WHO’S BEHIND THE FUTURE OF M NEY?
Internet currency Bitcoin has been hailed as the future of finance, but is it a viable alternative to real-world money, asks Nick Harding
Michael Clear admits to being bemused when he was asked, “are you Satoshi?” He answered with a surprised smile, “I’m not, but even if I was I wouldn’t tell you.” To this day he regrets that tiny hint of mischievous doubt that left the question hanging. It put him in the frame of arguably the world’s most perplexing cyber mystery; just who or what is Satoshi Nakamoto?
The simple answer is Satoshi is the inventor of Bitcoin, the controversial internet currency that many experts believe will change the world. But Satoshi is anonymous. He wrote the code for the program that controls the complex Bitcoin system and then disappeared, leaving a few scant clues as to his or her true identity.
Michael, an Irish computer science student, was approached by an investigative journalist on the trail of Satoshi because of his interest in cryptography – the study of the mathematical algorithms behind computer codes and secure communications. He’s also an expert in peerto-peer networks (the processes by which computers communicate) and has knowledge of banking trading software. These factors made him a possible Satoshi candidate.
Since he was linked to the mystery, Michael has received an avalanche of emails. In April he issued a statement to try to end the speculation, in which he admitted he was flattered to be a suspect but denied the accusation.
“I am certainly the wrong person,’’ he wrote. “There are far too many possibilities to consider for Satoshi, not to mention the many thorough investigations that have been undertaken. However, it seems that even limited searches yield candidates who fit the profile far better than I think I do.
“I’m a humble research student with an interest in crypto; I am very far from being any kind of expert in anything.’’
While the search for the mysterious figure behind Bitcoin continues, Satoshi’s invention is going through an uncertain period of highs and lows, which could see the currency either flop or become the next big thing.
The first boost for the Bitcoin came when the Cyprus financial calamity highlighted an aspect of banking that many investors found shocking. Money stashed in banks accounts, which people assumed was secure, was actually vulnerable to the vagaries of a volatile political situation.
Accounts were frozen and savings were raided to pay for the troubled nation’s $13 billion (Dh48 billion) financial bailout. Some investors stand to lose 80 per cent of the deposits they hold on the Mediterranean island.
The issue left many questioning whether centralised, corporate banks were sensible places to hold money in, and sent disgruntled investors looking for new homes for their cash.
The result was an upswing of interest in Bitcoin, which can be traded online and is not controlled by any government or central bank.
So what is a Bitcoin? Launched in 2009, the virtual currency is like the online version of gold – it is a store of value. But instead of being made of physical elements, such as gold, paper or metal as money is, Bitcoins are made of computer code.
Like gold, they are mined over time by a computer process. Bitcoin speculators can join together and link their computers to mine for more Bitcoins in the virtual world. In order to do this the computers have to solve increasingly complex mathematical puzzles.
Bitcoins can be exchanged through personto-person online Bitcoin exchanges, which trade currency for Bitcoins and pay that money into a PayPal account from where you can withdraw it as cash.
As interest in Bitcoin rose, so did its value, leading to a digital gold rush, which saw the price of a Bitcoin see-saw precariously.
When first launched Bitcoins were worth just 20 cents each, and for much of their short life they have been worth less than