Before Binance and Coinbase came along the biggest Bitcoin exchange was called Mt Gox. The nerdy name is short for Magic: The Gathering Online eXchange. The original creator of that exchange simply repurposed an old domain name they had and hence mtgox.com was born. At its peak, the exchange handled about 70% of all Bitcoin transactions. Then disaster struck in 2014.
Hackers exploited weaknesses in the exchange and stole about 850 000 Bitcoins. That loot is currently worth US$43 billion right now. Later on, the exchange managed to recover about 200 000 Bitcoins which it said were in an old unused wallet. That brought down the number of lost Bitcoins to 650 000 (US$33 billion worth of coins). This and many other chaotic incidents shows the chaos and mismanagement at Mt Gox.
In fact, while this was the last hack that Mt Gox suffered, it was not the first heist. The first heist occurred when the original founder of Mt Gox, McCaleb handed over the site to its final owner who was based in Japan. An unknown thief stole about 80 000 Bitcoins from a hot wallet. No one knows who the final beneficiaries of these wallets are thanks to Bitcoin’s anonymity. A popular theory is that the people who ran Mt Gox are also the people who stole the Bitcoin. No one can prove whether this is true or false.
A turn in the Mt Gox mystery.
The mystery has now taken an unexpected twist. A man named Craig Wright has stepped forward and announced that someone hacked into his computer and stole the private key to a certain wallet known as 1Fleex. Now, this is where I have to highlight something to those people who are not familiar with how Bitcoin works.
- While Bitcoin transactions are anonymous, they are not invisible
- In fact, all transactions are quite transparent. This is the genius of Bitcoin and by extension most popular cryptocurrencies. You can see all transactions as they occur in real-time and track them. However, transactions are linked to wallets rather than individual names.
So if someone was to say steal your Bitcoin, you can actually see that thief keep or spent them. You can see it happen but you are powerless to stop it. This brings us back to the famous 1Feex wallet (1FeexV6bAHb8ybZjqQMjJrcCrHGW9sb6uF) which is known as the wallet that has 80 000 Bitcoin that was stolen from Mt Gox. That’s right, the Bitcoin is still actually sitting there, in those wallets.
Craig Wright is not just any other ordinary guy. He is the guy who has been claiming and telling everyone who cares to listen that he is Satoshi Nakamoto, the father of Bitcoin. His claims have been met with sneering derision by core contributors in the Bitcoin community where he has been christened with the moniker Faketoshi.
“Satoshi” wants his Bitcoin back
Without a private key, you cannot spend your Bitcoin which effectively means whoever stole those private keys now controls those wallets in theory at least. The thief deleted those files on Craig’s computer probably to make sure only the thief would have access to the Bitcoin in that famous wallet.
Under normal circumstances that would mean the Bitcoin is lost. Wright however is having none of it. He wants his Bitcoin back and is suggesting that Bitcoin’s core developers and exchanges should help him get back his Bitcoin. His proposal would involve pressuring popular nodes to give back the Bitcoin to him even though he no longer has a private key.
That would probably involve code being added to the Bitcoin core and possibly will involve forking Bitcoin. All these changes are fraught with risk. Forking Bitcoin will mean that what you essentially have in the end is really not the original Bitcoin but something else. Also, the way Bitcoin transactions are processed means that even if major exchanges accepted to give back Satoshi his coins other participants on the blockchain can still choose to ignore this order. Bitcoin was created to thwart exactly this sort of centralised behaviour.
For now, all Satoshi/Faketoshi can do is have his day in court. However, winning in court doesn’t necessarily mean he will get “his” coins back. Like the other Mt Gox victims, he might just have to count his losses and move on.