The real Bitcoin scandal: revolutionary technology could end up in private hands
The London Review of Books has published perhaps the decisive account of the doomed unmasking of Bitcoin’s “creator”. But coursing through the article is a deeply troubling prospect: what if one of the most influential technologies since the worldwide web has now slipped into private hands?
The LRB piece describes a business deal pursued by Craig Wright, an Australian academic, with an IT expert and an investor. Wright was almost broke, claims the LRB, and his backers held out the prospect of clearing his financial woes and freeing him for a life of funded research.
Part of the deal was that Wright would publicly confirm his alter ego as Satoshi Nakamoto, the creator of the virtual currency Bitcoin. This went spectacularly wrong when Wright was unable to provide the proof sought by the Bitcoin community.
If you think the story ends there, in a tragic case of mistaken identity, think again. Also part of Wright’s deal was the transfer of his intellectual property. And as Reuters reports today, businesses allegedly connected with Wright are still pursuing patent claims around the technology that created Bitcoin.
And that’s the bit you have to focus on: it doesn’t matter who really invented Bitcoin. What matters is who can claim the patents. Even if Wright wasn’t the creator of Bitcoin but rather part of the development team, or even an early adopter, if he or others can claim “prior art” then they may be able to patent rights over some of the core tech behind the most disruptive financial product of the century.
To understand why this is a big deal, you need to understand that Bitcoin is in fact two things: on one level, it’s a currency like any other, subject to the same fluctuations as its bought and sold. But standing behind the currency is a revolutionary principle called triple entry accounting.
Put simply, when a Bitcoin is passed from one person to another, its transfer is recorded in the electronic wallets of the giver and receiver. But its journey is also recorded in a public ledger. Each new transfer has to be mathematically reconciled with every previous transfer, making fraud very difficult.
It’s not just money that can be tracked and audited through this “blockchain” system; anything with value can be traced: shoes bought, cars scrapped, hours worked, taxes paid.
If you want a vision of life in a blockchain world, take a look at this interview with Craig Wright. About two minutes in he uses the example of a can of soft drink. Its purchase can be tracked in the blockchain, and attributed to a buyer.
If that buyer throws the can in the recycling bin, then when the can is recycled the blockchain can reward them (perhaps via a small council tax discount). If the buyer chucks the can in the river? Expect a bigger tax bill when the littering is revealed.
Unsurprisingly, this concept is attracting huge interest and multimillion-dollar investment from serious financial institutions. And if Wright (or any of his connected companies or associates) can patent it they’re in line for a big slice.
If you want an insight into how valuable (and therefore legally tortuous) patent disputes can be, take a look at how a row between Google and Oracle over a few thousand lines of code turned into a $9bn lawsuit.
The risk is that similar patent disputes may hamper innovation in blockchain development. Some very bright minds are putting blockchain tech on the same level as the worldwide web.
Sir Tim Berners-Lee’s decision to make web tech public property has kickstarted what many feel is a new era of human development.
Blockchain, similarly, was founded on a free-for-all basis. It’s deeply troubling if Craig Wright’s financial woes have led it into private hands.