Skip to content

The mystery of 26.9 BTC paid to the Genesis block

[Recommend my two-volume book for more reading]:

BIT & COIN:  Merging Digitality and Physicality

Many suspect that the 26.9 BTC recently paid to the Genesis block on January 5, 2024 (txid=d7db4f96a4059c8906b953677ce533493d7b9da0f854a21b99f5772910dd0a31) was a deposit Dr. Wright made to satisfy the court-ordered security for costs of the core developers of BTC.

There are good reasons: The total amount is close (the total security deposit proposed by the court was £900,000, about $1.15 million, a very close match to the value of 26.9 BTC at the time of transfer), and the whole incidence has an air of peculiarity that is hard to put aside as accidental or irrelevant.

But here is something to think about.

If this is indeed a security deposit Dr. Wright made for the core developers, it effectively works as a catch-22 for them.

The Catch-22: if the core developers win the case in the courtroom, they must lose the case outside the courtroom.

This is because the security deposit is only relevant if the core developers win the case. But with the security deposit made into the Satoshi addressed in the Genesis block, the core developers will face a dilemma in either of the following two scenarios:

Scenario 1: Dr. Wright has the key. He will have to transfer the funds from the Genesis block to them if he loses the case in the courtroom. But if he does, he would effectively overthrow the judgment by showing that he is Satoshi outside the courtroom.

(Unlike Bitcoin transactions with IDs firewalled from the blockchain, a transfer from a Binance account presumably has an associated identity because Binance is now under government supervision. Therefore, this transfer sequence would be proof of identity.)

Scenario 2: Dr. Wright does not have the key. In this case, the court will have to order the coins to be moved. This act will vindicate the principle that Dr. Wright has always been advocating in opposition to the entire crypto world: The code is not law. The law is law. The law is part of the Bitcoin protocol, and the assets can be moved by a court order without the key. (Yes, it takes only a small patch of a few lines of code to the Bitcoin client software to move coins without a key. All the Bitcoin developers need is a court order. It is never a technical problem. It is always a legal problem.)

The trouble with the above theory

However, here is the trouble with the above theory:

The manner in which the security deposit is made cannot be unilaterally chosen by Dr. Wright in this case. It must be agreed upon by core developers.

How could the core developers agree to such a deposit, which works as a catch-22 for them? It is like they are hoping to win the case based on untruth but to get the security deposit from the truth that repudiates the untruthful verdict.

It is literally self-repudiating, at least in the moral sense. It would be equivalent to publicly proclaiming, “We know he’s Satoshi, but we win, and it is the only thing we care about!”

They certainly cannot be that hideously cynical, can they?

From a more benign view, perhaps they just wanted it to hedge against this particular scenario: Dr. Wright wins the case when he really is not Satoshi. In that case, Dr. Wright would have to lose the coins deposited in the Genesis block because he wouldn’t have the keys to access the coins. It’s sort of like a penalty for an unjustified win.

But that would be a week hedge. If Dr. Wright wins the case, losing a million dollars will be nothing to him. Besides, if Dr. Wright wins the case, he most likely has the key anyway.

The whole thing makes some sense if Dr. Wright initiated it, but it makes little sense if the core developers accepted it.

It is a mystery.

Can the coins in Genesis address move?

This is a very hard question because there are many unknowns associated with the output address in the Genesis block.

First, it should be noted that multiple UTXOs can be associated with a single address. The behavior of coins (whether they can move or not, and how) is determined by the specific UTXO where the coins are held, not by the address itself.

In other words, there can be two (in fact, many more) UTXOs that belong to the same address. The first UTXO may be a special one created to be unspendable, but the second can be a regular one that is spendable.

It is known that the original 50 bitcoins in the Genesis address cannot move (not even by Satoshi).

Satoshi hand-coded it to be unspendable. The Bitcoin nodes software includes a specific rule that excludes the Genesis block’s first transaction (the one that yielded the first 50 BTC) from the UTXO set.

But the question is, what exactly makes those 50 bitcoins unspendable?

It is known that the special UTXO is not even found in the UTXO database to which the mining nodes have access. It’s a result of a hardcoded rule within the Bitcoin client software. We can call that special UTXO the anchor UTXO.

If the P2PK locking script of the output was based on a regular public key that is derived from a private key held by Satoshi, and those 50 bitcoins were technically spendable but only rendered unspendable because the particular UTXO is not included in the valid UTXO set used by the miners, then the nonspendability would be a unique feature of that particular UTXO, not that of other UTXOs associated with the same address. This is because, when a user transfers coins from another address to the Genesis address, the transferred coins do not go to the same anchor UTXO but rather to a new UTXO (which is under the same address as the anchor UTXO). The other UTXOs newly created may be included in the valid UTXO set used by the miners without destroying the unspendability of the original 50 bitcoins in the Coinbase transaction. In this scenario, the new coins added to the same address could move or be spent by Satoshi or a party he authorized (unless the private key has been lost, or the transaction in the Genesis block never had a key to begin with).

However, if those 50 coins were unspendable for some even more fundamental reasons, like something that is inherent to the public key itself, then all coins related to the same public key (and accordingly the same address) would not be spendable.

NOTE: The key related to the Genesis blog is a mystery that only Satoshi himself knows the answer. The Genesis transaction does have a locking script, which is a Pay-to-PubKey (P2PK) script. At least on appearance, this suggests that the transaction has a key. But it is not conclusive. It is possible that the P2PK script is only a dummy, and no key is ever used, and no key is ever available for creating a signature and verifying the signature. If this is the case, then no coins sent to the Genesis block address can be spent unless there is a court order to move them. This would make the incidence of the 26.9 BTC transferred to the Genesis block even more mysterious.

Who transfered the coins, then?

The person or entity who transferred the 26.9 BTC to the Genesis address seems more likely to be Satoshi or someone authorized by Satoshi than another unrelated person.

It’s possible that the transfer was done by somebody else. But if it was somebody else, the person risks permanently losing these coins. His only hope is a court order to recover the coins. It is hard to imagine what that person is trying to say with such a costly signal.

At the same time, all signs of this peculiar transfer seem to add more persuasion to the following:

(1) It makes it less likely that Satoshi is dead without any representation. Although this transfer is not proof, it may signal that Satoshi is alive or at least active through representation.

(2) Satoshi is more likely Dr. Wright than anyone else. For if Satoshi is a different person, what is Satoshi trying to say here? If he wants to repudiate Dr. Wright, he could have done it a long time ago; and even if he’s only doing it now, he would be doing something very different, something that is effective for his purpose, rather than playing the game like this, which only lends support (although not a definite proof) to Dr. Wright’s Satoshi claim.

Opponents of Dr. Wright now torture their minds into believing that this million-dollar transfer with a peculiar destination address was an unfortunate accident. Strange as it may be, they can’t find an alternative logical explanation.

In a world where people don’t objectively compute probabilities but rather live on subjective imaginary possibilities, many can find it tolerable to attach their minds to an improbable position, until they can’t. They will resist seeking a more probable position that contradicts their entrenched interest. Such is human psychology.

But rationality requires us to follow a process of Bayesian estimate of probabilities, while acknowledging that every theory and practice must be tested by the ultimate truth when it is revealed.

(For the distinction between probabilities and possibilities, see the discussion of the Bayes theorem in the book BIT & COIN: Merging Digitality and Physicality.)

[Recommend my two-volume book for more reading]:

BIT & COIN:  Merging Digitality and Physicality