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Tech by VICE

Bitcoin Mints Its First Billionaire: Its Inventor, Satoshi Nakamoto

Bitcoin is now worth over $1150, which means the enigmatic crypto-inventor who holds the world's largest hoard is now, essentially, a billionaire.

Nov 29 2013, 2:28pm

Who is Satoshi Nakamoto, Bitcoin’s enigmatic creator? Is he Dread Pirate Roberts, the founder of the Silk Road? (No, says Texan Hacker Dustin Trammell. Is he Gavin Andresen, Bitcoin’s lead open source developer? (Gavin denies this.) Is he Shinichi Mochizuki, the reclusive mathematics prodigy, as alleged by computing pioneer Ted Nelson? Or is he the US government, an NSA researcher like Tatsuaki Okamoto, or some other DARPA pawn? Without hard evidence, we may never know. What we do know is that Satoshi just became the first Bitcoin billionaire.

In January of 2009, Satoshi started mining the first crop of bitcoin, creating what is known as the “genesis block.” By year-end, over 32,000 blocks had been added to this original block, producing a total of 1,624,250 bitcoins. Since all transactions are public on the blockchain, we know that only a quarter of those bitcoins have ever changed hands, which means Satoshi is believed to be sitting on a stash of roughly one million bitcoins. With Bitcoin surging past $1000, that stash is worth about $1.1 billion.

It’s all going according to plan. Indeed, Satoshi designed Bitcoin so that its price would increase in tandem with users' adoption of the cryptocurrency. And Bitcoin has gone viral. “Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes,” he wrote in February of 2009. “As the number of users grows, the value per coin increases. It has the potential for a positive feedback loop; as users increase, the value goes up”

Really, it’s quite devious. As Adrien Chen noted in a poignant op-ed for the New York Times, “Bitcoin fosters a particularly potent brand of FOMO.” When a forgotten $50 investment makes some kid a millionaire and Bitcoin hedge funds are returning 5000 percent returns in a single year, passive observers can’t help but feel foolish, as if the cryto-boat has left port without them, leaving them behind with their frustratingly stable fiat money.

But images of Satoshi cruising down the street in his new Lambo and passenger side dime piece will remain just that—images. For one, any movement in those original blocks would cause a huge ruckus, which would only add to Bitcoin’s already volatile price swings. Given Satoshi’s discipline up to now, we can only assume he’ll hold course. Of course, he could have quietly mined a few coins from 2010 on, which would easily provide him some “fuck you” money.

Moreover, even Satoshi’s net worth now fills nine digits, it’s not a straightforward translation into the real world. The exchanges, notoriously short on liquid cash holdings, simply wouldn’t be able to process that kind of volume. Most likely, the stash acts as a built-in fail safe. With ten percent of the entire pie, Satoshi could act as a central bank if necessary—which would of course be ironic, given his hatred of fiat currencies—by injecting the ecosystem with liquidity when the time was right.

On the other hand, it could all come crashing down as quickly as it captured our imagination, if Bitcoin turns out to be Tulips rather than gold. As they say, what comes up must come down, like Brazil’s formerly richest man, who lost his entire $34.5 billion fortune practically overnight. Then again, maybe Satoshi is onto something. Maybe Bitcoin really is the future. Or maybe that’s what we want to believe. Maybe that’s the FOMO talking, because the party can’t end yet, not before we’ve gotten past the bouncer.

At least for now, the champagne still flows, Satoshi rocks out, and the Bitcoin boat sails on.