Satoshi Files: Hal Finney
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Satoshi Files: Hal Finney

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Hal Finney was an American computer scientist, software developer and games designer.

Satoshi Files: Hal Finney

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Hal Finney was an American computer scientist, software developer and games designer. An early member of the cypherpunks, he was one of the first to reply to Satoshi's Bitcoin whitepaper, and worked closely with the pseudonymous Bitcoin creator.

His Reusable Proof-of-Work protocol was essential to Bitcoin; his debugging, editing and code changes helped Bitcoin get off the ground in its first year; and his supreme knowledge of cryptography and computer science helped turn Bitcoin into a success.

Credits: Coindesk

Early Life

Hal Finney grew up in Coalinga, California, where he attended Acrcadia High School, and then the California Institute of Technology, where he studied engineering. Finney’s Caltech classmates and teachers attest to his intelligence: he took graduate courses in gravitational field theory in his first year, and his peers awarded him a “most brains” award for his shining intellect.

In a strange coincidence, Finney grew up remarkably near to Dorian Nakamoto, who Newsweek outed as the brains behind Bitcoin. Nakamoto, a computer scientist, was seven years older than Finney, and attended a different school. But while he studied at California Polytechnic Institute, Finney was only a few miles away at Arcadia High.

Finney discovered libertarianism at Caltech; a number of his peers remember seeing him walking between classes with a copy of Atlas Shrugged tucked under his arm. His growing interest in political and economic libertarianism would eventually lead him to discover technologies that could bring about social and political change, such as cryptography and encryption.

After a brief stint developing video games like Adventures of Tron and Astrosmash, Finney worked with Phil Zimmerman at the Pretty Good Privacy Corporation (PGP), where he developed software that let people talk privately, away from the US Government’s prying eyes.

PGP’s overarching aim was to provide government dissidents and critics with a way to communicate without fear of reprisals. Naturally, the US government and security services didn’t share Finney and Zimmerman enthusiasm for free and easy-to-use encryption. Their software was confiscated, and the corporation faced a criminal investigation for having created it.

It was while working for PGP that Hal Finney learnt first-hand how important anonymity is for those who create tools that threaten to undermine state control.

The Cypherpunks

Finney was one of the earliest members of an online group of cryptographers and activists called the Cypherpunks, after discovering them in 1991. The Cypherpunks hold that cryptography, encryption, and other privacy-focused technologies can bring about positive social and political change. Many of the group’s ideas rely on decentralized and peer-to-peer (P2P) technology to shift power away from powerful governments and corporations and toward individuals.
Most of the people whose ideas and work paved the way for cryptocurrencies were Cypherpunks. There’s David Chaum, who invented Digital Cash; Nick Szabo, who designed Bit Gold; Wei Dai, who theorized b-money; and Adam Back, who created the Hashcash algorithm that inspired Hal Finney to create Reusable Proof-of-Work (RPoW), a precursor to Bitcoin.
Finney said his RPoW ideas occurred to him after he read an essay by Nick Szabo about the origins of money. “Nick Szabo has coined the term bit gold for information objects which are provably costly to create. He suggests that these could even serve as the foundation for a sort of payment system, playing the role in the informational world of gold in the physical world. RPOW would facilitate the use of POW tokens as a form of bit gold by allowing the tokens to be passed and exchanged from person to person,” he said. Nick Szabo later described Finney’s RPoW as “the world’s first implemented cryptocurrency.”

For Hal Finney, Nick Szabo and most of the other Cypherpunks, cryptographic technologies like Bitcoin represent much more than a flashy new investment vehicle or a convenient new way to transfer money abroad. They believe our monetary system is shackled by the State and Wall Street banks, and that Bitcoin could unlock those shackles and liberate our economy and society.

In his own words, this was what Finney said about encryption and digital currencies:

“A completely different direction to go in, one which puts power into the hands of individuals rather than governments and corporations. The computer can be used as a tool to liberate and protect people, rather than to control them.”

Corresponding with Satoshi

Finney was among the first people to read and reply to Satoshi’s Bitcoin whitepaper in October 2008. He was also the first person to download the Bitcoin software besides Satoshi, and the second miner on the network.

Finney recognised that what Satoshi described in his whitepaper could revolutionise cryptography and alter the course of human history. He told Satoshi that Bitcoin seemed to be “a very promising idea,” and that there was “potential value in a form of unforgeable token whose production rate is predictable and can't be influenced by corrupt parties.”

Much of what we know about Satoshi comes from his email correspondence with Hal Finney. For instance, the day after Finney replied to Satoshi’s whitepaper, Satoshi told Finney that he had written all the code before writing the whitepaper in order to convince himself that he could “solve every problem.” He also said he was better with code than with words.

These emails show that over the following three months, Finney and Satoshi worked closely together on Bitcoin. The two men kept in regular email contact, though they shared few personal details. And on January 12th, 2009, Satoshi chose Hal Finney to be the recipient of the first ever Bitcoin transaction — transferring 10 bitcoins.

Sadly, tragedy struck Finney in August 2009, seven months after he and Satoshi began working on Bitcoin together: he was diagnosed with ALS, a severely debilitating disease which attacked his central nervous system and would eventually rob him of control over his body. He was confined to a wheelchair two years after his diagnosis.

Like Stephen Hawking (who also suffered from ALS), Finney didn’t let his illness stop him working. He developed a new Bitcoin wallet from his wheelchair without the use of his hands in 2012, albeit very slowly.

He told Forbes:
“It's very slow, probably 50 times slower than I was before. But I still love programming and it gives me goals.”

Despite the slow progress of his work, Finney stayed in good spirits and remained hopeful about the future. “Since we're all rich with Bitcoins, or we will be once they're worth a million dollars like everyone expects, we ought to put some of this unearned wealth to good use,” he wrote in a Bitcointalk forum post.

Whether Finney’s Bitcoin wealth was in fact “unearned” is datable. On the one hand, his work considerably influenced Bitcoin and helped get it off the ground. But on the other hand, its price appreciation earned people who bought in early tens of millions of dollars, with very little risk. Finney, however, never got to spend any of this money: most of it went toward paying his medical expenses.

Finney’s disability and expensive medical care didn’t stop cyber crooks from trying to steal his wealth. He and his wife received countless ransom calls demanding thousands of Bitcoin. They were once even swatted: someone told the police that a heinous crime was committed in Finney’s house, prompting an armed SWAT response.

As a result of his ALS, Hal Finney sadly passed away in Arizona on Aug. 28, 2014. His body was cryopreserved by the Alcor Life Extension Foundation.

Now that we’ve examined Hal Finney’s life and relationship with Satoshi Nakamoto, let’s take a look at the evidence for and against him secretly being Satoshi.

Evidence That Hal Finney Could Be Satoshi Nakamoto

#1 The Timeline Fits

Hal Finney’s personal and professional timelines match up well with Satoshi’s. In August 2009, Finney was diagnosed with ALS; given that only 5% of people diagnosed with ALS live longer than five years, it’s safe to assume that Finney was in a wheelchair full time by the middle of 2011, and he would have struggled to do much coding after that.

This sequence of events fits almost perfectly with Satoshi’s movements during the same period. Satoshi handed over control of Bitcoin to Gavin Andresen in mid-2011 and was never heard from again. If Finney were Satoshi, his ALS would explain the timing of Satoshi’s disappearance.

#2 He Has The Technical Chops

Hal Finney enjoyed a stellar reputation in cryptography and computing circles. The Cypherpunks held him in particularly high regard thanks to his Reusable Proof-of-Work invention in 2004 and his CRASH (CRypto cASH) digital currency, which he built in 1993.

As a result of his reputation, Finney is widely regarded as one of the few people who had the skills to build Bitcoin at the time it was actually built.

#3 He Understood The Importance Of Privacy

Finney’s stint with the PGP corporation early in his career probably taught him that people who develop tools that can undermine crucial government functions are better off doing so anonymously. The PGP Corporation faced a criminal investigation for its encryption software, which Finney helped build.

#4 Finney’s Living Proximity To Dorian Nakamoto

Dorian Nakamoto was outed by Newsweek as the likeliest person to be the true brains behind Bitcoin. Surprisingly, he and Hal Finney lived in the same 36,000 person town for a considerable length of time. This means we’ve got Hal Finney, confirmed as the second person to have used Bitcoin, living practically next-door to Dorian Nakamoto, who could well have invented Bitcoin. What are the odds of that?

And while the two men attended different schools and universities, they walked the same high streets and probably ate in some of the same restaurants. Could they have known one another?

Evidence That Hal Finney Is Likely Not Satoshi Nakamoto

#1 The Emails

The emails between Hal Finney and Satoshi Nakamoto provide us with two reasons to think they are not the same man.
Their writing styles differ significantly. Skye Grey’s writing analysis indicated that Hal Finney used a different vocabulary and writing style to Satoshi.

The notion that Finney set up two accounts and wrote out a fake conversation with himself to throw off journalists and sleuths years later is implausible, if not utterly preposterous. This boils down to one of those “they were playing 4D chess” arguments which try to explain away criticism of far-fetched ideas by saying the people involved are simply smarter than everyone else.

#2 Hal Finney Was…Too Smart?

Nobody – and I mean nobody – could accuse Satoshi Nakamoto of being dumb (or, really, anything less than exceptionally intelligent). Having said that, some Bitcoin bigwigs have suggested that Hal Finney was actually a much better cryptographer than Satoshi, and that Satoshi wasn’t really the God-like programmer that many people remember him as.

Gavin Andresen, who led the Bitcoin project after Satoshi disappeared, said that he didn’t even consider Satoshi a cryptographer. He pointed out that Bitcoin uses elliptic curve keys, ECDSA signatures, and cryptographic hashes, but that’s all. He also said that using SSL was “kind of naïve,” and not something Finney would have thought of. Andresen did however call Satoshi a “brilliant programmer,” but maintained that he didn’t understand concepts at the cutting edge of crypto, which Hal Finney almost certainly would have.
Peter Todd, another Bitcoin developer, agreed with Andresen:
“He [Satoshi] made many design decisions that suggest he wasn’t a ‘professional’ cryptographer.”

He also noted that Bitcoin isn’t an example of a “God-like” programmer “coming down the mountain to give us perfection on a stone tablet,” but an example of how “an average guy with one really good idea can change the world even if he's a shitty programmer.”

#3 Bitcoin Wasn’t Private Enough For Finney

Despite its unfair reputation as a tool for drug dealers, arms sellers and tax frauds, Bitcoin 1.0 still wasn’t private enough for serious cryptographers like Hal Finney. About two weeks after Finney downloaded the Bitcoin software, he tweeted: “Looking at ways to add more anonymity to Bitcoin.”

So if Hal Finney was Satoshi, wouldn’t he have built better privacy into Bitcoin in the first place?

#4 Finney Flatly Denied Being Satoshi

When Forbes journalist Andy Greenberg interviewed Hal Finney in 2014, he asked him outright whether he was involved in the creation of Bitcoin, and if he was secretly behind the Satoshi Nakamoto pseudonym.

Finney couldn’t respond right away because of his ALS. He spent nearly an entire day writing an email responding to Greenberg’s question.

“As for your suspicion that I either am or at least helped Satoshi, I’m flattered but I deny categorically these allegations. I don’t know what more I can say. You have records of how I reacted to the announcement of Bitcoin, and I struggled to understand it. I suppose you could retort that I was able to fake it, but I don’t know what I can say to that.”

#5 Finney Coding Skills Don’t Match Satoshi’s

During the Forbes interview, Finney told Greenberg that his coding skills didn’t match up with Satoshi’s. “I’ve done some changes to the Bitcoin code, and my style is completely different from Satoshi’s. I program in C, which is compatible with C++, but I don’t understand the tricks that Satoshi used,” he said.

So, do you think Hal Finney created Bitcoin?

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