“bitcoin”, “blockchain” and “cryptocurrency” are words that most people have at least heard of since the industry exploded into the general public consciousness over the last year and a half.
Over the course of this series of articles, we’ll delve into the basics of the industry, providing an introduction to cryptocurrencies that will give you a solid grounding in the technology and its lexicon.
Reading: Bitcoin creator nakamoto
In short, it will be enough to understand what people are talking about and decide if you want to learn more.
read more from pymnts cryptography basics series:
what is a blockchain and how does it work?
what is a crypto wallet and how can you avoid losing a quarter of a billion dollars?
how to lose your crypto without getting hacked
Is bitcoin really anonymous and how can law enforcement track it?
what is a consensus mechanism and why is it destroying the planet?
what is mining and why does the bitcoin business not work
the tokenomics of cryptocurrencies
what is a permissioned blockchain and how does centralized decentralization work?
what is a satoshi? the ‘cent’ of a million dollars of bitcoin
what is a native token, a non-native token and a white label cryptocurrency?
the real identity of the creator of bitcoin and blockchain, satoshi nakamoto, is a topic of constant curiosity in the crypto community. it’s also a $25 billion sword of damocles hanging over his head.
and bitcoin owners may be about to get a preview of what could happen if it goes down.
On July 6, the Japanese trustee of mt. Cryptocurrency exchange gox, which was hacked for 850,000 bitcoins (btc) in 2014, is about to start distributing the 141,686 btc it recovered to creditors, bloomberg reported earlier this month.
Some of that was sold for cash in a years-long process overseen by Japanese courts, so not all of it will be distributed. and presumably a good number of the people who lost bitcoins in the heist will keep them. but it will still be a big dump that could drive prices down. how far down is debatable: bitcoin’s 24-hour trading volume on Tuesday (Aug 2) was $28 billion.
whoever is the author of the bitcoin whitepaper behind nakamoto, it is widely believed that he/she/they mined 1.1 million bitcoins in the early days of the project after the genesis block went live January 1st. 3, 2009. and have never been touched since they were first mined.
see also: blockchain basics series: what is bitcoin and how did it come to be?
which leaves two possibilities: whoever nakamoto is no longer has the private key codes needed to send or sell them, or chooses not to for whatever reason. in the latter case, that could change at any time, for example if that giant cache of bitcoins is inherited.
nakamoto is not the only crypto cache. In 2017, blockchain data firm Chainalysis estimated that between 2.8 million and 3.8 million bitcoins were lost, either the wallet or the private key codes needed to transfer a misplaced bitcoin. a lot of that was mined long before bitcoin was worth much. and about 30% to 40% of that is attributed to nakamoto.
While unlikely to be dumped on an exchange in one day, 1.1 million bitcoins at the August 2 price of just over $23,000 is $25 billion, which could definitely put price pressure .
On top of that, it could have a much bigger short-term effect on investors, particularly those holding bitcoin futures or bitcoin-backed overcollateralized loans, as a drop in price could cause a lot of margin calls.
see more: Crypto Basics Series: How Does Decentralized Crypto Lending Work?
One of the reasons bitcoin was considered an inflation hedge (digital gold) during its high-flying days in 2021 is that only 21 million can be mined, and around 19.1 million of them have been: The number of coins mined with each block is halved every four years, so the last bitcoin won’t be mined until 2040.
Even with that, the supply of bitcoin is very limited, with the 1.1 million nakamoto representing more than 5% of the total. which is more than enough to distort the market, even without psychological pressure from the creator of bitcoin leaving.
and since every bitcoin can be traced on the public blockchain, although the identities of the owners are protected, it would quickly be known that satoshi nakamoto is back.
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