The inventor is 'more valuable as an answer to a Trivial Pursuit question,' CFTC chief says. Regulators meh on Bitcoin creator

The identity of Bitcoin’s mysterious creator “Satoshi Nakamoto” is a sideshow from the point of view of the digital currency’s regulators.

Newsweek reported this week that Dorian Prentice Satoshi Nakamoto, a 64-year-old living in Southern California, is the creator of Bitcoin. Or maybe not. He denied the report on Thursday to The Associated Press, after being followed by a throng of reporters during the day. On Friday, Newsweek said it stands by the story.


While regulators may be as curious as the next guy about this week’s chain of events, government officials, Bitcoin enthusiasts and their regulatory consultants on Friday said the virtual currency’s mysterious origins is playing little role in the effort to figure out how to oversee and police Bitcoin markets going forward.

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“The ultimate creator of Bitcoin is probably more valuable as an answer to a Trivial Pursuit question than from a regulatory perspective,” CFTC Commissioner Bart Chilton said.

This week’s events underscore that while Bitcoin’s mysterious past, ongoing series of arrests and exchange problems are a big part of what keeps it in the headlines, it is nonetheless becoming more mainstream and its biggest challenge remains how the government will regulate the market.

Bitcoin’s advocates see it as more than just a new form of digital money, but also a competitive payment system that’s cheaper and more efficient than relying on banks. Financial speculators have seized on Bitcoin thanks to its price volatility, while some serious investors compare its potential to the early Internet.

The fact that Bitcoin’s anonymous creator, going by the online handle “Satoshi Nakamoto,” disappeared in 2011 after creating it with a 2008 white paper has been a well-known gray area during the short history of the virtual currency. The same is true about the long-running concerns about the stability of Mt. Gox, the big, Japan-based Bitcoin exchange that filed for bankruptcy last month and lost nearly half a billion dollars’ worth of customer funds.

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Congress and regulators are well aware of the intrigue around Bitcoin’s genesis under Satoshi Nakamoto and have moved on.

“Yes, in previous staff conversations as well as at our hearing in November, agencies and law enforcement have it made clear it’s open source code, so the author or authors isn’t important,” a committee aide for the Senate Homeland Security and Governmental Affairs Committee said Friday. “What is important is what the code actually does or can do.”

Committee Chairman Tom Carper (D-Del.) has taken the lead when it comes to corralling various agencies and law enforcement officials who are grappling with how to police Bitcoin. The committee held the first congressional Bitcoin hearing in November and is preparing a report on the federal government-wide response for the late spring.

“We’re focused on collecting information and making sure the government provides clear, consistent, and timely guidelines so that those interested in using digital currencies for legitimate commerce can continue to explore the opportunities this technology offers while also adhering to the law, and not as focused on its origins,” the committee aide said.

The Bitcoin protocol is open-source. A dispersed community of developers unaffiliated by a single organization take the time to fix it and make changes. The nonprofit Bitcoin Foundation, which is often the face of the technology in Washington, tries to lead the development efforts.

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Bitcoin Foundation Chief Scientist Gavin Andresen worked remotely with Satoshi Nakamoto in the early days of Bitcoin before his disappearance. Andresen has often denied he is the original creator.

Jerry Brito, a senior research fellow at George Mason University’s Mercatus Center, said Satoshi Nakamoto’s identity doesn’t affect Bitcoin technically because the vast majority of Bitcoin’s code has been written by developers other than Satoshi and most was written after his disappearance.

“Bitcoin is a technology that exists in the world, and whatever its creator’s motivations were for making it won’t affect the fact of its existence and what it can do, so it shouldn’t affect how regulators approach it, either,” Brito said.

Patrick Murck, the Bitcoin Foundation’s general counsel, said Satoshi Nakamoto has not been a large topic of conversation with officials looking into the digital currency.

Regulators are much more focused on issues like what can be done to improve the security of Bitcoin wallets and to reduce anti-money-laundering risks related to the technology’s semi-anonymity features, Promontory Financial Group Director Adam Shapiro said.

“For the most part the regulatory community has been looking at the big picture when it comes to Bitcoin … and have largely taken a wait and see approach, which I think is the right attitude,” Murck said Friday.