Analysis of the bitcoin blockchain suggests that Satoshi Nakamoto[1] owns around 1 million BTC, and that none of these funds have been touched since they were mined. Many question this as odd given the huge value of these funds, but there are some good reasons for not transacting on these funds.



Firstly there are the original motives of Satoshi to bear in mind. We know from the bitcoin white paper and the message encoded in the genesis block[2] that Satoshi's primary motivation was to create a form of money that provides an alternative to the government controlled fiat 'paper' money that is dominant around the world. Bitcoin provides answers to some problems of the current money system that go much further than any proposed solutions to date [3], and progress to-date has been impressive but the goal remains a distant hope, therefore Satoshi is likely still playing the long game.



If Satoshi were to tap into his funds this would run counter to his original goal. Even a small transaction on his funds would indicate that he still has the ability to use the funds and has begun to do so. The prospect of 1 million additional bitcoin being released onto the markets would likely crash the price, certainly actually releasing them would.



The success of bitcoin is dependent on a number of factors but a key one is its market value and value stability. Bitcoin's price may be volatile but this is to be expected of a very young and novel form of money with low liquidity. It does however have a not insignificant value, that is, you can use bitcoin to transact relatively large amounts of wealth/value in the region of low single digit millions of dollars without impacting the market price significantly, especially if the receiver of the bitcoin chooses to keep the bitcoin as a store of wealth rather than immediately selling on an exchange. Thus the price is an important factor that is to some extent independent from the importance of price stability.



Price stability will remain an issue for some time and that will retard use of bitcoin for some uses, e.g. trade and employment contracts are unlikely to stipulate bitcoin amounts for the foreseeable future. The price level though makes bitcoin useful now, today, for some scenarios. Satoshi's goal requires that he does whatever he can to maintain both price level and price stability, and enacting a transaction on his funds would be inconsistent with that goal.



Arguably Satoshi could go one step further to assisting price value and price stability by provably terminating his funds, i.e. creating a transaction to a bitcoin address from which the funds are provably irretrievable. It may be that the funds are already irretrievable but the market does not know this, therefore making this public knowledge would further improve price stability by removing a key unknown from what is known about the bitcoin money supply. There are some reasons for Satoshi not to do this.



Firstly, we're talking about 7% of the currently money supply and 5% of the final money supply of 21 million BTC. Compared to the money supply expansion of existing money systems this is fairly modest, certainly over a period of years. Secondly, there is the risk of revealing his identity. Thirdly, that is a lot of bitcoin so he may prefer to keep them to use as leverage in the future, perhaps towards the known goal of an alternative money, or some other goals. It's a very big opportunity to pass on, and given the uncertainties about how bitcoin will play out it's perhaps wise to not completely shut off this once in multiple-generation opportunity to have control over a significant amount of power.



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[1] - For brevity I refer to Satoshi as a single male individual.

[2] - "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks"

[3] - Which invariably have been based on reversion back to precious metal money and ownership 'notes'. Tags: bitcoin