Nakamoto’s Neighbor: My Hunt For Bitcoin’s Creator Led To A Paralyzed Crypto Genius

Hal Finney’s light brown eyes are pointed down.

I’ve just asked him if he was involved in the creation of Bitcoin. The 57-year-old man’s almost imperceptible eye movement is his only way of telling me that he was not, and that I’ve spent the last week caught in the same futile windmill-tilting that has ensnared so many other reporters trying to solve the puzzle of Bitcoin’s mysterious creator known only as Satoshi Nakamoto.

Finney is seated in an elaborate wheelchair, flanked by medical equipment and his wife and son, both of whom are wearing blue t-shirts that read “Hal’s Pals: Fight ALS.” ALS, or amyotrophic lateral sclerosis, is the name of the terminal disease that has locked Finney into a body whose muscles no longer obey his mind’s commands. His eyes are among the few parts of his anatomy that his will still controls. He uses them to manipulate voice synthesis software running on a computer attached to his wheelchair with an eye-tracking camera. Until recently, this setup allowed him to speak fluidly in a computerized voice.

But as the disease has progressed, even Finney’s eye movements are deteriorating. He’s often reduced to yes-and-no conversations like the one we’re having now. His engineer’s mind, which has written some of the most important code in the history of cryptography, is unaffected by the disease and remains as lucid as ever. But its last lifelines to the outside world are growing thin.

I ask Finney if he has any connection to Dorian Nakamoto, the man Newsweek has a week earlier named as the creator of Bitcoin, the cryptocurrency that has come to represent an entirely new digital form of money, and whose total value has risen as high as $16 billion at some points over the last year.

His eyes glance downward again, and this time Finney grins. His son Jason explains that involuntary movements are less affected by ALS than voluntary ones; Finney can’t easily smile on command for a photograph, but he can smile when he’s amused, and he’s clearly amused by my questions.

Finally, in a plea that must sound a little desperate, I ask Finney to show me what “yes” looks like, just to be sure I haven’t somehow misinterpreted his denials. He raises his eyes and eyebrows unmistakably, still grinning.

Amazing, I think, how quickly a raised eyebrow can shut down the most elaborate theories.

A week earlier, I was following clues that seemed to point to either Finney’s involvement in the creation of Bitcoin or one of the most improbable coincidences I’d ever encountered. Today, I believe those connections were in fact random, that Finney is telling the truth when he denies helping to invent Bitcoin, and that I am only the most recent of a long string of journalists to succumb to the mirage of a Satoshi Nakamoto-shaped pattern in a collection of meaningless facts.

But in following the clues that led me to Finney, I found something equally significant: a dying man who had been something like a far-more-brilliant Forrest Gump of cryptographic history: a witness to and participant in practically every important moment in the recent history of secret-keeping technologies. From the development of the first widely used strong encryption software known as PGP, to early anonymity systems, to the first Bitcoin transaction, Finney was there.

The rabbit-hole journey that led to my meeting with Finney began on March 6th, the day that Newsweek released its bombshell cover story on the man who it claimed had invented Bitcoin: Dorian Prentice Satoshi Nakamoto, a 64-year old ex-engineer and programmer living in the small exurb of Los Angeles known as Temple City. Nakamoto had even seemed to give Newsweek a tacit confirmation of its theory when he told the magazine’s reporter that he was “no longer involved in that,” a quote confirmed in essence by local police who witnessed the interaction.

Just hours after Newsweek’s story hit the Web, I received an email from an old cryptography community acquaintance of Finney’s who has asked to remain anonymous. The email was titled “What are the odds?” It pointed out that Hal Finney had lived for almost a decade in Temple City, the same 36,000 person town where Newsweek found Dorian Nakamoto. Finney’s address was only a few blocks away from the Nakamoto’s family home.

This was an uncanny link: Finney is known to be the second-ever user of Bitcoin after Satoshi Nakamoto himself. He had been one of the first supporters of the idea when Nakamoto floated it on a cryptography mail list, and even received the first Bitcoin test transaction from Nakamoto in early 2009, as Finney himself wrote in a post to the Bitcointalk forum.

In other words, the possibly-first and confirmed-second ever users of Bitcoin lived just blocks apart.

“What are the odds in a country as large as ours, or as large as California is, or even as large as the general LA area is, that [Dorian Satoshi Nakamoto] and Hal Finney both live(d) in Temple City at the same time, about 1.6 miles from each other?” my contact wrote. “Did they know each other socially, through some club? Did one help the other?”

Already, the theory was percolating through the Texas Bitcoin Conference I was attending that day in Austin, where one Bitcoin podcaster independently rehearsed a more extreme version of the same theory for me over drinks: Had Finney invented Bitcoin himself and simply used his neighbor’s name as a pseudonym? On Reddit, a user traced Finney’s IP address and found that he was in the Los Angeles area. “Dorian [Nakamoto] probably could’ve been a drop,” wrote a user called Ikinoki, using the hacker jargon “drop,” a patsy whose personal information is used to hide online exploits.

I didn’t suspect Finney of anything nearly so malicious. Instead, I began to believe he might have been Bitcoin’s ghostwriter.

At the request of my Forbes colleague Matt Herper, the writing analysis consultancy Juola & Associates had already compared Dorian Nakamoto’s various online comments and postings with Satoshi Nakamoto’s writings on Bitcoin before his total disappearance from the Web in 2011. (Read the details of their analysis in Herper’s post here.) Unsurprisingly, they found a total mismatch: Dorian Nakamoto’s half-broken English hardly matched the elegant technical style of Bitcoin’s creator.

Hal Finney’s writing, on the other hand, was as fluid and precise as the whitepaper that first introduced Bitcoin in late 2008. Maybe, I thought, Finney had served as something like Nakamoto’s amanuensis, crediting Nakamoto for the idea, but using his own superior writing skills to explain Bitcoin to the public. I collected a 20,000 character sample of Finney’s writing from various forums and mailing lists and sent it to Juola & Associates for analysis.

In the mean time, I emailed Finney a few times. When I didn’t hear back–he’s been mostly absent from the Internet as his paralysis deepens–I called his wife, Fran, who now works as Finney’s full-time caregiver. She explained her husband’s medical situation, and patiently relayed my questions to him. Using his eyebrows and eye movements, as she described to me over the phone, he confirmed that he had corresponded with Bitcoin’s creator, but denied any connection to the invention of Bitcoin or the Dorian Nakamoto Newsweek had named, just as he would when I visited a week later. “For all Hal knew, Satoshi Nakamoto could have been next door, or he could have been in Japan,” Fran said.

She also politely invited me to visit her and her husband in Santa Barbara, where the couple now lives. In person, she said, it would be easier to convince me that Finney wasn’t involved in Bitcoin’s invention despite the one-in-a-million geographical connection. She also requested that I include in any story I wrote her plea to the media and the Bitcoin community not to flock to their home and stalk Finney for interviews the way reporters had immediately done at Dorian Nakamoto’s house following Newsweek’s story.

“He’s very fragile,” she told me. “We have him on ventilator support twenty-four hours a day. He has difficulty communicating. It would be nice if people would not harass him.”

Just hours after that phone conversation, I received the results from the writing analysis from Juola & Associates. The firm, its chief scientist John Noecker explained in a phone call, had previously tried analyzing candidates for Satoshi Nakamoto named by older investigations performed by the New Yorker, Fast Company, and various Bitcoin enthusiasts. None of the results had been promising enough to publish, according to Noecker.

Hal Finney, by contrast, was the best Nakamoto candidate whose writing the firm had ever analyzed and the first who Noecker believed might have actually written the Bitcoin whitepaper.

“So, it seems to me,” he wrote in an email, “that you may have found the real Satoshi Nakamoto.”

***

Hal Finney grew up in the idyllic Los Angeles suburb of Arcadia, in a two-story cottage-style house just an eight-minute drive away from the Nakamoto family home in Temple City. Dorian Nakamoto, then known by his birth name of Satoshi Nakamoto, was seven years older than Finney, and the two never attended the same school. But Nakamoto’s brother Tokuo Nakamoto tells me that Satoshi commuted from the Temple City address to college at California Polytechnic Institute well into the early 1970s, when Finney was attending Arcadia High School just a few miles away.

None of Finney’s friends at Arcadia High whom I spoke to had any memory of an older friend or acquaintance of Finney’s named Satoshi Nakamoto.

They do remember Finney as an unusually intelligent and thoughtful student, who at times carried around an impressively large copy of Ayn Rand’s Atlas Shrugged and seemed to have adopted its lessons about libertarian free thinking. Friends recall him quietly sitting in the back of a physics class, only to approach the teacher afterwards to correct an error or suggest a better way of articulating a problem. At math team competitions, Finney would ring in with an answer to most questions before they’d been fully asked. In 1974, his senior year, he was voted “most brains” by his peers.

“He had this uncanny feel for numbers,” says Richard Lewis, a friend of Finney’s who is now a Stanford physiology professor. “To him, they seemed like living things that had behavior, that you could learn from.”

Finney enrolled in the California Institute of Technology, and soon switched his focus from mathematics to computers, staying up through the night and often missing class to obsess over his coded creations. When he graduated, he married his college girlfriend Fran and took a job writing video games for Mattel. In 1982, the Finneys moved to a house in Temple City, again less than two miles from the Nakamoto family home. (Dorian Nakamoto wouldn’t return to the Los Angeles area from New Jersey until 1987, according to Newsweek, and then lived in other neighborhoods like Buena Park and Costa Mesa. But Dorian Nakamoto’s mother and then a Nakamoto a family trust maintained ownership of the Temple City house through Finney’s nine years living in the neighborhood.)

It wasn’t until 1991 that Finney discovered the movement of anti-authoritarian encryption gurus who would define much of the rest of his career: the Cypherpunks. Centered around the Cypherpunk email list, the group advocated encryption tools as a means to shift power from the government and to individuals. Like many cypherpunks, Finney was inspired by the work of David Chaum, another Los Angelino cryptographer who had proposed theoretical systems that would use encryption tools to enable anonymous communications and even untraceable financial transactions. Chaum had developed the first-ever virtual currency known as DigiCash, with some of the anonymous and decentralized properties of Bitcoin, though it never gained widespread adoption.

“It seemed so obvious to me,” Finney would write on the Cypherpunks Mailing List in 1992. “Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization – and Chaum offers 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.”

Finney put his programming prowess to work building the tools to enact that cryptoanarchist vision. “Our motto was ‘Cypherpunks write code,'” says Tim May, a co-founder of the group, referring to a line in the Cypherpunk’s Manifesto written by his co-founder Eric Hughes. “Hal was one of those who actually wrote code.”

When word hit the mailing list that privacy activist Phil Zimmermann planned to release PGP or Pretty Good Privacy, the first freely available encryption program strong enough that not even government intelligence agencies could break it, Finney contacted Zimmermann and became one of his earliest collaborators. He worked almost a full-time job’s worth of hours developing PGP 2.0, widely considered to be the first truly secure version of the program, and pioneered its “web of trust” model of key-signing, a method to establish trusted identities through the peer-to-peer vouching of a community of users. “The trust model was a very complex part, and this was of crucial importance to PGP’s success,” says Zimmermann. “Hal made an enormous contribution.”

(When Zimmermann first wrote back to my query about Finney, he also noted Finney’s extraordinary humility and strength of character: “Hal is a rare genius who never had to trade his emotional intelligence to get his intellectual gifts,” Zimmermann wrote. “He is a fine human being, an inspiration for his attitude toward life. I wish I could be like him.”)

In fact, decades before anyone suspected Finney of ghostwriting Bitcoin, Finney ghostwrote much of PGP. Because of the legal controversy around the encryption tool’s distribution on the Internet–Zimmermann was nearly indicted for arms export control violations–Finney’s role was downplayed in Zimmermann’s public discussion of the program. Though Finney told me that he worked closely with Zimmermann to code “the bulk of the changes” from PGP 1.0 to PGP 2.0, he’s rarely been fully credited for that work.

As PGP’s usage spread, Finney was also the first to integrate the encryption software into “remailers”–free services that acted as proxy servers for email, bouncing messages among third parties so that they couldn’t be traced to their source. “Two people could communicate using email, with both of their identities being protected from the other,” Finney explained on the Cypherpunks Mailing List. Those tools would eventually evolve into strong anonymity services like MixMaster and Tor, used by millions around the world today.

Meanwhile, Finney never gave up on Chaum’s ideas of digital, pseudonymous currency. “With digital cash and smart cards, you should be able to engage in…transactions with no organization or institution able to violate your privacy or steal your money,” he wrote on the mail list in 1993. “You can protect yourself, rather than having to trust others. This puts more power into the hands of the consumer.” A few years later, Finney would even develop a “proof-of-work” system that closely resembled the one Bitcoin would later use, requiring that participants of the system solve complex computer problems to create a barrier to entry and keep out those who would corrupt the system.

So when the idea for Bitcoin first appeared on a cryptography mailing in 2008, posted by Satoshi Nakamoto, Finney says he was immediately enthusiastic, and responded with curious questions. Nakamoto’s announcement otherwise got a mostly skeptical reception. “Cryptographers have seen too many grand schemes by clueless noobs,” Finney wrote on the BitcoinTalk forum in 2013. “I was more idealistic; I have always loved crypto, the mystery and the paradox of it.”

Finney downloaded the early Bitcoin code and began running it on an IBM Windows desktop tower machine. He’s widely believed to be the first person other than Nakamoto himself to do so. He kept it running for weeks–just how long, he declined to tell me. With no competition, he was able to mine as much as a hundred coins a day using only his old PC’s off-the-shelf CPU. But sometime after mining a thousand coins, Finney turned the machine off–he and his son were worried the computer was overheating. The stash of bitcoins sat on Finney’s hard drive and were later burned to a DVD, left to gather dust on a desk. “I thought it was just an altruistic thing he was doing for a friend,” says Fran Finney. “And we thought the PGP thing had been enough altruism already.”

During his Bitcoin experimentation, Finney corresponded with Nakamoto, sending him a series of bug reports and suggestions for fixes. He would later write that while he had no idea of Nakamoto’s real identity or location, he imagined Bitcoin’s creator to be “a young man of Japanese ancestry who was very smart and sincere.”

In early 2009, Nakamoto also sent Finney the first ever test transfer of bitcoins. Finney said at the time he’d repay the ten coins back to Nakamoto. He never did, Fran Finney recalls with a laugh. He had other things on his mind by then, she says: Finney inexplicably began to fatigue quickly, slur his words, experience strange tingling, and lose coordination in his right hand. His doctor diagnosed him with ALS in August of 2009.

As Finney’s muscle control declined over the next years, he continued to write code for Bitcoin. At one point he wrote up an improvement to its elliptic-curve cryptography that would speed up its transactions by as much as 20%. Even after he lost the ability to type with both hands, and then to type at all, he continued to use eye-tracking software to write code, including a program called bcflick aimed at better securing Bitcoin wallets. “I am most proud of my work on PGP,” Finney wrote to me in an email, “ Although I would not be surprised if my small contributions to Bitcoin, particularly my optimization of the elliptic curve math, may be the lasting contribution of my work.”

As for the bitcoins Finney mined in those early days, he writes that he was relieved to rediscover them in 2010, still intact, as the currency suddenly began to gain value. He transferred them to the disc, and then later stored it in a safety deposit box at the family’s bank. But as Finney’s medical bills mounted, Finney sold the majority of the coins at an exchange rate of around $100, just a fraction of the more than $500 they’d be valued at today.

“[Our son] Jason is always saying ‘what if, what if,’” Fran says of the decision to sell the coins. “It’s fine with me if it means we have enough money to keep Hal alive, at home and comfortable.”

Fran declines to say just how much the family’s remaining Bitcoin savings are worth, but adds that the family has never had as much cryptocurrency wealth as is often rumored. Last year, she says, an extortion attempt threatened to release private information about the family online if Finney didn’t transfer a large number of bitcoins–more than he even had remaining after his medical expenses.

Finney himself doesn’t seem to dwell on what could have been, as much as his good fortune in becoming Bitcoin’s earliest-ever adopter. “I’m pretty lucky overall. Even with the ALS, my life is very satisfying. But my life expectancy is limited,” he wrote last year. “I’m comfortable with my legacy.”

***

After my initial phone call with Fran Finney, Hal Finney wrote me an email that I later learned had taken him the better part of a day to produce with his limited eye movement. In the note, he not only denied inventing Bitcoin, but also expressed doubts at Newsweek’s focus on his old neighbor Dorian Nakamoto.

I must be brief. The reason I was skeptical about Dorian Nakamoto is that he didn’t match the picture in my mind that I had of Satoshi. I pictured him younger, as he was giving the impression of youthful vigor. Then there is the language Bitcoin was written in, C++. Satoshi was a master of the intricacies, and I’ve only seen this in young programmers. It seems hard to master C++ if you didn’t learn it while you’re young. As I have learned more about him, there are details that don’t add up, such as his care for an aging mother, which might cause financial strain.

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. 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.

As far as your theory that I knew Dorian, that is unlikely because I lived in Temple City more than a decade ago, when Bitcoin hadn’t even been dreamed up. Again, I categorically deny any familiarity with Dorian Nakamoto.

In a written statement of his own a week later, Dorian Nakamoto would also deny any involvement with Bitcoin, arguing that he had never worked in cryptography and was so financially impoverished that he couldn’t even afford an Internet connection—two claims that called into question Newsweek’s assertion that he had invented Bitcoin, and with it, any connection this Nakamoto might have had to Finney. Through his brother Tokuo, Dorian Nakamoto also told me he had never before heard Hal Finney’s name.

But the most compelling evidence that Finney didn’t invent Bitcoin or ghostwrite the 2008 Bitcoin whitepaper came during my visit to the Finneys’ Santa Barbara home.

I arrived on a Saturday afternoon, 20 minutes late due to traffic between Los Angeles and the Santa Barbara suburb. Fran Finney welcomed me into her home and brought me into the living room, where Finney himself sat in his wheelchair with his son Jason. His ventilator whirred rhythmically and the air smelled faintly of something sweet, like hot milk.

I apologized for being late. Finney’s first words to me, and the longest sentence I heard him speak in his robotic voice, were “Andy, it’s hard to time the drive from LA.” He had spent around ten minutes writing the sentence with his eye movements, just to comfort me about my tardiness. “We’re used to that kind of thing from him,” Fran told me. “He’s a good guy.”

I sat down with Finney and explained again the strange connections that had brought me to his home. Then I rehearsed the questions I’d asked through his wife over the phone. With his eyes, he gave the same friendly denials.

Then Jason Finney brought me over to a computer to show me what he’d prepared: It was Finney’s Gmail account, opened to a January 2009 conversation between Finney and someone named Satoshi Nakamoto—clearly, the Satoshi Nakamoto. They had exchanged about fifteen emails, in which Finney described bugs he’d found in the early Bitcoin code and Nakamoto responded with fixes and notes of thanks.

The Nakamoto on the other end of the conversation wrote in fluent, colloquial English, not at all like Dorian Nakamoto. (I would later forward the emails to the same linguistics analysis firm who had earlier analyzed Nakamoto’s writings, Juola & Associates, and they confirmed that the new emails matched the style of the Bitcoin whitepaper more closely than Finney’s writing, and far more closely than Dorian Nakamoto’s.)

Jason Finney also let me see the transaction record for his father’s Bitcoin wallet from 2009, which clearly showed that Finney had received Nakamoto’s ten-bitcoin test transaction on January 11th, 2009. The wallet evidence, along with the Gmail timestamps, would have been very difficult to forge. And the notion that Finney alone might have set up the two accounts and created a fake conversation with himself to throw off snoops like me, long before Bitcoin had any measurable value, seemed preposterous.

“My father is an honest guy,” Jason said. “He would have loved to have been part of creating Bitcoin, and he wouldn’t have hidden it. But he wasn’t involved.”

At this point, I was convinced I had reached a dead end. All the signs that Finney might have had a secret hand in the creation of Bitcoin had turned out to be nothing more than an illusion of a signal in random noise.

But even as I dropped my theory, I had learned enough to know that Finney was no random red herring. As an open source project, Bitcoin has been built and rebuilt by a community of programmers who have rewritten 70% of its code, like a ship whose crew replaces its hull while at sea. As the very first debugger and contributor to Bitcoin’s code long before a bitcoin was ever worth a thousandth of a penny, there’s no question that Finney did in fact help to create it. And this might be the last chance I or any other journalist might have to meet him in person.

I sat next to Finney again and asked him if, in this sense of open-source contribution, he did consider himself one of the creators of Bitcoin.

He raised his eyes and eyebrows.

Then I asked him if he was proud of that work. Finney raised his eyes again, and he smiled.

With reporting contributed by Matt Herper, Susan Radlauer and Kashmir Hill.

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