It’s 2018, the crypto market is going through the roof, Bitcoin’s price still enjoys a huge volatility, and yet, we still don’t know who Satoshi Nakamoto, the legendary creator of the “people’s currency”, is. However, there may be even more interesting things to consider other than the identity of Nakamoto.
By the year of 2040, all bitcoins should be mined. The 21 million coins will be mined by then, and the supply of Bitcoins will be over. It is interesting, however, to analyze the current state of the coins, their number, and possible, the so-called “Satoshi Secret” connected with the lost bitcoins over time.
Right now, it is estimated that around 4 million Bitcoins are lost forever. In 2017, Chainalysis, a digital forensics firm that studies the bitcoin blockchain, reported the lost amount by November, 2017 was 3.8 million lost coins. Below is the representative findings of Chainalysis, as shown by Zero Hedge and reporter Tyler Durden.
Source: Zero Hedge, 2018
The graph shows the mined coins in 2017, the out of circulation ones or the so-called “hodlers” and, of course, the original coins – the Satoshi Coins. The lost Bitcoins are those that are indeed lost. In other words, they were not stolen or hacked, but just lost. Another interesting observation is the amount of lost Satoshi Coins. They are all lost or, as shown in the table, 100% of them.
Many now wonder if the value of Bitcoin takes into consideration the lost Bitcoins or not. The answer is no – the current market cap concerns only the Bitcoins in circulation and those that are free to trade with.
The huge revelation of lost Bitcoins comes when analyses can be performed right after hard forks, such as the one Bitcoin underwent this summer. What the fork does is initiating a transaction even if the Bitcoin holder is inactive. This category is the “hodler” one, or coins out of circulation. This inactivity of Bitcoin holders provides valuable information for companies such as Chinalysis, since it points to whether certain Bitcoins are lost or stored.
The “Satoshi Secret” may be a vague definition of the lost original coins. Back in 2008 and 2009, Bitcoins could be mined with extreme ease. For example, one laptop could mine around 100 coins without any issues. Those original coins, estimated to be around 1.5 million, are lost forever, based on the models used by Chinalysis and other blockchain analysis companies.
However, if Satoshi is still in hold of around 1 million coins, and if the theory that those are all lost proves incorrect, that can trigger a huge shock to the market and to the prices of Bitcoin. Now, with the currency trading at $14,300 per coin, the importance of the theory that the Satoshi coins are actually lost forever is crucial to how the market cap of Bitcoin behaves.
It is Satoshi himself that can actually move the 1.5 million Bitcoins, since he is the only one with the private key that can transact with the original coins. However, for simplicity and for taming the speculation on bitcoins, many analyses now take these coins out of calculations and market price analyses.
The “Satoshi Secret” poses an interesting question to the Bitcoin community: Where are the original bitcoins and what will Satoshi do with these? Why are these assumed to be lost and what will happen to the price once he releases the private key for them?