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The Lightning Network ELIDHDICACS*

(Explain Like I Don’t Have Degrees in Cryptography and Computer Science)

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It's Not What You Think

I apologize for the title of this article because it is pure unadulterated click-bait. You started reading this because you thought you were going to to hear the dirty details of the inner sanctum of the bitcoin moderators; a secret cabal of initiates who conduct ceremonies and rituals under the cover of darkness to control the bitcoin community.

Sadly, that is not the case.

The vast bulk of our time and energy is devoted to removi...

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Over Christmas break, 2013 I wrote a small computer program to parse the entire bitcoin blockchain and output some statistics. At the time my major motivation was simply a desire to understand how many bitcoins in circulation are potentially "zombies"; meaning those associated with addresses that have remained untouched for several years and might well be permanently lost.

Since then, I have gathered addi...

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About a month ago I posted an article on 'Let's Talk Bitcoin' entitled 'Rise of the Zombie Bitcoins'.  In this previous article I presented a great deal of data and analysis about the state of the bitcoin blockchain in relation to long unused addresses.  In that article I argued that the bulk of the bitcoins mined for the first two years have never been moved and, most likely, never will be.  I also argued that bitcoins which have sat in addresses for an extremely long time with absolutely no spend activity are arguably lost forever.  In total these 'zombie' bitcoins represent roughly 25% of the number of bitcoins which have ever been produced.  This is such a huge quantity that knowing whether or not they should be considered part of the active economy is an important mystery to investigate.   And investigate is what I have been doing. I have discovered in the data presented in this article strong evidence that this view may be wrong. It turns out that someone who mined the earliest bitcoin blocks has been spending them at semi-regular intervals in relatively recent history.

Today I will not be presenting a great deal of analysis.  There are only two simple graphs and no burndown charts.  Instead I am going to be providing absolute raw data that you, the reader, can use to become a blockchain researcher yourself.  You can use this data to produce your own findings, graphs, and conclusions.  I encourage readers to download this dataset and explore interesting ways to chart it and then leave links to those results in the comments section of this blog post.

This dataset can be extremely fascinating to dig through because, while most of those old 50 bitcoin mining reward blocks have never been spent, there are still some being shaken loose today.  It might be pretty interesting to track down when and where this happens and follow where they lead to.

For example, here is the address of a bitcoin public key which contained nothing but a miners reward block of 50 bitcoins created on July 13, 2010.   Then, on May 1, 2014, BOOM, the owner came along almost 4 years later and transferred these coins to two other addresses; one receiving 45 bitcoins which remains untouched, and another that has a lot of transaction history.  So, while it is true that the vast majority of those ancient 50 bitcoin miners reward blocks have been untouched, occasionally they do, in fact, rise from the dead.  This dataset provides you with a window directly into every single time this has ever occurred.  So let the chase begin!

I would like to explain what this dataset represents and how it was created.  I wrote a piece of software which analyzes the entire bitcoin blockchain at one day intervals since its inception.  For each day I gather all of the bitcoin public key addresses which are in active use and look for any which have had spend transactions performed that day relative to keys which were untouched for over two years.  This dataset is current as of today, July 26, 2014.  

I start with the assumption that these 'zombie events' are infrequent and becoming more rare all of the time.  I believe the data set attached shows this to be true.

For each zombie event I provide the following detailed information as a single line in a comma-separated-value file which can be imported into any standard spreadsheet program.

Here is a link to a spreadsheet which shows a list of the top 148 days since April 2013 that have had significant amounts of very old bitcoins transferred. You can cross reference any of these days against the full datset to drill down into every single individual public key address and transaction that was involved. You will note that most of these 'zombie events' refer to bitcoins which were last moved in 2011 and 2012. It is much more rare to see bitcions which were mined during the first year of the blockchain being moved.

Date: This is the date at which the zombie event occurred.

LastDate: This is the last date that his address was used prior to this event.

PublicKey: This is the bitcoin public key address associated with this event.  You can copy/paste this key into the blockchain.info website to get the entire transaction history to match.

Type: The type field classifies whether this public key is associated with a 50 bitcoin miners reward, a 25 bitcoin miners reward, or is simply a normal bitcoin address not previously associated with a miners output.

BalanceBefore : This is the balance held at this key before the zombie event occurred.

BalanceAfter : This is the balance held at this key after the zombie event occurred.

ValueChange: This is the amount of bitcoin value which was transacted during this zombie event; not necessarily all bitcoins may have been spent.

Age: This is how old this key was in days since its last send transaction prior to this event.  Minimum age is two years for this dataset.

ZombieScore : This is a computed value equal to the number of bitcoins previously associated with this address times the number of days since it was last used squared.

In the provided data set immediately following each day that new zombie events have occurred (and zombie events do not happen every single day), a subtotal is included.  The subtotals per day include the following.

TotalZombieCount : The total number of zombie events which occurred on this day.

TotalZombieValue : The total value in bitcoin addresses associated with the zombie events for this date.

TotalZombieValueChange :  The total value change which occurred, which is not necessarily the same as TotalZombieValue since not all of the bitcoins associated with each key may have been spent.

TotalZombieScore : The total zombie score for all events on this day.

Now let's take a look at some of the most significant zombie events in history.  There have been around 24,000 'zombie events' throughout the lifetime of the bitcoin blockchain.  Considering the fact that there have been millions and millions of transactions, this points out just how rare an event it is when bitcoins older than two years get moved to a new address.

Take a look at these four public keys.  These are public keys associated with block miner rewards of 50btc each that were mined over a couple of days starting January 30, 2009.  This is quite literally just a few weeks after bitcoin was started, and highly likely belonging to either Satoshi or one of his close friends.  These were all spent on the same day over five years later on February 7, 2014.  Maybe Satoshi (or Hal Finney) had some bills to pay?  Realize that this first address is a coinbase-reward from block #2400!

The oldest ever was this address which mined a block on January 30, 2009 (just a few weeks after bitcoin was started) but was spent on February 6, 2014.  Was this Satoshi?

Here are the four addresses:

15coobWGLz5rTPPLwMqDrC848g5rSqgXX1

1CgrbzKje66Pcz1egaAnhr7qEGfdk9atS2

1KiCeqdXxzTYeq1dDUi6B1265cqFwsihzm

14pDPbeBCCn4CoNKc7YZJnJSWnqfoxf1XF

Then we find that on November 15th and November 18th of 2013 someone (Satoshi??) cashed in 1,850 bitcoins over those two days from public keys that date back to January 29, 2009!  On November 18th, 2013, bitcoins were at their near all time high of over $1,100 each.  So on those two days someone who mined blocks on January 29, 2009 of the history of the blockchain cashed out over a million dollars worth of the earliest bitcoins!  

On October 9, 2013, probably the same person, cashed out 200 bitcoins from the earliest blocks.  Here is one of the public keys of the four he cashed in.  Again, this person is cashing in bitcoins mined right around January 30, 2009.  Probably the same person.

I must admit that I was surprised to find these transactions.  Apparently someone who mined bitcoin in the earliest days has, in fact, been cashing out some of them in relatively small batches (if you can call a million dollars worth of bitcoin 'small').  This person is either Satoshi himself or, more likely, one of the first handful of people who downloaded and were running the bitcoin client which could mine bitcoins easily on a CPU back then.  This demonstrates that at least one person who mined bitcoins in the earliest days actively controls the keys and is making withdrawals over time but probably not anywhere near their entire stash.  This is indeed very interesting data to inspect!

Here is a spreadsheet which highlights the several phases that bitcoins which were mined during just the first few weeks of the blockchain were moved over the course of the last year.



So who are the people likely to have been mining bitcoins in the first few weeks? Likely they were individuals participating on the cyberphunk mailing list and responding to Satoshi's announcement of the availability of the software. Some likely candidates include:

Satoshi Nakamoto
Hal Finney
Ray Dilinger
Dustin D. Trammell

The bitcoin zombie event with the highest zombie score in history is this transaction on March 10, 2014 of over 111,114 bitcoins when this public key got emptied.  Considering the timing, this could have been related to the MtGox fiasco.  It could also belong to the Winklevoss twins or could have had something to do with Silk Road; I’m really not sure but maybe someone knows and can post it in the comments section.

On March 7, 2014, the following four public keys, three containing 40,000 bitcoins and one containing 30,000 bitcoins, for a total of 150,000, were all transferred out of addresses which had not been touched in 842 days from November 16, 2011.  Considering the timing the movement of these coins was probably associated with MtGox's claim that they 'found' a bunch of old bitcoins they had lost.

Here are those four addresses:

16Ls6azc76ixc9Ny7AB5ZPPq6oiEL9XwXy

12HddUDLhRP2F8JjpKYeKaDxxt5wUvx5nq

1cXNTyXj4xPGopfYZNY5xfSM1EPJJvBZV

1MyGwFAJjVtB5rGJa32M6Yh46cGirUta1K

Finally, I will include two quick charts.  The first shows the number of zombie events that occur daily over time.  As you can see, during periods of time when the bitcoin price was running up, the number of zombie events (indicating people cashing in and moving a lot of old bitcoin public keys) goes up substantially.  Note that this is just a total count of 'events', it does not graph value.

Here is a graph of the absolute total value in bitcoins rising from the dead on a daily basis.  Note that the Y axis has been clamped at 18,000 bitcoins since on just a few days hundreds of thousands of bitcoins were moved and throw the graph out of scale.

References:

Here is a link to a graph showing the distribution of bitcoin balances by age.

Here is a link to a spreadsheet showing every day that a sigificant quantity of bitcoins rose from the dead, meaning value older than two years old was transferred.

Here is a link to the raw data as a straight ASCII comma separated value file showing every single 'zombie event' over the lifetime of the bitcoin blockchain and up until July 27, 2014.

Here is a link to a spreadsheet which shows the top 1,534 bitcoin public key addresses with a balance of greater than or equal to 1,000 bitcoins.

Finally, here are some overall blockchain statistics as of July 27, 2014.

* Total Blocks: 312,869
* Total Transactions: 43,386,218
* Total Inputs: 102,938,959
* Total Outputs: 115,051,298
* Found 42,288,981 addresses which have ever been used.
* Found 39,120,232 addresses with a zero balance.
* Found 1,509,310 'dust' addresses (less than 1mbtc) with a total balance of 206.78281 BTC
* Found 1,335,814 addresses with a balance greater than 1mbtc but less than 1btc, total balance 116,862
* Found 208,989 addresses with a balance greater than 1btc but less than 10btc, total btc: 528,389
* Found 99,695 addresses with a balance greater than 10btc but less than 100btc, total: 3,532,151
* Found 13,407 addresses with a balance greater than 100btc but less than 1,000btc, total: 3,044,956
* Found 1,435 addresses with a balance greater than 1,000btc but less than 10,000btc, total: 3,210,357
* Found 97 addresses with a balance greater than 10,000btc but less than 100,000btc, total: 2,206,252
* Found 2 addresses with a balance greater than 100,000btc, total: 295,838

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With approximataly 30% of all bitcoins in existence currently in a state of limbo it remains a nagging question, just what is happening with them and will they ever rise from the dead?

This article discusses in detail the character and quantity of these zombie bitcoins, presenting detailed graphical analysis extracted directly from the bitcoin blockchain, and highlights theories as to what their fate might be.

Image : Zombie Bitcoin Burndown Chart - Relative Over Time

Image : Zombie Bitcoin Burndown Chart for the Past 18 months.

Image : Bitcoin Value Distribution by Age of Last Send Excluding Zombie Bitcoins

Image : Bitcoin Value Distribution by Age of Last Send Transaction Pie Chart

Image : Bitcoin Value Distribution by Public Key and Age of Last Send Transaction Over Time

Image : Zombie Bitcoin Burndwon Chart Over the History of the Blockchain

Image : Bitcoin Value Distribution by Public Key and Age of Last Send Transaction Since January 2013

Image : Number of Unique Public Key Addresses Over Time INcluding Those With a Zero Balance

Image : Number of Non-Zero Balance Bitcoin Public Keys Over Time

Spreadsheet : Zombie Report using Relative Time

Spreadsheet : Bitcoin Public Key Counts Over Time

Spreadsheet : All Bitcoin Addresses With a Balance over 50btc and sorted by ZombiePower

Spreadsheet : Bitcoin Value Distribution Pie Chart

Spreadsheet : Bitcoin Value Distribution Area Chart

Spreadsheet : Zombie Bitcoin report using Absolute Time

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