-The mystery surrounding the 1.1 million coins mined by "founder" Satoshi Nakamoto

Today's global financial environment is an unmatched opportunity for Bitcoin. The unprecedented economic contraction brought on by the epidemic has left states with no choice but to adopt inflation-inducing policies. If this were confined to a few countries, the inflationary pressure could be dispersed through the global financial system. But if money is injected everywhere at once, the chaos that follows inflation cannot be avoided. Bitcoin emerged as a criticism of the present financial system, which rests on paper money that governments print at will and on the unrestrained expansion of credit. This crisis, then, is Bitcoin's first testing ground since its ecosystem took shape.

The Sinicization of Hong Kong has been proceeding systematically for a long time, but once it crossed a threshold, young people in Hong Kong began to resist fiercely from the summer of 2019. The Chinese government, with no intention of yielding a single step, has made clear its intent to tighten its grip on Hong Kong still further.

The backlash, of course, is formidable. The United States has announced plans to strip Hong Kong of the special status it had granted, and British politicians are issuing stern warnings to the Chinese government. Peace and stability may return to Hong Kong, but one trend seems unmistakable: Hong Kong cannot avoid losing its singular status as a place that is China and yet not China. Hong Kong has already lost its position as the world's third-ranked and Asia's top financial hub, sliding to sixth in the world and falling behind Shanghai as well as Singapore within Asia.

Media outlets that amplify sensational events have already begun to speak of a "Hong Kong exodus." Reports have emerged that inquiries from Hong Kongers considering emigration to Taiwan, Australia, the United States and Canada have risen to twenty times their usual level. At banks and currency exchanges in Hong Kong, stocks of not only U.S. dollars but even yen and pounds have temporarily run dry.

"No Borders" Is What Defines Bitcoin

One of Bitcoin's outstanding capabilities -- one that has virtually no comparison -- is sending assets across borders. Bitcoin does not even have the concept of a border. Because it has no spatial concept to begin with, it can be free from a spatial control such as a national boundary.

During the period when anti-Japanese sentiment ran high in China over the Senkaku Islands dispute, large Japanese corporations operating in China found that not just their businesses but even their personal safety was under threat. The Japanese government subsequently drew up a medium- to long-term strategy for its major companies to move core production facilities out of China to Southeast Asia, India and other regions. In the midst of this, an intelligence-flavored article appeared in an English-language outlet and was deleted a short time later. It claimed that in 2015 a Japanese company, "Company T," had instructed its subsidiaries and partner firms in China to buy up Bitcoin. To move industrial facilities out of China, a considerable portion of assets must be disposed of locally, with the yuan converted into dollars on the way out. But if the Chinese government refuses to convert the currency, or imposes predatory exchange fees, there are not many ways to respond. In particular, for a great many of the local nationals (Chinese) among the partner firms, moving assets out of China in the wake of their customers is in practice impossible. There is no way to verify the deleted article. But considering that in 2016 Japan's parliament passed legislation recognizing Bitcoin as one of the legal means of payment, it seems at least true that from around 2015 Japan was seriously studying Bitcoin's potential as one means of protecting the assets of its companies scattered abroad from an authoritarian government that controls foreign exchange.

If the status of the Hong Kong dollar, pegged to the U.S. dollar, becomes precarious, demand for Bitcoin could explode. But the decisive factor that the Hong Kong situation will bring to bear on Bitcoin demand lies elsewhere. For China's privileged class, Hong Kong was a special "instrument." By exploiting Hong Kong's special status -- part of China and yet independent of the Chinese government -- they could protect their own wealth and that of their children against a possible future confiscation of property by the Communist Party government. China's wealthy and its leadership keep addresses in Hong Kong and hold multiple financial accounts there, because Hong Kong makes it easy to transfer financial assets to major cities around the world. The likelihood has now risen that China's privileged class will discover Bitcoin as a substitute for Hong Kong.

Given that circumstances are unfolding that are more powerful than any external environment that has triggered a Bitcoin surge over the past 11 years, it would be no surprise if Bitcoin were to spike. The mining reward has even been cut in half. Under such conditions, the fact that the price is relatively calm is itself the thing worth studying.

It may be the calm before the storm, but it is worth noting that Bitcoin is being held back by an incident that flared up at the end of May. On May 21, news suddenly spread through the Bitcoin world that Satoshi Nakamoto, the developer of Bitcoin, had moved coins. The story went like this. Bitcoin moved out of an address that had been mined in February 2009, barely a month after Bitcoin came into the world in January 2009. Bitcoin that had not budged for a full 11 years had moved. The price reacted immediately to the news, plunging more than 2%. The reason is that Satoshi Nakamoto holds at least 1.1 million bitcoins.

The "Patoshi Coins," as the Developers Call Them

Roughly 18 million bitcoins have been mined to date, but about 8 million of them do not move. What this means is that a person holding more than 10% of the 10 million actually in circulation would be stepping onto the stage -- and that a substantial quantity of Bitcoin could be dumped onto the market all at once as sell orders. Moreover, if it were revealed who Satoshi Nakamoto is, the tax authorities of the country in question would have no choice but to respond, so there is a strong likelihood that Bitcoin's creator would be driven into a position of having to unload a substantial quantity of Bitcoin in a distress sale just to cover an enormous tax bill.

So was the block in question really mined by Satoshi Nakamoto? If Satoshi Nakamoto deliberately chose this address, it would appear he still intends to play hide-and-seek with the world. The reason is that this block is one of the few blocks from that period that do not bear the "Satoshi pattern."

Developers found a distinctive pattern in the mining of 2009. The pattern was left behind because a single computer was calculating continuously. As a result, developers know precisely which of the earliest blocks were mined on Satoshi Nakamoto's computer. This miner is also called "Patoshi." The name exists because the possibility -- slim though it is -- remains that the party who left those unmistakable fingerprints is not Bitcoin's creator Satoshi Nakamoto himself. In short, the May 21 incident was like an early miner holding an enormous stash of Bitcoin clearing his throat at the world -- and yet, astonishingly, it left open the possibility that the block that moved belonged to neither Satoshi Nakamoto nor Patoshi.

Of course, the absence of the pattern does not allow us to conclude that the block was not Satoshi Nakamoto's or Patoshi's. Satoshi Nakamoto or Patoshi may have used more than one computer. And of course, at the time, a number of people besides Satoshi Nakamoto took part in mining. It is true that Satoshi Nakamoto sent the Bitcoin source code to several developers, urged them to try mining, and obtained some feedback from them about the results. But looking at the hash rate, it does not appear that more than one computer was mining steadily. If there was anyone other than Satoshi Nakamoto or Patoshi, it is clear that they were not mining consistently.

The May 21 incident left more questions than answers. What is more, by showing that Bitcoin can still be toyed with by a small number of people, it etched Bitcoin's weakness into memory anew. The price volatility that people commonly point to is not Bitcoin's true weakness. Bitcoin's true weakness is the unending mystery that swirls around its creator. When the creator chose mystery, the more than 1.1 million bitcoins in his possession went with him into the world of uncertainty. The higher Bitcoin's price climbs, the more this problem will lodge itself in a corner of investors' unconscious -- like a toothache that proves its existence again just as you are about to forget it -- and become a source of deep unease.