Bitcoin 'father' denies any ties

RYAN NAKASHIMA
Last updated 15:31, March 7 2014
EXPOSED: Satoshi Nakamoto is surrounded by reporters as he leaves his home in Temple City, California.
Reuters

EXPOSED: Satoshi Nakamoto is surrounded by reporters as he leaves his home in Temple City, California.

A reclusive Japanese American man thought to be the father of Bitcoin has emerged from his Southern California home and denied any involvement with the digital currency, before leading reporters on a car chase to the headquarters of the Associated Press.

Satoshi Nakamoto, a name known to legions of bitcoin traders, practitioners and boosters around the world, appeared to lose his anonymity on Thursday after Newsweek published a story that said Nakamoto lived in Temple City, California, just east of Los Angeles, and included a photograph.

Newsweek claimed Dorian Prentice Satoshi Nakamoto, a 64-year-old model train aficionado who used to be named Satoshi, was the creator of the digital currency and said he seemed to acknowledge his role when a reporter knocked on his door.

Today dozens of reporters encircled a modest two-story house thought to be Nakamoto's residence.

No one answered the doorbell, though several times, someone pulled back the drapes on an upstairs window, suggesting the person was keeping an eye on the street.

In the afternoon, Nakamoto stepped outside and told reporters he had nothing to do with bitcoin but was looking for someone who understood Japanese, to buy him a free lunch.

An AP reporter said yes, and the two made their way to a nearby sushi restaurant with media in tow, before leaving and heading downtown.

In an exclusive two-hour interview with The Associated Press, Nakamoto said he had never heard of Bitcoin until his son told him he had been contacted by a Newsweek reporter three weeks ago.

Nakamoto acknowledged that many of the details in Newsweek's report are correct, including that he once worked for a defence contractor, and that his given name at birth was Satoshi. But he strongly disputed the magazine's assertion that he is "the face behind Bitcoin".

"I got nothing to do with it," he said, repeatedly.

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Newsweek stands by its account.

Since Bitcoin's birth in 2009, the currency's creator has remained a mystery. The person - or people - behind its founding have been known only as "Satoshi Nakamoto," which many observers believed to be a pseudonym.

After the story was posted on Newsweek's website early Thursday, Nakamoto said his home was bombarded by phone calls. By mid-morning, a dozen reporters were waiting outside the modest two-story home on the residential street in Temple City, California, where he lives. He emerged shortly after noon saying he wanted to speak with one reporter only and asked for a "free lunch."

During a car ride and then later over sushi lunch at the AP bureau in downtown Los Angeles, Nakamoto spoke at length about his life, career and family, addressing many of the assertions in Newsweek's 4500-word piece.

He also said a key portion of the piece - where he is quoted telling the reporter on his doorstep before two police officers, "I am no longer involved in that and I cannot discuss it" - was misunderstood.

Nakamoto said he is a native of Beppu, Japan who came to the US when he was 10. He speaks both English and Japanese, but his English isn't flawless. Asked if he said the quote, Nakamoto responded, "no".

"I'm saying I'm no longer in engineering. That's it," he said of the exchange. "And even if I was, when we get hired, you have to sign this document, contract saying you will not reveal anything we divulge during and after employment. So that's what I implied."

"It sounded like I was involved before with Bitcoin and looked like I'm not involved now. That's not what I meant. I want to clarify that," he said.

Newsweek writer Leah McGrath Goodman, who spent two months researching the story, told the AP: "I stand completely by my exchange with Mr. Nakamoto. There was no confusion whatsoever about the context of our conversation - and his acknowledgment of his involvement in Bitcoin."

Bitcoin has become popular among tech enthusiasts, libertarians and risk-seeking investors because it allows people to make one-to-one transactions, buy goods and services and exchange money across borders without involving banks, credit card issuers or other third parties. Criminals like bitcoin for the same reasons.

THE 'REAL' NAKAMOTO

The connection between the name Satoshi Nakamoto and Bitcoin first emerged in 2008, when a paper offering proof of the basic concept of bitcoins was published under that name.

After the initial source code created the first batches of bitcoins, it grew from an obsession of specialists into a global phenomenon.

Merchants around the world now accept bitcoins for everything from kitchen appliances to luxury goods. It also trades for traditional currencies, and one bitcoin was priced at NZ$755 on Friday, according to preev.com.

Some bitcoin enthusiasts were furious that the news media would attempt to violate Nakamoto's privacy.

"I would have thought every Satoshi Nakamoto on planet Earth had already been contacted and ruled out," Stephen Pair, the chief technical officer at Atlanta-based BitPay, a payment processor. "If this person is the real Satoshi, it would be easy to for him to prove it if he wanted to."

Jeff Garzik, one of the core developers on the bitcoin software protocol and an employee of BitPay, said "the 'real' Satoshi" can prove his identity only through cryptography.

"We will know Satoshi by his digital signatures," Garzik said in an email, adding that the founder could either sign a message using his unique encryption key or make use of the bitcoins that the creator is known to have kept.

Analysts who looked at the Bitcoin ledger have concluded that the creator of the system owns about 1 million coins, worth over US$600 million at current prices, said Jered Kenna, a San Francisco Bitcoin investor.

If the owner pledged never to sell or trade them, it would help add stability to what has been a volatile market, Kenna said.

Adam Draper, the chief executive officer of Boost, a San Mateo, California, company that incubates bitcoin startups, called the Newsweek article "intrusive" and said he's unconvinced.

"If Satoshi Nakamoto wanted to be anonymous the whole time, why would he use his real name on the paper?" Draper said. "He always used non-tracking emails and did everything he could to stay anonymous, so it's difficult for me to understand why he would use his real name."

Newsweek said Dorian Nakamoto, who was born in Japan, attended California State Polytechnic University, worked for defence contractors on classified military projects and eventually the Federal Aviation Administration. He adopted the first name Dorian in 1973, according to court documents cited by Newsweek.

Tim Lynch, a spokesman for California Polytechnic, confirmed that a Satoshi Nakamoto earned a bachelor's degree in physics from its Pomona campus in 1973. He declined to provide any more information, citing privacy rules.

The revelations will not affect the Bitcoin network, said Gregory Maxwell, one of the core developers on the project. The code is now out of Nakamoto's hands, and can't be changed except by broad consensus among the users of the network.

"There has been extensive rewriting and reorganisation since the time when the creator of the system ended his involvement," Maxwell said in an e-mail.

Jerry Brito, director of technology policy at the Mercatus Center of George Mason University, said that if Satoshi Nakamoto had been found it could be a good thing for the digital currency.

"I knew this day would come," Brito said. "I'm sorry for Nakamoto, who seems like an upstanding - if eccentric - citizen who just wants to maintain his privacy. Maybe we can all just put to rest now the 'mysterious origins' story and focus on Bitcoin's future."

-Associated Press/Reuters/Bloomberg News/Fairfax NZ

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