Mysterious Transactions With Satoshi Nakamoto Wallet

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• Mar 27, 2024
Mysterious Transactions With Satoshi Nakamoto Wallet

by Ryan Shea

On January 5 2024 an unidentified crypto wallet sent 26.9 Bitcoin to the first ever Bitcoin address attributed to Satoshi Nakamoto (1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa). At the time of the transaction, the amount involved was the equivalent of $1.2 million – not exactly spare change.

Mysterious Transactions With Satoshi Nakamoto Wallet

Source: www.blockchain.com

The question is, why?

Hypothesis 1

One popular theory is that it was a thank you from the Bitcoin community to Satoshi for creating the “greatest store of wealth in history”. While it is true that Satoshi wallets often get sent small amounts for this reason, $1.2 million seems to be an extraordinarily large tip to send to an entity that has one of the largest pots of wealth ever known to humankind.

Hypothesis 2

Another reason put forward was that it was a marketing stunt for the new US spot Bitcoin ETFs. While possible, I am sceptical, as I think is the guy who proposed it is, given he described it as a “weird” marketing scheme.

Mysterious Transactions With Satoshi Nakamoto Wallet

Source: twitter.com

Hypothesis 3

Another possibility proposed by Jeremy Hogan is that it might be an attempt to reveal Satoshi’s identity because of the recent US tax law change that requires US taxpayers to report crypto transactions over $10,000 to the IRS – a process that obviously cannot be done anonymously.

Mysterious Transactions With Satoshi Nakamoto Wallet

Source: Twitter

In my view, Hogan’s “Satoshi has to dox himself, or break the law." hypothesis is definitely closer to the truth, albeit with a twist.

Hide-And-Seek

Let me explain.

Satoshi Nakamoto is famously unfamous.

Despite a vast amount of speculation and considerable research efforts, no one knows who he/she/they [delete as appropriate] is/are [delete as appropriate], what their nationality is (which is important, as we will see later on), or where they live. About the only thing that is certain about Satoshi’s real world identity is that it is not Craig Wright after a UK judge in the recently concluded COPA trial stated the “overwhelming” evidence was that:

First, that Dr. Wright is not the author of the Bitcoin white paper. Second, Dr. Wright is not the person who adopted or operated under the pseudonym Satoshi Nakamoto in the period 2008 to 2011. Third, Dr. Wright is not the person who created the Bitcoin System. And, fourth, he is not the author of the initial versions of the Bitcoin software.”1

Just as nature abhors a vacuum, people abhor information vacuums. We are curious creatures, and not knowing the real identity of the creator of one of the most revolutionary steps in the evolution of money drives some people crazy. But crazy enough to burn $1.2m?

Somehow, I doubt it.

I concur with Hogan that given the recent US tax law changes making such a large transfer – one that is hard to argue went unnoticed if for no other reason than the media attention the transaction garnered - to a Satoshi wallet does indeed mean Satoshi has to either dox himself or break the law.

But I don’t think the motive behind the transaction is to get Satoshi to finally reveal his identity because there are already extremely sound reasons why someone would not wish to identify themselves as Satoshi (yet another reason, if one were needed, for thinking Craig White is not Satoshi as he repeatedly claims).

A Honey Pot

By analysing early Bitcoin transactions, blockchain sleuths like Sergio Damian Lerner estimate that Satoshi is associated with 20,000 wallet addresses holding a combined amount of mined Bitcoin totalling 1.1 million.

Others have slightly smaller estimates of between 600-700,000. Whatever the correct amount, we can be sure that Satoshi has (or had!) a very large bag of Bitcoins, with an approximate value at the time of writing of over $40bn.

This is a veritable honey pot for scammers, shysters or kidnappers. For this reason alone, I agree with those who consider attempts to unmask Satoshi are acts of, if not bad faith, certainly unhelpful faith. After all, it’s not like Bitcoin needs Satoshi’s identity to be revealed in order to continue functioning.

Moreover, having created an alternative – potential challenger – to the centralized fiat money system that was in its early years used by criminals2 (Silk Road being the most obvious example) it is sure the legal authorities would be very interested in spending quite a considerable amount of time meeting with whoever is identified as Satoshi.

This is probably not a terribly appealing proposition for anyone. We can certainly surmise this was Satoshi’s mindset because he confirmed in an email sent to Mike Hearn on April 26, 2011 that he had “moved on to other things”. This was four days prior to Gavin Andresen, who had been given commit access to Bitcoin core’s GitHub repo by Satoshi, revealing on a Bitcoin Talk forum that he was “going to give a presentation about Bitcoin at CIA headquarters in June at an emerging technologies conference for the US intelligence community”.

We know Satoshi had been aware of Gavin’s intentions to speak to the CIA for a couple of months prior to Gavin’s reveal on the forum because on The Bitcoin Show in June 2011 , filmed after the CIA conference, Gavin confirmed he had emailed Satoshi to tell him as much. He also stated that Satoshi never replied to his email. In fact, after sending the email to Hearn, Satoshi never corresponded with Gavin or anyone else again (aside from a terse message posted on the Bitcoin forum of the P2P foundation in March 2014 denying he was Dorian Nakamoto, a Japanese-US citizen Newsweek claimed was the creator of Bitcoin).

Given all this, on balance, it appears unlikely Satoshi will dox himself for the sake of complying with the new US Tax laws.

So that still leaves us with the question of why send the $1.2 million to a Satoshi wallet?

Hypothesis 4 (Mine)

We know wallets connected with Satoshi contain a large amount of Bitcoin. We also know that if not reported to the IRS – almost certain for the reasons outlined above - the recent transfer of 27 Bitcoin to one of these wallets would mean Satoshi is breaking US law.

This means any of the 600,000+ Bitcoin in wallets connected with Satoshi can only come back to the market with a legal case attached to them.

Assuming, as I have done, Satoshi would never intentionally reveal his/her/their [delete as appropriate] identity, they could still decide to bequeath them to beneficiaries of their will. And, if these beneficiaries decided to liquidate their holdings (which total between 2-4% of Bitcoin’s overall supply depending upon the estimate used) and turn them into fiat money, it would not go down well with other Bitcoin holders, as its scarcity would slightly decrease (albeit still finite). However, if, as a result of this transaction, these future sales come with an arrest warrant attached, combined with all the other potential negatives already mentioned, this is perhaps enough to make Satoshi think twice about making such bequests.

Burn, Baby, Burn

I admit there are a lot of ifs there, but I can see the logic of someone taking the risk of sending $1.2 million of BTC to wallet unquestionably connected with Satoshi to increase the odds of it becoming, in effect, a burn address in the hope of reducing further the risk these 600,000+ Bitcoins re-enter the market at some stage in the future.

Is my theory about the motive behind the mysterious transaction with Satoshi Nakamoto's wallet right?

I don’t know.

It is just one of a number of theories that have been proposed. The biggest hole in the logic is that it would only apply if the beneficiaries were either US citizens or residents of the US. This may not be true. The only person who really knows the motive behind the transaction is the one who did it. The rest of us are left to simply ponder.

Maybe I have hit the nail on the head and it is an attempt to stop Satoshi’s Bitcoins coming back into supply; maybe people really are driven so crazy by not knowing who Satoshi is and want to dox them (btw - the same US association problem holds for this hypothesis); maybe ETF firms like to engage in weird PR campaigns; or maybe Bitcoiners are just immensely grateful souls.

Hopefully, one day we will all get to find out why.


1See: https://www.coindesk.com/policy/2024/03/14/justice-james-mellors-ruling-on-craig-wright-copa-trial/

2This illegal-use narrative persists to this day even though it is no longer inappropriate (well, no more than for the fiat money system) – see: https://trakx.io/resources/research/how-crypto-combat-illicit-transactions/

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