policyThe One Big Reason Why It Matters Who Invented BitcoinAlex FitzpatrickAustralian police raided the home of one Craig Wright Wednesday, mere hours after two publications alleged that he is the secretive inventor of Bitcoin, a decentralized digital currency that's become a darling of tech-savvy libertarians seeking an alternative to dollars, euros and so on.Update: Wright is now claiming to be Bitcoin's creator.So far, Australian authorities say the raid against Wright has nothing to do with reports in Wired and Gizmodo suggesting he is Satoshi Nakamoto, Bitcoin's pseudonymous creator.Those publications provided ample evidence tying Wright to Nakamoto.But they also stressed that Wright could be trying to trick journalists and the legions of other Bitcoin-watchers who have made a hobby of seeking Nakamoto's true identity.We've been down this road before.Newsweek reported last year that Bitcoin's Nakamoto was Dorian Nakamoto, a California-based engineer.That Nakamoto refuted the claims and raised money to fund a lawsuit against the publication in response.But beyond simple curiosity about the man behind the curtain, does it actually matter who invented Bitcoin?

Only if you care about the future of a currency with a total value of about $6.3 billion as of this writing.First, a quick primer on how Bitcoin works.Bitcoins are brought into existence — "mined," in the parlance — by computers plugging away at very hard math problems.The system is designed so those problems get harder over time.That means it takes more processing power to mine one Bitcoin today than it did yesterday, and so on.The total number of Bitcoins that could ever be mined has a hard limit, which should theoretically bring some degree of price stability to the system.Oh, and this is important for later: One of Bitcoin's most important features is a public ledger of transactions.Back to Bitcoin's creator.Because it was easier to mine large amounts of Bitcoin in the currency's early days, whoever invented Bitcoin would reasonably have a large stash of them.The early bird gets the worm, after all.Indeed, there's a mysterious cache of 1.1 million Bitcoin, worth about half a billion American dollars as of this writing, visible on Bitcoin's public ledger.

The stockpile is widely believed to be controlled by Bitcoin's inventor, though it never moves.There could be a good reason the stash stays put.Wired reports the 1.1 million Bitcoin hoard could be tied up in a kind of digital trust fund that Wright only can fully access in 2020.When and if that happens, and Wright sells his stash, it will introduce a glut of supply to the Bitcoin market, likely wreaking havoc with the price of a currency that's no stranger to wild swings in value.Assuming Wright is indeed Bitcoin's creator, that leaves him with an interesting conundrum.Bitcoin is beloved by free-market types because it has no central bank, no Fed, no Janet Yellen controlling the money supply.But if Bitcoin's alleged creator really is sitting on a half-billion dollar stockpile of the stuff, he will have become the kind of central banker archetype that Bitcoin's die-hard fans consider their personal boogeyman.Should Wright cash out and make off with a more widely-accepted currency like dollars, Bitcoin may never recover from the price shock triggered by the sudden glut in supply.

Thus, the destiny of a supposedly decentralized currency may rest in the hands of one person — exactly the fate it was created to avoid.ethereum coin wikiHow can bitcoin be anything but a passing fad?bitcoin raw blockIt seems you can’t open a newspaper or read a website these days without hearing about the super-yet-mysterious virtual currency known as bitcoin.ethereum usd coinbaseEveryone’s talking about it.bitcoin wallet slowRichard Branson just began accepting bitcoin as a form of payment for flights on Virgin Galactic, which offers commercial spaceflights.bitcoin dhsThe Chinese website Baidu endorsed the currency, and lawmakers in Washington are holding hearings about it.python bitcoin node

Even Ben S. Bernanke, the Federal Reserve chairman, told senators in a letter that virtual currencies “may hold long-term promise, particularly if the innovations promote a faster, more secure and more efficient payment system.” And then, of course, there is the sky-high march of the value of bitcoin.bitcoin bloomberg codeA year ago, bitcoin was worth a couple of bucks.bitcoin in teluguToday bitcoin goes for $800 each, depending on the day.best payout bitcoin poolAnd the value can swing by more than $100 a day, if not more.If it all feels a bit like a 1999-style craze, that’s because it is.Peter Leeds of the Penny Stock newsletter put it to me this way: “In a matter of months you won’t be hearing about it.It will go the same way of Paris Hilton.People will move on to the next thing.” That’s not to say there aren’t fervent believers.

Bitcoin’s early success was a result, in part, of an angry libertarian strain of investor looking for an alternative to the dollar, something akin to a digital version of gold, in the event the world comes to an end — or starts to look like a Keanu Reeves movie.But there seems to be a disconnect between the idea of what makes a great investment — or a great speculation — and a new currency that will be universally accepted.Bitcoin, in the short or even long term, may turn out be a good investment in the same way that anything that is rare can be considered valuable.That’s because there are only so many of them.But bitcoin aspires to be much more than a collectible, or frankly, even gold.It aspires to be a universal electronic currency.On that score, it is unlikely to succeed.Let’s start with bitcoin’s value — or more accurately, the volatility of its value.Which merchants in their right mind are going to accept a currency that seemingly changes its value in wild swings every other day?

Branson’s experience with bitcoin is instructive: While he happily accepted bitcoin as a form of payment, he quickly converted the payment into dollars.That doesn’t make bitcoin a currency.It makes it a way for merchants, like Shopify — which also accepts bitcoin — to get a little publicity.Then there is the issue of how limited the supply of bitcoin truly is.Bitcoin is digitally “mined” by computers running an algorithm.(If you just rolled your eyes, you’re not alone.)The algorithm limits the total number of bitcoin ever mined to 21 million units.But there is no Bernanke (or Janet Yellen) of bitcoin.Nobody knows who created it and no one controls it.That’s supposed to be a benefit.It’s also why the currency is often associated with illicit sales.Bitcoin can be transferred anonymously and without banks taking transaction fees.But if, and this is a big if, your peer-to-peer transaction doesn’t work properly, there is no central clearinghouse to complain to.Whether the government ultimately seeks to regulate bitcoin is an open question.

It seems hard to believe that the government would allow the growth of such an unregulated market in which moms and pops, widows and orphans, and other individuals may be subject to all kinds of fraud.Oddly, the Chinese government has seemingly embraced the early use of bitcoin.Gordon G. Chang, writing in Forbes, has a provocative explanation for that stance: “Digital money can undermine the dollar’s status as the world’s reserve currency.Bitcoin is on track to becoming the world’s first trillion-dollar nonfiat form of money.” Finally, there is the question of what happens if other alternative digital currencies also rise.More than a dozen digital currencies are trying to compete with bitcoin.Can you imagine a world in which we all transact with dozens of different currencies every day with different rules?“Every big idea starts out sounding crazy.But not every crazy-sounding idea ends up being big,” Matthew O’Brien wrote in The Atlantic in a brilliant takedown of bitcoin.