The recent Craig Wright-Satoshi Nakamoto debacle has spurred a new discussion as to what should happen with the coins mined by the mysterious Bitcoin creator. Theymos, the owner of BitcoinTalk, feels these coins should be destroyed to “prevent disastrous monetary inflation.”
The Coins of Satoshi Nakamoto Pose a Risk
Bitcoin aficionados will know that, when Bitcoin was first launched, only Satoshi Nakamoto was effectively mining blocks of 50 BTC each. Satoshi mined a large portion of the coins currently in existence during the first few months of Bitcoin’s life. Most of those coins have never been moved. Satoshi was later joined by Hal Finney, who mined many coins as well.
Since Satoshi Nakamoto left the Bitcoin scene, his the coins have remained in limbo. Only Satoshi has the private key to spending these coins, and they have not moved for several years. Not even when the Bitcoin price surpassed the $1,100 USD mark in 2013. There seems to be no indication of these coins ever changing hands, unless Satoshi were to return all of a sudden.
When Craig Wright told the world he was Bitcoin’s creator, people kept a close eye on the Satoshi coins. After all, Wright claimed he would move one of these coins, even though he ultimately failed to do so, withdrawing himself from the Bitcoin community once again.
These recent revelations have spurred a new debate as to whether or not the bitcoins held by Satoshi Nakamoto are a risk to the ecosystem or not. If these — close to 1 million BTC — coins would be brought back into circulation, there is no telling what would happen to the bitcoin price.
Theymos, the owner of the BitcoinTalk forums and manager of /r/Bitcoin, posted an interesting comment on the situation.
“This issue has been discussed for several years,” he said. “I think that the very-rough consensus is that old coins should be destroyed before they are stolen to prevent disastrous monetary inflation. People joined Bitcoin with the understanding that coins would be permanently lost at some low rate, leading to long-term monetary deflation. Allowing lost coins to be recovered violates this assumption, and is a systemic security issue.”
Breaking Bitcoin Address Encryption
While not everyone may agree with Theymos’ view, there is a possibility that security researchers will be able to break ECDSA-protected bitcoin addresses in the future. If this were to happen, they could gain access to the coins belonging to Satoshi Nakamoto, and dump them on the market all at once. Such a scenario seems highly unlikely right now, but technology is advancing at an accelerated pace, and even the slightest possibility should not be ignored.
Theymos proposed two possible soft fork solutions to prevent such possibilities from ever becoming real problems. One implementation would introduce OP_LAMPORT-protected addresses, which adds another layer of security to ensure the encryption cannot be broken. Solution number two executes code that would automatically destroy coins protected by OP_CHECKSIG. All of the funds not moved by then would be destroyed automatically, although there should be very few people losing money from this scenario.
Both solutions hold a lot of merit, but that does not automatically mean the Bitcoin community will agree with these ideas. Setting a dangerous precedent to let the minority of developers strip coins from users is not a path one should walk lightly. Moreover, there is the moral question as to whether or not destroying Satoshi’s coins — which are ultimately his private property — is “wrong.”
What are your thoughts on the concept of destroying bitcoins belonging to Satoshi Nakamoto? Let us know in the comments below!
Images courtesy of Shutterstock, Sarath Dr.