‘Digital Gold: The Untold Story of Bitcoin’, by Nathaniel Popper

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William Goldman, the screenwriter who wrote of Hollywood’s hit-forecasting abilities that “nobody knows anything”, is also the author of The Princess Bride, a 1973 fantasy novel featuring a character called Dread Pirate Roberts. This was not a single individual but a name shared by outlaws whose rapacious deeds scared law-abiding princesses.

That combination of illegality and ambiguous identity led four decades later to the adoption of Dread Pirate Roberts as a pseudonym by Ross Ulbricht, founder of the illicit online trading hub Silk Road. He hoped it would shield him as he ran a network based on Tor, an encrypted communications system, and bitcoin, a peer-to-peer cryptocurrency invented in 2008. He was caught and sentenced to life imprisonment last month, having carelessly used an email address online.

Without bitcoin, Silk Road would not have worked; it allowed drug dealers and their customers to make payments without being caught. As Nathaniel Popper, a New York Times reporter, records in his lively and thorough account of the history of bitcoin, it has almost as uncertain an identity as Dread Pirate Roberts. In essence, it is simply a clever piece of technology allowing monetary value to be transferred among people without the need for a bank or central bank to approve the settlement.

Yet bitcoin means different things to different people, depending on whether they are hackers, libertarians, haters of the US Federal Reserve, venture capitalists or bankers who favour its potential to address weaknesses in existing payments systems. It is as much a movement of devotees as a technology, tapping into a yearning to shelter from government control and oversight — thus echoing the debate over online surveillance created by Edward Snowden, the former National Security Agency contractor.

“Privacy in an open society requires anonymous transaction systems,” wrote Eric Hughes in his 1993Cypherpunk’s Manifesto, which anticipated digital currencies. Or, as an early bitcoin advocate wrote to Satoshi Nakamoto, its pseudonymous inventor: “I’m really excited about the thought of something practical that could truly bring us closer to freedom in our lifetime.”

In Ulbricht’s case, defying the government meant being locked up for his lifetime. Many others have also been stung. Online exchanges such as Mt Gox have folded after mislaying millions of dollars in bitcoins, and a currency that was designed to avoid debasement by a central bank has experienced wild swings in value.

Popper provides a vivid guide to the characters who met online and built bitcoin, from Nakamoto to Roger Ver, an evangelist for the cryptocurrency known as bitcoin Jesus. “Mostly young men whose lives were untethered to anything but their laptops” brought to life a utopian idea despite flaky code, personality clashes and law enforcement. The narrative difficulty is that there were so many of them; a peer-to-peer network is of its nature collective.

After a while, introduced to yet another person who played a crucial part in the currency’s rise, the reader longs for a one presiding genius. Popper’s account is faithful to a fault to bitcoin’s anarchy.

The saddest of these characters is Ulricht. The son of “hippies of sorts”, a clever, libertarian student with a penchant for “eastern philosophy and designer drugs”, he turned into a ruthless crime lord. He wrote in his emergency escape plan, as the police closed in: “Hide memory stick/get new laptop/go to end of train/find place to live on Craigslist/create new identity.”

The ghost at the banquet is Nakamoto. Newsweek made one flawed effort to unmask bitcoin’s creator, identifying a Californian called Dorian Nakomoto, who promptly denied it and threatened to sue. Popper points his own finger atNick Szabo, a contributor to the cypherpunk movement, whom he tracks down at a conference, finding a man with “a seemingly perpetual smirk on his sleepy, bearded face”.

Szabo also denies being Nakomoto, although many in the movement believe he is. Unlike the identity of Dread Pirate Roberts, we may never find out. When it comes to bitcoin, nobody knows everything.

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