e_E7wgxcjtfQ Google: https://podcasts.google.com/feed/aHR0cHM6Ly9ubHdjcnlwdG8ubGlic3luLmNvbS9yc3M=   Join the discussion: https://discord.gg/VrKRrfKCz8   Follow on Twitter: NLW: https://twitter.com/nlw Breakdown: https://twitter.com/BreakdownNLW “The Breakdown” is written, produced by and features Nathaniel Whittemore aka NLW, with editing by Rob Mitchell, research by Scott Hill and additional production support by Eleanor Pahl. Adam B. Levine is our executive producer and our theme music is “Countdown” by Neon Beach. The music you heard today behind our sponsor is “Dark Crazed Cap” by Isaac Joel. Image credit: Janos Kummer/Getty Images News, modified by CoinDesk.  

One of the important things that was happening at this time is that users were sort of questioning Satoshi as a leader, but not just Satoshi as a leader, any leader as leader. They were starting to really dig into the idea of Bitcoin as a network that was different than some traditional organization. Welcome back to The Breakdown with me, NLW. It's a daily podcast on macro, Bitcoin, and the big picture power shifts remaking our world. The breakdown is sponsored by Nidig and produced and distributed by CoinDesk. What's going on, guys? It is Monday, December 13th, and today is a fascinating day.

11 years ago today, Satoshi Nakamoto posted for the last time on the Bitcoin Talk Forum. In December of 2010, Bitcoin was in a very, very different place than it is today. Indeed, very few of the people hanging out there on that Bitcoin talk forum, even in their wildest imagination, would have thought that Bitcoin would have gotten as far as it has, as fast as it has. The focus then was on normal issues for a two-year-old project trying to figure out how it was going to continue to grow. A lot of today's episode is influenced by Pete Rizzo's amazing piece in Bitcoin magazine last year at this time, looking at this from a 10-year perspective. That piece starts.

They suspected that he was British, that he was Yakuza, that he laundered money. They wondered if he was a woman, laid claim just in case, and joked about faking him. They kept contingencies for if he proved crazy, eyed for shifts in his sleep, debated why he spoke and didn't speak, and sent him eager patches signed with pretty pleas. To be sure, by the waning days of 2010, Satoshi Nakamoto was still acknowledged for inventing Bitcoin and was respected for growing the world's first decentralized digital currency into a $1 million market, but his frustrations with his authority and his availability built,

it became all too common for users to decry Satoshi the admin, Satoshi the bottleneck, Satoshi the dictator. If it can be said a quiet clamor against Bitcoin's creator had been simmering since summer, it soon became something of an outcry. As demands escalated, Satoshi sightings even assumed the role of sport, with users speculating when and why he might appear on the forums. Hell of a beginning, right? I'll make sure to link the piece in this show to.

notes today. And so as you can see, one of the important things that was happening at this time is that users were sort of questioning Satoshi as a leader, but not just Satoshi as a leader, any leader as leader. They were starting to really dig into the idea of Bitcoin as a network that was different than some traditional organization. On those same Bitcoin talk forums, Shadow of Harbinger wrote, there is no single mastermind in open source. It's more of a brain where a single human is just to sell. If one day Satoshi says, okay, guys, I was just a joke with this Bitcoin thing, I'm closing down the project, we would simply fork the code. Gavin Andresen, one of the most important early developers of the project said something similar,

writing, if Satoshi goes rogue, then the project forks. Another important thing at this time was that Bitcoin was bolstering its defenses against attack. On August 15th of 2010, 184 billion bitcoins appeared on the blockchain. Everyone scrambled to fix the issue, but it was was Satoshi who ended up writing and pushing the patch. In many ways, this actually reinforced people's worry that the network was a little too reliant on Satoshi. As the fall came, it saw more and more questions coming into being around numerous parts of the Bitcoin system, including fees, block size, even the number 21 million of Bitcoins. With all this fantastic and fascinating amount of technical debate, Rizzo really presents it as all part of the same

overall story, which is the community of developers starting to challenge Satoshi's default authority, which was really more about them setting a path for how the Bitcoin network could operate and collaborate going forward, more than just solely a critique of a single leader. NIDIG sponsors this podcast and they are helping banks, corporate treasuries, and fintechs integrate Bitcoin into their products and balance sheets. See why Bitcoin means business at nidig.com slash NLW. That's nydig.com slash NLW. One of the big culminations of this whole process was not in fact technical but political.

WikiLeaks had started to become a force in media and the full saga was underway in 2010. In April of that year, the so-called collateral murder video, which showed journalists being killed by U.S. forces, had been released. On top of that throughout the year, there were tons of Iraq war-related leaks. And then finally, there was the mass release of 251,287 U.S. diplomatic cases. that began on November 28th. Very quickly thereafter, WikiLeaks was blocked from payment networks including PayPal, Visa, MasterCard, in order to choke off their source of funding, which was, of course, donations. That was the context in which a number of people on the forum started to discuss the idea of Bitcoin being a tool for Wikileaks to continue. It was brought up by folks like Amir Taki,

and soon became a big discussion, and it got all the way to the leadership of Wikileaks. Now, at that time, Wikileaks actually decided to decline to accept Bitcoin, but PC World discovered the conversations and published an article called, Could the WikiLeaks scandal lead to a new virtual currency? This was, in fact, one of the first mainstream publications talking about Bitcoin. And while it did a lot to discuss what Bitcoin was and how it was mined and why people ascribed it with value, Satoshi themselves was none too pleased. They wrote, it would have been nice to get this attention in any other context. WikiLeaks has kicked the Hornets Nest and the swarm is head.

headed towards us. On the official threat about this on the forums, there was tons of debate. One username Joe wrote, why are we scared of association with WikiLeaks? I hate Wikileaks and its founder, but the currency is designed to persist in the face of institutional attempts to get rid of it. And WikiLeaks is in the news, so I hope they do use it. They're a perfect candidate of an organization that should use Bitcoin. If your business is legal, you're using PayPal and accepting credit cards. We need to throw away this dream of Bitcoin taking over PayPal for the white market. I hope we get a good share of the white market. but the main usage of Bitcoins will be in gray and black markets.

And whether the reader agrees with that prediction or not, there is no such thing as bad publicity in any case. This is definitely a good thing for Bitcoin. Let the public get mad about Bitcoin. Another user was even more blunt saying, basically, bring it on. To which Satoshi replied, no, don't quote, bring it on. The project needs to grow gradually so the software can be strengthened along the way.

I make this appeal to WikiLeaks not to try to use Bitcoin. Bitcoin is a small beta community in its infancy. He would not stand to get more than pocket change and the heat you would bring would likely destroy us at this stage. To give you a sense of how contentious things were, the official post in the forum was locked so users were unable to reply. And some thusly accused Satoshi of censorship, like Diablo D3, who concluded his message, if I want to donate to WikiLeaks using BTC, everyone else can s my D. About a week later, Satoshi posted his last message, and it was about security and the work left undone. In the coming weeks, he would do things like,

remove his name from Bitcoin's copyright statements, update Bitcoin.org to include names and emails of other developers while removing his own. He also gave Gavin Andresen blessing to start, quote, more active project management. For the next few months, Satoshi continued to be in touch with devs like Andresen via email, but moved farther and farther into the background. On April 26 of 2011, he had his final communication with Andresen. Satoshi took what Pete Rizzo called a, quote, short and reproachful tone, asking Andresen to downplay the notion of Satoshi as a mysterious, shadowy figure. Quote, the press just turns that into a pirate currency angle. Maybe instead make it about the open source project and give more credit to your contributors.

It helps motivate them. Gavin acknowledged the advice, but quickly moved on to another matter. His plans to attend, quote, an annual conference on emerging technologies for U.S. intelligence. Quote, it might be really stupid if it just raises Bitcoin's visibility on their radar, but I think it is way too late for that. Bitcoin is already on their radar. There has been much made of the CIA conference that Graven-Andreason went to, and many would later point to it as part of what drove Satoshi fully underground. There are, of course, even crazier

rumors than that, but it's also worth noting that this was the same time that Bitcoin was breaking into some amount of mainstream consciousness. It was starting to get press, and the price of Bitcoin had hit a dollar for the first time. What combination of fear of revealing by government in authorities or state attack versus finding oneself an outsider in one's own project because more people have come in and are demanding something that you're not willing or able to give. It was that made Satoshi leave. The important thing to note was that he left. This story is interesting today for a few reasons.

In a general sense, there is perhaps nothing in Bitcoin as remarkable or unique as the founder leaving the network to its own devices. The shadow of Satoshi's ghost has shaped fundamental. the notion that the network is ultimately owned by and will be defended and remade and reimagined or protected by its users. But in a more specific sense, there are some historical parallels to that moment. Last week, the U.S. won an extradition appeal in the UK High Court around Julian Assange, the founder of WikiLeaks. There are still more resources for appeal at Assange's disposal, but it's still a big step for the U.S. There is a lot of contentiousness around what Wikileaks

in Bitcoin's shared legacy is? Is WikiLeaks a project that almost killed Bitcoin by bringing government heat too early? Or is it a project that showed the importance of permissionless value transfer? Could it possibly be both? Bitcoin Core contributor Josie writes, this is terrible news. Whether or not you agree with everything Julian Assange and WikiLeaks have done in the past, that should concern you. Wikileaks is a part of the story of why we need Bitcoin. There's another piece of this as well, which of course goes back to the theories around Satoshi's disappearance that had to do with the notion of heat coming from a legal perspective. Last week, Bitcoin lost three core developers. John Newberry announced that he was not only leaving

Bitcoin core, but also leaving Brink, a nonprofit he set up to fund Bitcoin development. He gave no reason, just said he was moving on. Samuel Dobson announced he was stepping down as he approached the end of his Ph.D. and Jonas Schnelly departed citing stress of legal risks. On top of that, Luke Dash Jr. made an appeal for funding, although he didn't go so far as to actually leave the project. And these guys think that the timing is just sort of a coincidence. Dobson writes, there are a lot of regular contributors and people are always coming and going. I guess it's just a season for some change.

John Newberry wrote, I'm overwhelmed by the messages of support and kindness. I'll reply to you all individually, but it'll take me a while. In the meantime, this has nothing to do with mesh collider's departure. This has nothing to do with Craig Wright, scammers, comment, or lawsuits. This has nothing to do with funding. I'm more excited about Bitcoin and Bitcoin development than ever. Thank you so much to everyone who has supported me over the last five years. Jonas Schnelli wrote,

You may ask, why step down now? What happened? Sometimes interest shift and you can't do much about it. On top, I feel that the legal risks for Bitcoin developers are increasing year by year, which can be stressful. I've sold all my coins. Dda, dot, dot, dot. Just kidding.

Cobra Bitcoin asked, many Bitcoin core developers are stepping down or reducing their activity recently. What's going on? Bitme tweeted, the risk reward ratio in monetary and psychological sense is not at good odds. Not many in Bitcoin community care until they do. Orion and other Bitcoin Core dev wrote, It's not just about funding, not for me at least. No matter how enthusiastic you are about Bitcoin, all the attacks, and the media, social media, lawsuits by Looney's,

real and perceived political threats, just mess with you after a while. Mike in Space wrote two Bitcoin Core devs have stepped down this week. The subject seems to be lack of funding. Also, Luke was talking about lack of funding as well this week. Trillion dollar asset. No funding. Josie, the same Bitcoin Core developer, who I quoted before, also commented on this,

saying, while funding is an issue, I don't think this is the reason. Bitcoin has changed a lot in the last five years, and that brings different challenges. Working on a $1 trillion network with nation-state adoption is a whole different animal than working on Bitcoin five years ago. People get tired to or have different interests, different stages of life. This is natural and all the more reason to keep encouraging people to get involved as contributors. The hope is to build something that outlives us all, which means we will always need new devs. TLDR, De Sousier on Twitter, said that it was, quote, probably OPSEC. Devs went from working on a science experiment to working on a trillion

dollar asset on the brink of widespread sovereign adoption. When nations get involved, things become dangerous for unprotected individuals. I quit. Create anonymous GitHub account. Continue. Now, a lot of the discussion that has followed has, in fact, been about the nature of open source development, as well as the nature of the Bitcoin project. And adding even more to this, are questions swirling because of the Apache Log 4J exploit. Now, this is way beyond the scope of this show to get into, but basically this is a Java exploit that was revealed last week that would allow hackers to remotely execute code on affected systems. And the problem is that a huge part of the world runs on this software, including many legacy systems that aren't actively maintained,

but which are still running code, or current software that is being maintained, but which only uses this code in small parts of the system that are perhaps unknown even to those currently maintaining it. And the point bringing it back to Bitcoin is that we can't take the continued development of the system for granted. Satoshi's last post wasn't some philosophical treatise. It was technical. There's more work to do, he said. He might have been talking about denial of service attacks, but the more generalized statement also holds. Alex Gladstein wrote last week, legitimate criticisms of Bitcoin. Too traceable. Most users don't buy Bitcoin. They just buy claims via third parties. U.X remains fairly poor, especially with regard to running lightning nodes.

No native way to peg to fiat if desired, hard to run on a mobile node. Much work to do. Indeed, the point of all of this, the thing to take away from the 11th anniversary of Satoshi's last post on Bitcoin Talk is that there will always be more work to do and that someone needs to do it. We need to consider the full breath of what that group needs and be ready as a community to support it. Until tomorrow, be safe and take care of each other. Peace.