Satoshi Nakamoto did not appear, so what is the truth?

Last night, an unfounded news flash from Whale Alert caused a stir in the cryptocurrency circle. It was speculated that it might be Satoshi Nakamoto who moved the block reward at block height 3654. However, according to the researcher's Patoshi model analysis, these bitcoins do not belong to Satoshi Nakamoto. In addition, interestingly, Craig Wright, who was previously said to own the address, also denied that he had transferred these bitcoins. The truth of the matter then points to another possibility, that is, early Bitcoin miners are cashing out part of the Bitcoin. Why did they do this?

About Patoshi Patterns and Satoshi Nakamoto

In order to rule out the identity of the miner as Satoshi, we need to understand the Patoshi model, which is a study proposed by Argentinian researcher Sergio Demian Lerner. By reading the original source code of the Satoshi v0.1 client, he found three privacy-related flaws that allow anyone to link the blocks mined in the first year together and find a common source. In addition, it also allows anyone to calculate the approximate computing power of each early miner.

First, a little technical background: the extrance field in the coinbase transaction is incremented every time the nonce field overflows, which means that the search space has been exhausted. Since the nonce field is 32 bits long, and Bitcoin's initial difficulty was adjusted to require an average scan of 32 bits, the nonce sometimes overflows, but not always. Now let's understand the three flaws in the original Bitcoin code:

1. The ExtraNonce serves as a "free-running counter" that does not reset to zero between mined blocks.

2. According to the original Bitcoin source code, a miner increased the ExtraNonce much faster than his actual computing power indicated. We call this miner Patoshi.

3. During the mining process, the best block is checked every few seconds. If the best block changes, the ExtraNonce will be increased. Normally, all external blocks received will increase the ExtraNonce, but the exception miner Patoshi does not seem to follow this rule.

These flaws combined allow us to distinguish Patoshi-style blocks from blocks from other miners.

According to Sergio Demian Lerner’s research, the Bitcoin reward that meets the Patoshi model is approximately 1.1 million BTC.

Does the block reward at height 3654 that was transferred last night belong to this Patoshi model?

In this regard, Nic Carter, co-founder of the data analysis website Coinmetrics, and Sergio Demian Lerner, the proposer of the Patoshi model, both confirmed that the block does not belong to this model, which means that we can rule out his identity as Satoshi Nakamoto with a high probability (why we say high probability, because there is still a very small possibility that Satoshi Nakamoto used another common model to mine Bitcoin, but this speculation is completely unfounded)

As for the identity of this miner, in fact, Coinbase exchange is very clear (Note: the miner transferred part of the Bitcoin to Coinbase, and the exchange has strict KYC), but there is no need for us to explore in depth. As Sergio Demian Lerner said, we need to respect other people’s financial privacy.

Similarly, according to data provided by chain.info, on March 30, an early Bitcoin miner transferred some Bitcoin to the exchange, and his participation in Bitcoin mining can be traced back to January 29, 2009. It can be said that in terms of time, this miner may be earlier than the one who transferred the currency yesterday, and his mining model does not belong to the Patoshi model.

Craig Wright denies moving the bitcoins

During the discussion of this early Bitcoin miner last night, it was also pointed out that the address appeared in court documents in the Kleiman vs. Craig Wright case, when Craig Wright claimed the address as his.

But today, Calvin Ayre, an important participant in BSV, revealed that Craig Wright himself denied that he had transferred these bitcoins. He said:

“This was not done by Satoshi Nakamoto, Craig confirmed this.”

Well, Craig proved that this person is not Satoshi Nakamoto by denying the evidence he searched for. This logic...

Several speculations about how early Bitcoin miners used Bitcoin

At this point, there is actually not much room for our imagination. The real story is probably that early Bitcoin miners are using Bitcoin to cash out. As for why they do this, a reasonable guess is that it is related to the current epidemic and economic recession. According to the U.S. Department of Labor, more than 2.98 million Americans applied for unemployment benefits for the first time in the week ending May 9. The total number of unemployment applications in the past 8 weeks has reached 36.5 million, a level close to the Great Depression of 1929-1933.

Early Bitcoin miners were most likely geeks, so it is understandable that they used part of their Bitcoin reserves during this period to exchange for the fiat currency they needed for life.

Of course, there is also speculation that early Bitcoin miners suddenly found the private key. This statement is not impossible, but it does not seem to take into account the current economic environment.

The last guess is that someone has collided with the private key of the address through brute force guessing. We can only say that the probability of this is so low that we can ignore it.

As for the impact on the market, to be honest, it will naturally have some negative impact, but it is also very limited. While some people choose to sell out of panic, some people are quietly buying. For example, the latest data from Grayscale shows that they increased their holdings by approximately 3,100 BTC yesterday. As for why they made a different decision from most people, this is probably related to their interpretation of this incident.

Related information:

1. https://bitslog.com/2019/04/16/the-return-of-the-deniers-and-the-revenge-of-patoshi/

2. https://cointelegraph.com/news/craig-wright-denies-transferring-satoshi-coins-leaving-him-in-legal-catch-22

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