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April 10, 2016, 10:59:31 PM |
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Fascinating...
The Blockchain Begins Let us take, as a case in point, the first bitcoin transaction ever performed in history, which corresponds to the first ever mined bitcoin block by the infamous ‘Satoshi Nakamoto’. Here is a link to that transaction. This very first transaction, which was the result of a newly mined bitcoin block (known as a ‘coinbase’ transaction), went to the following public key address: 1A1zP1eP5QGefi2DMPTfTL5SLmv7DivfNa
If you follow that link you will see that, lo and behold, there are 908 bitcoin transactions associated with that address! However, all of these are the result of random people on the Internet making donations (probably better described as ‘offerings’ to their lord and savior Satoshi). You will see that not a single spend transaction has ever been performed from this public key.
Now, let us take a look at the second bitcoin transaction in history. Six days later Satoshi mined another bitcoin block and received yet another 50 bitcoin reward worth, at the time nothing, but worth today about $30,000 USD. Here is the link. These 50 bitcoins were sent to a different public key address: 12c6DSiU4Rq3P4ZxziKxzrL5LmMBrzjrJX. If you follow that link you will see that this address has received only 13 transactions since people were a little less excited about the second block than they were the first.
The third bitcoin mined block corresponds to this transaction and this public key address. This block was mined on January 9, 2009 and then, much later, on August 25, 2013, some generous soul decided to throw 0.1 bitcoins to Satoshi (about $60 today).
Finally, at block number four (this transaction) we find that no one has ever offered up a donation to Satoshi to the following public key address.
And this continues for block #5, #6, #7, #8, #9, and so on and so on. Every ten minutes for the next couple of years bitcoin blocks were mined, sent to a new public key address, and then never, ever, ever, spent. They sit there still just waiting. The vast majority of all of these bitcoins were likely mined by Satoshi Nakamoto himself. However, others were mined by people who downloaded and played with the software. Many curious technologists probably installed the mining software when it could still run on a CPU and just let it run for a while to see what the whole thing was about. Then they deleted it or otherwise have long since lost the hard drive or the machine which mined those bitcoins. It is important to remember that, for the first two years, bitcoins were nearly worthless. Here is a graph of the market price of bitcoin throughout its history. As you can see, it took until January of 2011 for a single bitcoin to be ‘worth’ even one dollar.
So, the big question remains, what about all of those bitcoins which were mined up until that point? Where are they? What happened to them? How many are there? Do they still exist or are they lost forever? What about the Zombie bitcoins? Will they rise from the dead to destroy the bitcoin economy and market, or are they lost forever?
We can answer some of these questions, like how many bitcoins should be considered ‘zombie’ coins, and we can make some educated guesses as well. The fact remains that approximately 30% of all bitcoins in existence are ‘zombie coins’, untouched for over a year and a half and likely lost forever. If you remove 30% of all bitcoins as having any chance of ever influencing the economy, this changes an awful lot of assumptions people make when they evaluate the market. Likewise, if these bitcoins were ever to rise from the dead, they could wreak havoc on the marketplace and cause an enormous amount of disruption.
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