Private email correspondence between Bitcoin's pseudonymous creator Satoshi Nakamoto and the project's early contributor, Marti Malmi, has shed more light on the pioneering cryptocurrency's origin story and its creator's early thoughts about the future.
The emails were shared as evidence by Malmi in the Crypto Open Patent Alliance (COPA) trial against Craig Wright as part of his testimony. The trial has been ongoing since the beginning of February and will determine whether Wright's claims of creating Bitcoin have any merit.
Never seen emails
One set of emails relates to early conversations between Nakamoto and Malmi, who contributed to the Bitcoin website and project code starting in 2009.
The emails provide insight into Nakamoto's early predictions regarding Bitcoin and its future growth. Based on the emails, he was aware of the challenges Bitcoin might face regarding its legal status.
He wrote in one email:
“There are a lot of things you can say on sourceforge that I can't say on my own site …However, I am not comfortable explicitly saying “consider it an investment.” This is dangerous and you should delete this point. It's okay then [Bitcoin users] “They came to this conclusion on their own, but we can’t put it that way.”
Whether cryptocurrencies and related offerings are investment contracts has been a critical point of contention between the industry and regulators, especially the US Securities and Exchange Commission.
After years of negative sentiment, Bitcoin has generally established itself as a commodity, with many considering it “digital gold.” This is primarily because they were initially issued through mining contracts rather than investment contracts, although Bitcoin exchanges allowed users to purchase the cryptocurrency asset as early as 2010.
By the way, the emails describe the creation of one of the first Bitcoin exchanges. Nakamoto was looking for ideas for Bitcoin applications, and Malmi suggested exchanging fiat currencies for Bitcoin.
Malmi continued to operate and register Bitcoinexchange.com, as it was formerly known. However, the latest emails show that Nakamoto was a key advisor to the exchange.
Nakamoto advised Malmi to initially operate the exchange individually rather than creating an “eBay”-type or peer-to-peer exchange. He also abandoned his plans to incorporate an auction system in favor of Malmy's idea of a fixed exchange rate.
Furthermore, Nakamoto received a donation of $3,600, of which $1,000 was allocated to support the initial operations of the exchange.
Other topics included anonymity, mining profits, and fees
Nakamoto also established the early distinction between anonymous and pseudonymous—or partially anonymous—transactions. He anticipated the controversy surrounding transaction analysis, which has now become a major business for companies like Chainalysis and Elliptic.
Nakamoto wrote at the time:
“I think we should focus less on the unknown angle… We can't give the impression [Bitcoin is] Automatically anonymous. Your name could be a pseudonym, but… if someone were to dig into your transaction history and start revealing information that people thought was anonymous, the backlash would be much worse if we didn't prepare expectations…”
Nakamoto and Malmi also discussed other topics, such as mining profits, energy consumption, and Bitcoin's potential environmental impact. In response to environmental concerns, Nakamoto wrote:
“It is ironic that we end up having to choose between economic freedom and environmental preservation.”
“Unfortunately,” he told Malmi, the proof-of-work consensus method was the only way to ensure that Bitcoin could “work” without a trusted third party. He added that it is “essential” in preventing double spending.
Nakamoto did not seem bothered by the idea of devoting significant power to the Bitcoin network. Even “if it grew to consume a significant amount of energy,” he wrote, it would not be as “wasteful” as the resources spent on “traditional banking activity.”
He also mentioned:
“The cost will be much less than the billions in bank fees paid for all those brick-and-mortar buildings, skyscrapers and credit card offers in the junk mail.”
Nakamoto was also fully aware that electricity prices would affect the profitability of mining. His analysis at the time did not take into account how quickly the mining industry was developing after the advent of ASIC devices. However, the emails show that he was aware of the pace at which technology could develop over the coming years.
“The value of bitcoins will be tied to the electricity consumed to produce them… If you run a computing task 24/7, without letting it idle, it uses much more energy… The extra wattage consumed goes directly to your energy bill, and the value The bitcoins you produce will be less than that.
Another topic discussed by the two developers is the possibility of using Bitcoin timestamp data. Later, Nakamoto's Genesis Block deal included a popular financial address.
The emails also revealed discussions about Nakamoto's decision initially.Hide the transaction fee setting“Because he felt that being able to customize fees would confuse users. He predicted that adjustable fees wouldn't be needed until “the distant future, if ever.”
Nakamoto's prediction was partly correct — the average Bitcoin transaction cost just cents before 2017, but the cost has risen dramatically over the years, and transactions are now costing several dollars more recently.
Emails could refute Craig Wright's claims
Significantly, Malmi's emails contradict some of the claims Wright has made over the years in trying to prove he is Nakamoto.
Wright said Malmi first contacted Nakamoto starting in February 2009. However, email records show Malmi reached out to Nakamoto months later, in May 2009.
Another discrepancy pointed out by Malmi was that Wright misspelled Malmi's first name in court, which was uncharacteristic of Nakamoto, whom he knew well.
Another discrepancy comes from the fact that Wright misidentified Malmi's nationality even though the emails contained a Finnish email address ending in .fi — and, in one case, Malmi's full street address, including his country.
Wright also claimed in a previous case that Malmi created the dark web marketplace Silk Road. This supposedly prompted Wright (like Nakamoto) to publicly leave Bitcoin in 2010.
In his testimony, Al-Malmi described these allegations as “ridiculous and false.” He noted that Ross Ulbricht was convicted years ago for creating and running an illegal dark web operation.
CryptoSlate previously covered emails between Nakamoto and Adam Back, which were presented as part of COPA's broader efforts to refute Wright's claims in court.
