1 December 2013, 18:47

Nakamoto the inventor of Bitcoin becomes its first billionaire

Satoshi appeared seemingly out of nowhere in 2008 when he released a research paper on the Cryptography Mailing List, which led to the foundation of the Bitcoin currency.

There have been lots of speculations on Satoshi Nakamoto, Bitcoin's enigmatic creator. It turned out that Nakamoto is neither the Dread Pirate Roberts, the founder of the Silk Road, nor the US government, an NSA researcher like Tatsuaki Okamoto. Without any reliable evidence, however, we may never know. But the fact is that Satoshi just became the first Bitcoin billionaire.

In January 2009, Satoshi started mining the first crop of bitcoin, creating what is known as the "genesis block." By the end of the year over 32,000 blocks had been added to this original block, producing a total of 1,624,250 bitcoins. Since all transactions on the blockchain are public, it is known that only a quarter of those bitcoins have ever changed their master, which means Satoshi Nakamoto is believed to be the owner 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.

"Instead of the supply changing to keep the value the same, the supply is predetermined and the value changes,"Nakamoto wrote in February 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". 

That is quite tricky. When a forgotten $50 investment, for instance, makes someone a millionaire and bitcoin hedge funds are making 5000 percent in returnper year, passive observers can't help but feel deprived of the profitable shares, as if the cryto-boat has left port without them.

Satoshi Nakamoto might be described as an incredibly rich man, but the images of him driving the street in a brand new car may not be real. Any movement in those original blocks would cause ado, which would only negatively influence bitcoin's already volatile price swings. Given Satoshi's discipline up to now, it can only be assumed that would stick to the course.

On the other hand, bitcoin could all come crashing down as quickly as it captured our imagination. 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.

Voice of Russia, motherboard.vice.com

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