Bitcoin’s black swan event: How the return of Satoshi could pose a $75 billion threat

Bitcoin is back on top. This week, the original cryptocurrency cracked its all-time high, fueled by new ETFs backed by BlackRock and others that have elevated its status as a mainstream investment. That doesn’t mean, of course, that Bitcoin is totally safe. Aside from its historic volatility, Bitcoin is exposed to a few unique risks that are highly unlikely but potentially devastating should they materialize. The biggest of these is the return of its pseudonymous creator, Satoshi Nakamoto, who controls a vast hoard of Bitcoins from the currency’s earliest days, and who could shock the market in unprecedented ways.

It is widely assumed Satoshi will never return, but recent events—including a mysterious $1.2 million deposit to one of their wallets and an ongoing U.K. trial focused on their identity—are a reminder that unlikely does not mean impossible. Here’s a closer look at the odds Bitcoin’s creator could come back—and what it would mean if they did.

Satoshi’s fortune

Satoshi Nakamoto first flirted with fame with the publication of a white paper laying out the case for Bitcoin in 2008. After that, he or she or they was active in early online Bitcoin forums, and regularly emailed other developers until 2011 before going dark. Satoshi briefly surfaced one final time in 2014 to refute a news story that professed to discover their identity, but it’s been crickets ever since.

In disappearing from the scene, Satoshi also left untouched a large trove of Bitcoin wallets. These were amassed during a time when Bitcoin traded for less than $1 and when each new piece added to the blockchain yielded 50 coins (versus the three it will yield beginning next month). The transparent nature of the blockchain makes it possible to make a very good guess as to which wallets Satoshi controlled.

“We estimate Satoshi’s funds total 1.124 million Bitcoin across about 36,000 wallets. That total has not changed over time,” the forensics firm Chainalysis told Fortune.

The company added that the wallets have been “dusted” with minimal amounts from time to time, which reflects the fact that, because wallet addresses are public, anyone can send Bitcoin to them.

In January, however, one of the Satoshi wallets received a gift that was decidedly not minimal—around $1.2 million worth of Bitcoin. The reason for the donation is a mystery. It’s possible it was simply a tribute by a wealthy crypto lover to mark Bitcoin’s 15th anniversary, but others have speculated more ominously that the size of the gift reflected an attempt by a governmental tax authority to ensnare Satoshi by giving authorities legal cause to issue subpoenas.

But even if this were the case, authorities would have to know whom to subpoena—raising the long-running question of who Satoshi is. Even 15 years later, the topic surfaces in the media on a semi-regular basis, most recently as the result of a pretender named Craig Wright who’s currently in midst of a trial in which he’s seeking to have a U.K. judge rule that he invented Bitcoin.

Although Wright is clearly not Satoshi, the trial has obliged an early Bitcoin developer to furnish hundreds of emails between him and Satoshi. While the emails contain no smoking guns as to the latter’s identity, they do furnish a heap of additional evidence in the form of time stamps as well as quirks in spelling and syntax.

These additional clues are likely to reinforce the strongest existing hypothesis: that Satoshi is the libertarian polymath Nick Szabo, who likely created Bitcoin while working closely with Hal Finney, the late cryptographer who had his body cryogenically frozen—and whose interest in Bitcoin may have stemmed in part from wanting to have access to money if he returned to life.

While mainstream speculation tends to overlook the Szabo-Finney theory in favor of more familiar names (Elon Musk is currently a fashionable choice) most of those involved in crypto since the early days will quietly concede the theory is true. The topic is somewhat taboo, however, among longtime Bitcoin believers—both because they prefer to treat the currency’s origin story as religious mystery, and because of a consensus that nothing good would come from exposing Satoshi.

As for Satoshi deciding to come forward on their own, the chances of that are extremely unlikely. Pete Rizzo, a Bitcoin historian who was an early editor-in-chief at CoinDesk, tells Fortune that Satoshi’s reemergence is about as likely as “an asteroid hitting the earth”—with the odds further declining the more time passes.

Rizzo is likely correct for two reasons. The first is ideological: Satoshi was a fervent believer in a decentralized system of money and, for Bitcoin to succeed, he had to remove himself from the picture. To return would be akin to proclaiming himself a king or, worse in the eyes of crypto believers, a central banker. The other reason Satoshi is highly unlikely to reveal himself is more practical: Doing so would attract a global swarm of criminals, crackpots, and tax inspectors—and who needs that?

The fact that Satoshi won’t voluntarily reveal himself doesn’t, however, eliminate the risk that a state authority could try to coerce him or one of his associates into disclosing who created Bitcoin. But given that 15 years have elapsed—and the fact that Satoshi is likely too wily to be caught this way—also makes this scenario improbable.

Some have also raised the possibility that Satoshi could return in order to exert control over Bitcoin’s core code. That scenario, however, is all but impossible given the decentralized way the currency is maintained, and for the simple reason that if Satoshi had an ideological objection to how Bitcoin has evolved, they would have spoken up by now.

All of this, though, doesn’t account for a final wild card: Satoshi’s eventual death.

A dead man’s switch?

Satoshi may be a true believer in the decentralized financial project known as Bitcoin, but he is also a human who very likely has family and loved ones. And like anyone with a large fortune, he’s likely to make arrangements to pass on his wealth.

This raises the question of what will happen to all of Satoshi’s Bitcoins—a fortune estimated to be at least $75 billion—when he passes. Seth Ginns, a partner at the prominent crypto investment firm CoinFund, says he has given the matter some thought—and made a guess at the most likely outcome.

According to Ginns, Satoshi likely controls a number of other wallets from Bitcoin’s early days that are not counted among the cluster associated with him as assessed by Chainalysis and other forensic companies. Ginns suggests that Satoshi will quietly disburse these to his loved ones, and likely has done so already.

What if Ginns’s guess is wrong though? What would happen if Satoshi now, or after his death, chose to liquidate his entire stash (“dump his bags” in crypto slang)? The mass unloading of over 1 million Bitcoins would certainly roil the market and tank prices.

Ginns, however, predicts that the market would absorb the shock and, in time, become even stronger since the selloff would result in Bitcoin becoming even more decentralized. But he also raised another intriguing scenario: that Satoshi has a so-called dead man’s switch to announce his death.

The idea of a dead man’s switch is pretty simple. It could involve a monthly or even yearly online activity—sending an email, updating a website, or whatever—that, if not performed, would trigger an automated scenario to occur. In the case of Satoshi, that could be an email from his long abandoned email address or an update to the original Bitcoin forum that he has died and elected to burn the keys to his wallets.

If this were to occur, Ginns says, the reaction in the market would likely be euphoria and a massive surge in the price as investors received confirmation Satoshi’s massive fortune was gone forever.

All of this is hypothetical, of course, as right now no one really knows for sure who Satoshi is or what—if anything—they plan to do with their huge stash of Bitcoins. The fact remains, however, that in assessing the risks of holding Bitcoin, investors must account for the future actions—and death—of its creator—and potentially a $75 billion swing.