Satoshi Files: Nick Szabo
Crypto Basics

Satoshi Files: Nick Szabo

Created 5mo ago, last updated 5mo ago

Nick Szabo is a computer scientist, cryptographer and Cypherpunk known for his pioneering work on digital contracts and currencies.

Satoshi Files: Nick Szabo

Table of Contents

Nick Szabo is a computer scientist, cryptographer and Cypherpunk known for his pioneering work on digital contracts and currencies. His ideas were ground-breaking and ahead of their time, and have shaped the modern-day blockchain and cryptocurrency sector.

Yet despite his achievements, Nick Szabo is a humble man who doesn’t seek the spotlight or bask in the glory of his accomplishments. He rarely gives interviews and almost never comments on current affairs. Instead, he lets his work speak for itself.

Source: Metaschool

Join us in showcasing the cryptocurrency revolution, one newsletter at a time. Subscribe now to get daily news and market updates right to your inbox, along with our millions of other subscribers (that’s right, millions love us!) — what are you waiting for?

Early Life

Source: Hungary Today

Nick Szabo’s father instilled in him a deep understanding of how easily governments and other centralized authorities can abuse their power. It was a lesson he learned during the Hungarian uprising against the Soviet Union, and one that his son Nick has shared with others.

Szabo said:

“He, along with many other people from communist societies that I’ve encountered, have plenty of horror stories to tell about the oppression, the killing of people, the stealing of their property and so forth. So, if you had just been born and raised in the US, you might not have known as much about the potential for government to be abused."

Nick Szabo is a man with many interests: computer science, cryptography and law, to name a few. He’s doggedly pursued each of these interests academically. He graduated from the University of Washington with a degree in computer science in 1989, where his interest in cryptography developed into a lifelong passion.

In the early 2000s, Szabo completed his Juris Doctor from George Washington University Law School. There, he and his fellow students took part in a moot court competition against John Roberts, Chief Justice of the Supreme Court, as well as Judge Sonia Sotomayor, who now also sits on the Supreme Court.


We can’t say for sure when Szabo became a Cypherpunk, but it was probably just after he left Washington University in 1989. The Cypherpunks were an online group who debated the merits of using cryptography and other privacy tools to bring about social and political change. The group’s members included Satoshi Nakamoto – Bitcoin’s inventor; Hal Finney, who invented Reusable Proof-of-Work (RPoW), a forerunner to Bitcoin; and Adam Back, who created the Hashcash function used by both Finney’s RPoW and Satoshi’s Bitcoin.

Cypherpunks and DigiCash

Many of the Cypherpunks’ core ideas revolved around (1) private communication tools which encrypted data and allowed people to interact without worrying about being spied on; and (2) digital currencies, such as Satoshi’s Bitcoin, Wei Dai’s b-money, and David Chaum’s Ecash, which was the first major project Szabo worked on after graduating from Washington University.


Ecash, which was built by Chaum’s company ‘DigiCash,’ was the first serious attempt at building a global digital currency. Unlike Bitcoin and other modern cryptocurrencies, it was controlled centrally by DigiCash. The Mark Twain Bank in the US and Deutsche Bank in Germany both offered eCash to their customers before DigiCash folded in 1998.
Szabo and others who worked for DigiCash found that Ecash’s centralized design allowed him to mess with people’s Ecash balances, which constituted a huge design flaw. “The lesson learned from DigiCash,” said cryptographer Adam Back twenty years later, “was that we needed a decentralized, peer-to-peer approach.” In other words, we needed something more like Bitcoin, and less like an anonymous credit facility.
While he consulted for DigiCash, Szabo started masking his true identity online using pseudonyms; he found the process tiring and difficult. “In my limited experience creating Internet pseudonyms, I've been quite distracted by the continual need to avoid leaving pointers to my True Name lying around -- excess mail to/from my True Name, shared files, common peculiarities (eg misspellings in written text), traceable logins, etc,” he said.

Writing Analyzes

It's clear then that by the late 1990s, Szabo was aware that someone could de-mask him by comparing “common peculiarities” in his written work with those in any work published under a pseudonym. This is intriguing because, during the thirty years since he revealed this knowledge, three independent writing analyzes have shown that Nick Szabo’s writing bears remarkable similarity with Satoshi Nakamoto’s.

The first known analysis of Satoshi’s writings was carried out by Skye Grey in December 2013. Grey collated all of Satoshi’s unusual phrases and terms (i.e., timestamp server, trusted third party, cryptographic proof, using timestamp as a verb,) in addition to the neutral phrases he uses (i.e., for our purposes; it should be noted; preclude; a level of) in order to create a writing profile for Satoshi. Grey then searched the web for any written content that matched Satoshi’s profile. The search led straight to Nick Szabo’s blog, without so much as a list of candidates to start with.

Grey wrote:

“…what originally led me to this hypothesis [that Szabo is Satoshi] is that reverse-searching for content similar to the Bitcoin whitepaper led me to Nick’s blog, completely independently of any knowledge of the official Bitcoin story.”
A study from Aston University in the UK concluded similarly. In early 2014, researchers found that Szabo’s writing matched Satoshi’s closest out of eleven candidates. The researchers used similar techniques to Grey, but they also analysed how each candidate punctuated their work. The research lead, Dr Jack Grieve, considered the case open and shut, he said:
“The number of linguistic similarities between Szabo’s writing and the Bitcoin whitepaper is uncanny, none of the other possible authors were anywhere near as good of a match.”
One last analysis, carried out by Michael Chon in December 2017, didn’t find the matter to be so black and white. Chon used natural language processing tools to compare Satoshi’s writing with authors of academic papers related to blockchain and cryptocurrency. He found that Nick Szabo’s papers were the most “linguistically similar” to Satoshi’s whitepaper, but his emails better matched another cryptographer called Ian Grigg. This led Chon to conclude that “Satoshi who had written the Bitcoin paper may not be the same Satoshi who had exchanged emails” — supporting the thesis that Satoshi is a group of people rather than one person.

Bit Gold — Bitcoin’s Predecessor?

Nick Szabo found some early success within cryptography thanks to his invention of smart contracts, which he proposed in 1994 and outlined in a paper in 1996. Smart contracts are, in short, programs that automatically execute when predetermined criteria are met. You could, for instance, program a smart contract to release a set sum of money every year to an individual on their birthday.
During the mid 1990s, Szabo wrote a number of essays and academic papers related to digital currency and cryptography. In 1998, he wrote a paper about his ideas for ‘timestamped databases,’ which could replace vulnerable written records with a digital alternative, not unlike Bitcoin’s immutable ledger. And in 2005, Szabo explored how “Antiques, time, [and] gold” have value because they can’t be forged, and that if someone created a virtual gold, or “bit gold,” it too would have value. Szabo expanded on his idea for bit gold in a post on his blog a few months later.

Bit gold was one of the earliest attempts at making a decentralized digital currency, and is generally considered to be the forerunner to Bitcoin.

Szabo writes, describing the problem bit gold could solve:

“The problem, in a nutshell, is that our money currently depends on trust in a third party for its value. As many inflationary and hyperinflationary episodes during the 20th century demonstrated, this is not an ideal state of affairs.”

As evidenced by the paper, bit gold and Bitcoin were remarkably similar: both require computing power to generate ‘bits’ which are time stamped and chained together, forming a chain; a record of who owns which bits is publicly available in the form of a digital ledger; the titles to ‘bits’ can be traded, and their value will depend on how much computer power is required to create them.

But there are still some important differences between bit gold and Bitcoin. The former’s overarching aim, for instance, is quite different from Bitcoin’s.

“I long considered bit gold as a design for "high-powered money" that like gold could be used as an investment vehicle, a medium for large transactions, and a reserve currency against which digital notes could be issued."
In other words, bit gold would ‘back’ other digital currencies, similar to how gold backed the dollar up until the 1944 Bretton Woods agreement.
Szabo doesn’t appear to have publicly discussed bit gold again until three years later, when he published a short essay titled “Bit gold markets” in April 2008. “The basic idea of bit gold is for "bit gold miners" to set their computers to solving computationally intensive mathematical puzzles, then to publish the solutions to these puzzles in secure public registries, giving them a unique title to these provably scarce and securely timestamped bits.” This will no doubt sound familiar to those acquainted with Satoshi’s whitepaper.

What’s even more intriguing is that at the end of the post, Szabo writes, “Anybody want to help me code one up?” For context, he asked this question just six months before Satoshi published the Bitcoin whitepaper.

Is it possible that Satoshi Nakamoto read Szabo’s post?

Bitcoin Whitepaper

At the end of October in 2008, Satoshi shared the Bitcoin whitepaper with his fellow Cypherpunks, but there’s no mention of any of Nick Szabo’s bit gold.

Hal Finney, a world-class and revered cryptographer, told Satoshi that he should look at bit gold, as it could help him further develop Bitcoin. Unlike when Adam Back suggested he reach out to Wei Dai, Satoshi didn’t contact Szabo – as far as we know. In fact, he didn’t even acknowledge Finney’s suggestion when he replied.

It's curious that Satoshi didn’t cite Szabo’s bit gold in the Bitcoin whitepaper, or contact Szabo himself, even after Hal Finney told him he should. After all, Szabo worked at the cutting edge of cryptography, and was a renowned Cypherpunk whose bit gold idea bore striking resemblance to Bitcoin.

Could it be that Satoshi didn’t want his work linked with Szabo’s?

More interestingly, a year or so after Bitcoin’s up and running, Satoshi then wrote that Bitcoin is “an implementation of Wei Dai's b-money proposal on Cypherpunks in 1998 and Nick Szabo's Bitgold proposal,” in a message to the Bitcointalk forum.

NS: Nick Szabo or Nakamoto Satoshi?

It's January of 2009. Satoshi Nakamoto, Hal Finney and a handful of others are developing Bitcoin. Satoshi and Finney regularly talk via email, but almost never about their personal lives: both men take their right to privacy very seriously. During one conversation, Satoshi wonders out loud whether people will start “brute force scanning” for Bitcoin wallets starting with their initials, like getting a phone number that spells something. He then said, “Just by chance I have my initials.” He then shared his wallet address.

The first three were “1NS.”

Does NS stand for Nick Szabo? Or for Nakamoto Satoshi?

New York Times

Szabo himself denies being Satoshi, and has done so on several occasions. He’s also speculated that either Hal Finney or Wei Dai could be him. “Myself, Wei Dai, and Hal Finney were the only people I know of who liked the idea (or in Dai's case his related idea) enough to pursue it to any significant extent until Nakamoto (assuming Nakamoto is not really Finney or Dai),” he said.
It wasn’t until May of 2015 that Szabo was named as a likely candidate to be Satoshi, when Nathanial Popper ‘outed’ him in a piece for the New York Times. Popper came to suspect Szabo was Satoshi after talking with “programmers and entrepreneurs who are most deeply involved in Bitcoin,” many of whom told him that he was the most likely candidate.

Popper managed to corner Szabo to ask him outright whether he was Satoshi. “I’m not Satoshi,” he said, while acknowledging the many parallels between his and Satoshi’s work. He further explained:

“The reason people tag me is because you can go through secure property titles and bit gold — there are so many parallels between that and Bitcoin that you can’t find anywhere else,”

Since the NYT piece, Szabo has mostly kept to himself. He hasn’t commented publicly on speculation about who Satoshi might be, or why he disappeared, although he still publishes essays to his blog, some of which concern Bitcoin and other cryptocurrencies.

The Evidence That Nick Szabo Could Be Satoshi Nakamoto

#1 Worked on Important Predecessors to Bitcoin

Szabo had the momentum. Just look at what he was working on during the two decades leading up to Bitcoin’s release.

He (1) worked on Ecash with David Chaum; (2) invented smart contracts; (3) theorized bit gold, which is considered the forerunner to Bitcoin; and (4) during the year that Satoshi published the Bitcoin whitepaper, he actually asked for help building a bit gold prototype.

#2 Professional Experience And Technical Ability

Much of Nick Szabo’s academic and professional experience relates to computer science and cryptography.

But more importantly, he was one of only a few people who had the ability to build Bitcoin. This point was made by Wei Dai who, when asked who had the technical chops to have invented Bitcoin, said, “just Nick Szabo and me.”

Szabo himself acknowledged that at the time Bitcoin was invented, only he, Wei Dai and Hal Finney were even interested in building something like Bitcoin.

#3 His Beliefs And Interests Aligned With Satoshi

Szabo has expressed libertarian views on Twitter, his blog, and while speaking publicly. Szabo said that using fiat was “trusting basically a bunch of strangers with your life savings.” Satoshi also supported libertarian politics, particularly when it came to economics and banking. In fact, he even included the message from the London Times saying “Chancellor on brink of second bailout for banks” within Bitcoin’s genesis block.

How many cryptographers with libertarian political views were around in the 1990s? A few, but not thousands. And most of them hung out on the Cypherpunks mailing list. One of them was Satoshi Nakamoto; another was Nick Szabo.

#4 The “code one up” Message

Six months before Satoshi published the Bitcoin whitepaper, Nick Szabo wrote a blog post explaining how bit gold could work, and then asked if anyone could help him “code one up.” Now this isn’t necessarily a slam dunk, but it’s one hell of a coincidence.

What are the chances that during the time period one of the few people who could have created Bitcoin was coding another digital currency, which he never publicly shared?

Is it possible that Szabo successfully developed bit gold, but changed the name in order to hide his identity?

#5 Writing Analysis

Two independent writing analyses showed that Nick Szabo authored the Bitcoin whitepaper and all the emails and forum posts. Another found that he authored the whitepaper, but he probably didn’t write the messages and forum posts.

What are the chances that the writings of a man with Nick Szabo’s expertise would match up so well with Satoshi Nakamoto’s? It’s worth noting that no one else’s writing from this period matches up with Satoshi’s anywhere near as well as Nick Szabo’s.

#6 The “1NS” Initials Message

Satoshi told Hal Finney that his wallet address started with his initials: “1NS.” Nick Szabo? Or Nakamoto Satoshi?

It’s worth remembering that Japanese folks traditionally write their family name first and their forename second, making Satoshi’s name Nakamoto Satoshi. But not once did he ever write his name in that format. So does it stand for Nakamoto Satoshi or Nick Szabo?

#7 Satoshi Didn’t Cite Szabo’s Work

Nick Szabo’s bit gold was one of the best attempts at building a digital currency pre-Bitcoin. In fact, for Satoshi to have built Bitcoin without hearing about Szabo or bit gold seems extraordinarily unlikely. So why didn’t he reference either in the Bitcoin whitepaper?

Perhaps Szabo purposely distanced his work from Bitcoin in order to keep his anonymity?

#8 Slip of the Tongue

While being interviewed on the Tim Ferriss Podcast, Szabo said, “I designed bitcoi…gold with two layers because…” Did he really mean to say Bit Gold? Or was this an accidental admission that he built bitcoin?

#9 Szabo’s Conspicuous Silence After Bitcoin Launched

Nick Szabo spent decades theorizing a digital currency like Bitcoin. He even planned to build a similar project the same year Satoshi built Bitcoin. Yet when Satoshi put the missing pieces together and launched Bitcoin, Szabo was nowhere to be found.

Given his experience and interest in decentralized digital currencies, his silence raises some important questions. Why wasn’t he talking with Bitcoin’s developers in the forums? Or helping Satoshi and Finney develop Bitcoin? Why did it take him until May 2011, twenty-nine months after Bitcoin launched, for him to discuss it publicly?

Is it possible he wanted to distance himself from the project so as to protect his pseudonym, Satoshi Nakamoto?

The Evidence That Nick Szabo Is Likely Not Satoshi Nakamoto

#1 He Says He’s Not

Szabo has denied being Satoshi on a number of occasions, including in 2014 on Twitter. Now while this doesn’t preclude him being Satoshi, it’s notable that he would deny being Satoshi because he could have just stayed silent.

#2 Dai Says Szabo Isn’t Satoshi

Wei Dai, a Cypherpunk and cryptographer who could also be Satoshi, claimed he didn’t think Szabo was Satoshi during an interview with the Times. “No, I’m pretty sure it’s not him,” he said. He offered two reasons to back up his assertion.

“One: in Satoshi's early emails to me he was apparently unaware of Nick Szabo's ideas and talks about how Bitcoin 'expands on your ideas into a complete working system' and 'it achieves nearly all the goals you set out to solve in your b-money paper'. I can't see why, if Nick was Satoshi, he would say things like that to me in private. And two: Nick isn't known for being a C++ programmer,” he said.

Dai elaborated at a later date that when he said, “Nick isn’t known for being a C++ programmer,” he didn’t mean that Szabo didn’t know C++. Szabo almost certainly does know it. He really meant that Szabo hadn’t published anything about any projects which he wrote in C++, and therefore his C++ skills probably weren’t sharp enough to have created Bitcoin.

#3 He’s a Lawyer

When Satoshi was asked whether Bitcoin might be subject to the same rules and regulations as banks, he said “I am not a lawyer and I can’t possibly answer that.”

This puts a spanner in the works of most “Szabo is Satoshi” theories because Nick Szabo is most definitely a lawyer – an exceptionally well qualified one at that. However, this doesn’t mean that Szabo couldn’t have been involved in Bitcoin’s development. He could easily have helped during the early stages and written the whitepaper while Satoshi wrote the v0.1 code and worked with the other developers.

So, do you think Nick Szabo created Bitcoin?

This article contains links to third-party websites or other content for information purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of CoinMarketCap, and CoinMarketCap is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. CoinMarketCap is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by CoinMarketCap of the site or any association with its operators. This article is intended to be used and must be used for informational purposes only. It is important to do your own research and analysis before making any material decisions related to any of the products or services described. This article is not intended as, and shall not be construed as, financial advice. The views and opinions expressed in this article are the author’s [company’s] own and do not necessarily reflect those of CoinMarketCap.
5 people liked this article