written by the team at @veriphibtc
For years, many of the coins originally mined in the early days of Bitcoin have laid dormant, unmoved from their original addresses. Many are considered forever lost, some belonging to early miners, while others belong to Satoshi himself.
On the 20th of May 2020, a concerning alert was shared through the twitter handle @whale_alert. This account, with over 220k followers at the time of writing, insinuated the unexpected return of the mystical and crucial figure of Bitcoin, the famous Satoshi Nakamoto. Coins that were mined early on in Bitcoin’s existence and that hadn't moved since 2009, had been included in a transaction.
Some may not admit it, but everybody in the Bitcoin community must have stopped what they were doing at that particular moment and started to look for some extra information regarding the possible come-back. Every telegram and Facebook bitcoin and “crypto” group were captivated by the prospect of Satoshi coming back.
One hour later, the price of Bitcoin dropped by over 5%. Hard to say if it was directly related to the theory of Satoshi coming back, but some may have been scared that much more of Satoshi’s coins were about to flood the market, resulting in a significant price drop.
The news was also exciting, considering that these Bitcoin were from a different era in which mining was still done on everyday computers, produced practically for free. This move showed an unprecedented level of patience from an investment perspective. Bitcoin was virtually worthless at that time of being mined, and capitalizing on any of the tremendous gains in the previous 11 years must have been incredibly enticing to say the least.
Bitcoin mining has evolved tremendously since its early days, evolving into a complex and constantly thriving multi-billion dollar industry. The whole Bitcoin scene has completely transformed from its cypherpunk origins.
If you are by nature a skeptic, you may have felt that something was not right. Did it really make sense for Satoshi to move only 40 bitcoin out of the 1 million coins he’s believed to be in possession of? Your doubts would have been rapidly confirmed by the countless amazing minds that subsequently swept through Twitter and Bitcoin forums to debunk myths with strong technical arguments.
A lot of research was conducted regarding the early mining days. Much of it pointed out that there was a singular entity (presumed to be Satoshi Nakamoto) that mined close to 1 million coinsby himself. That mining entity was called Patoshi and was identified after a complex analysis that remarked that the data structure of these presumed satoshi blocks was different from all the others. Without over-complicating things, here's a brief explanation:
When a block of new Bitcoin are mined, the creation of these new coins is called the coinbase transaction (not to be confused with the online exchange fo the same name). In this transaction there is a bit of information called a nonce, and part of this information can help differentiate coins mined by one entity vs another. Using this data, researchers were able to link most coins they believe to be mined by Satoshi himself.
For the geekiest of readers, I invite them to dive into this incredible rabbit hole that is the Patoshi research... but don’t expect it to be an easy read!
Ok, now let's get back to that Whale Alert transaction. It turns out that the presumed Satoshi transaction that occurred on the 20th of May 2020 didn’t include any of the originally identified Pathoshi coins. So yes, it was a false alarm, but it doesn’t completely remove the possibility of Satoshi Nakamoto still being alive and waiting to dump his coins on you!
Just kidding! We've now reached the point where the return of Satoshi would be largely inconsequential (barring mild short-term market uncertainty). Bitcoin has become transcended its creator, and has become an organism with no ruler.
Let’s understand why!
The Cypherpunk Origins
Numerous previous failed attempts of creating a digital form of money paved the way for Bitcoin’s success. The first idea of digital cash was introduced in 1983 by David Chaum, a famous and renowned cryptographer. He later founded a company called Digicash that introduced the first electronic currency, called e-cash. It failed eventually as it was stopped by US authorities.
The above example was only one of the other attempts to create money living solely on the backbones of the internet. All iterations were centralized at one point or another, leading to their demise. Nevertheless, they were all valuable experiments leading to the creation of Bitcoin in 2009.
The true genius of Satoshi Nakamoto comes from the fact that he founded Bitcoin on a completely anonymous basis and nobody has successfully identified him. Therefore, Bitcoin lives truly according to the principles of being open-source and decentralized. If any government wants to stop Bitcoin, on which door should they knock? You get the point, there are none.
A successful digital money that could not be controlled by any centralized entity was a long time dream of the cypherpunks. The cypherpunks were a group of avid liberty and independence believers fighting over freedom of expression and action over the internet. They quickly realized they couldn’t build that type of society without a properly functioning e-cash. The history before Bitcoin is filled with numerous attempts to create it.
Satoshi was the first to get it right, and he perhaps chose the best path disappearing shortly after launching Bitcoin. This allowed the protocol to develop according to consensus vs dictatorship. Some posit that he even purposefully tainted the coins he was mining so nobody could use his name in vain in the future, his coins being frozen in the blockchain forever.
Breaking that anonymity pattern wouldn’t resemble Satoshi’s style, as his words were truly reflective of cypherpunk principles. What that said, if were to return would it really make a difference? Should we live in fear of that possibility?
High-Risk High Reward principle
Bitcoin is a slowly maturing and continuously evolving ecosystem with tens of thousands of Bitcoin nodes, a full-fledged mining industry, and now layered scaling solutions, such as the Lightning Network.
The task of developing Bitcoin has been undertaken by equally passionate and motivated individuals from its original creator. Would these people stop working if Satoshi came back? Almost certainly not.
With that said, this recent event has brought to question the idea of Bitcoin allocation, and how handsomely the early adopters of Bitcoin were rewarded.
Greater Risk Can Yield Greater Rewards
Nobody from the original Bitcoin core developers or miners were guaranteed to get insanely rich. Bitcoin, in its embryonic state, didn’t even have a monetary value and most of the people working on it were doing it by principle. That is why there are a lot of stories out there of early miners looking for a forgotten lost hard-drive on which they know they mined few full blocks just for fun in 2010.
Those who successfully preserved the private keys to some Bitcoin they gathered in those days shouldn’t be demonized or called out as having it easy either. They deserve every single sat they successfully kept as they voluntarily provided some resources to support Bitcoin at a time when nobody could even dream of the state of success at which Bitcoin is at today.
Don’t you worry if you’re just getting into Bitcoin in 2020. Some people will complain about you having it easy as well in 10 years when Bitcoin is that much more entrenched in society. Bitcoin still poses risks to its investors and developers today, and as an individual owning it you are accepting those risks. Should you not be rewarded if your belief in this system turns out to be correct?
So, even if Satoshi comes back, let him enjoy his Sats, he deserves them.
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