Panic in the cryptoverse over $1 billion Bitcoin transaction: was it Craig Wright?

The crypto world was thrown into a frenzy when $1 billion in Bitcoin was moved on 15 January with the source and destination of the funds unknown. Tension, fear, and concern engulfed crypto twitter as the transaction happened in the wake of fresh developments in the Craig Wright case. There was speculation that the funds were moved by the Australian computer scientist who claims to be the Bitcoin inventor, Satoshi Nakamoto.

Just days before, Mr Wright had declared to an American court that he had proof of ownership for the 1 million Bitcoin, worth around $8.6 billion at the time, held in a wallet belonging to Satoshi Nakamoto. However, these claims were quickly dispelled as it emerged that Wright had only provided publicly available information that could in no way prove that he really is the bitcoin inventor. The only way he can verify ownership of the wallet and those bitcoins is by proving that he has ownership of the private keys.

However, this did not stop the ‘trigger happy’ crypto community from speculation as such event would have profound effect on Bitcoin. There were fears that if indeed the transaction was performed by Wright it would trigger a mass selloff of Bitcoin pushing the price down and rapidly boost the price of Bitcoin SV, a Bitcoin spinoff championed by Wright.

Unsurprisingly, crypto twitter rolled into a frenzy thanks to a fake tweet by Whale Alert purporting that the 123,447 Bitcoin (worth over $1billion) were moved from Wright’s wallet to Huobi, a crypto exchange. The false alarm spread rapidly over the social media platform with the tweet being retweeted a thousand time in under 12 hours.

This happened despite the fears being quashed a few minutes later when Bitfinex, a cryptocurrency exchange, confirmed that they were indeed behind the massive transaction. The exchange’s CTO Paolo Ardoino clarified by replying to Whale Alert with a tweet stating

It’s a 1.5k BTC refill of hot wallet and resulting change address movement

Despite the relief that it was not Wright, this transaction brought to the spotlight the colossal amount of bitcoin held by exchanges. According to Glassnode, a Bitcoin monitoring resource, the recent development brought the bitcoin balances held by exchanges to 2.12 million BTC translating to around 11% of the total supply. This amount comprises bitcoin held in addresses confirmed to belong to exchanges and user balances on the platforms.

This has raised concerns from the crypto community as the trend has rapidly grown in 2019 despite efforts to educate people about the risks involved in keeping Bitcoin in exchanges. Much more awareness in required to inform people about the risks associated with trusting third parties with their Bitcoin private keys.

Image by Geralt from Pixabay

Edwin Kinoti

Edwin Kinoti

Edwin is a naturally curious person with a deep interest in blockchain, finance and new tech, fields which he dedicates his time to researching and documenting.

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