Satoshi No No Read online

  Chip gave a sympathetic snort. He knelt down and wiped some dust from the smooth tops of the rack-style server chassis. Peering inside the fan vents, he found them surprisingly clean for units of this age.

  “You’re sure they both work OK?”

  “Far as I know.”

  “Can we power them up for a quick test?”

  “Sorry,” Henry said. “I don’t have a proper rack or monitor for a test console.”

  Chip hummed. Something told him these servers were barely used. But he made it a policy not to trust his gut. If he couldn’t reduce his risk by verifying their condition, he could at least reduce it by lowering the price.

  “I don’t know,” Chip said. He made a show of stroking his chin reluctantly. “I’m buying for my company. We can’t risk faulty hardware for our new project.”

  “Make me an offer,” Henry suggested.

  “Hmm. I’d be happy to pay your asking price if I could test them. I guess I could take a risk for a better deal, though.” Chip paused and looked up at Henry. “Would you take $250?”

  “Two-fifty! Servers just like these are selling on eBay for $300 each .”

  “You’re right,” Chip said. “But you gotta factor in shipping, eBay auction fees, PayPal fees… Plus on eBay I could check the seller rating and leave negative feedback if something didn’t work.”

  Henry turned away and checked his phone. He was frowning as he turned back to Chip. Maybe another buyer had just flaked out.

  “Tell you what,” Henry said. “I also have this NAS unit and hard drive RAID rack. I was going to sell it separately, but I’ll throw it in with the two servers for the same $400 price.”

  “What size hard drives?” Chip asked.

  “Four 500 gigabyte drives.”

  “That’s not much these days. But the rack might come in handy. What were the drives used for?”

  “I don’t know,” Henry said. “I’m not even sure if they came with the servers. I haven’t had a chance to test and wipe them.”

  “OK.” Chip stood up and looked down at Henry. “Let’s say $300 for the whole bundle?”

  “Three-hundred,” Henry repeated skeptically. “Make it $350 and you’ve got a deal.”

  “How about $340? I only have twenties.”

  “Don’t worry," Henry grinned. "I’ve got change. So, $350 cash, no warranty?”

  “Sure, that’s fine,” said Chip. “But can you give me a receipt for work? I need to expense this. Just a handwritten note is fine. Thanks.”

  Henry settled the transaction quickly and helped Chip haul his new equipment to the curb outside the building. The Uber pulled up a few moments later, and soon Chip was back at CloudButler.

  He had messaged his co-worker Ravinder to meet him at the freight elevator to help him haul up the gear. Ravi was a laid back developer who was more interested in anime than work. He wheeled a cart into the test bench room with Chip. Spare parts, cables, and cards were stacked around the bench. The lighting was extensive, but as was typical for the test room, only a few dim, yellowish LEDs were currently shining. Surrounded by all that technology, Chip felt a nesting instinct, as if he was prepared for any possible problem.

  “I thought Palmer told you to get new Dell servers,” Ravi said.

  “He did.”

  “Those aren’t new Dells,” Ravi said flatly.

  “These are way better value for the company,” Chip replied, and recounted the deal he got off Craigslist. “The whole deployment is just a sham, anyway; no real software is being built yet, they just need something physical they can point to if they get audited for their first funding claim. And yet they decide to waste money on brand new top-of-the-line servers.”

  “So?”

  “The government only funds 60% through the ASF program. We have to pay the rest,” Chip reminded him. “But even if ASF paid for all of it, that’s our tax dollars being wasted. Doesn’t that bother you?”

  “My old company exploited ASF way more blatantly.” Ravi yawned. “You don’t think you’ll get in trouble over the servers, though?”

  “Nah, once the servers are deployed and they get their funding, they won’t care. Here, pass these down to me.” Chip handed Ravi some cables and grunted as he crawled under the bench. “They might even thank me!”

  Ravi chuckled. “‘It’s easier to ask forgiveness than it is to get permission.’”

  “Exactly,” said Chip.

  Once they got the servers booted up, Chip let Ravi get back to his lunch break. (He was halfway through an Airbender episode and had just enough time left to finish it.) As Chip had hoped, the servers worked perfectly. After booting and running some basic diagnostics, he plugged in the NAS to test the drive array.

  Chip wasn’t terribly surprised to find that the drives still held some files intact. A lot of companies in financial trouble didn’t take much care to wipe their data. Most of the time it was rubbish anyway, but it didn’t hurt to check. You never knew what you might find.

  He recalled that a few years ago, a big local computer chain called NCIX had gone bankrupt, and somebody had bought their servers at auction. It turned out that the staff had left thousands of customer contact records, invoices, and tax documents just sitting on the hard drives, unwiped, unencrypted. Luckily, the buyer was a Good Samaritan who reported it on his blog and refrained from selling the private data. Apparently he had been approached by some shady characters offering to pay high five-figures.

  So Chip half-expected something on the drives, but he was intrigued to find that the RAID array contained an NTFS file system. Closer inspection showed that it was a Windows XP installation. With an operating system that old, the drives hadn’t been used in connection with the rest of the server hardware, which was of a newer vintage. When Chip fired up his disk analyzer, it didn’t report any abnormally large directories. Chip was about to wipe the drives when he thought to check the Documents and Settings folder. That was where you could sometimes find interesting user files on Windows XP drives.

  ..

  Administrator 2008-08-02 19:55

  All Users 2010-09-21 17:43

  Default User 2008-07-14 18:12

  Satoshi 2010-11-14 18:12

  Chip stopped. Satoshi… Where do I know that name from?

  He drilled down into the Satoshi folder and found a full user profile with various documents and data files. Nothing jumped out at him until he noticed a MyProjects folder:

  ..

  Bitcoin-qt 2009-06-13 10:25

  Bitcoin-core 2010-11-14 12:41

  Wallet 2010-11-14 18:12

  Future 2009-03-20 23:46

  Bitcoin. Right. Digital currency invented anonymously by Satoshi Nakamoto. Did they ever find out who he was?

  Chip drilled down further and realized that each folder under MyProjects was a Visual C++ 6.0 project. He had done enough C++ coding to know that the projects in the folders he was looking at weren’t just downloaded from the web. Each showed evidence of compiling, linking, and debug logging. They must have been under development right up until the date on the directory timestamps.

  Chip fired up Google. “When did Satoshi—” he typed, and autocomplete helpfully suggested, “When did Satoshi Nakamoto disappear?”

  April 23, 2011

  Whoa. Just a few months after these drives were abandoned. That’s gotta be a coincidence, right?

  More Googling sharpened his vague recollections. Satoshi Nakamoto — widely assumed to be a pseudonym — appeared online in 2008 with the Bitcoin whitepaper, detailing a clever way to build a distributed, peer-to-peer digital currency network without the need for a central authority to issue the money. He wrote an elegant, working prototype, and invited other programmers to help him enhance the system starting in 2009. Satoshi led its development into a solid worldwide cryptocurrency network before handing it over to a public group of open source developers in late 2010. His last message stated that he had “moved on to other things.” While developing Bitcoin, Satosh
i mined nearly a million coins.

  To this day, the coins had not been spent.

  If these really were Satoshi’s old hard drives, they might contain a treasure trove of clues about his identity, his whereabouts, maybe even his true motivations for inventing Bitcoin.

  Chip dug around a bit more. He opened the wallet folder.

  ..

  wallet.dat 309 kB 2010-11-14 18:12

  passphrase.txt 135 B 2009-02-25 14:05

  A passphrase stored in plaintext? Chip’s head swam. No. Way.

  He opened the passphrase.txt file. Sure enough, it contained a cryptographically random string of printable characters. Obviously, whoever owned the wallet had created the text file to allow copying and pasting the passphrase into the Bitcoin app. Chip was shocked that a cryptocurrency developer would be so careless as to not use a proper password manager.

  Well, I guess Satoshi wouldn’t be the first geek to fail at opsec. Heck, every good car mechanic I’ve known has driven a beater.

  Thirty minutes later, Chip had copied the files over to his laptop, installed an older, matching version of Bitcoin, and confirmed that the passphrase worked on the wallet.

  His eyes dropped to the box on the screen showing the total funds.

  The wallet contained exactly 868,190.29404395 bitcoins.

  01:

  Trust, but verify

  Chip had been careful to make a copy of the files before wiping the hard drives. He had installed the wiped hard drives at the data center with the new servers but had brought the files home on a USB flash drive. He told no one at work about what he had found. After all, he thought, I bought them with my own money. Technically, until I expense them to the company, I still own them, right?

  He didn’t worry much about the legalities. He was more preoccupied with verifying that he was actually holding what he thought he was holding. The last few hours were a blur to him. The thought that he might be in possession of a key piece of history, a clue to a mystery that had captivated people for the last decade — it had pushed aside every other concern. He hadn’t eaten, he hadn’t checked his email or messages. And naturally, he couldn’t escape the weight of nearly 900,000 bitcoins, or 40 billion US dollars, sitting on a flimsy piece of plastic in his pocket.

  Chip had to know exactly what he was dealing with. How could he tell if the wallet file he had found was viable or just a copy of the real Satoshi wallet? Did it even matter if it was a copy, since the coins had not been spent yet? Was bitcoin reliable? How did it actually work? If all the coins were digital, and there was no central authority, what stopped anyone from just creating their own coins?

  He emailed Palmer to say he was taking a sick day tomorrow. He had a lot of reading to do. What he found, after a long night of research, was intriguing.

  Before bitcoin appeared in 2008, all the money in the world relied on central banks and government treasuries. Governments printed the cash and lent it to the big banks, and the public trusted the governments not to print too much. Irresponsible governments plundered their economies and printed too much cash to compensate, causing runaway inflation and economic collapse; responsible governments cared well for their economies and kept their money supplies stable, encouraging investment and growth.

  Governments also controlled the interest rate at which the big banks borrowed money. This was an important lever they could use to heat up or cool down the economy in response to sudden or cyclical fluctuations.

  When governments spoke of “increasing the money supply,” they didn’t necessarily mean more physical cash in the form of paper or coins. For decades, most modern economies had far more money in circulation than physical cash. In 2005, the United States had about $1 trillion in physical cash compared with about $6 trillion across all personal checking, savings, and other liquid deposit accounts. This difference had grown as salaries, investments, and large purchases were increasingly paid by check, direct deposit, credit card, or other intangible means. So even before bitcoin came along, most money was effectively digital.

  Digital or not, such money was called fiat currency because it was created by government order and not tied to physical commodities such as gold or other precious metals. It was secure because wealthy, stable countries such as the United States would always accept it as payment for taxes and tariffs; and because it was difficult to counterfeit. Digital money was transferred between banks that were highly trusted by the public and highly regulated by governments. Paper cash was printed with many security features, and few businesses accepted large amounts of it without intense scrutiny. And the penalties for counterfeiting and bank fraud were severe.

  Most people not involved in finance didn’t think much about this system — until the Great Recession of 2007. As the US housing market collapsed under the weight of runaway credit and irrational speculation, it threatened to take the country’s entire financial system, and the rest of the world’s, down with it. Governments eventually agreed to the largest monetary bailouts in history to keep their economies afloat. But many observers questioned why the banks were “too big to fail” while the average Joe was left underwater on his mortgage.

  It was in this climate that Satoshi Nakamoto first released the Bitcoin whitepaper on October 31, 2008. The whitepaper described, in nine pages of terse but precise English, how to build a digital currency that required no trust for authority.

  Bitcoin would operate as a decentralized network of independent nodes. All nodes would run software speaking a common protocol and playing by common rules. Every transaction — every coin sent or received — would be broadcast to the entire network. The user behind each node’s wallet was identified, not by name, nor by a government-issued social security number or by a bank account number, but by a cryptographic public key — a long string of random numbers. The user had a private key that corresponded to their public key, which they used to digitally sign each transaction.

  Each node had an equal opportunity to monitor the public ledger of all transactions — called the blockchain — and verify that no other node had falsified a transaction, fraudulently invented new coins, or “double-spent” a coin or fraction of a coin. Thus the only way to defraud the network was to control more than 50% of its nodes — or, more precisely, 50% of all nodes’ CPU power — and manufacture false consensus. But any fraudster in that position had already expended immense resources and effectively started their own rival cryptocurrency network, which no legitimate nodes would want to join.

  Satoshi didn’t build a pyramid scheme. He gave all the initial bitcoin users the same opportunity as himself to earn coins. Coins were earned by spending CPU power to “mine”, or verify blockchain transactions in a process called “proof of work”. The miners’ proof of work involved using a mathematical formula called a one-way cryptographic hash to process millions of variations of each transaction to zero it out. Hashes are easy to confirm but hard to guess. This protocol left it essentially up to random chance which miner would “win” the next coin by verifying a transaction — except, of course, that those who devoted more CPU and electrical power to the network were more likely to win. But in a zero-trust environment, democracy by wattage was the most fair way to play.

  Satoshi also built the initial Bitcoin software, and released it free to the world starting in 2009. He invited other skilled programmers and cryptographers to help him enhance and audit the code in a well-known public process called open source development. For Chip, the most impressive thing about what Satoshi and his team had built was that it had withstood the crucible of outright attack by skilled hackers and cryptographers all around the world. All those eyeballs and all those brains, with all that incentive to cheat, had found only a couple of major bugs in the protocol, and those were quickly corrected.

  Bitcoin grew more useful, more international, and more valuable. You could use it to buy cannabis in an illegal dark-web marketplace, and then later buy some pizza at Papa John’s. Some tech companies started paying their emp
loyees in bitcoin.

  At first, it wasn’t that strange for Satoshi to keep his real identity secret. But when he announced that he had moved on from bitcoin in late 2010, the mystery deepened. Each passing year proved the resiliency of the bitcoin network and increased the value of bitcoin in relation to fiat currency like the US dollar. But Satoshi didn’t touch his coins. Aside from his fortune of nearly a million bitcoins (peak value over $40 billion) he also possessed the private key to the “genesis block,” the first ever bitcoin transaction, in which he had transferred 10 coins to Hal Finney, an early collaborator on the software.

  The public nature of the bitcoin blockchain meant that any attempt to spend Satoshi’s coins would be instantly noticed around the world. Or, if he merely wanted to prove his identity, he could use the private key of the genesis block coins, or any of his other coins, to cryptographically sign a message to the public. Observers watched and waited, but Satoshi never did that.