Craig Steven Wright (CSW) is an Australian computer security expert living in the UK. In 2015, several news outlets published claims that CSW is the man behind the pseudonym Satoshi Nakamoto and thus the creator of bitcoin. After a brief attempt at denial, CSW ultimately embraced this assertion and now affirms it publicly, in court and elsewhere. Most people in the crypto-currency sphere reject this claim and instead argue that CSW is a fraud and that BSV, the version of bitcoin currently supported by CSW, is a scam.
The markets appear to be largely agreeing with the latter camp. BSV has consistently been priced between 1% and 1.5% the price of BTC, the market leading version of bitcoin. This defies the fundamentals; BSV leads BTC in important fundamentals like maximum transaction throughput by 2,000x and growing, attracting entrepreneurs to build new businesses leveraging the BSV network. BSV has surpassed BTC in both daily transaction count and total data added to the blockchain per day and the gap is widening.
Craig Wright has made many statements that suggest events are likely to occur in 2020 which would all see BSV appreciate rapidly relative to BTC. It is possible that the price of BSV has this potential already baked in, but we think that it is much more likely that the assets are mispriced, even ignoring technological fundamentals. This is supported anecdotally by the large number of BTC purists who claim that CSW has a 0% chance of being Satoshi. There is a regularly worn t-shirt by influential BTC personalities and developers that reads “We Are All Satoshi, Except Craig Wright”. Unbounded Capital believes that CSW is the creator of Bitcoin. Internally, our evaluation of the probability that his claim is truthful fluctuates within the high 90%s. This confidence is buoyed by a shared understanding with CSW about the nature of bitcoin and a profound skepticism about the efficacy of competing chains like BTC, BCH, ETH, etc. However, without going into the details of CSW’s views on Bitcoin, his displayed depth of knowledge on the subject, and why these both suggest to us that he created Bitcoin, we still feel that a compelling case can be made that the market has fundamentally mispriced the likelihood that CSW is Satoshi. We will make this case by reviewing some of the evidence for and against this claim and analyzing the incentives facing the various parties involved in the controversy. While we are making a probabilistic argument and can’t guarantee the accuracy or validity of our sources, we don’t feel such a guarantee would be remotely necessary to demonstrate that the market clearly lacks the relevant details and has made a huge pricing error accordingly.
The Case for Craig Wright
The case for CSW begins simply; his background lines up much more with that of a creator of bitcoin than a clear fraud. Craig has an impressive track record as both an academic and as an industry leader in computer security. He has over a dozen degrees including a Doctorate of Philosophy, a Master of Statistics, an LLM in international commercial law, Masters of Information Security Engineering, Information Security Management, Information System Security, Management (IT), Networking and System Administration, and at least 19 certifications from GIAC, a leading computer security certifier. He has referenced other degrees which Unbounded Capital has not seen at this time. He has been an adjunct lecturer at Charles Sturt University where he received many of his degrees.
He has been widely published on information security, both formally and informally on his own extensive blogs. Before becoming fully involved with Bitcoin and after a stint as a Wesleyan minister, Craig had a prolific career as a computer security expert working for OzEmail, K-Mart, ASE, Mahindra & Mahindra, Lasseter’s Online, and BDO Kendalls, all done in conjunction with his academic career. He has also consulted for various government organizations and police departments, both before and after Bitcoin’s creation. He certainly has the bona fides to have created a secure economic system for international commerce on the internet.
CSW’s writings in the years leading up to the publication of the Bitcoin whitepaper further paint a picture of a man very well suited to the task of creating Bitcoin. Unsurprisingly, most of the ideas and concepts he was writing about line up nicely with the current BSV conception of the protocol. Consider the abstract for GIAC (Global Information Assurance Certification) Paper: Electronic Contracting in an Insecure World (Accepted: January 14th 2008).
“The rise of the Internet as a commercial tool has created a level of uncertainty surrounding the law of offer and acceptance. The United Kingdom’s “Electronic Communications Act 2000” endows electronic signatures with the force of law. This has been stated to represent the final piece of the puzzle (McCarthy, 2002) in creating an enforceable electronic contract in the UK. However, the legislation alone may not ensure that there are no areas of uncertainty in electronic contract formation. The paper covers the legal aspects of electronic contracts and the technologies that aid in the creation and preservation of these instruments and the implications associated with online contractual dealings and the issues that have created these uncertainties. It closes by addressing the issues with digital signatures and repudiation concerning online transactions.”
Of all of Craig’s writings from this time, his LLM dissertation is extremely revealing as it contains sections that resemble the Bitcoin whitepaper even though the dissertation predates it. CSW also happens to have been granted a copyright on the bitcoin whitepaper. CSW’s detractors claim that the version of the LLM available online was not published before the whitepaper. This is true, but CSW points to the version sitting in the archives at Newcastle University as well as handwritten copies he holds of both that LLM and the whitepaper which he plans to use in his upcoming libel suit against Peter McCormack, a Bitcoin podcaster who has made it his mission to publicly paint CSW as a fraud.
To get a window into Craig’s mindset, we can examine a statement he made about several of his former papers that remain unpublished. He now views his failure to publish as a serendipitous accident as he planned to release all of them earlier but did not after seeing the use and development of Bitcoin deviate from his vision, specifically by organizations such as Ross Ulbricht’s silk road, an online marketplace that used bitcoin to facilitate the sale of illegal drugs, firearms, and other prohibited items.
“In what you have here (the LLM dissertation), I have still only released half of the papers I wrote while at the University. I haven't yet released my competition law, international trade finance law or law of international trade papers. In these, I have subjects but have only recently lead to patents being filed.
In the paper on international trade finance law I discuss electronic bills of exchange and EDI. These are use cases I foresaw for bitcoin in 2007. I would have released them many years ago. If it wasn't for Ross and the other group of clowns, I would have made them public.
I see it as extremely fortunate right now that I didn't. in 2010 I had to put a single patent filing on hold because of money. There is no way that I would have been able to file hundreds of patents as I do now.
If I had released these papers publicly, many of the ideas now patenting would have been in the public domain and I would not be able to protect them. Like it or not, I have a vision for bitcoin and it is my right to be able to take my vision the way I envisioned it”
Beyond his academic work, a track record of legal documents puts CSW clearly on the scene early on in the history of bitcoin. In his lawsuit with Ira Kleiman, the estranged brother of CSW’s deceased partner, Dave Kleiman, documents have emerged which show that CSW included bitcoin related expenses on his 2008-09 tax return. He began creating businesses around his mining activities in 2009. This puts him within the extremely small circle of people who were involved with Bitcoin in 2008, the year of the whitepaper’s release, and makes CSW likely the biggest spender on Bitcoin related activities at that time regardless of whether or not he is Satoshi.
In addition to this circumstantial evidence, there are many foundational people in Bitcoin who back up CSW’s claim that he is the creator, some based on the fact that CSW showed them cryptographic proof privately by signing a transaction for coins known to be held by Satoshi. These include Gavin Andresen, the man put in charge of BTC development by Satoshi when he left the project in 2010. Gavin was subsequently barred from the project by the other core developers after Gavin publicly affirmed CSW’s claim.
It’s also worth noting that no one claimed to be Satoshi before CSW was outed in 2015, and no credible candidates have emerged since. CSW is the only individual with a strong case claiming to be Satoshi Nakamoto. His detractors often point to other people in the space like Nick Szabo as possible Satoshis, but if Satoshi was someone other than CSW, they have had every opportunity to come forward or put out a message using Satoshi’s keys or messaging accounts to discredit Craig. This has not occurred, although it did occur when a theory emerged that a man named Dorian Nakamoto was Satoshi. Satoshi re-emerged briefly on the P2P Foundation forum to announce that he is not Dorian Nakamoto.
There is a lot more we could include, and we will expand on this case in the section on the incentives facing the various parties. What is certain is that CSW has every qualification to be Satoshi Nakamoto in terms of his education, work experience, and proximity to the project. Here are links to see Craig talk about Bitcoin in a 2014 documentary and to see Craig interviewed at recent conferences about the creation of Bitcoin and the Bitcoin whitepaper.
The Case Against Craig Wright
The case against CSW relies on two pillars. The first of these pillars is the fact that CSW has not publicly signed a transaction demonstrating the ability to move coins known to have been mined by Satoshi. It is understandable why many people in the crypto-currency community would see this as disqualifying. There is a widely held mantra in crypto, “not your keys, not your bitcoin”. The ethos of many in the space is that the keys are what gives you rights over the underlying coins. This is intuitive as keys are necessary to move coins practically speaking.
It is true that CSW has not publicly signed any transactions with Satoshi’s private keys, although privately he is reported to have demonstrated the ability to sign by people like Gavin Andresen. However, using this absence of a signature as a reason to discredit CSW’s claim misses a few key points. The first is that CSW does not necessarily have an incentive to sign and prove his identity to those who see a signature as the evidence necessary to prove one’s identity. CSW and other’s incentives will be addressed in the next section. Even if there were some financial incentive to sign, CSW’s personality appears to be such that he would be repulsed to do so for those who demand it.
The other error in this claim is the assertion that keys should prove identity in the first place. CSW has written copiously on this and related topics. The ideology of many in crypto is that the rules in the code are the rules of the system. They do not see law as a superseding ruleset. Therefore, they see control of keys as the be-all and end-all on the question of ownership of bitcoin. However, we can clearly see that this is a poor argument and a flawed approach. Keys to one’s house are useful in that they create a system where the owner of the house can use the keys to limit the ease of access to trusted parties. However, if someone stole the keys, they would not own the house. If someone simply holds the keys to bitcoins, that alone should not give them legal ownership. Similarly, asking someone to prove ownership of keys to prove identity is a non-sequitur, even if it is true that control of keys known to belong to an individual increases the likelihood that the key-holder is that individual.
The other pillar of the argument against CSW as Satoshi Nakamoto is the claim that CSW fabricated evidence to make it look like he was Satoshi. This evidence can look damning to someone with limited knowledge of both the broader story surrounding CSW and the standards for evidence used by modern legal systems. However, upon closer inspection, these pieces of evidence ultimately tend to fall into one of several groups.
The first of these groups are documents that allegedly came from compromised servers. CSW was operating companies in Australia in the mid 2010’s that he claims were hacked by an employee. These documents were turned over from the allegedly compromised servers in a case with the Australian Tax Office. Independent investigators acknowledged that the ATO had a vulnerability that would allow this. These documents have resurfaced in other cases that attained these documents in discovery. The documents are often misrepresented as evidence put forward by CSW, but are actually documents that were submitted by the plaintiff in Craig’s ongoing case with Ira Kleiman, the plaintiff, that came by way of allegedly comprised servers seized by the ATO.The second group are documents that are claimed to have been altered by CSW but could have instead been altered by anyone. These include things as technologically simple as backdated PDFs. There isn’t much point discussing these further as they are only damning if one’s preconceived notion was that CSW is certainly not Satoshi and one is seeking confirmation by looking for anything to defame CSW’s character and claims.
The final group are documents obtained by third parties who may or may not be trustworthy, such as the Wayback machine or archive.org. This type of evidence has been a mixed bag as far as permissibility in court. Forgeability is widely seen as possible and there have been many accusations of alterations. For example, the Wayback machine has been accused of deleting records relating to the sale of malware. We believe there is a strong incentive for parties to have bribed or conspired with internet archivers such as the Wayback machine such that these documents should be treated with skepticism.
Beyond the strangeness that an expert in both law and computer security would be so sloppy in forging documents that an army of anonymous reddit warriors could routinely expose the same mistakes again and again, what is ironic about the narrative that CSW is a serial forger is that his vision for bitcoin is the antidote to the entire controversy. CSW wants an internet built on bitcoin which would mean an internet with an immutable and accessible history. This backdating and fabrication can not occur when these documents are published on-chain.
Incentives of the Interested Parties
It is interesting to ask someone who is convinced CSW is a fraud what the incentive is for him to pretend to be Satoshi Nakamoto. A typical answer in my experience is something about his character; he’s an egomaniac, a psychopath, or a pathological liar. They point to Calvin Ayre’s support of CSW as evidence that convincing just one billionaire opens up a world of funding. That may be true, although they make light of the difficulty of procuring this support in the face of the public crying fraud. Also, when one’s claim involves having ten billion dollars worth of BTC, it’s not so easy to get someone to hand over heaps of cash as some of CSW’s detractors suggest Calvin has done. In fact, it is not clear that Calvin has given any financial support directly to CSW, although he has certainly invested money into Craig’s ideas and vision via his substantial support for the BSV ecosystem.
The truth for most is that pretending to be Satoshi Nakamoto would be a hugely costly proposition. It is rather predictable that the community would desire a signature as proof and would dismiss those who could not produce it as they have dismissed CSW. Anyone setting out to claim that they are Satoshi without the ability to sign publicly is engaging in an uphill battle. To those that are convinced one is Satoshi, there may be something to be gained through partnerships, fundraising, or influence, but for all those who are unconvinced, the fake claim amounts to reputational suicide. Taking the claims into court and filing libel lawsuits against detractors escalates the consequences from reputational suicide to jailtime. This seems like an odd calculus coming from an extremely successful professional in his late 40s with a wife and children.
CSW’s actions since being outed as Satoshi throw further doubt on the claim that he can somehow profit from assuming this identity fraudulently. CSW could have asked for money or started a competing coin in the ICO boom. Instead, he made it crystal clear in an interview with the BBC that he would not accept any money or awards. He then threw his weight behind a vision for Bitcoin supported by the minority of bitcoin holders and ultimately ended up backing a minority chain, thereby alienating the majority and failing to capture value by creating a new coin where he could have assumed outsized ownership. Conmen often have a way of telling their victims what they want to hear. CSW has taken the opposite approach, sticking with a very clear set of principles that are extremely unpopular and notably consistent with the ideas espoused by Satoshi Nakamoto when writing under the pseudonym.
While CSW’s motivations for fraud are unclear, his incentive to keep people in the dark are very clear. Consider first that Satoshi, whoever he is, did not want his identity revealed. Perhaps that same person would relish the opportunity to be able to work again in relative secrecy. In the years since he was outed as Satoshi, Craig has filed over 800 bitcoin related patents. Over 200 of these have already been granted and over 1000 more are in the pipeline. While his detractors diverted the public’s attention away from his work and onto the controversy, he has created a patent fortress around Bitcoin IP. For CSW, the ability to create valuable IP without competitors paying attention is a big perk of not proving without a doubt to the typical crypto mind that he is Satoshi. From our vantage point, CSW appears to have consciously released evidence with strategic selection bias, alienating those who naively see code as law and creating a tighter network among those who understand the value of his ideas and then seek to look more deeply for evidence that CSW is honest.
CSW has also established himself as a man of principle, someone who is extremely self-assured and dismissive of what he considers incorrect viewpoints. He has stood by roughly the same set of principles since he first began writing and speaking about bitcoin under his real name in the early 2010’s and beforehand in his writings on other topics. Chief among these principles is a steadfast belief in the importance and effectiveness of the western legal tradition. We believe that Craig’s preference is to prove his identity to his own satisfaction in court before possibly submitting cryptographic evidence to the public. This would be his demonstration of the supremacy of law over code in determining legal matters surrounding property rights and identity.
So what are the incentives of his detractors? Many of his most vocal detractors are associated with BTC. Craig is extremely critical of BTC and outwardly calls many of his detractors criminals who seek to use BTC as an extralegal network. If the market listened to and agreed with CSW, it could be extremely damaging to the value of BTC. Some in BTC outwardly note that their desire is to antagonize governments with government-proof money, a technology that would clearly be useful in facilitating money laundering. However, the individual technological changes that move BTC towards this vision are often sold to the bitcoin holding masses as less provocative alterations and simply incremental improvements to enable things like fee minimization or scaling. The developers at the helm of bitcoin's codebase often have a public and private position on these matters. If CSW is right in many of his claims, he would both exposes the private, crime-friendly intentions of the BTC roadmap while also invalidating the public claim that these alterations are necessary and improve bitcoin.
Conclusion
The social media campaign to paint CSW as a fraud after he was revealed to be Satoshi in 2015 has been extremely successful. We would argue that this has been mutually successful for both CSW and supporters of competing blockchains such as BTC and ETH. These supporters have benefited from suppressing criticism from the creator of bitcoin which has allowed price levels to stay high, giving early adopters time to try and innovate or liquidate. CSW has benefited from a much greater degree of privacy than what would be afforded to him had he more concretely proved his identity. He has used this privacy to create a patent fortress which he plans to leverage on behalf of BSV in order to steer Bitcoin in the direction of his original vision, a vision which he has described in great detail in his public writings.
In 2020, there are a series of events which we anticipate will align market perception to the realities surrounding Bitcoin and the identity of Satoshi Nakamoto. These include Craig’s warning that he will be moving upwards of 800,000 BTC, the January 1st 2020 maturation of a trust containing over 1 million BTC mined by CSW in 2009-2011, Craig’s prediction that an international court order will be issued to Bitcoin miners ordering certain funds be frozen a/o confiscated, a possible collapse of Bitfinex and Tether, the imposition of FATF guidelines in June 2020 and updated EU anti-money laundering directives in January 2020, and the halvening of the BTC block reward on May 14, 2020.
In the short term, CSW selling BTC into BSV and cash would be a boon to BSV price and harmful to BTC price. The other events CSW has predicted will each put the digital gold narrative to the test, potentially leading to a huge BTC price drop if the belief that bitcoin is not able to be confiscated changes. Most importantly for the long-term, we believe that if Craig is publicly viewed as Satoshi, more investors will end up seriously engaging with his ideas. Our belief is that CSW’s vision for bitcoin is superior and that the broader market will agree, particularly those who do not see money laundering as a primary use case. When markets adjust to reality, those who were deceived by the misinformation campaign surrounding CSW will end up as the bagholders. For those who understand that CSW’s credibility is much greater than what has been represented, an enormous opportunity lies ahead. Unbounded Capital plans to be among those who leverage an unprecedented informational asymmetry within the crypto space to generate outsized risk-adjusted returns.