Bitcoin is back on top. This week, the original cryptocurrency broke its all-time high, boosted by new ETFs backed by BlackRock and others, strengthening its status as a mainstream investment. Of course, this does not mean that Bitcoin is completely safe. Aside from its historical volatility, Bitcoin is subject to some unique risks that are highly unlikely but potentially devastating if they materialize. The biggest of these is the return of its pseudonymous creator Satoshi Nakamoto, who has controlled a huge supply of Bitcoins since the currency's early days and could shock the market in unprecedented ways.
It is widely believed that Satoshi will never return, but recent events – including a mysterious $1.2 million deposit into one of her wallets and an ongoing trial in the UK focusing on her identity – are a reminder that unlikely does not mean impossible. Here's a closer look at the chances that Bitcoin's creator could come back – and what it would mean if he did.
Satoshi's net worth
Satoshi Nakamoto first flirted with fame in 2008 when he published a white paper outlining the case for Bitcoin. Afterwards, he or she was active in early online Bitcoin forums and wrote regular emails to other developers until 2011, before he or she faded into obscurity. In 2014, Satoshi briefly appeared one last time to refute a news report that purported to discover her identity.
When Satoshi disappeared from the scene, he also left a large trove of Bitcoin wallets untouched. These were amassed at a time when Bitcoin was trading for less than $1 and each new piece added to the blockchain yielded 50 coins (up from the three it will have starting next month). The transparency of the blockchain allows a very good guess as to which wallets Satoshi controls.
“We estimate that Satoshi’s funds total 1.124 million Bitcoin spread across approximately 36,000 wallets. This sum has not changed over time,” forensics firm Chainalysis told Fortune.
The company added that the wallets have been “dusted” with minimal amounts from time to time, reflecting the fact that anyone can send Bitcoin to them since the wallet addresses are public.
However, in January, one of the Satoshi wallets received a gift that was by no means minimal – Bitcoin worth around $1.2 million. The reason for the donation is a mystery. It is possible that it was simply a tribute from a wealthy crypto lover to mark Bitcoin's 15th anniversary, but others have speculated more ominously that the size of the gift reflected an attempt by a government tax agency to entrap Satoshi , giving authorities legal grounds to issue subpoenas.
But even if that were the case, authorities would need to know who to subpoena – raising the long-standing question of who Satoshi is. Fifteen years later, the issue continues to crop up in the media every six months, most recently as a result of a claimant named Craig Wright, who is currently in the middle of a trial in which he is trying to get a British judge to rule that he invented Bitcoin .
Although Wright is clearly not Satoshi, the process has forced an early Bitcoin developer to provide hundreds of emails between him and Satoshi. While the emails do not contain conclusive evidence of the latter's identity, they do provide a lot of additional evidence in the form of timestamps and quirks in spelling and syntax.
These additional clues are likely to support the strongest existing hypothesis: that Satoshi is the libertarian polymath Nick Szabo, who likely created Bitcoin in close collaboration with Hal Finney, the late cryptographer whose body was cryogenically frozen – and whose interest in Bitcoin may have declined since then Partly from wanting to have access to money when he returned to life.
While mainstream speculation tends to overlook the Szabo-Finney theory in favor of more familiar names (Elon Musk is a fashionable choice at the moment), most who have been involved in crypto since its early days will tacitly admit that the theory is true . However, the topic is somewhat taboo among long-time Bitcoin supporters – both because they prefer to treat the currency's origin story as a religious mystery and because they agree that no good would come from Satoshi's revelation.
As for Satoshi's decision to turn himself in, the likelihood of that happening is extremely unlikely. Pete Rizzo, a Bitcoin historian and former editor-in-chief at CoinDesk, tells Fortune that Satoshi's reappearance is about as likely as “an asteroid hitting Earth” – with the likelihood decreasing over time.
Rizzo is probably right for two reasons. The first is ideological: Satoshi was an ardent supporter of a decentralized monetary system and had to withdraw from the scene for Bitcoin's success. Going back would be like declaring yourself king or, worse, in the eyes of crypto believers, central banker. The other reason it's highly unlikely that Satoshi would reveal himself is more practical: doing so would attract a global horde of criminals, crackpots and tax investigators – and who needs that?
However, the fact that Satoshi is not disclosing himself voluntarily does not eliminate the risk that a government agency might try to force him or one of his employees to reveal who created Bitcoin. But given the fact that 15 years have passed – and the fact that Satoshi is probably too smart to be caught this way – also makes this scenario unlikely.
Some have also raised the possibility that Satoshi could return to exert control over Bitcoin's core code. However, this scenario is all but impossible given the decentralized way in which the currency is managed, for the simple reason that if Satoshi had had an ideological objection to the development of Bitcoin, he has since spoken out would have.
However, none of this explains the final wild card: Satoshi's eventual death.
A dead man's switch?
Satoshi may be a true believer in the decentralized finance project Bitcoin, but he is also a person who most likely has family and loved ones. And like anyone who has a lot of wealth, he will probably make arrangements to pass on his wealth.
This raises the question of what will happen to all of Satoshi's bitcoins – a fortune estimated at at least $75 billion – when he dies. Seth Ginns, a partner at prominent crypto investment firm Coinfund, says he has thought about the matter – and made a guess about the most likely outcome.
Ginns said Satoshi likely controls a number of other wallets from Bitcoin's early days that Chainalysis and other forensic firms have determined are not included in the group associated with him. Ginns suggests that Satoshi will quietly pay these out to his loved ones, and has probably already done so.
But what if Ginns' guess is wrong? What would happen if Satoshi decided to liquidate his entire supply (“throw away his pockets” in crypto slang) now or after his death? The mass unloading of over 1 million Bitcoins would certainly disrupt the market and cause prices to plummet.
However, Ginns predicts that the market would absorb the shock and become even stronger over time as the sell-off would cause Bitcoin to become even more decentralized. But he also mentioned another interesting scenario: that Satoshi has a so-called “dead man’s switch” to announce his death.
The idea of a dead man's switch is pretty simple. This could be a monthly or even annual online activity – sending an email, updating a website, or whatever – that if not performed would trigger an automated scenario. In Satoshi's case, that could be an email from his long-abandoned email address or an update to the original Bitcoin forum that he had died and decided to burn the keys to his wallets.
If this were to happen, Ginns says, the market reaction would likely trigger euphoria and a massive price increase as investors would receive confirmation that Satoshi's vast fortune was gone forever.
All of this is hypothetical, of course, as at the moment no one really knows for sure who Satoshi is or what – if anything – they plan to do with their massive stash of Bitcoins. However, the fact remains that when assessing the risks of holding Bitcoin, investors must consider the future actions – and death – of its creator and potentially a $75 billion price increase.
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