The pseudonymous inventor of bitcoin, presumed dead, mysteriously reappears. Here’s what experts say would happen next.
His return is imperceptible, at first a faint rumour in some dark reach of the web. A lone cybersecurity researcher uncovers curious activity on a long-dormant Bitcoin wallet, unused since 2011. It appears a single “satoshi”—worth 1/millionth of a bitcoin, the smallest possible unit—has been transferred from one of the digital wallets believed to have been owned by Satoshi Nakamoto, Bitcoin’s presumed dead inventor.
The researcher tweets about it.
Soon the gossip grows in frequency, screaming across social media, as the contours of the realization come into focus. Short of a physics-defying hack, there’s only one person who could have reactivated that wallet: Satoshi himself, either risen from the dead, or never dead at all, returned to bring forth a reckoning on the heretics who have degraded his good works into a sham parade of #thirsty tweets and opulent wealth.
Satoshi Nakamoto is the father of Bitcoin and blockchain, two technologies that have grown up mostly in his absence. The last post the pseudonymous inventor made online was in 2011, and the intervening years have mythologized him, his blog posts now revered as sacred religious texts, his identity used as a pretext for peddling vaporware and running crude publicity stunts .
What would happen if he returned?
First, chaos—but the immediate result of that confused excitement is anyone’s guess.
“I don’t know of any studies looking at what happens when a near-mythical figure, presumed dead, suddenly reappears,” said David Ludden, a professor of psychology at Georgia Gwinnett College, who has explored the paranormal in his work. “I’m not even sure if there are accurate historical records of such events. Who knows how people will react to a first contact with aliens or a Second Coming of Christ, since neither has ever happened.”
The difference is Satoshi is pseudonymous; he may well still be alive.
All through this will be fears of looming catastrophe—a full-blown Bitcoin recession. Satoshi is believed to hold around 1 million (worth some $9.3 billion worth) of the 21 million bitcoin that will ultimately be minted in this world. Some 18 million BTC are currently in circulation (the number increases every 10 minutes) so his ability to manipulate the market price would be enormous.
No one knows who owns the most bitcoin. The Winklevii claim to be among the biggest whales, and supposedly hodl 1% of the total supply, in their Gemini Exchange.
he resurrection of Satoshi could ignite a round of spin wars between Bitcoin and “altcoin” believers, reckons security analyst Kim Nilsson, whose Wizsec blog analyzes on-chain data and tracks Satoshi’s wallets.
“Altcoiners might try to spin it as ‘Satoshi starts moving coins, a sell-off is imminent!’ but I don’t think it will be given much credence by most bitcoiners,” Nilsson told Decrypt. But “if Satoshi was going to sell any of those coins, you’d think he would have been inclined to do so much earlier.” (Though some say that Bitcoin is already transparently manipulated: a Satoshi sell-off might not make much of a difference.)
Satoshi’s majority ownership of the Bitcoin supply would raise worrying political and regulatory questions, said Neeraj K. Agrawal, a spokesperson for Bitcoin lobby firm Coin Center.
Revered as he is, Satoshi would acquire political influence, and wield make-or-break power over many of the ideas floated since his disappearance. Suppose Satoshi decrees that Bitcoin is not intended as a store of value—would people listen? Or maybe it turns out Satoshi is an enthusiastic government boot-licker, and explains that his invention’s sole purpose was to aid authorities in tracking people’s finances?
Obviously, “if Satoshi proposes a dumb idea people can choose not to adopt it,” said Agrawal. But his political influence could prove an immense regulatory headache. Bitcoin is the only cryptocurrency to be almost definitely not a security. But a security is an asset that investors expect will rise in value, based on the efforts of a third party. If Satoshi were to return as a disproportionately powerful influence, might that change the way the ur-crypto is regulated?
Bitcoin “might (MIGHT) be an investment contract under the SEC’s airdrop analysis,” admitted Stephen Palley, an attorney at Anderson Kill. “It’s possible.”
The real headache for the SEC would be “deanonymizing” Satoshi and bringing him to heel. “The ability to deanonymize depends on where that [satoshi] goes,” said Agrawal. Say Satoshi sends it to Coinbase; he’ll have to proceed through know-your-customer requirements, and upload a passport photo, which the exchange would then be able to hand over to law enforcement. But, surely, he wouldn’t do that.
Of course, some people will simply write off the whole satoshi transaction as sleight of hand—a fraud. Satoshi pretenders aside, the real Satoshi’s old blog recently reactivated—bearing the cryptic phrase “nour.” But, alas, dismissed as a hoax.
“I don’t see how knowledge of the keys is solid sufficient evidence to establish someone as Satoshi,” said Nic Carter, a partner at Castle Island Ventures. “He could have been extorted, or killed.”
The same goes for signing a message with the PGP key for his registered email address, or offering up a time-stamped early draft of the Bitcoin white paper. Again, this can be stolen, backdated, forged. One of the most prominent Satoshi claimants, the Australian computer scientist Craig Stephen Wright, was widely discredited after it appeared that early online manuscripts had been backdated, to make them look as though they had pre-empted Bitcoin.
“The thing about Satoshi is it would be really hard to think of a piece of evidence that would be sufficient to say ‘yep that’s him,’” said Carter.
Regardless, we can be sure “some believers would go nuts,” said David Gerard, a critic of all things crypto, and the author of Attack of the Fifty-Foot Blockchain. “Everyone will lose their shit,” agreed What Bitcoin Did host Peter McCormack.
The darkest prognosis comes from Ameen Soleimani, founder of crypto adult entertainment platform SpankChain. Soleimani imagines an end-times bacchanal of pseudonymous cypherpunk debauchery: First, Satoshi emerges from cryogenic stasis (some people believe that the real Satoshi was crypto pioneer Hal Finney, who died around the time Satoshi went silent, and had his head cryogenically frozen). Soleimani imagines that the re-animation of Satoshi occurs in a “ceremonial chamber in the middle of the city square, with everyone kneeling for miles in every direction.”
Soleimani predicts there will then be a reawakening of biblical proportions. “He pulls out a tablet BTC, and breaks it, and somehow this reveals a private key which he then sends to the city,” he said. In other words, Satoshi donates his windfall to the world.
With Satoshi’s billions available to all, “everyone has a rager,” said Soleimani.
Then, of course, Satoshi is indicted on charges of securities fraud.