Satoshi Nakamoto's Early Papers and Concepts: The Truth Behind the Birth of Satoshi Nakamoto as Seen in Early Email Records

As the 2008 financial crisis shook the world, cryptographer Satoshi Nakamoto was secretly working on the innovation of digital currency. Today, from the valuable email exchanges he had with early collaborators, the formation process of the Bitcoin white paper and the concerns he initially held are coming to light.

From Technical Discussions with Adam Back to the Completion of the Paper

In 2008, Satoshi Nakamoto sent an email to Adam Back, the developer of HashCash and a renowned cryptographer. Most of the content of the Bitcoin white paper was actually condensed within this email exchange.

Adam Back recommended that Satoshi read Wei Dai’s famous cryptography paper, “B-money.” In response, Satoshi expressed gratitude but explained that the innovation of Bitcoin lay in utilizing proof-of-work as a decentralized timestamp server. When users generate proof-of-work to create new digital currency, that same proof-of-work also supports the network’s timestamping. This design was conceived as an alternative to Usenet.

Within this email exchange, Satoshi’s ideas became clearer. He told Adam Back that he had not yet read the “B-money” paper but reported that his own paper and open-source code (Bitcoin v0.1) had been released. The core of this system was to generate a hash-based proof-of-work chain to create a self-verifying consensus. By providing proof-of-work to the chain, users could earn new digital currency—an innovative mechanism.

Collaboration with Early Partner Martti: Bitcoin Adoption Strategy and Concerns

After releasing the Bitcoin white paper, Satoshi Nakamoto sought collaborators. Martti “Cyrus” Malmi became an early partner, and emails exchanged between them reveal insights into Satoshi’s business strategy and legal concerns.

Satoshi thanked Martti for opening a topic on the ASC forum and praised his accurate understanding of Bitcoin. He also looked forward to Martti setting up a website on SourceForge to manage Bitcoin-related FAQs.

When asked about future expansion of Bitcoin, Satoshi’s answer was specific. He believed the Bitcoin network could potentially have up to 100,000 nodes, and scalability at that point should be judged based on economic conditions.

Interestingly, Satoshi also showed foresight regarding energy consumption in mining. He considered Bitcoin mining to be more energy-efficient than traditional banking systems. While acknowledging that proof-of-work is essential, he argued that even if energy consumption increased, it would be far more efficient compared to the enormous costs associated with traditional financial infrastructure like brick-and-mortar bank buildings, skyscrapers, and spammy credit offers.

Satoshi Nakamoto’s Forward-Looking Ideas

Even after completing the white paper, Satoshi continued to envision non-monetary uses for Bitcoin, especially focusing on the use of timestamps. He argued that blockchain could function as a decentralized, secure timestamp server, suitable for proving that a particular file existed at a certain point in the past. Using just a few lines of code to add additional hashes to transactions, he proposed a pioneering idea for timestamp applications.

He also explained in detail the differences between Bitcoin and David Chaum’s failed digital currency DigiCash. DigiCash prioritized privacy, but Satoshi’s design approached privacy and double-spending prevention differently. Bitcoin allows recipients to verify whether a payment is the first one, preventing double-spending. DigiCash, on the other hand, depended on a central server, and if that server went down, the currency would cease to function.

Satoshi was cautious about calling Bitcoin an “investment.” He warned Martti about legal risks and suggested that such risky terminology should be removed from the website. This cautious attitude reflected the practical challenge of how to avoid the attention of regulatory authorities during the early promotion of the white paper.

In July 2009, after 18 months of development, Satoshi felt exhausted and in need of rest. During this period, his early collaborator Hal Finney was also stepping back from active involvement. Hal had conducted early testing of Bitcoin and had previously contributed significantly to the field with reusable proof-of-work (RPOW), but was now too busy to provide substantial support.

Satoshi also thought strategically about how to promote Bitcoin. He believed that offering Bitcoin as a backing currency could attract many free seekers and generate promotional effects. Initially, he thought it would be recognized as a way to earn free currency during idle computer time. However, as competition increased and mining difficulty rose, he predicted that Bitcoin’s scarcity would become apparent, and people would realize it’s impossible to obtain all Bitcoins.

Satoshi was also cautious about anonymity. He recommended removing the word “anonymous” from the Bitcoin website, fearing it sounded suspicious. He believed that those seeking privacy would understand it themselves, and there was no need for Bitcoin to promote this aspect loudly.

This early email record reveals that by the time Satoshi Nakamoto finalized the white paper, he was already grappling with many practical challenges and legal and social concerns. Balancing technological innovation with realistic risk management, Satoshi carefully advanced the dissemination of the Bitcoin white paper.