The bitcoin community was alive with speculation yesterday that bitcoin creator Satoshi Nakomoto has been moving bitcoin funds as 40 of some of the earliest ever mined bitcoins were moved for the first time in eleven years.
Mined only a month after the bitcoin genesis block was minted in 2009, whoever is the owner of the bitcoins is likely to have, at least, been part of a small cabal of individuals involved in bitcoin in its early days. And could even be Satoshi Nakomoto him-or-herself.
The news sent jitters through the bitcoin trading community, initially wiping $600 of the price of bitcoin on fears that previously dormant bitcoin whales were now gearing up to sell large amounts of their fortune, triggered, potentially, by the recent bitcoin halving or the appreciation of bitcoin price which has been flirting with the $10,000 mark for the last few months.
While 40 bitcoins (more recent updates from other sources have now suggested 50) which represents less than $400,000 is small fry compared to the potential billions of dollars that are believed to be held in the hands of a handful of whales, the fortunes of these individuals is often spread out across a number of wallets. It’s the demonstration of activity from a large bag-holder that may be dipping their toe in the water in preparation for a large sale rather than the amount being moved that has spooked the community.
Enter Craig Wright
To add further intrigue, the wallet owned by this whale appears to have some —albeit rather tenuous — association with Craig Wright, the controversial figure in the bitcoin community who claims to be Satoshi Nakomoto.
Wright has been embroiled in a legal dispute with the estate of the late David Kleiman concerning the ownership of 1.1 million Bitcoin that may or may not have been mined by Bitcoin’s founder, could be in a trust controlled by Craig Wright.
The Kleiman family is suing Wright for allegedly tampering with the late Dave Kleiman’s bitcoin assets and intellectual property after his death.
According to documents submitted as part of the dispute, wallets containing over 1.1 million coins, worth in excess of $9bn were held within the trust called the Tulip trust, the vehicle Wright and Kleinman allegedly created together.
However, Wright has testified to court that he has no ability to identify the wallets nor control over them as the associated keys were encrypted and he is not in possession of these keys. Wright has claimed that these keys will be delivered in the future by a bonded courier. That’s a claim that many in the community have considered as dubious.
However, Steve Shadders, CTO of nChain, a company associated with Wright, did perform an analysis of the bitcoin blockchain and based on certain patterns, identified over 25,000 wallets which may potentially have been owned by the Tulip trust.
This information was submitted to court as part of the dispute with Kleinman and included the wallet that is now subject to the recent whale alert. However it does provide a legal basis to a claim, instead providing a temporary stop-gap until Wright’s bonded courier emerges from the scenes with the access to the encryption keys.
With the coins now on the move, this raises a number of key questions. Either Wright lied about not being in possession of the encryption keys during the court case and is instead fully in control of this wallet, and potentially all of them within the trust.
Alternatively he may now have come into possession of the keys, which could mean that he would either need to comply with a ruling to hand them over or may be able to liquidate his position in bitcoin which could significantly destabilize the market.
Alternatively Steve Shadder’s list may actually be inaccurate — after all the list was only a best guess as to the wallets owned by Wright. Therefore Wright may not be the actual owner of this wallet.
Multiple bitcoin analysts have previously commented on the accuracy of Shadder’s list, pointing to inaccuracies, such the inclusion of the public addresses of the crypto exchange Mt Gox as well as Roger Ver’s wallet. In addition, some in the community have pointed out that number of the wallets identified from Shadder’s list have seen movements, with of over 73 blocks before this whale alert, suggesting that they are controlled by other people.
In addition, there have been criticisms of the algorithm used, and Shadders himself has admitted to a bug in his analysis code that may have inadvertently included addresses that would not have met the criteria he initially established.
Whether that means that the list is now sufficiently discredited to be completely unreliable remains to be seen. Certainly it’s not a document that has been deemed legally enforceable.
Crypto Twitter Reacts
Wright was in typical bombastic form on crypto twitter, yesterday, goading the bitcoin community by implying that he now has access to his coins and was planning on dumping them on the market.
While he did not specifically mention the whale transfer, he included a statement that he was seeking to “[move] the rest of them”, implying that he was indeed responsible for the 40 bitcoins which were moved.
However, Calvin Ayre, a long time business associate of Craig Wright who has backed Wright in his bitcoin fork – Bitcoin Satoshi Vision – weighed in today to state that he had spoken with Wright and confirmed that the movement was not related to Wright after all.
That appears as though Wright is now backtracking from his claims. Potentially because there are legal implications related to his lawsuit with Kleinman if it does prove that he has access to the private keys which he has so far claimed not to have access to.
Enter The Patoshi
Another source of evidence that the keys may not be owned by Satoshi — whether that be Wright or other — is based on research conducted by security researcher Sergio Demian Lerner, who has been examining the signatures associated with early miners of bitcoin.
Lerner has been able to chart out the patterns of early miners which may either represent Satoshi’s fortunes or those of the small group of early bitcoin insiders. Lerner has identified that the coins moved on Wednesday weren’t among those believed to be Satoshi as an owner.
So potentially they were just owned by an early miner with no links to Satoshi.
Maybe It Was J.K. Rowling All Along?
Probably the most unlikely theory, but the one that arguably we would all love to be true, and would represent the biggest twist of irony, is that the whale is actually J.K. Rowling.
The famous author of the Harry Potter stories has been mercilessly trolling the bitcoin twitter community over the past week providing some levity to a community that is often accused of taking itself a little too seriously.
In a moment of light comic relief, a clever tweet from Coinpayment.net suggested that maybe J.K. Rowling had been trolling the community all of this time.