Bitcoin 101: Who Is Satoshi Nakamoto And Why Do People Care?

Image: Hong Kong's First Bitcoin Counter Opens To The Public

A worker holds a sign at the first bitcoin retail store open in Hong Kong on Feb. 28 in Hong Kong. Lam Yik Fei / Getty Images

Why is the press chasing a 64-year-old man named Dorian S. Nakamoto across Southern California?

Because he could be the key to one of the biggest mysteries of the Internet Age and the creator of a virtual currency that, in total, is worth more than $7 billion.

To the bitcoin-obsessed, this is a fascinating drama. To people who prefer using cash, this fiasco is probably kind of confusing.

What is bitcoin?

It is a virtual currency that can be spent anonymously over the Internet. Bitcoin isn’t tied to a government or central bank and it isn’t backed by a precious metal, like gold. Instead, it has value because people believe it does. That is enough for big companies like, OKCupid, and the Sacramento Kings to accept it. As of Friday morning, one bitcoin was worth $639.

How do people get them?

The easiest way to get your hands (figuratively speaking) on some bitcoins is to use a service like Coinbase. People used to buy and sell bitcoins on something called Mt. Gox but, well, it kind of went down in flames. That's another story.

Who created them?

The idea for a “peer-to-peer system of electronic cash” was first proposed in 2008 in a paper posted by someone or some group of people under the name Satoshi Nakamoto. After unleashing this radical idea, the true identity of "Nakamoto" was never revealed to the public, leading many people to believe that it was a pseudonym.

Who is this California man everybody is chasing?

His name is Dorian S. Nakamoto, changed from Satoshi Nakamoto 40 years ago. Newsweek claimed in a 4,500-word cover story on Thursday that he invented bitcoin. For the bitcoin community, it was a bit like unmasking Batman, if Bruce Wayne created brilliant code at night instead of fighting crime.

Nakamoto denied being involved with bitcoin to an AP reporter who offered him a sushi lunch.

So what happens now?

Both Nakamoto and Newsweek are standing by their stories. Bitcoin seems unaffected by the chaos, but could be in trouble for other reasons. Batman is still at large.