Published: May 30th, 2020
Crypto fans and mystery lovers alike took to social media in droves this week, after bitcoins first mined in 2009 were cashed-in after lying dormant for 11 years.
The 50 BTC were mined on 9th February 2009, a month after crypto’s pseudonymous founder ‘Satoshi Nakamoto’ created the Bitcoin network. By mid-week the #satoshi hashtag was trending on Twitter, driven by a surge in speculation that the man himself had stepped out of the shadows – if only fleetingly.
Adding frisson to the rumours is the long-held assumption that Satoshi may be sitting on anywhere from half a million to a million Bitcoins that haven’t yet been moved. As intriguing as that possibility may be, the truth is probably more mundane. It’s more likely that someone else who mined Bitcoin in the early days just got ‘round to moving his pile of virtual gold.
Why do we think so? Data from the Bitcoin blockchain and a thing crypto analysts call the "Patoshi Pattern."
The 50 coins in question were mined just a month after bitcoin was bootstrapped into existence, suggesting they might well belong to Satoshi, as it was too early for others to have delved into mining new coins.
What people forget is that Satoshi broadcast bitcoin’s coming launch via the cryptography mailing list he used to share the original cryptocurrency whitepaper. Blockchain data points to a handful of miners already on the network alongside Satoshi in Bitcoin's early days.
A pattern developed by software engineer Sergio Lerner – since dubbed the 'Patoshi Pattern' – paints a rough picture of BTCs mining landscape in the days and weeks after it arrived.
The pattern looks at the cryptographic hashes – ‘nonces’ in cryptocurrency lingo – that miners have to guess in order to link a new Bitcoin block to an old one. Nonces from the early days are believed to have been created by a single entity, arguably Satoshi himself.
Thanks to an old flaw in Bitcoin’s code, ‘Patoshi’ blocks have a different nonce pattern than other miners’ blocks. As crypto analysts have been pointing out via Twitter, the legacy bitcoins just moved came from a different block than those displaying a Patoshi Pattern.
When Patoshi patterns are displayed in visualisations, they show a distinctive pattern in the nonce which is missing from the block of BTC just spent.
Analysts say there’s a lot of uncertainty as to the size of the bitcoin vault created by an early miner, which is assumed to be Satoshi. The one million BTC thought to be cooling in a wallet somewhere may just be an assumption, driven by rumour and romantic notions about hidden treasure.
Crypto historians think there were probably dozens of other miners on the network in its first month. Journalists have been citing sources who tell them they ‘personally know someone’ who was ‘definitely mining Bitcoin in 2009’ for years, adding to the anecdotal record suggesting Satoshi wasn’t alone on the network in its infancy.
A Reddit post by Gregory Maxwell, co-founder of Blockstream, lays out how the mystery miner could have been spending BTC from his or her original Bitcoin Core wallet for years; it was just the legacy transaction that had gone unspent until this week.
‘Just because the bitcoin is old, it doesn’t automatically point to Satoshi,’ he added.
Far from an esoteric idea, the Patoshi Pattern has more than a million Bitcoin attached to it. If Satoshi was really starting to liquidate his fortune, surely we'd see more than 50 Bitcoin in motion.
Of the 50 re-animated bitcoin mined in the Satoshi-era, the majority remains unspent, but a portion has been cashed out.
The coins in question were split into two separate addresses—the first containing 40 Bitcoins and the second holding the remaining 9.99 coins. Blockchain analytics firm Merkle Science has told journalists that only 7.37 of the legacy bitcoins have been cashed in – worth about USD 65,000 at time of publication.
A substantial portion of those funds has been moved to Binance and Coinbase. Of the 9.99 BTC believed to have actually moved, 7.37 in bitcoin has ended up in exchanges.
Judging by the excitement and near-panic sweeping the crypto community this week, interest in the identity and whereabouts of Satoshi Nakamoto hasn’t waned, even as bitcoin begins to be embraced by traditional finance.
The idea that crypto’s founder might have chosen the waning days of a global pandemic to cash out his fortune had some dusting off their copies of Nostradamus, wondering if it was a sign of the end times.
Researchers however quickly put paid to the idea, working out that the stash had none of the signature Patoshi markings one would expect to see on coins owned by Satoshi.
Speculation has moved on to suggest that it may be an associate of Satoshi's, or merely an old miner finding an old wallet they’d forgotten. Whoever it is, they did not attempt to cover their tracks.
As evidence is shared more widely, the reality is settling in that the mystery miner is most likely a Satoshi era early-early adopter who finally decided to cash out. Merkle Science told the press that hadn’t seen any signs of coin-mixing or other evidence that wanted to mask their intent.
The analytics firm also said that to arrive on exchanges, the 9.99 Bitcoins were sent to 30 different addresses. An amount of 5.640 was sent to a number of Coinbase addresses, while another 1.741 found their way into a Binance hot wallet.
Market reaction to the news was notably negative, sparking a BTC sell-off within hours of the 2009 coins being spotted.