Bitcoin Hashpoint

A theory has been going around this fall, and it sounds almost too clever to be true. Most of the federal debt, it says, belongs to institutions. A college graduate does not keep a stack of Treasury notes in a drawer. Pensions, retirement funds and big institutions own it. So as the bond market bends, and starts to look like it might break, the damage lands on them, and the fallout turns into a tailwind for asset prices.

Test that theory against the record and it gets the details wrong. Sort the holders a different way, though, into the foreigners and everyone else, and a stranger picture comes out.

Ronald Reagan liked an old Russian proverb: trust, but verify. Bitcoin's users shortened it years ago to a rule with no room in it. Don't trust, verify. This week showed why the shorter version matters.

On October 9, buyers of Ledger hardware wallets started watching their coins leave. The thief emptied wallets on six blockchains within 47 minutes. By October 12, the tracing firm Bitquery counted $102.0 million gone from 324 wallets, valued at October 9 prices, including $16.8 million from 122 bitcoin wallets. Other investigators put the total between $72 million and $102 million, and most reports settled near $93 million.

On October 5, 2009, a website called New Liberty Standard posted a number no one had published before: one U.S. dollar would buy 1,309.03 bitcoin. Seven days later, on October 12, a Finnish developer named Martti Malmi sold 5,050 bitcoin to that website for $5.02.

That is the first published price of Bitcoin and the first known sale of it for government money, and both happened seventeen years ago this week. Nobody bid against anybody. No exchange matched an order. The first price came from an electricity bill, and the first seller took a few dollars for coins now worth about $419 million.