Ask Doctor Bitcoin: Could Satoshi Tank the Market? [Free, #9]
The question nocoiners and haters like to ask (and maximalists hate to answer!). But what's more likely? Hyper-bitcoinization or collapse?
Well hello there!
It’s been a week of sideways market and a week largely absent of earth-shattering news (if you set aside Elon Musk’s SNL appearance, which caused the price of Doge to tumble after he made an offhanded comment about the crypto.
I actually like weeks like this, though. They are a good opportunity to look inward towards evergreen questions around crypto and their markets. This week, I answer a question I get from a lot of nocoiners and crypto-doubters: Could Satoshi tank the market?
It’s an important question to consider, because markets are arguably the biggest Achille’s heel of any tokenized Byzantine fault tolerant system. It’s something that those in the enterprise use to argue for the advancement of DLT technology over tokenized blockchains.
I personally don’t believe those tradeoffs of DLTs over blockchains are worth it, but as far as blockchains go, Bitcoin is the most mature of them, and we’re going to poke at this scab a bit and see what’s there this week.
As I always say, when I harp on Cypherpunk Maximalism, it’s important to understand what works (and doesn’t work) in bitcoin if you plan to design good decentralized systems. Many tokenized projects (like Ripple, most notably), leave the vast majority of the tokens in the hands of the founders. If they’re driven by profits and not principle, those holders will always find a way to depress the overall market value of those tokens.
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Blockchain Bulletin
Bitcoin is coming to hundreds of banks in 2021, according to NYDIG. Crypto custody firm NYDIG said this week that hundreds of U.S. banks will soon be offering customers the ability to buy, hold, and sell bitcoins.
EBay open to accepting bitcoin for payments. The CEO of Ebay recently spoke to CNBC in an interview and said that the company is open to accepting bitcoin and other cryptocurrencies as payment. The platform may also look into selling non-fungible tokens.
Dogecoin now supported by Gemini and Blockchain.com. With Dogecoin’s ever-increasing popularity, Gemini and Blockchain.com have jumped on the meme coin bandwagon and now support the cryptocurrency on their platforms for purchase, sale, and trade.
Blockchain Behind the Scenes
Galaxy Digital plans to acquire Bitgo for $1.2B. In what would be the largest-ever deal in the cryptocurrency industry, Bitcoin-focused asset management firm Galaxy Digital signaled plans to acquire crypto custody provider Bitgo for $1.2 billion.
Upshot raises $7.5M to crowdsource experts for NFT appraisal oracle. Looking to provide a new way to appraise the value of NFT items, expert crowdsourcing protocol Upshot raised $7.5 million in a Series A funding round.
Blockchain Deep Dive: Could Satoshi tank the market?
I’m often asked this question… usually by nocoiners or vocal critics of crypto.
If you’re looking for the tl;dr, the answer is an unequivocal yes.
That’s not really the whole story.
We don’t know exactly how much BTC is controlled by Satoshi, but we have an idea of how much he mined based on research by Sergio Demian Lerner.
His work on “the Patoshi Pattern” puts the amount of BTC mined around 1.1 MM BTC.
Glassnode research puts all market liquidity for BTC across all markets at around 4.2MM BTC.
Each individual market has much lighter liquidity. A straight market sell of 10k BTC on even major markets like Binance could drop the price from $60k to $9k on a good day.
This sort of thing has happened before when bad actors have taken to do market sells (like the MT Gox trustee Nobuaki Kobayashi).
The more likely scenario, despite this, is that in a bull market that the price would take a sharp turn northward, rather than south.
This is the theorized result of so called current “exchange liquidity crisis.”