A team from the Department of Computer Science and Applied Mathematics at the Weizmann Instituate of Science in Israel has discovered a link between Ross William Ulbricht, the founder of Silk Road who was recently arrested by the FBI, and the mysterious inventor of Bitcoin, which has recently exploded in value and mainstream awareness.
The paper by Dorit Ron and Adi Shamir was published Sunday and explores how Ulbricht, known online as “Dread Pirate Roberts,” acquired and protected his vast Bitcoin fortune. Through their research, they concluded that the FBI seized only about 22 percent of Ulbricht’s total bitcoins, and that he was given many of them just after the invention of Bitcoin by an account associated with the earliest “mining” of Bitcoin.
Bitcoin is believed to have been invented in 2008, though its creator remains a mystery. The Bitcoin community has long attributed the creation to a person or team of people using the pseudonym “Satoshi Nakamoto.” The person or people behind Satoshi Nakamoto are believed to hold bitcoins worth several millions of dollars.
That is, if Satoshi Nakamoto is still alive. After mining (the term given to the complex cryptographic algorithms behind creating a bitcoin) the first 20,000 blocks of bitcoins (which would be worth about $1 billion today), Satoshi Nakamoto vanished from the Internet, leading to speculation that Satoshi Nakamoto had died.
While bitcoins protect the anonymity of the buyers and sellers, the actual transactions are public. Ron and Shamir used a list of these public transactions as well as information about Silk Road-related transactions to trace how Ulbricht acquires his wealth. The team found that Ulbricht created a bitcoin during the earliest days of Bitcoin, and noticed that this account received transfers from another account that was created just one week after the first block of bitcoins were mined.
This early account accumulated more than 35,755 bitcoins that were likely mined by Satoshi Nakamoto. Ron and Shamir believe it’s reasonable to assume that this user was a founder of the Bitcoin network, and could have been owned by Satoshi Nakamoto.
Ulbricht received several transfers of bitcoins from this early Bitcoin founder, including one worth about $60,000 at the time (it would now would worth close to $1 million).
“Such a single large transfer does not represent the typical behavior of a buyer who opens an account on Silk Road in order to purchase some narcotics,” Ron and Shamir reported, who added that most buyers made an initial deposit of bitcoins into their Silk Road account that was worth tens or hundreds of dollars and added more bitcoins as they needed.
The team speculated that it could indicate a form of investment or partnership between Ulbricht and this Bitcoin founder, though it pointed out that it could not be proven.
“The short path we found suggests (but does not prove) the existence of a surprising link between the two mysterious figures of the Bitcoin community, Satoshi Nakamoto and [Dread Pirate Roberts],” Ron and Shamir said.
Bitcoin enthusiasts insist on the many benefits of the digital currency, but its undeniable that Bitcoin is frequently used for illegal purposes. When the FBI shut down the Silk Road, which used only Bitcoin for transactions, the value of Bitcoin temporarily plummeted.
If more links are found between the anonymous inventor of Bitcoin and illegal websites like Silk Road, it could provide more roadblocks towards Bitcoin acceptance as a mainstream currency.
Originally from Northern California, Ryan W. Neal came to New York to earn his master's in journalism from Columbia University. He joined IB Times April 2013, and is a writer...