On January 10, 2009, Hal Finney posted on Twitter that he had launched the Bitcoin software. Bitcoin enthusiasts celebrated the anniversary of this tweet before, but this year, as Bitcoin turned ten, Twitter's seen a real retweet campaign. Hal Finney received the first Bitcoin transaction and was one of the most active Bitcoin developers. He died in 2014 after a five-year-long illness. DeCenter tells his story.
One can already purchase smartphone cases, mugs, T-shirts, and sweatshirts with the “Running bitcoin” print. And the artist under the nickname Cryptograffiti presented his work dedicated to Hal on January 10:
Harold Thomas Finney II, or Hal Finney, as he was known in the community, was a developer, cryptographer, and cypherpunk.
Hal graduated from Caltech with a bachelor’s degree in engineering. After graduation in 1979, he went to work at Mattel, a company that developed console video games. Hal wrote code for games such as Adventures of Tron, Astroblast, Armor Ambush, Dark Cavern, and Space Attack.
In the ’90s, Hal became the developer of PGP software, created by cypherpunk Phil Zimmermann. At the time, it was the first freely available public key cryptography. The PGP (stands for Pretty Good Privacy) is used to encrypt files, e-mails, and hard disk data. Today, PGP remains one of the most popular cryptographic messaging protocols. In 2002, PGP Corporation was established, where Hal worked until retirement in 2011.
In 2004, Finney created the first reusable proof-of-work protocol (RPoW). It was based on the Hashcash algorithm (like the Bitcoin PoW system). According to Finney, its use cases included creating tokens that could be used to pay for services on any site. The reusable PoW protocol, unlike conventional PoW, allowed not to repeat the work to create a new token each time a token was used (that is, not to create a new digital record and not to spend resources on it). Until then, PoW tokens could not be reused, as this would provide a possibility of double-spending. Finney made it possible to reuse PoW tokens thanks to special security feature called “trusted computing,” which allowed a third party to make sure that the software was running on the RPoW server.
Finney also launched the first anonymous remailer based on cryptography. “Two people could communicate using email, with both of their identities being protected from the other,” wrote Finney.
Hal Finney, the Cypherpunk
A Forbes reporter, probably the last journalist who personally talked to Finney, spoke with his childhood friends from Arcadia, California. “They do remember Finney as an unusually intelligent and thoughtful student, who at times carried around an impressively large copy of Ayn Rand’s Atlas Shrugged and seemed to have adopted its lessons about libertarian free thinking,” as Andy Greenberg writes.
Later, Hal was an active participant in the cypherpunk mailing list, where he presented many of his works, including RPoW and an anonymous remailer.
Finney was inspired by the work of David Chaum, one of the founding fathers of the cypherpunk movement and creator of the anonymous electronic cash system eCash, which Chaum described as early as 1983 (the system was based on cryptography, but was centralized, and functioned under the name DigiCash in one of the American banks from 1995 to 1998, until the project went bankrupt).
“It seemed so obvious to me. Here we are faced with the problems of loss of privacy, creeping computerization, massive databases, more centralization—and Chaum offers a completely different direction to go in, one which puts power into the hands of individuals rather than governments and corporations. The computer can be used as a tool to liberate and protect people, rather than to control them,” writes Finney in a cryptographic mailing list in November 1992. In this post, Finney justified the need for remailers after Timothy May, the co-founder of the cypherpunk movement, had mentioned that not many mailing list members were interested in remailers. “Chaum’s ACM paper is titled, provocatively, ‘Security Without Identification—Transaction Systems to Make Big Brother Obsolete.’ The work we are doing here, broadly speaking, is dedicated to this goal of making Big Brother obsolete. It’s important work. If things work out well, we may be able to look back and see that it was the most important work we have ever done,” says Finney in the same post.
“Hal was one of those who actually wrote code,” said Timothy May, referring to one of the postulates included in A Cypherpunk’s Manifesto, “Cypherpunks write code.”
In a post published on the mailing list in 1993, Finney had already come up with ideas that were extremely close to the ones reflected in the Bitcoin white paper 15 years later. “With digital cash and smart cards, you should be able to engage in…transactions with no organization or institution able to violate your privacy or steal your money. You can protect yourself, rather than having to trust others.”
“Bitcoin and Me”
This is the title of Hal’s post on Bitcointalk, in which he described his history of relations with Bitcoin and Satoshi.
Finney says that when Satoshi first announced his work on the mailing list, it was greeted with skepticism. “I’ve noticed that cryptographic graybeards (I was in my mid-50’s) tend to get cynical. I was more idealistic; I have always loved crypto, the mystery and the paradox of it… So I found Bitcoin fascinating.”
According to Finney, he downloaded the Bitcoin software as soon as Satoshi posted it. “I think I was the first person besides Satoshi to run bitcoin,” says Finney (this is what he announced on January 10, 2009, on his Twitter account). For a few more days, they carried on an email conversation, during which Finney reported bugs.
Finney said that after the launch of the software, he “mined block 70-something” and then spent some time mining. “Those were the days when difficulty was 1, and you could find blocks with a CPU, not even a GPU. I mined several blocks over the next days. But I turned it off because it made my computer run hot, and the fan noise bothered me. In retrospect, I wish I had kept it up longer, but on the other hand, I was extraordinarily lucky to be there at the beginning,” wrote Finney.
“I thought it was just an altruistic thing he was doing for a friend. And we thought the PGP thing had been enough altruism already,” says Hal’s wife, Fran, about that time.
Despite his enthusiasm for Bitcoin, Finney admits that he was surprised that the network was still running when he returned to Bitcoin at the end of 2010. “I was surprised to find that it was not only still going, Bitcoins actually had monetary value. I dusted off my old wallet, and was relieved to discover that my Bitcoins were still there. As the price climbed up to real money, I transferred the coins into an offline wallet, where hopefully they’ll be worth something to my heirs.” Most of the Bitcoins were sold at an exchange rate of about $100 and went to Finney’s treatment and the purchase of special medical devices.
In 2011, in correspondence with developer Mike Hearn, Satoshi confirmed that “Hal,” a participant in the discussion on Bitcoin.org, was Hal Finney, who “was supportive on the Cryptography list and ran one of the first nodes.”
One of the latest posts by Satoshi on Bitcointalk was addressed to Hal Finney during the discussion of the Bitcoin code. “Another client is useful, especially since the current Bitcoin client is a big mess. I was *shocked* that cryptography code looked like this,” wrote the Bitcointalk user farmer_boy in 2010. Finney wrote under this comment that he would like to hear “specific criticism.” “To me, it looks like an impressive job, although I’d wish for more comments. Now I’ve mostly studied the init, main, script, and a bit of net modules. This is some powerful machinery,” commented Finney. “That means a lot coming from you, Hal. Thanks,” Satoshi wrote back.
Back in 2010, Hal Finney mentioned the importance of second-level solutions for Bitcoin scalability. Also, long before it became a problem, Hal was pondering how to avoid the negative impact of mining on the environment. “Thinking about how to reduce CO2 emissions from a widespread Bitcoin implementation,” Finney wrote on Twitter in 2009. A few years later, he reflected on taxation, relying on his study of IRS documents: “I acquired most of my coins by mining. This has no analogy with currency (unless you’re counterfeiting) so I intend to treat Bitcoins as precious metals and declare my profits as capital gains,” he wrote on Bitcointalk in 2013.
Andy Greenberg’s article “Nakamoto's Neighbor: My Hunt For Bitcoin’s Creator Led To A Paralyzed Crypto Genius” was published in Forbes in March 2014. Greenberg decided to conduct his own investigation after a sensational story about a new "true Satoshi." A couple of weeks before Greenberg's article was published, Newsweek called Dorian Satoshi Nakamoto to be the creator of Bitcoin. He was a US citizen of Japanese descent. It soon became clear that Dorian had not even heard of Bitcoin and subsequently had to go to the police to avoid annoying persecution of journalists.
At the time of the interview, Finney could only answer questions with his eyes. He had a special apparatus that, using a computer program, tracked eye movements and synthesized speech. The disease had progressed so much, however, that by that time, the eye muscles had also been affected. As a result, Greenberg asked questions that suggested yes/no answers: if Finney raised his eyes and eyebrows, it was a “yes,” and if he glanced downward, a “no.” Greenberg came to Finney’s home due to the fact that he lived for about ten years in Temple City, the town where Newsweek discovered Dorian Nakamoto, and their houses were located an eight-minute drive away. Greenberg reports that he received an e-mail with this information from a long-time member of the cryptographic community who wished to remain anonymous. And it happened just a few hours after Newsweek had published its investigation.
Theories went so far that Finney invented Bitcoin himself and simply used the name of his neighbour as a pseudonym. “Dorian probably could’ve been a drop,” as written by a Reddit user.
Greenberg admits that his own investigation seemed to point to either Finney’s involvement in the creation of Bitcoin or to be one of the most improbable coincidences he’d ever encountered. He also gave samples of Hal’s writing to the Juola & Associates writing analysis consultancy and, according to the results, Finney’s language patterns were similar to the Bitcoin white paper style more than many similar analyses of previous candidates. “So, it seems to me that you may have found the real Satoshi Nakamoto,” wrote the chief scientist of Juola & Associates John Noecker in an e-mail to Greenberg (later, comparing the examples of Satoshi’s emails sent to Finney, the researchers concluded that the white paper style corresponded to the style of Satoshi’s messages and differed from Finney’s language).
Finney himself, first by email, and then in a private conversation, told Greenberg that he was not the creator of Bitcoin and that he didn't know Dorian and did not consider him to be Satoshi. “But in following the clues that led me to Finney, I found something equally significant: a dying man who had been something like a far-more-brilliant Forrest Gump of cryptographic history: a witness to and participant in practically every important moment in the recent history of secret-keeping technologies. From the development of the first widely used strong encryption software known as PGP, to early anonymity systems, to the first Bitcoin transaction, Finney was there.”
Finney himself said that when talking to Satoshi by email, he thought he "was dealing with a young man of Japanese ancestry who was very smart and sincere."
Finney was diagnosed with amyotrophic lateral sclerosis in August 2009. “ALS is a disease that kills motor neurons, which carry signals from the brain to the muscles. It causes first weakness, then gradually increasing paralysis. It is usually fatal in 2 to 5 years. My symptoms were mild at first and I continued to work, but fatigue and voice problems forced me to retire in early 2011. Since then the disease has continued its inexorable progression. Today, I am essentially paralyzed. I am fed through a tube, and my breathing is assisted through another tube. I operate the computer using a commercial eye tracker system. It also has a speech synthesizer, so this is my voice now. I spend all day in my power wheelchair. I worked up an interface using an arduino so that I can adjust my wheelchair’s position using my eyes,” wrote Finney in 2013.
He died on August 28, 2014, in Phoenix, Arizona, at the age of 58.
Finney’s Other Beliefs
According to his roommate Yin Shih, Finney became interested in cryopreservation as a young man. In 1992, Finney visited the Alcor facility to learn more about its services. “In my personal opinion, anyone born today has a better than 50-50 chance of living effectively forever,” he wrote.
Finney (like the President of the Alcor Life Extension Foundation, Max More) was part of the Extropian movement, a futuristic theory, according to which, the development of science and technology at some point will lead to eternal life. So Finney and his wife made the decision to cryopreserve their bodies after death.
“He’s always been optimistic about the future. Every new advance, he embraced it, every new technology. Hal relished life, and he made the most of everything,” said Fran.
Despite the skepticism surrounding such theories, some members of the community believe that Hal can indeed return with the development of medicine. “He’s in cryo so he may rise again”; “And after resting in peace, may he be successfully revived to enjoy life again, free of ALS”; “I hope the next genius advances medicine, and Hal is given the opportunity to return in the future to witness his Bitcoin/Blockchain masterpiece fully adapted and in motion,” as Reddit users write.
“Hal, I know I speak for many when I say that I look forward to speaking to you again sometime in the future and to throwing a party in honor of your revival,” as More wrote after Finney died.
Hal and Bitcoin after ALS
Hal continued to program until his death. In particular, he worked on experimental bcflick software. “I recently discovered that I can even write code,” Finney wrote on Bitcointalk in 2013, already being paralyzed, breathing and feeding through tubes, and communicating using a speech synthesizer. “It’s very slow, probably 50 times slower than I was before. But I still love programming and it gives me goals,” as Finney wrote, also saying that he was working on Mike Hearn’s proposal, which was to use trust computing to increase the security of Bitcoin wallets (bcflick software).
“I am most proud of my work on PGP, although I would not be surprised if my small contributions to Bitcoin, particularly my optimization of the elliptic curve math, may be the lasting contribution of my work,” wrote Finney in an email to Andy Greenberg.
“I sat next to Finney again and asked him if, in this sense of open-source contribution, he did consider himself one of the creators of Bitcoin. He raised his eyes and eyebrows. Then I asked him if he was proud of that work. Finney raised his eyes again, and he smiled,” writes Greenberg.