Dormant Bitcoin Addresses Wake for the First Time
There are over 8 billion people on Earth, thus it should come as no surprise that the number of Bitcoin addresses number somewhere over 3 million, but what may surprise you more is the number of inactive Bitcoin addresses there are out there.
So, what makes an address inactive? And what happens when an old address wakes up? We will dive into all of that and more in this article.
What Are Inactive Bitcoin Wallets?
Establishing a Bitcoin wallet is easy. Essentially, the user simply buys a cold wallet or sets up a software wallet and transfers some amount of Satoshis into it, and just like that, a Bitcoin wallet is made.
However, because it is so easy to make a Bitcoin wallet, and there is no limit to the number of wallets a person can have, many individuals involved in the cryptocurrency world make multiple wallets. Additionally, some people make multiple when they sign up for a new platform to purposely diversify their holdings.
That means that even though there are over 3 million Bitcoin wallets out there (it’s difficult to know the exact number since wallets are opened and closed every minute), there are very few active wallets. While the definition of active changes from person to person, it is generally used to refer to a wallet that has made some sort of transfer in the previous decade.
If a wallet has seen no Bitcoin movement in over 10 years, it is classified as inactive.
Related: Crypto Wallets: How to Choose One
Why Are There Inactive Bitcoin Wallets?
There are several reasons that a wallet may go inactive. The most obvious is because the individual in charge of the wallet dies without leaving behind information for their family to access their cryptocurrency.
This is sadly very common in the Bitcoin world, as many individuals who got involved in 2009 had no idea that Bitcoin would take off in the future. Thus, they didn’t set up a contingency plan for their family to access their crypto. Not only that, but Bitcoin was obscure in its infancy, meaning their family may not have even known that their family member had invested prior to death.
Although this is tragic, there are also a high number of Bitcoin wallets that are inactive because their owner has lost their seed words. Most Bitcoin wallets are protected by a 20-word collection of random words, and if you lose these, you lose access to your wallets. Several individuals have unfortunately lost access to their cryptocurrency long ago and now have inactive wallets as a result.
However, there is one, non-nefarious reason that a wallet could be inactive, and that is because the individual has enough money to spend on their daily life in the previous decade and is simply saving their Bitcoin for a rainy day.
Overall, no matter what the reason, scientists estimate there are currently 1.7 million Bitcoin wallets in existence that haven’t had any activity in a decade or more. These inactive wallets contain approximately 1,786,681 BTC and are worth over $121 billion dollars.
A Long Dormant Wallet Awakes May 6th
On May 6th, in the early hours of the morning in the US, a wallet that has seen no activity since before 2014 sent all of its holdings to two different wallets. This is big news, because the wallet held 687 Bitcoins, currently worth over $43 million, and the holdings were split into two different wallets.
The wallet with the activity is known as a “Satoshi-era” wallet, the name referring to the years when the nameless founder of BTC was active in online forums before disappearing entirely in 2011. Many in the crypto community theorize that Satoshi era wallets are the friends and family of Satoshi, or even the man himself.
Prior to today’s awakening, another Satoshi-era wallet awoke in August 2023, transferring 1005 Bitcoins that were mined in 2010. Before that, another large wallet awoke in July to transfer $30 million in BTC, however this wallet had been active as recently as 2017 and wasn’t classified as truly inactive.
Do These Whale Wallets Belong to Satoshi?
While it can be fun to theorize that the dormant wallets that have been awakening belong to Satoshi, it is far more likely that they belong to early miners or believers in the cryptocurrency. In the early days of cryptocurrency, many people tried their hand at mining, or buying some Bitcoin, before moving on to another project. It took several years for Bitcoin to become worth mining, as at one point, Bitcoins were available at the cost of 600 for $1.
Because Bitcoin took almost a decade to begin to reach its full potential, we believe that many early miners simply moved on. Back in 2013, it was hard to find a buyer for Bitcoin, and even harder to find a buyer who wanted to buy a large number of Bitcoin. Many of these individuals may have eventually run out of capital to continue mining, or simply abandoned the task for another.
Now that Bitcoin is truly worth something, these individuals are likely coming to the realization that they should sell what they once held and take their profits. Maybe they have a big purchase to make, or maybe it is simply time in their mind, we can’t say for sure.
Of course, there is a chance that these wallets belong to Mr. Satoshi Nakamoto himself and seeing that a sale/transfer this large won’t break the market these days, he is finally cashing in on his invention. It’s possible.
But we can’t help but wonder if these Bitcoins were moved not because of a sale but just because the owner(s) of these wallets wanted to move their Bitcoin to a new location before selling at a later date or making further investments with their Bitcoin.
We will likely never know for sure why these old accounts are finally awakening, but it sure is fun to theorize about who these Bitcoin whales are and what they might be doing with their earnings after all this time.
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