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⚡Tracking Bitcoin’s ‘Sleeping’ Wealth😪

Croxroad

23 Sep 2024 — 4 min read

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🛟 Old Bitcoins Stir to Life

This past week, a batch of five block rewards from 2009 moved for the first time in almost two years. These “sleeping” bitcoins, untouched since Bitcoin’s early days, highlight the significant amount of dormant BTC that still exists. Since 2015, only 48 block rewards from Bitcoin’s creation year have been spent. Over 1 million bitcoins from 2009 remain unspent, and another 700,000 from 2010 to 2012 block rewards also lie dormant. The Bitcoin blockchain, with its Unspent Transaction Output (UTXO) model, allows users to track every bit of activity on the network, offering transparency into these long-dormant assets.

The UTXO model, a crucial part of how Bitcoin transactions are recorded, treats every transaction as a movement of value between UTXOs rather than as account balances. Each UTXO holds a specific amount of BTC and can only be spent in full, creating new UTXOs when transactions occur. This system allows blockchain explorers to track all previous transactions in detail and spot new ones in real-time, such as last Friday’s transfer of the 2009 block rewards. Despite frequent transfers from newer dormant wallets, Bitcoin’s earliest rewards remain mostly untouched, with over 1.7 million BTC from 2009 to 2012 still dormant.

A large portion of these coins, worth over $100 billion today, were mined during the earliest years of Bitcoin, some by Satoshi Nakamoto. Bitbo.io and timechainindex.com report similar figures for the remaining unspent BTC, although their data shows slight discrepancies after 2012. Together, the dormant BTC from 2009 to 2012 account for about 8.73% of Bitcoin’s total market cap. While it’s rare to see these older coins resurface, they remain a significant part of Bitcoin’s circulating supply, standing as a testament to the untouched wealth that still exists within the network.

⬜ BlackRock’s Latest White Paper

In its recent white paper,“Bitcoin: A Unique Diversifier” BlackRock explores the characteristics that make Bitcoin a compelling addition to modern investment portfolios. While acknowledging Bitcoin's volatility, the firm highlights its value as a distinct, non-correlated asset, particularly attractive to institutional investors. BlackRock notes that Bitcoin’s decentralised nature and fixed supply set it apart from traditional assets like stocks and bonds, making it resilient to central bank policies. This independence, coupled with its unique risk-return profile, positions Bitcoin as an effective portfolio diversifier in the face of traditional monetary challenges.

BlackRock emphasises Bitcoin’s low historical correlation with other asset classes, such as equities, making it a powerful tool for reducing overall portfolio risk. Although Bitcoin might experience short-term correlations during market sell-offs, its long-term behaviour remains largely disconnected from traditional assets. This lack of correlation, according to the firm, enables Bitcoin to enhance portfolio returns while lowering overall risk. Despite the notorious volatility associated with Bitcoin, BlackRock argues that small, carefully managed allocations of the asset can improve a portfolio’s risk-adjusted returns.

Additionally, BlackRock highlights Bitcoin’s role as a non-sovereign store of value, offering protection in times of geopolitical uncertainty. Its decentralised nature and limited supply make it a hedge against currency debasement and political instability, positioning it as a potential safe-haven asset. While BlackRock remains cautious about regulatory challenges, the firm points to growing institutional interest as an indication that Bitcoin could play an increasingly significant role in the global financial system. Ultimately, the white paper concludes that Bitcoin, despite its risks, can strengthen portfolio performance when used strategically.

😵 What else do I need to know?

When using Bitcoin, it's crucial to safeguard your address to protect your privacy. Although your identity remains anonymous, Bitcoin transactions are fully transparent, with anyone able to view your balances and history. Changing addresses with each transaction and using multiple wallets can help maintain privacy. Additionally, be aware of your confirmation score, which takes about 10 minutes to confirm transactions. Different wallets may display this information differently, so it's important to familiarise yourself with how your specific wallet handles transaction confirmations.

🤣 Crox Road Memes

“Bitcoin may offer anonymity, but it’s the most transparent ledger on the planet. Protecting your address is key to keeping your transaction history private.”

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