Who is Satoshi Nakamoto?
To this day, no one really knows who Satoshi Nakamoto is. Whether Satoshi is a singular person or a group of extremely smart programmers, no one really knows. Satoshi, whomever, he, she, or they are, released the white paper detailing the Peer-toPeer Electronic Cash System which molded the foundation used to communicate Bitcoin.
As elusive as Satoshi Nakamoto is, there is information on him. He wrote that he was, “a 37-year-old-male living in Japan.”
People speculate that Satoshi resided in the United Kingdom, North America, Central America, South America, and even the Caribbean. Claims of Satoshi’s origin expand to many continents which unpack the idea that Satoshi may be a group of people. This theory seems to be plausible given the scope of knowledge ranging from computer science to psychology that Satoshi had. However, and even more puzzling, was the level of awareness Satoshi had in Wall Street’s financial crisis of 2008.
The Financial Crisis of 2008
Financial times in 2008 were a nightmare. This nightmare came about due to irresponsible lending, known as subprime loans, to Americans who could not pay their debts. Historically, when a bank issues a loan, the bank was responsible for ensuring that the borrower repaid the funds. But, with subprime loans, once these loans were issued to borrowers, they were packaged into complex instruments known as collateralized mortgage obligations (CMOs). These CMOs were then sold to other investors, effectively passing on the risk like a hot potato through financial markets, with purchasers lured by the promise of high returns combined with low risk.
The problem was how deep and interrelated the risks CMOs posed were. Part of the problem was that CMOs were complex financial instruments supported by outdated financial architecture that blended analog and digital systems. The lack of seamless digital documentation made quantifying risk and understanding exactly what CMOs were spread around the world. Global investors were suddenly interconnected in a web of American mortgages.
The Birth of Bitcoin
On October 31st, 2008, a few weeks after the Lehman brothers’ bankruptcy Satoshi released the Bitcoin white paper. In Satoshi’s white paper he concludes with, “We have proposed a system for electronic transactions without relying on trust.” Satoshi’s motivation was to create an alternative system free of top-down control, governed by no central authority — complete decentralization.
In the opening moments of Bitcoin’s life as a public network, Satoshi made clear he was attuned to the failings of the global financial system. In the first instance of recording information on Bitcoin’s blockchain, Satoshi inscribed: “The Times 03/Jan/ 2009 Chancellor on brink of second bailout of banks.”
What Bitcoin created
Satoshi, whomever they, he, she, or it is — essentially created a decentralized system of record keeping which has the power to bring power back to the people. Bitcoin’s record storing network, called the blockchain, could have been used to track CMOs which ultimately may have prevented Lehman’s demise.