Big Questions: Did the NSA create Bitcoin?

Over the 15 years since Bitcoin was created, there has been no shortage of crazy conspiracy theories about how it was made and where it came from. 

Some believe Bitcoin was the work of “a bunch of engineers” in the Chinese Communist Party — presumably for world domination; others claim Bitcoin is the work of benevolent aliens to help humans evolve.

But one theory with circumstantial evidence supporting it has persisted over the years — and it involves one of America’s most secretive intelligence-gathering agencies. 

There’s a small sect of Bitcoiners that believes Satoshi Nakamoto — the creator of Bitcoin — is, in fact, the United States National Security Agency in disguise.

Many more, of course, think the idea is ridiculous and point out there’s no absolutely no solid evidence to support it.

But where does the theory stem from? Well, one only needs to look into Bitcoin’s source code.

It’s in the code

What makes Bitcoin so secure lies in its use of Secure Hash Algorithm 256, or SHA-256 (read as sha), which is used for everything from deriving transaction IDs and block hashes to addresses and Merkle trees.

Put simply, it’s a mathematical formula that garbles data into a string of seemingly random text, and it’s why Bitcoin is basically impossible to crack.

Well, it just so happens that this algorithm is the direct work of Glenn M. Lilly, a mathematician who, under the direction of the NSA, designed and eventually published the algorithm in 2001. Lilly later became the NSA’s chief of mathematics research.

The NSA was also one of the first organizations to describe a Bitcoin-like system in a 1996 paper titled How To Make A Mint: The Cryptography Of Anonymous Electronic Cash.

In the paper, the authors proposed a system that uses public-key cryptography to allow users to make anonymous payments without revealing their identity. 

Satoshi Nakamoto is code for the CIA?

Of course, some Bitcoiners don’t think the NSA invented Bitcoin…. they reckon it was the Central Intelligence Agency.

The name of Bitcoin’s pseudonymous creator, Satoshi Nakamoto, can be interpreted as a reference to the U.S. spy agency. Nakamoto, loosely translated from Japanese, means “central,” while the name Satoshi means “intelligent.” 

Speaking of Satoshi, their identity has never been uncovered, prompting some to believe they are likely to have had some form of intelligence training. 

In an interview with Impact Theory’s Tom Bilyeu in June, former Goldman Sachs executive and Real Vision CEO Raoul Pal revealed he’s believed for years that Bitcoin could be the result of the NSA and the United Kingdom’s government experimenting with potential ways to get out of future potential financial disasters. 

“I don’t think it’s a coincidence it came out in the financial crisis. I don’t think it’s a coincidence that the halving cycle and all of this is all related.”

So, did the NSA create Bitcoin?

Jeff Man, a former NSA cryptanalyst, tells Magazine that it’s “feasible” that the NSA could have created Bitcoin as a means to gather intelligence about its enemies, but is doubtful. 

Man joined the NSA in 1986 at the tail end of the Cold War between the Soviet Union and the United States. At the time, the NSA was hiring around 100 people a week to fill roles in critical skills, including engineering, mathematics and computer science, he says.

One of the NSA’s main missions is to gather signals (or communications) intelligence necessary for the country’s defense. This became an even higher priority following the September 11, 2001, terror attacks on the World Trade Center.

Asked about whether Bitcoin could have been created to gather intelligence about foreign agents and powers, Man said the agency certainly had the resources to do so. 

“It’s certainly a possibility. It’s certainly feasible,” says Man.

“It’s not outside of the realm of possibility that there would be a concerted effort to set up something like this.”

However, Man has strong doubts about it, based on his experience at the agency. He notes that one of the outcomes of the Watergate scandal in 1972 put a congressional spotlight on America’s three-letter agencies, which were found spying on American citizens without proper warrants.

Man believes, at least based on his years at the NSA, that the agency had since been very cautious not to breach its charter and that devising Bitcoin could be seen as spying on its own citizens. 

“Historically, in my experience, NSA takes very seriously its charter to only do what NSA does to foreigners, and not U.S. citizens.”

“Because it would be hard to prove or disprove perhaps who the targets were, or who were the potential targets. It would be hard to say definitively: ‘We did not do any of this capability — we did not set it up and target any U.S. citizens.’ That makes me doubt that it happened.”

Man, however, noted that he left the agency back in 1996 and conceded that the 2001 terror attacks and the subsequent Patriot Act may have changed this. 

The Edward Snowden leaks in 2013 alleged the NSA had been gathering data on domestic internet communications without the proper warrants, an idea the U.S. government has denied. 

No, the whole idea is silly

Of course, most Bitcoiners completely dismiss the idea the NSA invented Bitcoin.

While SHA-256 is used in Bitcoin, it also just happens to be one of the most widely used hash algorithms, making its presence in anything from digital signatures to password authentication. 

The fact it was made public in 2001 means that everyone had access to it long before Bitcoin was invented. And no one has ever identified a secret backdoor into the SHA-256 algorithm or suggested a credible way it could be cracked.

Silicon Angle’s Mellisa Tolentino addressed the notion that ‘Satoshi Nakamoto’ could be a veiled reference to “Central Intelligence”, writing that the argument is “not very compelling.” Satoshi Nakamoto is a fairly common Japanese name, and spy agencies don’t tend to leave easter eggs calling attention to the fact they’re involved.

“Would the NSA really have given the creator of its ‘secret project’ such an obvious name? If the NSA really is behind Bitcoin, naming it “Central Intelligence” would not be a very intelligent move.”

Others have argued that Bitcoin’s first proof-of-concept software was more of a “clever patchwork” of old cryptography algorithms, which wouldn’t be something an organized intelligence behemoth would come up with. 

And the idea that Nakamoto must have intelligence-training credentials, given that he has remained anonymous all these years also falls apart the closer you look at it.

“It ignores the fact that thousands (if not millions) of people manage to remain anonymous online everyday,” Ian DeMartino wrote in a Cointelegraph editorial.

“I have had internet friends that I talked to for years, on message boards and elsewhere, without ever meeting or talking on the phone. I suspect many reading this have had similar experiences. I don’t suspect all of them are CIA agents.”

Will we ever find out if the NSA invented Bitcoin?

It seems unlikely we’ll ever know for certain whether the NSA was involved in Bitcoin, at least not in our lifetime, says Man.

“You will never get the answer to that definitively until it doesn’t matter anymore.”

“If it’s this honeypot type of scenario, where it’s a resource for information […] and it’s still providing results and information, you’re never going to get the definitive answer,” he adds.