Just one more thing...

One more bit of data extracted from the big wallets list... I ran a script to track the build'up of value over time in the "savings" addresses. So here is the graph... Savings as they increase over time. Notice the total climbs up towards 10 million coins (worth around $6bn at market rates) - as I said before, 78% of bitcoin is in savings accounts.

A few noticeable features: 

• Ongoing increase of savings over time
• Rapid saving from the off. This is a period when coins were mined by a few individuals for a couple of years and stockpiled in 50 coin blocks (see previous post). Presumably there was almost no spending at this time.
• Some peaks in saving rate. This may be the times when bitcoin boomed. See the steepest rate is at the end of the line - corresponding with the massive surge of interest.

Bitcoin Address

My Bitcoin Address: 1F1njXCvZGtwzWmKrb1txKiFugnaoavTsQ

Bitcoin whales

I've written a little python script to analyse the big bitcoin address dataset I mentioned the other day. When I say little, I mean little (I'm new to python so it was slow going, but worth it as I learned a few basics along the way). What the script does is create a "heatmap" showing how bitcoin value is spread across the addresses - i.e. "where" the bitcoins are. To do the processing I first used Excel to save a csv file (prior to this I changed the number format to get rid of commas in the middle of decimals (which make unpacling the csv harder. Then the python script reads through each line, builds a summary and writes that out as another csv that I can read into Excel to do graphs. Its clunky but works.

So here are the results:

The first graph shows a "raw" heatmap. Its a similar idea to the scatter plot I did in a previous post. The leftmost edge of the chart shows bitcoin value in accounts with the lowest "flow" - i.e. the smallest amount of in/out traffic through the accounts. In fact the lefthand edge itself represents bitcoin with no flow at all. The area to the right of that edge shows bitcoin in accounts with progressively more and more flow. As you can see, most of the bitcoin value is on the left hand edge and there's really much less in the middle. Similarly the area of the chart nearest to you the viewer is bitcoin in low value accounts - that farthest away is in the highest value accounts. By the way, like the original scatter plot the horizontal scales on this plot are logarithmic. The vertical scale is linear so you can read off the actual number of coins involved on the vertical scale. Because of the logarithmic horizontal scale the area nearest the viewer shows tiny address and those on the far edge are monsters.

So, the analysis actually shows that 78% of bitcoin is in no-flow accounts. That is a lot. Only 22% are actively in circulation and being traded etc. This next plot looks "along" the edge - totalling up all the coins for each address activity level. Its on a log scale both ways - otherwise the peak would be overwhelming. This just illustrates the issue. The big peak on the left is bitcoin in accounts with no outflow. Ten million coins or thereabouts - 78% of total value.

Do lets take a closer look at the left hand edge. The next plot is a line graph that is basically that 78% of un-traded bitcoin addresses totalled according to how large a holding the addresses contain.

The left side of the graph shows tiny accounts - the right side shows big ones. As you can see, there is a big spike (we're on a vertical linear scale here so the spike is actual size in terms of coin value... ignore the x axis on the graph as it is not meaningful). The big spike represents dormant bitcoin packaged in 50 coin addresses. I assume these are "raw" mined blocks that are being stockpiled. There are other spikes that suggest there are raw blocks in a range of sizes sitting in cold storage (as well as other small-to-big time savings accounts). The no-flow 50 coin addresses alone contain nearly 20% of all bitcoins in existence.

Okay - one more chart. Here is a plot similar to the above one, but this time plotting the first used time in days before present against the address value size: Here Tiz:

You'll notice the spike again - at the same x axis value. What that's saying is that the 50 coin addresses are very old - it suggests an average of 1500 days. A look at the raw data  confirms that these addresses are indeed very old. They were mined and left in 50 coin blocks - one block per address. They start on 9th Jan 2009 (a week after Satoshi's very first block) and continue at quite a pace for a couple of years. It looks like this must be either Satoshi's holding or one or more of the original inner circle. Strangely the oldest address of all - 3rd Jan 2009, which HAS to be Satoshi's andoriginates in the "genesis block" appears to have been very active - 65 coins value, 891 transactions - last transaction on 17th Feb this year. Tantalizing glimpses.

Of course the big advantage of keeping all these bocks in separate addresses as they have been is that they aren't linked together under one owner. It's impossible to trace any inter-relationship or reconstruct the underlying social network...  you can't tell whether they belong to one individual, a few of the inner circle or a whole bunch of people. But this pattern does suggest a single origin.

I'm going to "mine" deeper into this data - but this set of plots clearly shows the bitcoin "whales" under the surface. When they will break cover is an interesting question.

BTW if you want my python script, lemme know.

Bitcoin Creator Unmasked

So, the true identity of mysterious creator of bitcoin - the man behind the pseudonym Satoshi Nakamoto is revealed - (in Monday's Newsweek - somehow missed that - news takes a while to reach us in Luxembourg). His true identity... Satoshi Nakamoto - which proves the validity of the old wisdom about hiding things in plain view. Now we know who he is, the world can congratulate him for a truly great world-changing invention.
I was planning to do some work on crunching the bitcoin ID dataset some more but it never happened. I did get the blockchain cruncher to build and run but it seems to throw a bad_alloc exception. I'm guessing it needs a 64 bit platform. I need to take a look at what he's done... It shouldn't need to fit the whole blockchain in memory to process it, surely!! Shouldn't it be just a sequential read-through?

Blockchain revelation

I downloaded a monster spreadsheet just released by John Ratcliff (see blog ref below) - created by his fast C++ blockchain reader tool - giving a load of info on the top 100,000 or so bitcoin wallets. I've done some work with excel and just produced this scatter plot. I think it shows this data source is both rich and apparently flawless.

I'l explain what it shows, as the axes aren't labelled (sorry - sloppy).
Each point is a bitcoin address. The vertical axis tells you the total volume flow for that address (in number of coins). The horizontal axis tells you the current value. So, points at the top have the highest all-time flow and points on the right have the highest current value.
The area at the bottom with no points is just because excel maxes out at 32k points. I plotted the highest flows. The very clear diagonal line is just due to the fact that the current value of the address can't exceed its total flow (the coins had to flow in at some point!). The vertical bars are there because the values are rounded to one whole coin. Note, the axes are logarithmic so things at the extremes are much bigger than they seem (the numbers of the axes represent actual numeric values).

Now the interesting initial observations:
One address has a huge flow - 15 times larger than all the rest at some 50 million coins. Its current value is just 177 coins though. Its clearly something very significant.
Many wallets have just one transaction inwards. This includes some of the biggest value wallets. These are clearly hoards/savings
Plenty of wallets have flows above 10k coins but near-zero value. These must be some kind of coin transfer or business nodes.
There is some extremely strange flow-balancing on some of the very high flow addresses - see the horizontal feature high to the left. Around 25 addresses with flows of 390k coins each - what's that all about!?
Further down (and not visible in the plot) there are innumerable one-transaction addresses with value 50 coins each. This looks like a risk reduction strategy for a massive holding. I haven't done the maths yet but this could be one or more very big hauls.

There's lots of fodder here (although I may need to start writing some python to crunch the numbers as Excel is creaking at this kind of data volume). The next thing to get hold of (based on instructions from John Ratcliff is a full blockchain transaction dump). That will be a step up in data volume (more programming!) - but should be interesting!

Unlocking the blockchain

After a quick search I found a neat blockchain reader today. here tiz :-) . Thanks to John Ratcliffe for writing this. He says its small but it looks like a good chunk of work. Now I just need to dust off my C++ and get stuck in (must be 8 years since I wrote C++).
I just installed Eclipse CDT on my Ubuntu box, got it to work, then downloaded Subversion, and checked out the source tree from Google Code and I'm now able to build the source. I have some blockchain analysis I want to do... Actually another link from John's site is a good looking paper on some previous analysis here.
Also thanks to John for some links to explain the transaction malleability issue in bitcoin transaction malleability explained. Seems like its just a crude random corruption of the chain that gets corrected but SHOULDN'T cause any loss of coins. Have a read.

Blockchain secrets

Back on the bitcoin theme, I really wondered at the time what the point of the rather sophisticated cyber-attack on bitcoin in the early weeks of this year was. The way I understand it is that the hackers were exploiting the transaction malleability problem  (not that I fully understand what that is) to disrupt and confuse the blockchain (the definitive record of all transactions). It sounds like a very sophisticated hack - suggesting to me a team with a deep understanding of the inner workings of bitcoin. At one time the blockchain was seriously disrupted and forked into two different accounts of the transactions. But it survived and was repaired. Tough little cookie! But who would want to attack in this way? Technophobes (clever ones)? An intolerant state? The financial establishment? Or maybe coin-grabbing criminals? There's no word on the hackosphere about who was doing this as far as I know - which is interesting.
But what was the purpose of the attack? On the face of it it looks like theft - Shadowy trading site Silkroad 2 threw in the towel saying all their bitcoins had "gone" (pretty much). But now MtGox say much the same thing, citing a massive loss of coins. I wonder, was this cyber attack really grand-theft cyber, or was it a massive smokescreen to hide something really bad behind. The attack caused mass confusion and very nearly smashed the blockchain (the definitive immutable record of all bitcoin transactions that have ever occurred). This would have effectively killed bitcoin stone dead. I wonder why anyone would want to do that. On the face of it it makes little sense in theft-terms.

Got Them Bitcoin Blues

The Sunday Times supplement had a great article of yesterday - Desperately Seeking Satoshi - Focussed on the mystery of bitcoin's creator Satoshi Nakamoto. Satoshi the persona appeared on public blogs in 2009, posted the seminal bitcoin paper https://bitcoin.org/bitcoin.pdf (a masterly paper) then, having got the bitcoin community rolling, gradually faded from the blogosphere and finally disappeared  in 2001, saying he had "moved on" to other interests. The article was a very nice piece of work and after much ado pointed out David Chaum as the most likely identity for Nakamoto.

Another article in the main Sunday Times discussed the woes of bitcoin - with a headline suggesting the currency was "crumbling" after the MtGox meltdown. However, it did concede that bitcoin prices were actually holding fairly firm around the $500 mark - In fact I just checked BTC-E and it looks like there's an upward trend - currently trading at $574.

One thing that I haven't heard mentioned is that the whole idea behind bitcoin was the removal of a need for a "trusted broker" in transactions - bitcoin passes direct, person to person with no need for a middleman. The aim was to take banks etc. out of the game because they CAN'T BE TRUSTED. People were supposed to hold their own coins. The thing is, sites like MtGox and the others are exactly what bitcoin was supposed to do away with. What's worse they are totally unregulated. Who knows what went on at MtGox - the various stories make minimal sense to me. I have my theories. But the blockchain could know some interesting stuff about the whole story - and the neat thing is that that isn't going to disappear (ever)!

So in a way, the MtGox calamity is a reminder about what Bitcoin is really about. I believe it will rise again - with a reshaped ecosystem... far greater than before! 

The weather revisited

Looking back at my last post of 11 months ago I'm quite pleased (kind of) with my weather prediction. To me what we've seen this spring looked pretty much like the tipping point I predicted, into a new and more energetic weather pattern - the crazy storms we've had here at a rate of 2 a week, since before Christmas are quite unprecedented. If the hot/cold biannual cycle is continuing, this March might be super-hot, followed by cold again next year. But maybe we already flipped into an energetic stirred up mode. We'll see very soon.