If you’ve been long enough in the crypto-space, you must have heard somewhere that Satoshi Nakamoto, the anonymous creator of Bitcoin holds 1 million BTC. The important thing to understand here is that Satoshi did not allot those Bitcoins to himself at the time of creation, like most altcoins. In the early days, it is believed that he mined those many Bitcoins before it gained enough mainstream attention which led to the development of GPU miners.
The first real burst of GPU mining took place in July 2010. Prior to that, one could mine just by switching on their CPU. Of course, each Bitcoin was practically worthless then. In May 2010, Laszlo Hanyecz, an early miner negotiated a price of 10,000 BTC for only two pizzas. We all know that story though!
Recently, we have had some peculiar instances involving old Bitcoin [BTC] addresses that could possibly be Satoshi. This is a reason for worry for investors because Satoshi Nakamoto apparently holds the power to liquidate $8-9 billion worth Bitcoins in the market. Craig Wright, a computer scientist and businessman, for long, has claimed the identity of Satoshi Nakamoto.
To understand the recent events and it’s implications. First, let us understand,
What is a Coinbase Transaction?
It is the first transaction of every Bitcoin block. It contains no input address, only an output address and cannot be spent until 100 confirmations are made on the network.
In the first year of its launch from January 2009, about 2 million Bitcoins were mined already. At the time, due to the small number of transactions, the daily average was much below 144 blocks/day. Most transactions were empty blocks (with only Coinbase transactions mined for the sole purpose of earning Bitcoins).
According to updated research by BitMEX, there is evidence of a dominant miner who is expected to have mined about 740,750 Bitcoins until August 2009, and in total about 968,400 BTC.
According to their findings,
Even if one is convinced, the evidence only supports the claim that the dominant miner may have generated significantly less than a million bitcoin in our view. Perhaps 600,000 to 700,000 bitcoin is a better estimate.
This miner could be Satoshi or any of the early adopters and believers of Bitcoin. Many believe that it could be one of the figureheads from Blockstream (Adam Back or Samson Mow), or Charlie Shrem, or even Hal Finney. Moreover, many of the Bitcoin OGs would have chosen anonymity over fame when it comes to their holdings. Hence, one could continue shooting in the dark around the identity of the dominant miner or Satoshi’s identity, but the conclusive proof is rather improbable.
An Old 2009 Miner Moves 50 Bitcoins
On 20th May 2020, an 11-year old Bitcoin address ‘called havoc’ in the market. The Coinbase Transaction of the address dates back to February 2009, only a month after it’s launch. Hence, there is a high probability of the miner being Satoshi Nakamoto. However, there is no conclusive proof.
Whale Alert tweeted around 14: 24 hours UTC,
40 #BTC (391,055 USD) transferred from possible #Satoshi owned wallet (dormant since 2009) to unknown wallet. The coins in this transaction were mined in the first month of Bitcoin’s existence. Tx: https://whale-alert.io/transaction/bitcoin/cb1440c787d8a46977886405a34da89939e1b04907f567bf182ef27ce53a8d71
All we know that is this transaction moved 40 BTC to a new address and possibly spent 10 BTC in the market. At the time, the reward for mining a Bitcoin block was 50 BTC. 11 years and three halvings later it has slipped down to 6.25 BTC.
It caused a massive drop in the market, the prices dropped by 10% ($975) in the hours following the revelation of the transaction. While the volume of the transaction was negligible to cause a massive move, it exposed the weakness and uncertainty in the market.
Craig Wright Is a Fraud, Not Satoshi
Craig Wright, the self-proclaimed Satoshi Nakamoto has gone to the extremes to uphold his claims. From defamation suits, court cases involving early Bitcoins, and even copyright claims on the whitepaper Wright has stirred the crypto markets many times in the last few years. However, the notion among leading Bitcoiners is still unchanged.
In a legal filing, Wright had submitted a list of addresses 16,405 Coinbase transactions claiming the ownership of those Bitcoin addresses. The list can be found in the court document here,
“Craig Steven Wright is a liar and a fraud.”
On 25th May 2020, only 5 five days after the 40+10 BTC transaction was made, 145 addresses linked to the list submitted by Craig Wright were sent across this public message.
Although the claims on Satoshi’s identity may be contested, there is still a looming fear around the potentially large number of Bitcoins held by Craig Wright. In the case of Ira Kleiman vs. Craig Wright, Kleiman claims that his deceased brother had mined around 600k-800k Bitcoins in the early days. Ira has sued Wright for half the amount which apparently belongs to Dave Kleiman.
Can These Old Wallets Still Create a Dump?
It may have been a coincidence that the silent ghosts from the past happened to have resurrected within the same week. Possibly, it could also be a return of Satoshi Nakamoto addressing the community one more time. Nevertheless, given his persistence, it is unlikely that the creator is willing to dump his coins in the market just yet.
In the early days of Bitcoin, Satoshi was actively involved with the Bitcoin community, sharing emails and discussing Improvement Protocols on the network.
Until the first halving i.e. by November 2012 g, 50% of Bitcoins supply had already been mined. It was not until 2010 that a market for Bitcoin started developing. The monthly average number of transactions in 2009 was less than 5000, it is around a billion currently. Until then, the transactions primarily consisted of only the coinbase transaction. Moreover, there was obviously more than one entity running their miners and many more after the GPU burst of 2010.
HODL Wave Percentages and Bitcoin Distribution
One could say that for doing very little, the miners were able to earn quite a lot. Nevertheless, the HODL waves chart by unchained capital suggests that there has been quite a bit of distribution in the last decade.
By January 2013, the only motive for Bitcoin mining was holding the next generation of global currency. The total hold percentage (percentage of Bitcoin held for more than 6 months) was 60.1%, and for more than a year was 52.3%. Nevertheless, the markets witnessed quite a bit of redistribution in the following years, especially during the bull markets of 2013 and 2017.
Currently, consolidation is again underway with the lower time frame moves still not showing highs of previous bull markets. During the last halving, the HODL percentage of more than a year was 58.09%. Presently, it is on par with that value, as the greater than 5-year holder percentage has increased from 16.3% to 21.6%. Also, around 1.5 million Bitcoins are believed to have been lost due to theft, negligence, or accidents. Hence, around 8% of the total supply is assumed to be lost, which were mostly lost during the pre-2014 era.
However, over 15% of the holders at the moment belong to the 2-3 years category. Hence, there is a strong possibility that these are still unprofitable or at par with the current prices. Approximately, 20% of the Bitcoin has been hodled through the 2018 drop in prices. Therefore, it is unlikely that those hands are going to unload in the near future.
Hence, the traders can safely affirm that Satoshi will not be causing a Bitcoin dump in the markets anytime in the near future. Some of these miners allegedly have acquired around 2-3% of the supply sometime in the past. Whether or not they still possess remains to be unknown. Moreover, while there is considerable speculation around dumps from these entities, the HODL wave charts seem to have begun the bullish accumulation phase.
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