Crypto Finance: Knowledge Session

Two events in the last two weeks caused interest in early blocks of the bitcoin blockchain. First, an old block was moved, block number 3654 that was mined in the second month of bitcoin's existence. The second event was the signing of a message from 145 early blocks, just a week later. Both events gave rise to the question of whether those blocks belong to Satoshi. If any message is signed or any coins are moved from an address belonging to Satoshi, it would signal that potentially 1.1 million BTC could be on the move that were previously widely regarded as permanently 'frozen', among other implications of course. After the first of these two events, we discussed the field of blockchain archaeology that you hear in this knowledge session. Old node software and mining practices had quirks that compromised the miners' privacy and now, in hindsight, allow us interesting insights into those early days. The most prominent example is the "Patoshi Pattern", which allowed the quick answer that neither of the two events were likely to be related to Satoshi. This session included showing a chart from https://satoshiblocks.info. We believe that the recording is useful even without this chart, but a quick glance over there does not hurt.

Bitcoin's genesis block encoded the news headline "The Times 03/Jan/2009 Chancellor on brink of second bailout for banks." During the recent halving, a miner encoded also a recent headline, "NYTimes 09/Apr/2020 With $2.3T Injection, Fed’s Plan Far Exceeds 2008 Rescue" into the blockchain forever. With fears of inflation growing in the public discourse for some countries and regions, we take advantage of the pertinent personal experience of a member of our team, Crypto Broker AG's Backend Engineer Alessandro Chacón. who gives his personal account of how hyperinflation played out in Venezuela and what role harder currencies, as well as Bitcoin, play in the daily life of ordinary citizens. This discussion intentionally does not address the macroeconomic aspects of the likelihood of inflation, which will greatly differ throughout the world, but it does review a local playbook and the consequences for society.

Flashback to pre-corona times in this episode, which was originally recorded in April 2018 to cover the time-less topic of hashes in general and their use in Bitcoin. In ensuring the integrity of the chain, generating addresses, linking transactions and mining. Hashes are one of only two cryptographic concepts that you need to understand to get the foundations of cryptocurrencies. The other one, signatures, we covered in a separate podcast before. Being recorded pre-corona has two implications. It is much more interactive. Remotely, the discussions don't work that well. The recording quality however is significantly worse. Don't worry, after the first minute it improves, but does not reach the level that we have over a conferencing system where each participant has a dedicated mic.

The halving is coming up, current estimate is for May 11, give or take a few days. What sounds like a simple thing - to just pay 6.25BTC reward per block instead of 12.5 - develops quite some complexity in the ecosystem. Crypto Finance's Head of Research, Dr. Lewin Boehnke looks at previous halvings in bitcoin and altcoins, and ultimately he has come to an intriguing realisation: the current starting point before the halving is sufficiently different from any previous halving that all bets are effectively off.