Digital Gold (33 page)

The bulk of this book is based on over three hundred interviews I conducted with the people involved, in places as far flung as Buenos Aires; Beijing; Shanghai; Tokyo; Austin; San Francisco; Palo Alto; Reykjavik; Toronto; Washington, DC; Amsterdam; and New York. I was often able to confirm the recollections with private e-mails and other contemporaneous documents that were shared with me. In the end only a handful of the people mentioned in this book declined to talk to me.

Unless I have specified otherwise in the notes below, readers can assume that every moment described in this book came to me directly from at least one or, when possible, more than one person present at the event described. Most of the direct quotes come from contemporaneous documents or recordings but some of the quotes are the best recollection of the participants, generally backed up by at least one other person in attendance. I was lucky enough to be present for some of the events, such as the March 2014 gathering at Dan Morehead's house on Lake Tahoe.

Most of the material that did not come from interviews and personal e-mails sat in the digital treasure trove of public messages and chats that the Bitcoin community has created over time, and that various participants had the wisdom to maintain for posterity. They will be referenced in the notes by following abbreviations:

CYPH: Cypherpunk mailing list, http://cypherpunks.venona.com/.

CRYP: The Cryptography and Cryptography Policy Mailing List, http://www.mail-archive.com/[email protected]/.

DEV-LIST: Core Bitcoin development discussion, http://sourceforge.net/p/bitcoin/mailman/bitcoin-development/.

BTCF: Bitcoin Forum, https://bitcointalk.org.

IRC: #bitcoin-dev Internet Relay Chat channel, http://bitcoinstats.com/irc/bitcoin-dev/logs/2014/01.

On Silk Road, there are two remarkable online efforts to gather and catalog all available information, including legal documents and postings from the now defunct marketplace. One is available at http://antilop.cc/sr/. The other is at http://www.gwern.net/Silk%20Road. Many of the details in the book came from the Silk Road's forums and Ross Ulbricht's trial, which will be referred to in the notes by the following abbreviations:

SRF: Silk Road forum archives, http://antilop.cc/sr/download/stexo_sr_forum.zip.

RUTT: Ross Ulbricht trial transcripts,
United States of America v. Ross William Ulbricht
. United States District Court Southern District of New York. 14 CR 68 (KBF).

RUTE: Ross Ulbricht trial exhibits,
United States of America v. Ross William Ulbricht
. United States District Court Southern District of New York. 14 CR 68 (KBF).

The notes below will not contain citations for material from the sources above when it is obvious in the text where the material came from.

All Bitcoin prices are taken from CoinDesk's Bitcoin Price Index, which is available at http://www.coindesk.com/price/, unless I have stated otherwise. The numbers on Bitcoin trading volumes come from www.bitcoinmarkets. com and www.bitcoinity.com/data.

For those looking to learn more about the topics covered in this book there are several wonderful books. On the history of the Cypherpunks, there is Andy Greenberg's
This Machine Kills Secrets: How WikiLeakers, Cypherpunks, and Hacktivists Aim to Free the World's Information
. For the history of cryptography I learned a great deal from Simon Singh's
The Code Book
. For those eager to learn more about the evolution of money, Felix Martin's
Money: An Authorized Biography
and Jack Weatherford's
The History of Money
are wonderful reads, and Nigel Dodd's
The Social
Life
is thought-provoking. Those looking to go into greater depth can try
A History of Money
by Glyn Davies. I also benefited from Eileen Ormsby's book
Silk Road
, the first of what I'm sure will be many fascinating volumes about the online bazaar.

The pagination of this electronic edition does not match the edition from which it was created. To locate a specific passage, please use your e-book reader's search tool.

xiv
  
only 15 percent of the basic Bitcoin computer code: Based on calculations done for the author by Gavin Andresen.

4
     
this particular e-mail came from: Satoshi Nakamoto to CRYP, October 31, 2008.

4
     
the nine-page description: A later version of the paper would be nine pages, but the initial version Hal reviewed was actually eight pages.

5
     
tied to an Internet provider in California: Hal's debug log showed that the IP addresse of the other user was reached through a Tor service that would have obscured the real IP address. But Tor generally routes users to nodes in the same geographic area, suggesting that the other user on Bitcoin's first day was probably in California.

5
     
He said he'd been testing it heavily: I have elected to use the pronoun “he” to refer to Satoshi, but Satoshi could also be she or they.

6
     
now recorded next to one of his Bitcoin addresses: The address in question was 1AiBYt8XbsdyPAELFpcSwRpu45eb2bArMf.

12
   
Chaum's effort would rub Hal and others the wrong way: Hal Finney to CYPH, August 22, 1993.

12
   
DigiCash went down with it: Tim Clark, “DigiCash Files Chapter 11,” CNET, November 4, 1998, http://news.cnet.com/2100-1001-217527 .html.

13
   
Hal would calculate the maximum bill: This anecdote was recounted by Hal's college roommate and later colleague, Yin Shih.

13
   
“The work we are doing here, broadly speaking”: Hal Finney to CYPH, November 15, 1992.

16
   
As sociologist Nigel Dodd put it: Nigel Dodd,
The Social Life of Money
(Princeton, NJ: Princeton University Press, 2014).

17
   
“We could envisage proposals in the near future”: Alan Greenspan, Conference on Electric Money and Banking, United States Treasury, September 19, 1996, http://www.federalreserve.gov/boarddocs/speeches/19960919.htm.

17
   
a British researcher named Adam Back released his plan: Adam Back to CYPH, March 28, 1997.

18
   
a concept called bit gold, was invented by Nick Szabo: Nick Szabo, “Bit Gold,”
Unenumerated
, December 2005, http://unenumerated.blogspot .co.uk/2005/12/bit-gold.html.

19
   
Another, known as b-money, came from an American named Wei Dai: Wei Dai to CYPH, 1998.

19
   
Hal created his own variant, with a decidedly less sexy name: Hal Finney to CYPH, August 15, 2004.

20
   
The nine-page PDF attached to the e-mail: the current version is available at https://bitcoin.org/bitcoin.pdf.

22
   
modeled after the contest that Adam Back: While this process was modeled on Back's program, it also relied on the innovations of several other cryptographers and mathematicians, including Ralph Merkle, Stuart Haber, and W. Scott Stornetta.

25
   
usually belonging to Satoshi: Satoshi's mining activities were traced by the Argentinian researcher Sergio Demian Lerner. Sergio Demian Lerner, “The Well Deserved Fortune of Satoshi Nakamoto, Bitcoin Creator, Visionary and Genius,” Bitslog, April 17, 2013, https://bitslog.wordpress .com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/.

25
   
the first transaction took place when Satoshi sent Hal ten coins: Satoshi's address for this transaction was 12cbQLTFMXRnSzktF kuoG3eHoMeFtpTu3S; Hal's was 1Q2TWHE3GMdB6BZKafqwxX tWAWgFt5Jvm3.

26
   
Satoshi was using his own computers to help power the network: Lerner.

26
   
When a programmer in Texas wrote to Satoshi late one night: The programmer, Dustin Trammel, posted the e-mails on his blog at http://blog.dustintrammell.com/2013/11/26/i-am-not-satoshi/.

29
   
Before reaching out to Satoshi, Martti had written about Bitcoin on anti-state.org: Martti's post, written under the screen name Trickster, is available at https://board.freedomainradio.com/topic/17233-p2p-currency-could-make-the-government-extinct/.

30
   
“The root problem with conventional currency”: Satoshi Nakamoto, “Bitcoin Open Source Implementation of P2P Currency,” P2P Foundation forum, February 11, 2009, http://p2pfoundation.ning.com/forum/topics/bitcoin-open-source.

33
   
It also meant that Satoshi's computers were still: Sergio Demian Lerner,
“The Well Deserved Fortune of Satoshi Nakamoto, Bitcoin Creator, Visionary and Genius,” Bitslog, April 17, 2013, https://bitslog.wordpress .com/2013/04/17/the-well-deserved-fortune-of-satoshi-nakamoto/.

35
   
“Be safe from the unstability caused by fractional reserve”: An archived version of the page designed by Martti is available at http://web.archive .org/web/20090511173000/http://bitcoin.sourceforge.net/.

35
   
A few dozen people downloaded the Bitcoin program: Data on software downloads available at http://sourceforge.net/projects/bitcoin/files/stats/timeline.

37
   
Starting in August, the log of changes to the software: The history of changes to the software is available at https://gitorious.org/bitcoin/bitcoind/activities.

37
   
When the next version of Bitcoin, 0.2: Satoshi Nakamoto to DEV-LIST, December 17, 2009.

37
   
the majority of coins were still: Lerner.

37
   
throughout 2009 no one else was sending or receiving: Data on the number of transactions per block available at https://blockchain.info/charts/n-transactions-per-block.

38
   
In the very first recorded transaction of Bitcoin for United States dollars: Information on the transaction is available at https://blockchain .info/tx/7dff938918f07619abd38e4510890396b1cef4fbeca154fb7aaf ba8843295ea2.

38
   
NewLibertyStandard came up with his own method: The shuttered exchange is still online at http://newlibertystandard.wikifoundry.com/page/Exchange+Rate.

39
   
Swap Variety Shop on his exchange website: The shuttered shop is still online at http://newlibertystandard.wikifoundry.com/page/Specialty+Shop.

44
   
But on May 22, 2010, a guy in California offered to call Lazlo's local Papa John's: Information about the Bitcoin transaction is available at https://blockchain.info/tx/a1075db55d416d3ca199f55b6084e2115b9345e16c5cf302fc80e9d5fbf5d48d.

44
   
small item on the website of
InfoWorld
: Neil McAllister, “Open Source Innovation on the Cutting Edge,”
Info World
, May 24, 2010, http://www.infoworld.com/article/2627013/open-source-software/open-source-innovation-on-the-cutting-edge.html.

47
   
“Slashdot with its millions of tech-savvy readers”: Martti Malmi to BTCF, June 22, 2010.

48
   
“How's this for a disruptive technology?”: “Bitcoin Releases Version 0.3,”
Slashdot
, July 11, 2010, http://news-beta.slashdot.org/story/10/07/11/1747245/bitcoin-releases-version-03.

49
   
The number of downloads would jump from around three thousand: Data on software downloads available at http://sourceforge.net/projects/bitcoin/files/stats/timeline.

49
   
“Over the last two days of Bitcoin being”: Gavin Andresen to BTCF, July 14, 2010.

53
   
the difficulty of mining new Bitcoins jumped 300 percent: Data on mining difficulty available at https://blockchain.info/charts/difficulty? timespan=all&showDataPoints=false&daysAverageString=1&show_ header=true&scale=0&address=.

54
   
In one month, the forum had gained more new members: Data on forum usage available at https://bitcointalk.org/index.php?action=stats.

57
   
“Nobody can stop the Bitcoin system”: Keir Thomas, “Could the Wikileaks Scandal Lead to New Virtual Currency?”
PC World
, December 10, 2010, http://www.pcworld.com/article/213230/could_ wikileaks_scandal_lead_to_new_virtual_currency.html.

65
   
“To tell the truth, I always felt”: Mark's blog has been taken down, but an archived version of this post is available at http://web.archive .org/web/20140302234940/http://blog.magicaltux.net/2006/02/12/pensees-nocturnes/.

69
   
begun in earnest in July 2010 when he had sold a cheap house in Pennsylvania: RUTE GX 250 and GX 251.

69
   
Ross rented a cabin about an hour from his home in Austin, Texas: RUTE GX 240A.

70
   
he knew he wanted to set up a new kind of online market: RUTE GX 240A.

70
   
His curiosity about and penchant for the outdoors: Ross spoke about his youth in a recording done for the StoryCorps project with his friend Rene Pinnel in 2012.

70
   
At Penn State, he had the unique distinction: Erin Rowley, “Caribbean Students Host Cultural Event,”
Daily Collegian
, March 24, 2008, http://www.collegian.psu.edu/archives/article_ef9c02f3-a9c2-5b8f-b1d3-f0ef82e3dce0.html. Katharine Lackey, “Paul to Visit PSU,”
Daily
Collegian
, March 26, 2008, http://www.collegian.psu.edu/archives/article_239513a3-a577-5732-bab0-9cc27c5d4610.html.

70
   
“Everywhere I looked I saw the State”: Dread Pirate Roberts to SRF, March 20, 2012.