This currently isn't "news," as the paper hasn't been published yet, and none of the disclosed findings are too damning or conclusive.
That being said, it's important for two reasons:
1.) the paper gets published tomorrow, which will lead to a round of negative press, regardless of the claims' merit.
2.) More significant: it highlights what I see as an existential threat to the Bitcoin experiment: a.) the poor distribution of early wealth and b.) the possibility that a great percentage of all Bitcoins are currently held by bad actors (criminals, anarchists, use your imagination).
A few things to consider:
1. A list of richest Bitcoin addresses is not a good representation of the concentration of wealth. A single person can have x wallets, just like this Ulbricht character.
2. Bitcoin wealth is often used to reinvest in mining equipment, which furthers one's wealth to a greater extent. Rinse/repeat.
Several of the oldest wallets have been dormant for years, which means that this is not hypothetical -- that wealth has not circulated.
edit made to be clear about "bad actors":
"Bad actors" meaning: unpredictable and possibly having malicious intent.
If Bitcoin becomes a more important part of our daily lives, handling commerce ubiquitously, etc.--a single individual with ~10+% of said Bitcoin has enormous disruptive potential. I'm not referring to what said person could purchase with that wealth, but one's ability to manipulate markets.
This has never been a big issue, as far as the growth in value of the currency. However, I think this kind of uncertainty could freak out potential institutional investors.
Altcoins like Litecoin, PPC, Namecoin, etc - do not suffer as much from this issue because their exposure was far greater than Bitcoin ca. 2009, and the mining competition was greater on the respective debut-dates by several orders of magnitude.
There's no way in hell Satoshi is anywhere connected to "DPR". Look at the OPSEC between the two. Satoshi carefully concealed his identity even in the early crypto mailing list days of Bitcoin. Ross Ulbricht failed at this completely throughout his underground career. Satoshi was a pretty good developer, Ulbricht posted to Stackexchange the most basic of php questions.
Satoshi seemed to be very aware of the power of gov agencies both in UK and US and the risks he was taking creating Bitcoin, a good example was his response to people back in 2010 who were calling for Wikileaks to accept Bitcoin donations. Ulbricht on the other hand foolishly underestimated them and would've cheered Wikileaks adoption. I don't recall Satoshi ever granting interviews and was hesitant to even reply to PMs on bitcointalk. He also didn't discuss politics, though you could infer from his hatred of central banking what his politics were he never spelled them out like Ulbricht did on a regular basis.
Since when does "person X is connected to person Y" mean "person X is person Y"? They're "obviously"[1] not the same people. That by no means shows there is no connection.
[1]: Which isn't to say "definitely" but it'd be quite a lot of misleading going on to no obvious end - better covering up "created something fascinating" than "sold drugs and hired hitmen"?
Ross Ulbricht failed at this completely throughout his underground career.
That's a bit of revisionism. It turned out that he made mistakes, which in hindsight now make his identity seem 'obvious', but it took some time for his identity to become known, despite DPR & SR being very high-profile targets for many different people.
If he really had been rubbish at this, his identity would have been known so much sooner.
Those points are the first things that come to my mind.
DPR just does not fit the Satoshi profile in anyway. Satoshi was very humble even, DPR has never shown humility and his journal showed evidence he was power obsessed.
> a.) the lack of even distribution of early wealth
Like an IPO? [1]
> b.) the possibility that a great percentage of Bitcoin are currently held by bad actors (criminals, anarchists, use your imagination).
I know you are probably using the term anarchist in the colloquial sense (meaning those black bloc anarchists who smash things and want revolution) conjuring images of a Mad Max like dystopia, but would you consider Noam Chomsky a bad actor? People of that ilk just consider a different structure to organizing society, or as he puts it "a kind of voluntary socialism, that is, as libertarian socialist or anarcho-syndicalist or communist anarchist, in the tradition of, say, Bakunin and Kropotkin and others."[1]
Sometimes its tempting to paint pictures with broad strokes but as someone who can appreciate many different political viewpoints (as long as they are peaceful and productive), it doesn't seem to make your image any more accurate.
bitcoin.it has a page on some myths you should read.[3]
I know it doesn't add anything to this discussion, but I must say, your reply is very articulate and elegant. What kind of books are you reading, if you don't mind my asking?
held by bad actors (criminals, anarchists, use your imagination).
Where do you get off calling anarchists "bad actors"??? Personally I find this highly offensive and insulting. Just because I believe people should be free, and not subjects of some "state", I am the "bad actor"? F@%@ that...
It highlights what I see as an existential threat to the Bitcoin experiment: a.) the poor distribution of early wealth and b.) the possibility that a great percentage of all Bitcoins are currently held by bad actors
I share your concerns, and thank you as I've never been able to sum it up as well as you.
I think he probably was alluding to destabilization of major markets, which can lead to market crashes, inflation, deflation, etc... Fairly bad things in the short term.
An uneven distribution of early wealth describes almost every organisation in society (including society itself): as long as later participants perceive they are gaining value for themselves, they will allow this to continue.
Part (b) is more interesting - the danger as I see it is that Bitcoin is entering legal-issues territory. For example, a legal crackdown on ownership of Bitcoin identified with illegal activity would likely provide an economic shock to the whole network.
i don't think you understand what he was saying. You are just being overly defensive against any liberal ideology. He was saying that if it isn't that evenly distributed then one actor, or maybe a few, could have large control over the markets. That is a different problem than distribution of wealth in the sense that the poor are disadvantaged. This argument is purely from a stability concern, not a concern of societal well being.
"I just dislike when people tie political ideology into their evaluation of new technology."
Tying political ideology to the evaluation of new technology is the MO of Bitcoin's supporters. If you wanted to focus strictly on technology, Bitcoin would never have gotten off the ground. No security definition, design documents spread across human language and source code, no attention given to the various ways distributed systems can be attacked or can fail, etc. The only reason Bitcoin became popular in the first place is that people with a particular political ideology saw a chance to realize their dreams.
I do not know about ideology but there is definately a political angle to all of this. Bitcoin is only worth anything as long as people are willing to give things or services of value in exchange of bitcoins. For now people have because bitcoin has generated a lot of excitement and there have been relatively few bitcoins available for purchase.
But if one of the early adopters busts out a billion dollars worth of bitcoins and demands massive amounts of real world wealth in exchange, people may just decide he does not deserve it and stop buying bitcoins. Then the bitcoin will be worth nothing again.
Now that I think about it, it seems like Bitcoin was designed to create this problem. The protocol produces blocks at an (on average) constant rate, but the value of finding a block decreases exponentially. This gives a significant advantage to the initial investor.
I understand that the point of this exponential decay was to that, after the currency was bootstrapped, there would be a constant supply. However, couldn't this be accomplished with a constant, or increasing, rate of production in the beginning, then let the rate decline at the end?
The Coase theorem says that the initial allocation doesn't matter if transaction costs are low enough. Transaction costs are exceptionally low in the case of bitcoin.
And Ronald Coase says the Coase theorem doesn't represent reality. Bitcoin dramatically decreases some parts of the costs of transactions, but the cost of buying a loaf of bread isn't only the credit card fee - it's also the trip to the store, time considering other things you could have bought, &c. Transaction costs are merely lower. Which does say this should help the Coase theorem better apply, but we don't really know how much better.
Spend a $1 billion of your early bitcoins disrupting Bitcoin or spend $1 billion to buy bitcoins today and disrupt it. Either way costs the same doesn't it?
I agree with you completely. But in the meantime, mainstream media have started picking the story (omg shocking), which will surely have an effect on the price of Bitcoins. I wonder if the authors are planning to take advantage of this.
I doubt that the link here amounts to DPR knowing SN personally, or even worse, DPR being SN.
Obviously I don't know DPR or SN, but I really doubt that DPR is SN or even communicated with him. The reasons are entirely circumstantial but from what I've read of both of them:
- DPR is arrogant.
- DPR makes stupid mistakes.
- SN is fairly humble.
- SN is smarter than DPR.
- SN doesn't make mistakes.
Is it possible that DPR himself was an early adopter of BitCoins, and mined those early coins himself - giving him the occasion to later transfer them to himself? He might have had to become acquainted with the BitCoin crypto-currrency scheme for some time before he was confident enough in it to use it to protect his own identity, which means he may have been in the first couple of groups of people to download and use the software.
You are talking about some one or group who took great care (including in all their dealings with other early bitcoin users) to maintain their anonymity - which is really hard to do, in the face of the sort of scrutiny that SN has had.
Its at least plausible that, along with the name, other aspects of the SN persona were explicitly constructed.
There's all this myth around who SN is. A lot of people seem to believe SN is a benevolent crypto researcher working in their bedroom, for the benefit of humanity, with no profit motive in sight. I mean, sure, I hope that's the case too, but we should remember that we don't actually know very much at all.
A braggart might construct a humble persona, but would a true braggart maintain such a persona for long? If they could, is there really any basis for calling them a braggart in the first place?
Being a braggart seems fundamentally incompatible with "not bragging", for years on end, about your greatest accomplishment (and barring the possibility that SN is somebody very famous, say, Putin, it is almost certain that bitcoin is the most famous thing that SN has done). Not in a "Scottish, but doesn't wear a kilt" way, but in a "Scottish, but does not live and was not born in Scotland" kind of way.
Sure he might not be humble, however if you read everything Satoshi wrote he came across as a very humble person.
Regarding his immense Bitcoin wealth, he has anonymised himself but not his Bitcoins. 99.9% of the Bitcoins he mined lay exactly where they were mined and he has made no attempt to move them or anonymise those coins. He might in the future but who knows.
In addition he made the first block unspendable so that the only block he had to mine himself to start the network would never contribute to his wealth.
It is possible that aspects of the SN persona were highly constructed but what is a simpler explanation - that everything about SN was fake or just his identity? It would have taken an enormous cognitive effort to be able to consistently demonstrate the same personality traits in post after post unless it came naturally. It seems like he was more concerned about technical discussion than hiding information about himself beyond his identity.
But of course you are right - until we know who SN is, we can only speculate.
I agree with you that there's no way DPR is Satoshi. DPR seemed to be learning to code when launching Silk Road. While Bitcoin had bugs (lots of them) to start with, it is not amateur level computer science. It's not even reasonable to assume that a dude who needed help getting curl to talk to a proxy would be competent enough to work with very advanced crypto concepts, and even invent a few things of their own (using standard crypto algorithms, but still, Bitcoin was not tested waters...).
So, yes, SN is smarter than DPR, and vastly more capable as a software engineer.
And, Satoshi wouldn't need Silk Road to be fantastically rich in Bitcoins. As far as we know, he's got a vast swath of the first mined Bitcoins, even if he gave away most of it. (Which is possibly how Satoshi's identity will be revealed...if suddenly there's a new trillionaire in the world in five years...well, might be Satoshi.)
> And, Satoshi wouldn't need Silk Road to be fantastically rich in Bitcoins. As far as we know, he's got a vast swath of the first mined Bitcoins, even if he gave away most of it. (Which is possibly how Satoshi's identity will be revealed...if suddenly there's a new trillionaire in the world in five years...well, might be Satoshi.)
Out of interest, aren't Satoshi's coins all held in a small number of wallets, so people will immediately see if anyone tries to use them? Presumably, this would provoke a crash in bitcoin prices.
This is extremely likely. The SilkRoad admins all have access to the old (and the new) DPR forum account. One of them was using it even after Ross was arrested, leading someone to ask why DPR was showing up on the active members list of the SR forum even after be was arrested.
Not just possible but likely. Then DPR created Silk Road to earn more BTC in a more traditional way than mining, and then DPR passed the business to one Ross Ulbricht. Or there may even have been more than one DPR before Ulbricht.
2 possible situations I can think of, based strictly on 'Among their discoveries was a particular transfer to an account controlled by Mr. Ulbricht from another that had been created in January 2009, during the very earliest days of the bitcoin network, which was set up the previous year.':
- the bitcoin wallet, although said to be associated with SN, has changed ownership since its creation in 2009
- SN purchased something from DPR, perhaps something DPR himself was selling on SR, either a legitimate buy or for some other purposes; SN was just a regular customer in this case
In the meantime, I'm eagerly awaiting their paper. Ron and Shamir have previously co-authored another bitcoin related paper titled 'Quantitative Analysis of the Full Bitcoin Transaction Graph'. There's a very interested overview of it in this Gist: https://gist.github.com/jgarzik/3901921 It appears to have some flaws.
I don't know how accurate this statistic is, but the last Gist comment mentions that 22% of bitcoins are held in reused addresses.
Not all the early mined coins were controlled by Satoshi, Hal Finney and other's on the crypto mailing list have many, many coins. Maybe Hal bought some weed
According to Bitcoin developers Satoshi hasn't moved any of the coins they know he is/was in control of. Amateur sleuths trying to unmask Satoshi have gone through every piece of public writing and paper he's done, picked out unique phrases and words and tried to match them up to existing mailing list posts, forum posts and white papers with no success. Satoshi slipped in and out of British slang as well, either on purpose for distraction from his real identity or they were 2 people using the same account. He also referenced the Times when mining the first block as proof he had not premined a bunch of coins to run a ponzi/scam further indicating he may of been from the UK.
Either way he certainly is content with avoiding the spotlight while Ulbricht loved the fame that came with being DPR.
I don't believe that at all. DPR got busted for posting total newbie questions on Stack Overflow, after all - and SN displayed a deep knowledge of secure coding and cryptography!
A form of cover that doesn't get you busted by the feds and thrown in jail?
Let's say I'm an expert killer who has assassinated dozens of people without being caught. Do I camouflage myself by doing a shitty job and getting sent to jail? Of course not, I keep doing an expert job because I'd rather not be in jail.
There is nothing inherently illegal about creating BitCoin but there is something very illegal about facilitating drug trafficking. If they were the same person, wouldn't you practise good OPSEC to keep you out of prison? What is the value of keeping your identity as BitCoin creator a secret when you are in prison?
If they were one and the same, it seems to me, you would just practise good OPSEC across the board or, if need be, make "mistakes" that reveal you as BitCoin creator (and take the credit) and keep your identity as SilkRoad founder a secret.
Readit News
That being said, it's important for two reasons:
1.) the paper gets published tomorrow, which will lead to a round of negative press, regardless of the claims' merit.
2.) More significant: it highlights what I see as an existential threat to the Bitcoin experiment: a.) the poor distribution of early wealth and b.) the possibility that a great percentage of all Bitcoins are currently held by bad actors (criminals, anarchists, use your imagination).
A few things to consider: 1. A list of richest Bitcoin addresses is not a good representation of the concentration of wealth. A single person can have x wallets, just like this Ulbricht character. 2. Bitcoin wealth is often used to reinvest in mining equipment, which furthers one's wealth to a greater extent. Rinse/repeat.
Several of the oldest wallets have been dormant for years, which means that this is not hypothetical -- that wealth has not circulated.
edit made to be clear about "bad actors":
"Bad actors" meaning: unpredictable and possibly having malicious intent.
If Bitcoin becomes a more important part of our daily lives, handling commerce ubiquitously, etc.--a single individual with ~10+% of said Bitcoin has enormous disruptive potential. I'm not referring to what said person could purchase with that wealth, but one's ability to manipulate markets.
This has never been a big issue, as far as the growth in value of the currency. However, I think this kind of uncertainty could freak out potential institutional investors.
Altcoins like Litecoin, PPC, Namecoin, etc - do not suffer as much from this issue because their exposure was far greater than Bitcoin ca. 2009, and the mining competition was greater on the respective debut-dates by several orders of magnitude.
Satoshi seemed to be very aware of the power of gov agencies both in UK and US and the risks he was taking creating Bitcoin, a good example was his response to people back in 2010 who were calling for Wikileaks to accept Bitcoin donations. Ulbricht on the other hand foolishly underestimated them and would've cheered Wikileaks adoption. I don't recall Satoshi ever granting interviews and was hesitant to even reply to PMs on bitcointalk. He also didn't discuss politics, though you could infer from his hatred of central banking what his politics were he never spelled them out like Ulbricht did on a regular basis.
Not the same people
[1]: Which isn't to say "definitely" but it'd be quite a lot of misleading going on to no obvious end - better covering up "created something fascinating" than "sold drugs and hired hitmen"?
That's a bit of revisionism. It turned out that he made mistakes, which in hindsight now make his identity seem 'obvious', but it took some time for his identity to become known, despite DPR & SR being very high-profile targets for many different people.
If he really had been rubbish at this, his identity would have been known so much sooner.
DPR just does not fit the Satoshi profile in anyway. Satoshi was very humble even, DPR has never shown humility and his journal showed evidence he was power obsessed.
Or her.
Like an IPO? [1]
> b.) the possibility that a great percentage of Bitcoin are currently held by bad actors (criminals, anarchists, use your imagination).
I know you are probably using the term anarchist in the colloquial sense (meaning those black bloc anarchists who smash things and want revolution) conjuring images of a Mad Max like dystopia, but would you consider Noam Chomsky a bad actor? People of that ilk just consider a different structure to organizing society, or as he puts it "a kind of voluntary socialism, that is, as libertarian socialist or anarcho-syndicalist or communist anarchist, in the tradition of, say, Bakunin and Kropotkin and others."[1]
Sometimes its tempting to paint pictures with broad strokes but as someone who can appreciate many different political viewpoints (as long as they are peaceful and productive), it doesn't seem to make your image any more accurate.
bitcoin.it has a page on some myths you should read.[3]
[1] https://en.bitcoin.it/wiki/Myths#Early_adopters_are_unfairly...
[2] https://en.wikipedia.org/wiki/Noam_Chomsky%27s_political_vie...
[3] https://en.bitcoin.it/wiki/Myths#The_Bitcoin_community_consi...
Where do you get off calling anarchists "bad actors"??? Personally I find this highly offensive and insulting. Just because I believe people should be free, and not subjects of some "state", I am the "bad actor"? F@%@ that...
I share your concerns, and thank you as I've never been able to sum it up as well as you.
Deleted Comment
Part (b) is more interesting - the danger as I see it is that Bitcoin is entering legal-issues territory. For example, a legal crackdown on ownership of Bitcoin identified with illegal activity would likely provide an economic shock to the whole network.
Totally! All we need is an "affordable bitcoin act" and the problem is solved.
Without being snarky: I just dislike when people tie political ideology into their evaluation of new technology.
Tying political ideology to the evaluation of new technology is the MO of Bitcoin's supporters. If you wanted to focus strictly on technology, Bitcoin would never have gotten off the ground. No security definition, design documents spread across human language and source code, no attention given to the various ways distributed systems can be attacked or can fail, etc. The only reason Bitcoin became popular in the first place is that people with a particular political ideology saw a chance to realize their dreams.
But if one of the early adopters busts out a billion dollars worth of bitcoins and demands massive amounts of real world wealth in exchange, people may just decide he does not deserve it and stop buying bitcoins. Then the bitcoin will be worth nothing again.
I understand that the point of this exponential decay was to that, after the currency was bootstrapped, there would be a constant supply. However, couldn't this be accomplished with a constant, or increasing, rate of production in the beginning, then let the rate decline at the end?
Deleted Comment
Obviously I don't know DPR or SN, but I really doubt that DPR is SN or even communicated with him. The reasons are entirely circumstantial but from what I've read of both of them:
- DPR is arrogant.
- DPR makes stupid mistakes.
- SN is fairly humble.
- SN is smarter than DPR.
- SN doesn't make mistakes.
Is it possible that DPR himself was an early adopter of BitCoins, and mined those early coins himself - giving him the occasion to later transfer them to himself? He might have had to become acquainted with the BitCoin crypto-currrency scheme for some time before he was confident enough in it to use it to protect his own identity, which means he may have been in the first couple of groups of people to download and use the software.
You are talking about some one or group who took great care (including in all their dealings with other early bitcoin users) to maintain their anonymity - which is really hard to do, in the face of the sort of scrutiny that SN has had.
Its at least plausible that, along with the name, other aspects of the SN persona were explicitly constructed.
There's all this myth around who SN is. A lot of people seem to believe SN is a benevolent crypto researcher working in their bedroom, for the benefit of humanity, with no profit motive in sight. I mean, sure, I hope that's the case too, but we should remember that we don't actually know very much at all.
Being a braggart seems fundamentally incompatible with "not bragging", for years on end, about your greatest accomplishment (and barring the possibility that SN is somebody very famous, say, Putin, it is almost certain that bitcoin is the most famous thing that SN has done). Not in a "Scottish, but doesn't wear a kilt" way, but in a "Scottish, but does not live and was not born in Scotland" kind of way.
Regarding his immense Bitcoin wealth, he has anonymised himself but not his Bitcoins. 99.9% of the Bitcoins he mined lay exactly where they were mined and he has made no attempt to move them or anonymise those coins. He might in the future but who knows.
In addition he made the first block unspendable so that the only block he had to mine himself to start the network would never contribute to his wealth.
But of course you are right - until we know who SN is, we can only speculate.
So, yes, SN is smarter than DPR, and vastly more capable as a software engineer.
And, Satoshi wouldn't need Silk Road to be fantastically rich in Bitcoins. As far as we know, he's got a vast swath of the first mined Bitcoins, even if he gave away most of it. (Which is possibly how Satoshi's identity will be revealed...if suddenly there's a new trillionaire in the world in five years...well, might be Satoshi.)
Out of interest, aren't Satoshi's coins all held in a small number of wallets, so people will immediately see if anyone tries to use them? Presumably, this would provoke a crash in bitcoin prices.
It is also possible that DPR is more than one person.
Deleted Comment
Deleted Comment
- the bitcoin wallet, although said to be associated with SN, has changed ownership since its creation in 2009
- SN purchased something from DPR, perhaps something DPR himself was selling on SR, either a legitimate buy or for some other purposes; SN was just a regular customer in this case
In the meantime, I'm eagerly awaiting their paper. Ron and Shamir have previously co-authored another bitcoin related paper titled 'Quantitative Analysis of the Full Bitcoin Transaction Graph'. There's a very interested overview of it in this Gist: https://gist.github.com/jgarzik/3901921 It appears to have some flaws.
I don't know how accurate this statistic is, but the last Gist comment mentions that 22% of bitcoins are held in reused addresses.
According to Bitcoin developers Satoshi hasn't moved any of the coins they know he is/was in control of. Amateur sleuths trying to unmask Satoshi have gone through every piece of public writing and paper he's done, picked out unique phrases and words and tried to match them up to existing mailing list posts, forum posts and white papers with no success. Satoshi slipped in and out of British slang as well, either on purpose for distraction from his real identity or they were 2 people using the same account. He also referenced the Times when mining the first block as proof he had not premined a bunch of coins to run a ponzi/scam further indicating he may of been from the UK.
Either way he certainly is content with avoiding the spotlight while Ulbricht loved the fame that came with being DPR.
Let's say I'm an expert killer who has assassinated dozens of people without being caught. Do I camouflage myself by doing a shitty job and getting sent to jail? Of course not, I keep doing an expert job because I'd rather not be in jail.
There is nothing inherently illegal about creating BitCoin but there is something very illegal about facilitating drug trafficking. If they were the same person, wouldn't you practise good OPSEC to keep you out of prison? What is the value of keeping your identity as BitCoin creator a secret when you are in prison?
If they were one and the same, it seems to me, you would just practise good OPSEC across the board or, if need be, make "mistakes" that reveal you as BitCoin creator (and take the credit) and keep your identity as SilkRoad founder a secret.