Leonid Bershidsky is Bloomberg Opinion's Europe columnist. He was the founding editor of the Russian business daily Vedomosti and founded the opinion website Slon.ru. Read more opinion SHARE THIS ARTICLE Share Tweet Post Email

Photographer: Tomohiro Ohsumi/Bloomberg Photographer: Tomohiro Ohsumi/Bloomberg

It's probably impossible to determine with 100 percent accuracy the identity of "Satoshi Nakamoto," the pseudonymous creator of bitcoin. News reports of investigations into his identity didn't quite go that far in linking Australian Craig Wright to Nakamoto. Yet media efforts to identify Nakamoto highlight two major problems with the bitcoin market: It's too easily manipulated and too vulnerable to the nation-states it was meant to transcend.

About a month ago, Wired, Gizmodo and The New York Times received leaked e-mails and documents linking Wright to Nakamoto. The two tech publications started digging, but the Times' Nathaniel Popper decided against it: "Didn't find it convincing at the time," he tweeted. Judging by his tweets on Wednesday, he's sorry his curiosity didn't get the better of him.

The most convincing evidence presented by the two investigations takes the form of e-mails apparently written by Wright using the same e-mail address that "Nakamoto" used to communicate with early bitcoin enthusiasts. There was also an e-mail in which Wright allegedly complained to the late U.S. cybersecurity consultant Dave Kleiman: "I cannot do the Satoshi bit anymore. They no longer listen. I am better as a myth."

There was, however, also evidence that he has edited and re-edited old blog posts to point to his involvement with bitcoin's creation, and the authenticity of the e-mails is difficult to confirm. Parts of Wright's public profile fit the Nakamoto story -- he was clearly an early bitcoin miner, he is a libertarian, a competent software developer and a fan of Japanese culture -- and others don't. It's hard to imagine the inventor of a decentralized cryptocurrency as a traditionalist opponent of hacktivism, so how could the real Satoshi Nakamoto pen this column denouncing the Anonymous hacker collective and saying, "Let's hope the vigilance of the people at PayPal exceeds the desire to destroy, of [sic] groups such as Anonymous."

Popper makes a strong argument against identifying Wright as Nakamoto:

. @samfbiddle @a_greenberg Satoshi was understated + opted for economy in his writing (+ spelled well) That's where Wright doesn't match — Nathaniel Popper (@nathanielpopper) December 8, 2015

Wright's writing is sloppy, colorful, passionate. He betrays more emotion in a single e-mail than "Nakamoto" did in all his communication.

There was also a strong reason for Wright to lead the public to believe he is Nakamoto. For some time now, he has been engaged in a bitter dispute with the Australian Tax Office about how his bitcoin holdings should be taxed, whether as assets subject to capital gains tax or as currency. Not much is known about the possible consequences of the dispute for Wright, but on Wednesday, Australian police raided a home he had rented (they denied this had anything to do with the Wired and Gizmodo stories). Revealing himself as Satoshi Nakamoto had the potential to create a wave of public indignation with what could be seen as government persecution of a genius innovator. There are indications in the material published on Tuesday night that Wright was thinking along these lines. He apparently asked his lawyer in an e-mail: "Would our Japanese friend have weight coming out of retirement or not?"

This would explain why "Nakamoto's" identity has been revealed now, but also undermine Wright's credibility: What if he's just clutching at straws in the face of legal problems?

So there are doubts that the real Nakamoto has been revealed (and Wright himself is apparently missing; he'd told his landlord he was about to move to London). If this latest attempt to find Nakamoto turns out to be as unsuccessful as all the previous ones, notably an embarrassing Newsweek report that tagged a modest U.S. engineer, to his endless chagrin, it still serves a useful purpose. It draws attention to a huge stash of bitcoins -- more than a million of them -- owned by Nakamoto and now sitting without movement. With 14.9 million bitcoin now in circulation, it's a sizable chunk of the total market supply.

The documents revealed by Wired and Gizmodo -- including a purported transcript of a conversation between Wright, his lawyers and Australian tax officials -- tell a story of Wright and Kleiman setting up a Seychelles trust to hold 1.1 million bitcoins. According to the terms of the trust, contained in a bizarre PDF file with incomplete sentences and some arcane language, Wright would be able to borrow the money and use it as collateral for bitcoin-related projects, but it would only be released to him on Jan. 1, 2020.

This revelation may have caused a big spike in the bitcoin price soon after the two stories were published:

Bloomberg

If the "Nakamoto" stash is locked up until 2020, it's understandable why speculators can bid up bitcoin. That means it's not threatened by a big injection of the virtual currency anytime soon.

The bitcoin market is so fragile that the founder's holdings could cause it to crash, and it's not even known who thee founder is or what his motives might be. Wright has already lost some bitcoin when large amounts of the cryptocurrency were stolen from the Mt. Gox bitcoin exchange. Who knows what he, or whoever else "Nakamoto" is, could do under stress if pursued by the authorities.

That's another problem with bitcoin. It's an attempt to operate a borderless, supranational scheme in a world where countries and borders still matter a lot. The fundamental weakness of any such libertarian scheme is that governments are backed up by force, and the schemes are not. The more ingenious they are, the more attention they attract -- usually of the wrong kind.

If Wright had to reveal himself as Satoshi because he's threatened with ruin or jail time, the value of his supposed fortune is not $400 million, as the current bitcoin price suggests; it's zero. Fiat money represents the brute force of the governments behind it. Bitcoin only stands for about 5 million people's ideal of stateless freedom; it's not a good shield when things go bad.

This column does not necessarily reflect the opinion of the editorial board or Bloomberg LP and its owners.

To contact the author of this story:

Leonid Bershidsky at lbershidsky@bloomberg.net

To contact the editor responsible for this story:

Therese Raphael at traphael4@bloomberg.net