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Researcher Re-mines Satoshi’s Bitcoin Blocks To Discover His Secrets

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Sergio Dermain Lerner, a researcher known for looking at the mining patterns of the original Bitcoin (BTC) miner, has turned his attention on the Bitcoin blocks mined by Satoshi Nakamoto.

Lerner made a preview of his latest findings available to Cointelegraph. His research is based on the irregular pattern of the Least-Significant-Byte (LSB) of the nonce field of block.

This past June, Lerner published a blog that expanded on his original research from 2013. He suggested that for an unknown reason, Satoshi refrained from mining in the first five minutes of the block interval. Other researchers have also expanded on Lerner’s research. TechMiX showed that all the blocks mined by Satoshi could be grouped into five baskets, based on the frequency distribution of the Nonce LSB values. 

Nonce LSB value. Source: TechMiX.

A nonce gets incremented with every new attempt to solve a mining puzzle. Apparently, Satoshi’s equipment was not using the entire available nonce space, only focusing on a limited range. Lerner’s latest research indicates that Satoshi was decrementing the nonce value instead:

It turned out that re-mining reveals a strong tendency of the Patoshi mining algorithm to choose higher nonces when scanning the inner nonce. This tendency suggests the nonce was being decremented, which is the opposite that the Satochi client version 0.1 does.

This leads to a more interesting conclusion that perhaps will put an end to the discussion about the type of equipment that Satoshi Nakamoto used:

Since the nonce imbalance decreases when analyzing two subranges together, this suggests Patoshi was scanning the 5 subranges in parallel, but each subrange internally sequentially. This contradicts a theory that Patoshi deployed the first mining farm of 50 independent computers (or any other highly decoupled system) and supports the theory that Patoshi was simply multi-threading in a high-end CPU.

If Lerner’s conclusions are correct that would lend more credence to the hypothesis that Satoshi Nakamoto was a single person and not a team. This would also put another nail into Craig Wright’s claims of being a Bitcoin creator as he has indicated numerous times that he used dozens of computers to mine the early blocks.



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China’s attempt to kill Bitcoin failed — Here are 3 reasons why

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Bitcoin (BTC) might have suffered its largest coordinated attack over the last couple of months, but in this instance, the investor community did not capitulate. China outright banning mining in most regions after giving BTC miners a two-week notice and this caused the single largest mining difficulty adjustment after the network hash rate dropped 50%.

The market sentiment surrounding Bitcoin was already damaged after Elon Musk announced that Tesla would no longer accept Bitcoin payments due to the environmental impact of the mining process. It remains unknown whether China’s decision was influenced or related to Musk’s remarks, but undoubtedly those events held a negative effect.

A couple of weeks later, on June 16, China blocked cryptocurrency exchanges from web search results. Meanwhile, derivatives exchange Huobi started to restrict leverage trading and blocked new users from China.

Finally, on June 21, the People’s Bank of China (PBoC) instructed banks to shut down the bank accounts of over-the-counter desks and even their social networks accounts were banned. OTC desk essentially act as a fiat gateway in the region so without them it would be difficult to exchange from Bitcoin to stablecoins.

As these events unfolded, some analysts were reluctant to describe the tactics as nothing other than meaningless FUD, but in hindsight, it appears that China launched a very well-planned and executed attack on the Bitcoin network and mining industry.

The short-term impact could be considered a moderate success due to the collapse in Bitcoin price and the rising concerns that a 51% hashrate attack could occur.

Despite the maneuvers, China’s attack ultimately failed and here are the main reasons why. 

The hashrate recovered to 100 million TH/s

After peaking at 186 million TH/s on May 12, the Bitcoin network hash rate, an estimate of the total mining power, started to plunge. The first couple of weeks were due to restrictions to coal-powered areas, estimated at 25% of the mining capacity.

However, as the ban extended to other regions, the indicator bottomed at 85 million TH/s, its lowest level in two years.

Bitcoin estimated hashrate. Source: Blockchain.com

As the data above indicates, the Bitcoin network’s processing power recovered to 100 million TH/s in less than three weeks. Some miners had successfully moved their equipment to Kazakhstan, while others shifted to Canada and the U.S.

Peer-to-peer (p2p) markets carried on

Even though the companies involved in crypto transactions have been banned from the country, individuals continued to act as intermediaries—some of these recorded over 10,000 successful peer-to-peer transactions according to data from the exchange’s own ranking system.

Huobi Global peer-to-peer market advertisement. Source: Huobi

Both Huobi and Binance offer a similar marketplace where users can trade multiple cryptocurrencies including USD Tether (USDT). After converting their fiat to stablecoin, transacting on a regular or derivatives exchange becomes possible.

Asia-based exchanges still dominate spot volume

A complete crackdown on trading from Chinese entities would likely be reflected in the exchanges previously based on the region, like Binance, OKEx, and Huobi. However, looking at the recent volume data, there hadn’t been a meaningful impact.

Weekly spot volume, USD. Source: Cryptorank.io

Take notice of how the three ‘Asia-based’ exchanges remain dominant, while Coinbase, Kraken, and Bitfinex are nowhere near their trading activities.

China’s ban on Bitcoin mining and transactions may have led to some temporary hiccups and a negative impact on BTC price, but the network and price have recovered in a way that is better than many expected.

Currently, there is no way to measure the OTC transactions where larger blocks are traded but it is just a matter of time until these intermediaries find new gateways and payment routes.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph. Every investment and trading move involves risk. You should conduct your own research when making a decision.