Satoshi Coins: What could happen to Bitcoin in 2020?

There’s one big question facing Bitcoiners in 2020—particularly those following Bitcoin SV (BSV). What happens if the famed “Satoshi Coins” early-mined Bitcoins supposedly belonging to Satoshi Nakamoto, start to move? Does the thought make you feel excited, nervous, both, or… nothing at all? If you’re the last option you’re probably a Zen master or you know something no one else does, we’d like to have a few beers with you. Otherwise, at the end of 2019 it’s time to go into wild speculation mode and look at some of the possibilities.

Just a quick note: We’re not predicting any coins will move from the known “Satoshi wallets” in the next week. And we don’t have any inside information on the matter. Think of this as our riff on a hypothetical that’s been in the back of Bitcoiners’ minds for almost a decade.

What are ‘Satoshi Coins’ anyway?

That’s a good question. There’s no definitive proof that “Satoshi Nakamoto,” or whatever that name represents, holds Bitcoin in any address, wallet or information that’s available to the public. However since “Satoshi” was mining Bitcoin for the first 70 blocks at least—and the blockchain shows those blocks were mined into coinbase addresses and have not been moved since—those Bitcoins could be described as being “Satoshi Coins.”

Dr. Craig Wright in court testimony, October 2019:

The first 70 addresses are definitively ones that I was involved with verifying. After that, there was another party at 74, I don’t know who that individual was. And then 78 I believe is Hal Finney.

Bitcoin followers have been watching those addresses like hawks for years. If any coins appeared to be moving from them, crypto conversation on the internet (and probably elsewhere) would explode.

There may be many other “Satoshi Coins” addresses as well. There probably are. No one knows for sure.

There could be other signs that something is happening to a large number of early Bitcoins. Someone may begin giving away or selling BTC in noticeable amounts. It could also be in non-noticeable amounts. There might be a public announcement, followed by analysis and market moves.

We’ll also look at Dr. Craig Wright’s online statement/s that he “will have 821,050 BTC used in 2020” as part of our speculative scenarios. The wording of this statement is curious, since it doesn’t say “move,” “spend,” “Satoshi,” or where the BTC might come from. It also implies Dr. Wright himself is not performing any action directly. The effects of any action on those Bitcoins would be similar to those of any movement concerning “Satoshi’s Coins” though, so we’re including it.

First up: Why are people thinking about this now?

In theory, Satoshi’s coins could have “moved” at any time since January 2009—but the date January 1st, 2020, has special relevance. An email leaked by employees at the Australian Tax Office in 2015 purportedly detail an arrangement between Dr. Craig Wright and his friend David (Dave) Kleiman to put 1,100,111 bitcoins in a “trust” that would be returned to Dr. Wright on that date. The email (or at least, a PDF facsimile of it) was entered as evidence in the ongoing lawsuit brought by Ira Kleiman, Dave’s brother.

This arrangement is the one most commentators are referring to when they say “Tulip Trust,” even though the word “tulip” does not appear on it. In reality “Tulip Trust” could mean a number of different things, but that’s another story.

The authenticity of the leaked email (or some of its contents) has been questioned by all parties. Dr. Wright pointed out in court that it is a PDF, not an email (meaning it could have been faked or altered). His opponents have accused him of creating it in 2014, a year after Dave Kleiman passed away—meaning the entire arrangement is fictional.

Even if it is 100% genuine, though, it may be void. It contains instructions for the bitcoins to be returned to Ramona Watts (now Dr. Wright’s wife) or Dr. Wright himself in the event of Wright’s or Kleiman’s death. Additionally, there’s no mention of Satoshi Nakamoto in the email—but it’s unlikely anyone else would have had over a million bitcoins in 2011.

Since Dave Kleiman passed away in April 2013, and none of Satoshi’s (known) coins have moved, speculation about whether January 1st 2020 still means anything has continued.

One other thing…

On July 20, 2019, Dr. Wright posted in a chat group “I am going to have 821,050 btc used in 2020.” He did not specify a date, but noted “The BTC will not be dumped immediately”.

Again, we don’t know if this means the “Satoshi coins” or not, but it’s a high number. Dr. Wright hints they are pre-fork coins by saying “In 2020, I will only have BSV … BTC and BCH are to be used to fund a number of charities and development projects.”

Scenario 1: Satoshi’s coins move, and Dr. Craig Wright is behind it

We’re saying “Dr. Wright is behind it” for simplicity’s sake, as there could be all manner of ways the coins could move without his direct action, ownership or control. Things could change in the background without anything being immediately visible to outsiders at all. Third parties could be acting on instructions. Access, control or movement related to Satoshi Nakamoto’s bitcoins may have been pre-programmed into a time-locked contract years ago.

Dr. Wright has been fairly public with this 821,050 BTC claim and plan. And there’s little doubt that, should the statements be accurate, he’d do something that favors Bitcoin SV value and the BSV ecosystem.

So IF we see coin movement from the Satoshi stash in January or at some point in 2020, it would be reasonable to assume Craig Wright is involved in that action. The first and most obvious prediction in that case would be:

Consequence 1a: BSV up, BTC down

Craig Wright is Satoshi Nakamoto!” That headline would come as little surprise to the Bitcoin SV community, but the reality is many outside it would be shocked. There’s virtually an entire industry built on counter-signaling that claim, an industry that would begin to crumble if blockchain or market evidence started to appear.

We could expect a lot of fence-sitters to suddenly take a second look at BSV. That would prompt a rush on BSV news sites, code repositories, project homepages and social media as businesses and developers realized they now had to take it seriously after all.

That interest would transfer almost immediately to the BSV price as investors everywhere suffered a FOMO (fear of missing out) attack. The effect on BTC price would be less predictable, though given Dr. Wright has publicly stated several times that he would offload his BTC (note we didn’t say dump, or fast) or at least held enough of it to affect the price — negatively.

And BCH? That’s an interesting one. Arguably, BCH has switched focus more to the anti-authoritarian set since the November 2018 split. Craig-as-Satoshi could see it become even more marginalized and there could be a negative impact on price if dumping fears emerged. However it could still retain some of its popularity in the longer term at local meetups, libertarian events and online as its more defiant fans stuck to their guns.

Consequence 1b: Miners

Miners, like investors, care more about their economic interests than protocol preference. Many miners also do so ideologically, to support their preferred version of Bitcoin or other blockchain project.

Non-ideological miners using Bitcoin’s SHA-256 hashing algorithm can switch to whichever version of Bitcoin is most profitable at the time. There has indeed been a lot of switching in the past between BTC, BSV and BCH according to market conditions.

Bitcoin hashing power would follow a similar trajectory to market prices, especially if there’s a large shift. The question is: would ideological miners also switch, if their worldview changed? Or would they stay committed to their preferred chain no matter what?

Should any coin’s hashing power drop precipitously at a time before its mining difficulty can adjust, it could experience a phenomenon known as “chain death”. Chain death occurs when confirmation of transactions on a blockchain essentially freezes, because the hashing power required to mine/confirm them is far greater than that available. This has happened to minor altcoins in the past.

Were chain death to occur on a Bitcoin-named blockchain though (especially if it’s BTC) there would be even further ripple effects. It’s doubtful it would happen so suddenly as to freeze billions of dollars in Bitcoin-related assets. More likely it would be a slow departure.

Any scenario involving the sudden (or even semi-sudden) dismantling of BTC could have unforeseen effects too. Many out there in the mainstream world still know only “Bitcoin”, or are only vaguely aware of its variations, disputes, and even the existence of altcoins. The market value of all cryptocurrencies, even those not using proof-of-work mining, could become collateral damage amid a flurry of knee-jerk reactions. For this reason we also doubt the shift will be so sudden… but it remains a possibility.

Consequence 1c: Exchanges, wallets, other downstream businesses

Like miners, businesses built on various blockchain projects are that way for a number of economic and ideological reasons. Many exchanges, wallets and other services have been vocal (or agnostic) in their opinions. This means there would be downstream economic effects of any change as well, as participants at all levels from management to development and even marketing were forced to reconsider their career options.

Alternative: The psy-ops wars ramp up

Don’t forget that a lot of people’s investments, businesses, livelihoods, reputations and careers rest on BTC dominance and Craig Wright NOT being Satoshi Nakamoto. Dollar for dollar, it could even be more than the amounts invested in BSV as of today. Many have been public and vocal in their refutation, and wouldn’t be able to flip the switch as easily as a miner.

Many would rush to their keyboards to comment, express disbelief, edit and delete years of online postings. Some would pretend they knew all along, others would remain in denial.

The preparations for this kind of scenario have been underway for some time anyway. At some point over the past few years, the Bitcoin narrative switched from “What would Satoshi do?” to “It doesn’t matter who Satoshi is,” or “Anyway, we’re all Satoshi now.” To be fair, this started even before the spotlight shone on Dr. Craig Wright—though it certainly ramped up after.

IF the status of Satoshi’s bitcoins changes, and IF Dr. Wright appears to be behind it somehow, the anti-Wright narrative won’t go away. In fact it will probably escalate. There are plenty of posts out there already claiming the entire BSV ecosystem is an attempt to “steal” Satoshi’s bitcoins somehow. But that won’t matter much unless he has the BTC too—and we’re not sure how BSV enables the theft of BTC.

nChain’s Dan Connolly explains the P2SH disinformation here:

In short, we could expect to see a more definite version of the Kubler-Ross “Five Stages of Grief” (denial, anger, bargaining, depression and acceptance), which everyone in crypto has probably experienced in degrees at different times over the years already.

Scenario 2: The coins move, but it’s not Craig Wright

One good rule of thumb to follow in Bitcoin is: There’s always something going on that you don’t know about. Since this article is mostly hypothetical and speculative, we’ll entertain the notion that someone other than Craig Wright has influence over the “Satoshi Coins” and moves them in 2020, for some reason.

If this happens, we could expect to see (a) coins moving from very early Bitcoin addresses, and (b) a public denial by Dr. Wright that he has anything to do with it. We consider this scenario unlikely, but anything is possible due to the aforementioned rule of thumb.

The consequences of this scenario unfolding would likely be the opposite of the market moves described in previous paragraphs—that is, BSV value would likely drop and BTC may rise on the implication that Dr. Wright is not Satoshi Nakamoto after all. BTC could also falter if the identity and intent of the party behind the action stays unknown.

Scenario 3: Nothing happens at all

This scenario is something you won’t have to worry (or crow) about till later in the year. What happens if nothing happens to Satoshi’s Coins, or some large Bitcoin amount, at all?

Since it’s the BSV community most anticipating action in 2020, this would affect BSV the most. And not in a good way—unless there was a valid reason that most participants accepted. Since there’s no definite timeframe attached to any of these scenarios there, the effects could be more gradual.

So… What should you do?

There’s a multiverse of possibilities here and any number of circumstances that could influence them. “What happens if Satoshi’s Coins Move?” has been a favorite discussion topic among Bitcoiners for years—but this is the first year where there’s been real anticipation it could happen.

We couldn’t possibly advise and probably shouldn’t. So like everything, it depends on your degree of confidence and risk tolerance level. The best advice is to grab some popcorn and watch these spaces, because 2020 is unlikely to end the same as previous years.

New to Bitcoin? Check out CoinGeek’s Bitcoin for Beginners section, the ultimate resource guide to learn more about Bitcoin—as originally envisioned by Satoshi Nakamoto—and blockchain.

[10]
[10]