Home Education 1 Huge Reason We Care about Who Invented Bitcoin

1 Huge Reason We Care about Who Invented Bitcoin

292
0
SHARE
Mysterious person
Who?

Over the past several years there have been several person’s who have been fingered as Satoshi Nakamoto, the inventor of Bitcoin, but none of the claims have ever been proven, leaving the identity of Bitcoin’s creator as a mystery.

Perhaps one of the most prominent rumors was that regarding Craig Wright, an Australian technology entrepreneur, whose home was raided by Australian police back in 2015, although no evidence of Mr. Wright actually being the creator of Bitcoin was actually found.

The raid came shortly after Wired posted an article that provided ample evidence of Mr. Wight being Satoshi Nakamoto, although Australian authorities deny that the article had anything to do with the raid.

Subsequently Mr. Wright did come forward in May 2016 and admit to being the creator of Bitcoin, even providing technical proof of his role as creator of Bitcoin by digitally signing messages with the first 10 cryptographic keys used to create the initial blocks of Bitcoin.

While the evidence seems irrefutable, not everyone in the Bitcoin and cryptographic community has been convinced, so there still remain questions as to whether Wright is really Satoshi Nakamoto.

Whether or not Craig Wright is the creator of Bitcoin isn’t entirely relevant to why it should matter to you and I who created Bitcoin. You and I should care because of the 1.1 million Bitcoins that have been sitting untouched since the inception of Bitcoin. These coins are believed to be controlled by Bitcoin’s creator, and if this is true, which seems probable, we could see a massive crash in the price of Bitcoin in the coming years.

Those 1.1 million Bitcoins have a current value of roughly $600 million, and one can assume that value will only continue to increase in the coming years.

If you haven’t already read my post explaining Bitcoin here’s a quick primer. Each Bitcoin is created through a process called “mining” in which a computer solves a cryptographic problem to create a key for each transaction. The computer that solves the problem and finds the key first is rewarded with a set amount of Bitcoins, currently 12.5 Bitcoins. However, it becomes increasingly difficult to solve these problems and create more Bitcoins, with the difficulty doubling roughly every 4 years. There will only ever be 21 million Bitcoins created, and this limit is expected to be reached in 2040, after which the number of Bitcoins will remain static. The system was created in this way to theoretically create price stability for Bitcoin. And the Bitcoin creation is permanently recorded in a public ledger, which can be viewed by anyone wishing to do so.

This is why the 1.1 million Bitcoin stash is believed to be controlled by the creator of Bitcoin. The coins can be seen in the ledger, and haven’t moved at all since their creation. The early days of Bitcoin would have been very easy to amass a large amount of Bitcoin as the reward for mining was much higher, and the processing power was much smaller than it is today.

If you believe that Craig Wright is the creator of Bitcoin then there’s a very good reason that stash never moves. According to the report from Wired those Bitcoins are in a private trust, which will only be accessible, by Wright, on January 1, 2020. If that’s true we could see a huge crash in the price of Bitcoin as 2020 unfolds as Wright takes control of that stash, which could easily be worth in excess of $1 billion in 2020, and begins to dump large amounts of Bitcoin into the market.

However this creates several conundrums for whomever might hold those 1.1 million Bitcoin, whether it is Wright or some other person or entity. One of the purposes in the creation of Bitcoin was to free people from the need for centralization of the money supply. Yet someone who controlled that much Bitcoin would become a de facto central bank, at least until they liquidate the position. And that poses another problem. Dumping that much Bitcoin all at once would drive the price of Bitcoin sharply lower, making the Bitcoin worth far less as more and more hit the open market.

This is all very interesting conjecture, but in reality we have no idea if Wright is the creator of Bitcoin, if he will actually control 1.1 million Bitcoin on January 1, 2020, and if he would even sell those Bitcoin.

Even so, I am marking the Jan 1, 2020 date on my calendar and may even consider moving my Bitcoin elsewhere just as a precaution against such a black swan event.

SHARE

LEAVE A REPLY

Please enter your comment!
Please enter your name here