Pete Rizzo

David Canellis

Join Rizzo, The Bitcoin Historian, as we detail Bitcoin’s rise from internet plaything worth less than a penny to global phenomenon disrupting money as we know it.

Supply Shock

This week, Rizzo is joined by Nolan Bauerle and Michael McSweeney for a heavyweight clash of Bitcoin visions: Jack Dorsey vs. Michael Saylor. The panel breaks down Dorsey’s developer-first, decentralized payments push versus Saylor’s Wall Street-centric, corporate treasury strategy. They debate who's funding Bitcoin’s future, who’s leading the charge in public perception, and which model holds up better under political and economic pressure. Enjoy!
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Ledn is the leading platform for Bitcoin-backed loans, offering a secure and transparent way to unlock liquidity without selling your Bitcoin. Ledn has issued over $9 billion in loans since 2018 and has never lost a single satoshi of client assets, earning a reputation as the name you can trust in the crypto space.
Visit ⁠https://www.ledn.io/⁠ to learn more. 
—
Timestamps:
(00:00) Introduction
(03:01) Michael Saylor's Bitcoin Journey
(05:14) Jack Dorsey's Bitcoin Vision
(08:44) Comparing Saylor and Dorsey's Approaches
(11:22) Ledn Ad
(11:59) Investment Strategies and Funding
(20:32) Corporate Treasury and Market Impact
(28:29) Personal Reflections on Jack Dorsey
(28:58) Ledn Ad
(29:45) The Cult of Personality in Bitcoin
(31:19) Narrative Building and Financial Engineering
(32:33) Corporate Adoption of Bitcoin
(34:47) The Evolution of Bitcoin Narratives
(35:30) Human Capital and Industry Shifts
(37:25) Political Influences and Bitcoin
(40:48) Challenges and Opponents
(48:21) The Future of Bitcoin
(49:20) Final Thoughts
—
Disclaimer: Nothing said on Supply Shock is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Hosts and guests may hold positions in the companies, funds, or projects discussed.
#Bitcoin #Crypto #SupplyShock

Bitcoin Visions Collide: Jack Dorsey vs. Michael Saylor

In this episode, Bitcoin OG Isaac Miller recounts his journey from HODLing coins in 2013 to becoming a cultural icon through viral videos and meme coins. He reflects on the shifting ethos of Bitcoin—from its cypherpunk roots to political adoption and corporate backing—while warning that many early believers have lost touch with the tech’s evolution. Miller also defends his engagement with meme coins and argues that Bitcoin remains a foundational freedom technology. Enjoy!

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Join us at Permissionless IV June 24th - 26th. Use code SUPPLY10 for 10% OFF! https://blockworks.co/event/permissionless-iv
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Ledger, the global leader in digital asset security, proudly sponsors Supply Shock. As Bitcoin adoption grows, Ledger celebrates 10 years of securing over 20% of the world’s crypto. Buy a LEDGER™ device now for true self-custody and peace of mind in securing your Bitcoin. Devices are also available in Bitcoin orange. For every device ordered in BTC Orange, we’ll donate $5 to brink.dev. Buy now at https://Ledger.com.
—
Timestamps:
(00:00) Introduction
(01:41) Bitcoin OG: Isaac Miller
(04:41) Bitcoin Then vs Now
(11:38) Ledger Ad
(12:23) Bitcoin Spending Regrets?
(13:38) Bitcoin Mining
(15:04) Libertarianism &amp; BTC Economics
(18:04) Bitcoin &amp; Politics
(20:09) Has Bitcoin Sold Out?
(23:25) Bitcon’s Changing of the Guard
(26:53) Bitcoin vs Other Crypto Assets
(32:41) Ledger Ad
(33:27) Isaac Meme
(37:29) Coinbase Partnership
(40:03) Meme Coins Are for Fun
(44:53) Bitcoin vs New Technologies
(50:44) Stablecoins &amp; Tether
(54:11) Freedom &amp; Bitcoin
(58:06) Are We Still Early?
(01:02:16) Isaac’s Biggest Contribution
—
Disclaimer: Nothing discussed on Supply Shock should be considered investment advice. Please always do your own research &amp; speak to a financial advisor before thinking about thinking about putting your money into these crazy markets.

He Bought Bitcoin at $80 — Why He's Buying at $100,000 | Isaac Miller

In this episode, veteran Bitcoin developer Matt Corallo joins to discuss why second layers like Lightning and Ark are essential for scaling Bitcoin — and why current laws put them at risk. He breaks down the regulatory blind spots threatening non-custodial wallet developers, and advocates for the Blockchain Regulatory Certainty Act to preserve open-source Bitcoin innovation in the U.S. Corallo also challenges Bitcoin's cultural orthodoxy, pushing for realism on decentralization, L2 tradeoffs, and the future of meaningful development. We cover Bitcoin maximalism, scaling via hybrid wallets, legal tail risks to L2s, and more. Enjoy!
 
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Join us at Permissionless IV June 24th - 26th. Use code SUPPLY10 for 10% OFF! https://blockworks.co/event/permissionless-iv 
 
—
Ledn is the leading platform for Bitcoin-backed loans, offering a secure and transparent way to unlock liquidity without selling your Bitcoin. Ledn has issued over $9 billion in loans since 2018 and has never lost a single satoshi of client assets, earning a reputation as the name you can trust in the crypto space.
Visit https://www.ledn.io/ to learn more. 
 
—
Timestamps:
(00:00) Introduction
(01:38) Is Bitcoin Mainstream?
(03:50) Saveourwallets.org
(07:49) Bitcoin Rights
(10:31) Ledn Ad
(11:08) Why Wallets?
(12:10) Next Steps
(14:53) Tackling Regulation
(17:21) Bitcoin Payments &amp; Lightning
(22:08) Is Bitcoin Special?
(25:51) Is Bitcoin Decentralized?
(28:37) Multiple Bitcoin Implementations
(32:39) Ledn Ad
(33:26) Bitcoin’s Roadmap
(36:36) Bitcoin's Vision &amp; Leadership
(39:47) Bitcoin Price vs Tech Development
(45:17) Bitcoin L2s &amp; Non-Custodial Wallets
(52:46) Debating “Valid” Transactions
(01:01:23) Node Runner Rights
(01:02:47) Bitcoin Maximalism
(01:06:36) Bitcoin’s Values &amp; Culture
(01:14:18) Final Thoughts
 
—
Disclaimer: Nothing said on Supply Shock is a recommendation to buy or sell securities or tokens. This podcast is for informational purposes only, and any views expressed by anyone on the show are opinions, not financial advice. Hosts and guests may hold positions in the companies, funds, or projects discussed.

Save Our Wallets: The Legal War on Bitcoin | Matt Corallo

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Bitcoin is hard money, in more ways than one.



The never-ending task of keeping BTC safe might be one of the hardest. There are plenty of options — hardware wallets, software solutions and even multi-sigs can do the trick, depending on how they&#8217;re implemented.



But if you’re legendary Bitcoiner Peter Todd, you might opt for the trusty brain wallet. And luckily for us, he’s told us exactly how he would do it.



(P.S. Catch Peter Todd on stage at <a href="https://blockworks.co/event/permissionless-iv">Permissionless IV</a> in Brooklyn later this month, as he sits down with Pete Rizzo for an intimate chat to kick off Day 1.)



First, a disclaimer: Todd shared his brain wallet process a long time ago, in August 2012, over a year before <a href="https://en.bitcoin.it/wiki/BIP_0039">BIP-39</a> was introduced.&nbsp;



BIP-39 brought mnemonic phrases to Bitcoin and made room for a 25th word to be layered on top, which significantly boosted the level of <a href="https://security.stackexchange.com/questions/6683/password-entropy-in-laymans-terms">entropy</a>, keeping private keys safe from brute force attacks. All that only makes Todd’s process more impressive, even if he might use a different method today. He effectively did what BIP-39 does with his mind (and some help from Bitcoin itself).



<h2 class="wp-block-heading">The method</h2>



Here’s how, in Todd’s own <a href="https://bitcointalk.org/index.php?topic=98639.msg1081052#msg1081052">words</a>:



<ol class="wp-block-list">
<li>&#8220;Generate a password that you can remember individually. Personally I use the program pwgen which produces ‘pronounceable passwords.’ I use it in eight-character upper/numerals/symbols mode.</li>



<li>Write that password down. Yes this is heresy; you&#8217;ll securely destroy it later. </li>



<li>Memorize that password. This is a lot easier than you think. I find if I spend five minutes a day memorizing a password I can recall it easily in a week or so, and have probably memorized it pretty much permanently after a month or two. Remember studying in university? Use those techniques. Flashcards are very effective; an important part of memorization is being forced to recall what you are trying to memorize. </li>



<li>Repeat until you have five different passwords memorized. During this process it helps to do something like encrypting different files with the sub-passwords, and practice decrypting them to ensure you don&#8217;t forget the individual parts. This also allows you to avoid having copies of the parts of the password if you&#8217;re paranoid. </li>



<li>Take all five passwords and concatenate them into one big super password: eiS9ui@R + vi4Ug~ee + Aet\ito0 + ohB$oh9w + Roh&#8221;k2ie = eiS9ui@Rvi4Ug~eeAet\ito0ohB$oh9wRoh&#8221;k2ie </li>



<li>Use this password! Eventually you will forget it, although the time it takes to forget it will go down exponentially the longer you use it. For me, I make a point of using my passwords every month or so. Even just recalling it mentally is enough.&#8221;</li>
</ol>



<figure class="wp-block-image size-full is-resized"><img loading="lazy" decoding="async" width="740" height="601" src="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png" alt="" class="wp-image-103870" style="width:681px;height:auto" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=740 740w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=316 316w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=321 321w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=270 270w, https://blockworks-co.imgix.net/wp-content/uploads/2025/06/image-2.png?w=80 80w" sizes="auto, (max-width: 740px) 100vw, 740px" /><figcaption class="wp-element-caption">As always, <a href="https://imgs.xkcd.com/comics/password_strength.png">a relevant xkcd.</a></figcaption></figure>



Follow those steps and your password would be 49 characters long. Ideally, Todd would like at least 128 bits of entropy to eliminate any risk of brute force. By his own analysis, his optimal configuration for <a href="https://linux.die.net/man/1/pwgen">pwgen</a> would generate 221 bits of entropy — “almost the gold-standard 256-bits level that modern encryption provides.”



In practice, this works by feeding the memorized password to the Bitcoin client’s <a href="https://developer.bitcoin.org/reference/rpc/encryptwallet.html">encryptwallet</a> function. The client would re-encrypt the wallet.dat file using that password as the key.



Any potential thieves — in meatspace or cyberspace — would need to somehow syphon the password from your brain before they could ever get to your bitcoin. Just whatever you do, do not forget the password. “You just gotta trust that you really can learn,” Todd wrote.



“The key is that you don&#8217;t try to memorize the whole thing at once. Split the task up into a few subtasks, IE, sub-passwords, and memorize them one after another. People used to have dozens of phone numbers in their head, memorized one at a time.”



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcvAGF5QOxdkiNCf22QIDPRr1BmtHj7eH9Dua6ljvC0LFa-7Xsr1m01opmV9LgeK-PTUKOUQMJDpyD22qcXYVE4BdrE-3_sWElf8jyJ21_ROtul8Oe7qQKlgF08fD9wK7KcQsOJHg?key=9401tKbxrv6jjpTeDAWkeQ" alt=""/><figcaption class="wp-element-caption">All hail the safe deposit box!</figcaption></figure>



Todd was right to point out that the average Joe isn’t going to do any of this.



And that’s exactly why Peter Todd will forever be a Bitcoin Legend.



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<li><a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



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<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>

Bitcoin

How Peter Todd stored bitcoin in his brain wallet

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



<hr class="wp-block-separator has-alpha-channel-opacity"/>



It’s nice to imagine a world where the price of bitcoin didn’t matter. Sadly, it can never be so.



Perhaps in a vacuum, maybe, in an alternate dimension where human brains are hardwired — like an ASIC miner — to only ever transact in bitcoin and nothing else. Not with <a href="https://www.fon.hum.uva.nl/rob/Courses/InformationInSpeech/CDROM/Literature/LOTwinterschool2006/szabo.best.vwh.net/shell.html">shells</a>, gold or livestock. Only bitcoin and barter, forever.



<a href="https://hyperbitcoinization.com/">Hyperbitcoinization</a> or bust.



In boring reality, bitcoin needs reference points. The ones we currently have may well be trending to zero, but Bitcoin could never fulfill its true calling — payments and storing value — without knowing exactly how much it’s worth relative to something else at any given moment.



Tracking exchange rates quickly turns into an obsession, and for good reason: That’s how fortunes are made.&nbsp;



Few know that better than Mark Cuban, my muse for today’s retrospective.



<h2 class="wp-block-heading">Money Is Speech</h2>



It’s been eight years exactly since <a href="https://www.cnbc.com/2017/06/06/mark-cuban-calls-bitcoin-a-bubble-price-falls.html">this banger tweet</a> about Bitcoin from the former majority Mavs owner Cuban:



“I think it’s in a bubble. I just don’t know when or how much it corrects. When everyone is bragging about how easy they are making $=bubble.”



It was June 2017, and bitcoin had been rallying for about six months straight to cap off a 10x run over two years — from $250 to $2,800 around the time of Cuban’s post.



Bitcoin would push 600% higher over the next six months until the cycle’s peak in December, before retracing by more than 80% across the following year.



Was that a bubble? It really depends on how loose your definition is, but for what it’s worth, bitcoin never returned to $2,800 again after Cuban’s post.



So, anyone who bought bitcoin as he sent that tweet would have never lost money, and would today be up by 3,600%.



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">Look at Bitcoin. As long as everyone stays in their comfort zone , btc is never more than a SOV driven by supply and demand. Unless everyone drops fiat, no one drops fiat&mdash; Mark Cuban (@mcuban) <a href="https://twitter.com/mcuban/status/1268663448847765515?ref_src=twsrc%5Etfw">June 4, 2020</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div><figcaption class="wp-element-caption">Nods in Jack Nicholson: “Unless everyone drops fiat, no one drops fiat.”</figcaption></figure>



Cuban’s opinion about bitcoin and crypto has indeed evolved over time — the same guy who <a href="https://www.cnbc.com/2019/10/04/mark-cuban-on-the-value-of-bitcoin.html">said</a> “I’d rather have bananas than bitcoin” in October 2019 (when bitcoin was at $8,000) has more recently <a href="https://x.com/mcuban/status/1908344893862269417">said</a> “btc is probably a better buy right now” over stocks, even amid the buyback craze and with bitcoin at $84,000.



It’s not totally fair to surmise Cuban’s personal views from just his tweets and media spots. But I’ll do it anyway.



Cuban’s tendency is to consume Bitcoin through the very narrow lens of prices and profits, and he has certainly agreed with bitcoin’s potential as a store of value, even if it’s really a euphemism for “number go up.”



His most telling <a href="https://x.com/mcuban/status/1426920428237434888">tweet</a> is this, from August 2021, peak bull market: “BTC is a great SOV. Far better than gold. I own a bunch. But it is what it is. It doesn’t have all the special powers Maxis try to assign to it.”



Calling it now: If Bitcoinization is anything like the Apocalypse — 15 signs and all — then let the moment Cuban finally sees the magic of Bitcoin, beyond its price, be undeniable.



— David



<h2 class="wp-block-heading">A Historian’s View</h2>



To pull a quote from Harry Suddock, when it comes to Bitcoin —&nbsp;“price is the product,” but I’ll add my own twist. It’s also the marketing. Since David has regaled us with a tale of just how late Mark Cuban has been to Bitcoin, I thought it would be nice to provide a reminder that we’re still early.



Take this quote from Zooko Wilcox, written 14 years ago:



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXc0FiUG4XAVIQ8SZCpf8nc3AA0gdYt7HN-uRl_wMZq91hwFgqD4YRpYarV_nAiY6BLTELV01MSbrZ47kF9NE4nIoQH8ApyvLM_HI5gAcNMtE7GtgrrpvwUp-O8ZV-9jiYuAoE4n1w?key=2bRz0-TRqtndVWoTllE4yw" alt="" style="width:528px;height:auto"/></figure>



An off-the-cuff remark from a renowned cypherpunk (with his own fascinating crypto story), it’s a 14-year-old observation that rings true today.



It makes you wonder how high the price will be when the number of economists supporting BTC is over 10%.



— Rizzo



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What Mark Cuban still misses about Bitcoin

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Decentralization is a spectrum.



No doubt you’ve heard this before. After all, Bitcoin started out much more centralized than it is today: There were <a href="https://bitcointalk.org/index.php?topic=194078.0">check points</a> and single-digit node counts, and the hash rate is <a href="https://blockworks.co/news/satoshi-bitcoin-holdings-wallet-123b">believed</a> to have been concentrated mostly with Satoshi for at least the first year.



But a spectrum needs two dimensions, otherwise it’s just a scale.&nbsp;



For blockchains (and peer-to-peer networks more generally), the other dimension would be “interestingness” — the more decentralized something is, the more interesting it is.



Pre-Bitcoin, e-gold was the most successful alternative digital currency. And it was still very interesting, even with its overt centralization.



Seventeen years ago, in 2008 (and five months before Bitcoin’s white paper), the public got <a href="https://www.offshorealert.com/us-judge-rejects-e-golds-argument-that-it-is-not-a-money-transmitter/">confirmation</a> that e-gold’s legal appeals couldn’t save it: A federal judge had ruled that e-gold was in fact a money transmitter by the government’s standards.



The company and its execs would officially stand trial for operating as one without a license, with four criminal counts against their names, for which they’d plead guilty.



At the very surface level, e-gold was not totally dissimilar from how some stablecoins operate, only it was launched in 1998, when there was no such thing as a cryptocurrency.



Users would first exchange fiat currency for digital grams of gold that would then be credited to their e-gold accounts. Gold &amp; Silver Reserve Inc., an offshore company registered in Saint Kitts and Nevis, physically backed each of those digital grams with actual gold — first in a safe deposit box in Florida and later across bank vaults in London and Dubai.



E-gold users could then cheaply send gold-denominated payments to other users, and balances could then be cashed out via supporting money exchangers.



All transactions were instant, irreversible and tallied by a private ledger operated by the company on a centralized server. Gold &amp; Silver Reserve Inc. charged a minor fee for the trouble, and allowed accounts to be opened without any identity checks, making each user pseudonymous.



E-gold was properly massive for its time. At its 2006 peak, it was second only to PayPal when it came to internet-native payment processing: over 5 million registered <a href="https://www.wired.com/2009/06/e-gold/">accounts</a> spread all over the world, with active users pushing $2 billion worth of transactions per year.&nbsp;



But the cumulative value of all the e-gold in circulation — which we’d probably describe as its market cap — was low by today’s standard. It was only $85 million, converting to around 3.8 metric tons of physical gold to back each unit.



Tether Gold, probably the closest we have to a modern crypto equivalent of e-gold, otherwise has a circulating <a href="https://www.coingecko.com/en/coins/tether-gold">supply</a> of over $800 million, but only about 134,000 transactions in the token’s entire <a href="https://etherscan.io/token/0x68749665ff8d2d112fa859aa293f07a622782f38">history</a>. Around 7,250 Ethereum addresses contain at least some Tether Gold, although those include exchange hot wallets holding balances on behalf of an unknown numbers of users.



E-gold unravelled precisely due to its lack of decentralization. In the simplest terms, the feds could shut it down because it was run by a small number of people who controlled all of its functions, from the buying and selling of gold reserves to server maintenance and lax fraud prevention.



E-gold was interesting on a libertarian level — and even with cypherpunks — until the risks of its centralization became glaringly obvious.&nbsp;



Bitcoin fixed this.



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digital gold

Before Bitcoin: Digital gold in the ’90s was interesting, until it wasn’t

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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On a long enough timeline, all companies will become Bitcoin companies. Some have just been there from the very start.



PayPal, back when it was still owned by eBay, was an unknowing bedrock for the very first Bitcoin exchanges.



And considering how often the two were lumped together — a tech duo flipping the script on online payments — Bitcoin and PayPal were almost adoptive siblings. One radical, one moderate.



<h2 class="wp-block-heading">On This Day</h2>



“Commerce on the internet has come to rely almost exclusively on financial institutions serving as trusted third parties to process electronic payments,” Satoshi wrote to open the Bitcoin <a href="https://bitcoin.org/bitcoin.pdf">white paper</a>.



“While the system works well enough for most transactions, it still suffers from the inherent weaknesses of the trust based model.”



PayPal was fundamental in the very first trade between bitcoin and the US dollar, which occurred not on this day, but in October 2009.&nbsp;



Martti Malmi, one of Satoshi’s right-hand men in the early days, famously <a href="https://x.com/marttimalmi/status/423455561703624704">swapped</a> $5.02 for 5,050 BTC to the operator of New Liberty Standard, with the fiat side of the transaction handled by PayPal.



It was so early that PayPal had no policies dealing with the concept of Bitcoin and cryptocurrency, which of course meant everything was fair game!



New Liberty Standard was a manual <a href="https://newlibertystandard.io/exchange">operation</a> — the price was initially fixed to the average electricity cost to mine a whole coin, and anyone wanting to buy or sell bitcoin would need to send an email to a Gmail address stating how many they’d like to trade.&nbsp;



Traders were then directed to send cash to a PayPal account and wait for their Bitcoin address to be credited.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfFSk1dqN8FJPsHdaZxeX-EtiFStm9bZKFOEOdTvLfeBU1Q_287KW_c3n1PKm8_T3jp91QlnSLhTdTWoxhdFYvJlXsH3bN855hx1Ccxy83o2XOh3lbKfpPiERd5RwonaWE82Mz2UA?key=_UXEm8Dw23GofD1xW8zLeg" alt=""/><figcaption class="wp-element-caption">New Liberty Standard would later add supply and demand into its pricing model, leaving us with this spectacular post from a non-believer.</figcaption></figure>



New Liberty Standard was more of a currency exchange desk than a trading platform. But within two months, Bitcointalk user dwdollar was working on a way to bring true price discovery to bitcoin.



“I am trying to create a market where Bitcoins are treated as a commodity,” he <a href="https://bitcointalk.org/index.php?topic=20.msg100#msg100">wrote</a> in January 2010, as bitcoin celebrated its first birthday.&nbsp;



“People will be able to trade Bitcoins for dollars and speculate on the value. In theory, this will establish a real-time exchange rate so we will all have a clue what the current value of a Bitcoin is, compared to a dollar.”



Bitcoin Market debuted shortly after as the first official BTC exchange, as denoted by its ability to price bitcoin based on supply and demand rather than mining cost.&nbsp;



In some ways, Bitcoin Market resembled a modern-day crypto exchange, even if you could only have one order open at a time. There were BTC pairs for fiat currencies (US and Australian dollars) as well as for grams of gold, with all trades handled off-chain by a centralized server.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd94C9axAjWl9UHNyy11wj19SomSiEdP3F_0O4I2KnQ-K-38_o1UFdSJ-dzUHLNREUMUifmWGgoc-WhdYW3Qxm_3VrVLLCVPC_RJr2T_MQ-sQKrNqa7scO66bhLI1DVgwdIaiExIw?key=_UXEm8Dw23GofD1xW8zLeg" alt=""/><figcaption class="wp-element-caption">It took only six months for the price of bitcoin to rise by 1,000% following the launch of Bitcoin Market. By August 2011, bitcoin was trading on the platform for $15 apiece.</figcaption></figure>



Pairs were also broken down by payment processors, which complicated matters. In PayPal’s case, it eventually stopped allowing its users to transact with Bitcoin Market’s PayPal account — so anyone hoping to trade bitcoin with US dollars from their PayPal accounts would need to buy and sell a specialized PayPal USD pair, BMBTC/PPUSD.



The site <a href="https://web.archive.org/web/20110826203112/https://www.bitcoinmarket.com/info/faq/#paypal_deposits">read</a>: “Bitcoin Market holds the seller&#8217;s Bitcoins until the seller has received PayPal funds from the buyer. Then the seller confirms payment and the bitcoins are dispersed to the buyer&#8217;s Bitcoin Market account. In short, Bitcoin Market acts like an escrow agent for PayPal payments.”



It was actually on this day, in 2011, that Bitcoin Market was forced to suspend PayPal payments — opposite to how that dynamic usually goes.&nbsp;



After removing the invitation-only restriction on new signups, opening it to the public, Bitcoin Market users were hit by a <a href="https://web.archive.org/web/20120319162645/https://bitcointalk.org/index.php?topic=12678.0">wave</a> of fraudsters initiating phony PayPal refunds after receiving the coins they paid for. Which is ironically quite similar to a double-spend attack, except it wasn’t the Bitcoin blockchain under siege, but Bitcoin Market’s PayPal hot wallet.



These days, PayPal lets its users buy, hold and sell bitcoin right within its flagship app, and even allows BTC to be withdrawn to external wallets.&nbsp;



But using PayPal to manage bitcoin feels just like that scene from the Matrix, where Neo (a PayPal user) can’t believe that Morpheus (Satoshi) has suggested that they can dodge bullets (transact trustlessly).



“No [PayPal user], I’m trying to tell you that when you’re ready, you won’t have to.”



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Bitcoin Market: How a single user brought price discovery to Bitcoin

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It took nearly seven centuries for a cryptography breakthrough to sunset the Caesar cipher that was big in the first century BC.



Caesar ciphers simply shifted letters up or down in the alphabet by a fixed number of positions. Starting in the year 800, Arab polymath <a href="https://historyofinformation.com/detail.php?id=3162">al-Kindi</a> began working on what&#8217;s known as frequency analysis — a type of systematic pattern recognition that would result in reverse-engineering shift cipher encryption, like the Caesar.



By the 16th-century Renaissance, solving Caesar ciphers was so easy that they were considered children’s puzzles.



So it was until two cryptographers, Italian Giovan Battista Bellaso and French Blaise de Vigenère, discovered and popularized the so-called <a href="https://www.britannica.com/topic/Vigenere-cipher">Vigenère cipher</a>, which incorporated multiple cipher alphabets derived from a single keyword.



The Vigenère cipher was a revolution in information privacy. The poly-alphabetic method was believed unbreakable and even named the “indecipherable cipher.”&nbsp;



Three hundred years would pass before, in the mid-19th century, two others independently cracked the system.&nbsp;



Charles Babbage, a revered grandfather of computer science, and military man Friedrich Kasiski, unknown to each other, had separately rendered Vigenères entirely obsolete, even before the arrival of computers.



So, that makes for a 700-year gap between Caesar and al-Kindi, and a 300-year gap between Bellaso-Vigenère and Babbage-Kasiski.



<h2 class="wp-block-heading">A cypherpunk breakthrough</h2>



On this exact day in 1976 — 49 years ago and more than a century after Babbage and Kasiski cracked Vigenère — a pair of American academics presented their own revolution: the concept of public key cryptography, which today underpins Bitcoin and most modern communication technologies.



Building off the novel work of computer scientist Ralph Merkle, the duo of Richard Diffie and Martin Hellman had devised a way to achieve what was, once again, considered theoretically impossible: enabling secure communication without a secret key shared between the two parties.



The method was outlined in their <a href="https://ee.stanford.edu/~hellman/publications/24.pdf#:~:text=Manuscript%20received%20June%203%2C1976,1975%20and%20the%20IEEE%20International">paper</a>, New Directions in Cryptography, which WIRED would later describe as “a cypherpunk sacred text.”



“We stand today on the brink of a revolution in cryptography,” Diffie and Hellman wrote. “The development of cheap digital hardware has freed it from the design limitations of mechanical computing and brought the cost of high grade cryptographic devices down to where they can be used in such commercial applications as remote cash dispensers and computer terminals.”



“&#8230; At the same time, theoretical developments in information theory and computer science show promise of providing provably secure cryptosystems, changing this ancient art into a science.”



Diffie-Hellman’s paper would be adapted into RSA encryption within two years, itself a touchy cornerstone of the <a href="https://blockworks.co/news/cypherpunk-movement-history-wired-1993">Crypto Wars</a> that directly followed.&nbsp;



Amazingly, <a href="https://www.wired.com/1999/04/crypto/">as WIRED documented</a>, another cryptographer, British intelligence officer James Ellis, had proposed a public-key system years before the Diffie-Hellman paper. But Ellis’ work was never permitted to see the light of day, a factoid that makes the conclusion of Diffie and Hellman’s foundational work so much more poignant:&nbsp;



“We hope this will inspire others to work in this fascinating area in which participation has been discouraged in the recent past by a nearly total government monopoly.”&nbsp;



And while specific or weak forms of public-key encryption have been broken over the years, it remains unbroken at a theoretical level.



Now, (almost) half a century on from cryptography’s last great breakthrough, all eyes are on the arrival of practical quantum computing — whenever that may be.



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Public-key birthday: ‘Cypherpunk sacred text’ turns 49 today

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About 15 million people go whale watching every year — many in places like Mozambique, Costa Rica and Sri Lanka.



Stuck in Iceland, a travel magazine, <a href="https://www.stuckiniceland.com/whale-watching/">labeled</a> whale watching “a demanding contact sport where you battle the elements while looking for creatures that care nothing, whether you see them or not.&nbsp;



“Sometimes you are lucky, and the whales take a long time when they are visible. Sometimes they move fast, pop up all over the place, and you must be quick to see them.”



Today’s post celebrates Bitcoin’s version of the sport. So grab your spray jacket and binoculars, and let’s go crypto-catamaranning. 



Thar she blows!



The earliest known efforts to find, track and even identify Bitcoin whales occurred in August 2013, as bitcoin was crossing over the $100 mark for the last time ever.



Prominent Bitcointalk user prophetx had <a href="https://bitcointalk.org/index.php?topic=282879.0">proposed</a> three whale-hunting commandments and encouraged others to join in:



<ol class="wp-block-list">
<li>Post any address holding in excess of 5,000 BTC ($500,000 then, $522 million now) in the last 90 days on a rolling basis.</li>



<li>Collaborate to identify the owner of the address, either in the real world or through their online footprint.</li>



<li>Use that information to map the biggest whales in the Bitcoin economy and follow the movement of their coins.</li>
</ol>



“Why?” was the first response.



“I study economics, so observing and studying the spending of the capitalist group is important to me,” prophetx said.



“It seems a bit creepy and stalkerish…,” replied another.



Prophetx: “This is no different than Forbes’ richest list. Bitcoin enables this and it should be used to advance knowledge. And if someone is that concerned perhaps they shouldn&#8217;t use a currency with a public tx ledger…”



Quickly, though, other whale hunters joined in. Within two days, someone had produced a rich list of about 300 addresses with more bitcoin than anyone else, discovered at 50,000 block increments (every 350 days or so).



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfmEBT3konP17uSTDNxl1F-STSovvFFbLJkZ4WcERKvLJsOexHrVCbDI9i3THmHDjskl24ToYjX69qg9vcJafJt1saW2r6BNK8HICQZgcPyw50EvIu_5d4JlWywyKA2COYj8b2QfQ?key=cMtRQN4-8YMqHSlqsgMNgw" alt=""/><figcaption class="wp-element-caption">In the future, bitcoin would be worth much more than $500.</figcaption></figure>



Among those whales was an address starting with “12ib7…” with 31,000 BTC — $3.1 million at 2013 prices and $3.2 billion today. It’s the 967th address ever created and was initially funded in May 2010.



The address can still be found on Bitcoin’s <a href="https://bitinfocharts.com/top-100-richest-bitcoin-addresses.html">rich list</a>, currently ranked 28th, closely trailing behind a Binance mining pool and cold wallet.



Prophetx’s thread never went far beyond that, with no whales identified under the actual post. Years later, as part of the depressingly long Kleiman estate court case, Craig Wright would falsely <a href="https://blog.wizsec.jp/2018/02/kleiman-v-craig-wright-bitcoins.html">assert</a> ownership of the address alongside others via Tulip Trust.&nbsp;



Wright had claimed that hackers had stolen the private keys and any backups were deleted — even though the coins in question had not been moved following the theft. He also attempted to sue Bitcoin developers into somehow granting control of the coins.&nbsp;



Of course, Wright ultimately lost the Kleiman case and was <a href="https://www.zdnet.com/article/craig-wright-to-pay-100-million-in-kleiman-v-wright-56b-case/">ordered</a> to pay the estate $100 million, dropping the case against the Bitcoin devs shortly after.



So, who owns 12ib7? Nobody knows. 12ib7’s last outgoing transaction was in July 2010, when it directed 9,000 BTC to an unidentified address (its first outgoing transaction was also on this day in 2010!)



Much juicier: Coinbase director Conor Grogan got as far as potentially linking the address to Satoshi.&nbsp;



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true">This address is also associated with funding 12ib, one of the largest active BTC address of all time, which hold 3B of BTC today. This lends credence to the link that 1PY was associated with Satoshi or a very early adopter/contributor <a href="https://t.co/q0b0H8PrMj">pic.twitter.com/q0b0H8PrMj</a>&mdash; Conor (@jconorgrogan) <a href="https://twitter.com/jconorgrogan/status/1887154642267574302?ref_src=twsrc%5Etfw">February 5, 2025</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



A so-called Patoshi address originally funded 12ib7 with 3,700 BTC. Patoshi addresses are believed to have mined bitcoin using a method that <a href="https://blockworks.co/news/satoshi-bitcoin-holdings-wallet-123b">only Satoshi may have known</a> was possible.



Whether that means Satoshi technically controls 12ib7 is unclear. All we know for sure is that the true owner was an early adopter and, for whatever reason, a Satoshi-linked wallet felt it necessary to send them thousands of bitcoin. Lucky them!&nbsp;



If they still have the keys, that is.



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Bitcoin whale watching is a sport for having fun, staying poor

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After Silk Road founder Ross Ulbricht dialed into the Bitcoin Conference from prison in 2021, he quickly found himself in solitary confinement.



It was obvious punishment. Ross was then placed under increased surveillance for the rest of his time behind bars — a direct result of his communication with the Bitcoin community.



Four years later, on Thursday afternoon, Ross stood on the conference stage in Las Vegas for Bitcoin 2025, in what he described as a “mirror image of that day.&#8221;



“You know what, I&#8217;m glad I did it [dial into Bitcoin 2021]. I am. Connecting with you that day felt so, so good, because it was like a small part of me had broken beyond the prison walls and escaped only for a little while.”&nbsp;



Well, the rest of Ross finally caught up.



Poetically enough, yesterday was 10 years to the day that Ulbricht was handed a double life sentence (plus 40 years) without parole.&nbsp;



“I was just 31 years old. If [the judge] and all the others behind my prosecution had their way, I would have grown old and eventually died still in prison. Instead, I&#8217;m here with you,” Ross said.&nbsp;



He wore a formal black suit, white shirt, red tie and shiny black shoes. But he was comfortable.



Bitcoin is, of course, very different now than when Ross was arrested in October 2013.&nbsp;



There were no Strategys buying up hundreds of thousands of coins, or government-controlled strategic bitcoin reserves. No CoinJoin or Lightning Network, either, and definitely no Ordinals.



Not to mention, there were <a href="https://coinmarketcap.com/historical/20130929/">fewer</a> than 40 cryptocurrencies on the market at the time, with bitcoin dominance at more than 90%. The price of each coin was around $120, giving BTC a $1.6 billion market cap. Number-two XRP was far off in the distance with $100 million.&nbsp;



“I effectively went into a time capsule in 2013, and now I&#8217;m coming out like Rip Van Winkle. I mean, just a few months ago when I walked out of prison,” Ross said. “I&#8217;d never seen a drone. I had never experienced AI. I still haven&#8217;t [experienced] VR, the headsets, yeah, I haven&#8217;t done that yet. I had never chatted with AI.”



“It&#8217;s all hitting me at once, freedom. The new technology, the fact that I have a future again. It&#8217;s a lot. It&#8217;s a lot. I mean, I was in prison and now I get to live through this incredible time with you. What a blessing. What a miracle. What a gift.”



<iframe loading="lazy" width="560" height="315" src="https://www.youtube.com/embed/8ZZGRA-8ZMU?si=wM-rUAJy_iQDVacr" title="YouTube video player" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>







With deep gratitude, Ross recounted the ways that the Bitcoin community fought for his release. He received letters and funding for his legal defense, and they defended his legacy while he couldn’t.&nbsp;



He said: “You even got President Trump to see that Bitcoin is the future. Yeah, you did that. You got him to see that decentralization and freedom are our future. You said, ‘Ross is one of us.’ You stayed united. You said, ‘We want Ross out here with us.’ You said, ‘Free Ross.’ You did this.”



But Bitcoin was simply paying it all back. Silk Road was arguably Bitcoin’s <a href="https://blockworks.co/news/silk-road-ross-ulbricht-history-bitcoin-crypto">first killer app</a>. It was Ross and Ross alone who showed the world the power of Bitcoin, both as magic internet money and a tool for freedom without compromise.



“[David Bailey] said, ‘Ross, you took Bitcoin from 0 to 1. And while you were in prison, we, the community — all of you — we took it from 1 to 10. But we still need to go from 10 to 100,’” he said.



There were three core principles of Bitcoin that Ross championed in his speech: freedom, decentralization and unity. Each one reinforces the other, making them critical to maintain as Bitcoin evolves through its next great epoch.



“We can argue all day, but please, never see each other as enemies. Those that oppose decentralization and freedom love it when we&#8217;re divided, I promise you. So stay united. So long as we can agree that we deserve freedom and that decentralization is how we secure it, and we can be united, we can have each other&#8217;s backs. Just like you had mine,” Ross said.



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Stay united: Ross Ulbricht’s heartfelt message for Bitcoin

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Today’s retrospective will be a trauma-bonding experience for anyone who was too busy playing Plants vs. Zombies or StarCraft 2 to stack sats in 2010.



At this point 15 years ago, the premier Bitcoin faucet was in full swing.



Gavin Andresen, one of Satoshi&#8217;s first collaborators, had only been a member of Bitcointalk for two weeks when he <a href="https://bitcointalk.org/index.php?topic=183.0">announced</a> he would give away free bitcoin.



“For my first Bitcoin coding project, I decided to do something that sounds really dumb: I created a web site that gives away Bitcoins,” he wrote.



Anyone who entered a Bitcoin address and solved a captcha would soon soon receive 5 BTC, worth about five cents apiece at the time. Today, 5 BTC would trade for more than half a million dollars.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXenNA-6Q7-Dvyk0fVrdPPR5egVEp1wgprTqGb_Tvklvb0AvSD_vEh4TcDp1oBpN65CmjZh4J9iin8DKfXdH1J3a_KfeUzEmhibTZKAWQcb2e1ulWRQ-cepxdsRfHG6RWcWfbtaruQ?key=UOy3Jz74SGgMbJKgrO5IMQ" alt=""/></figure>



Gavin filled the faucet with 1,100 of his own bitcoin to start, or about $55 in US dollar terms, and said he would add more once he was sure the system worked as intended. Those same coins would fetch nearly $118 million at current prices.



“Why? Because I want the Bitcoin project to succeed, and I think it is more likely to be a success if people can get a handful of coins to try it out. It can be frustrating to wait until your node generates some coins (and that will get more frustrating in the future), and buying Bitcoins is still a little bit clunky.”



At first, the faucet was restricted to dishing out 5 BTC per IP address, leading one user to pull out 50 BTC in minutes using Tor, which can quickly generate new IP addresses within the browser itself. In good faith, that user sent the coins back to the faucet.&nbsp;



“He&#8217;s giving it away, it&#8217;s an honor system, so don&#8217;t take more than you need,” wrote Laszlo Hanycez.&nbsp;



Gavin then made it so each bitcoin address could only ever receive one faucet donation “to make it a teeny-tiny bit harder to cheat. I don&#8217;t want to blacklist anybody coming from Tor, though — I think a lot of people using Tor will also be interested in Bitcoin.” He also tipped one user 50 BTC ($2.50 then, $5.4 million now) for submitting a bug report for a security flaw.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcy7vU92BCZJJJMVEp-Eh3LAT87C8cTsxr-wmERoOBgmycBS4xV1izzJA0lMo4wloQ2BB-Py4N7B5hQDwpLTTCK0eq--VDdp1Rr7FRnfQLlGIb5694HoB_mq3jXbyvy67tKBiq2_A?key=UOy3Jz74SGgMbJKgrO5IMQ" alt=""/><figcaption class="wp-element-caption">Within a week, Gavin’s project received approval from the big S himself.</figcaption></figure>



The faucet was active for a little under two years, right up until March 2012. Bitcoin’s price had exploded up to 500x all the while, to nearly $30 at most, leading Gavin to scale payouts down over time.&nbsp;



When the faucet had run dry (<a href="https://spectrum.ieee.org/thousands-of-bitcoins-stolen-in-a-hack-on-linode">accelerated by a hack</a> on the Linode cloud server that was <a href="https://gavintech.blogspot.com/2012/03/bitcoin-faucet-hacked.html">underpinning</a> the faucet and a number of other Bitcoin services), bitcoin’s US dollar exchange rate had settled at about $5, and each user was receiving 0.0015 BTC, or less than a penny.



It’s difficult to say exactly how much bitcoin the faucet distributed overall. Part of the intended appeal was that anyone could donate coins for the benefit of the community, and often recipients would simply return the coins they received back to the faucet’s address. Giving and receiving coins had clearly become a ceremony for some. The total volume of the faucet’s <a href="https://bitinfocharts.com/bitcoin/address/15VjRaDX9zpbA8LVnbrCAFzrVzN7ixHNsC-full">address</a> amounted to nearly 19,716 BTC ($2.1 billion at current prices).&nbsp;



Realistically, actual distributions likely amounted to a few thousand coins at best, at least by my very surface-level count.



Is there a moral here? Something hokey might do, like “giving is good” or “pay it forward.” I’m just not sure any of that eases the pain of being 15 years too late for a free bitcoin fortune. 



In that case, there’s always Charlie Shrem’s faucet <a href="https://x.com/CharlieShrem/status/1919161109300281350">revival</a>, if it ever attracts any coins.



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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We’re all still early — but not early enough for the free bitcoin faucet

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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Let’s say a “generation” is about 30 years. In that case, Bitcoin has just entered the second half of its first one.



Whether Bitcoin is on track to ubiquity faster than electricity really depends on your mental model of Bitcoin itself.



There’s no question that bitcoin is money. But anecdotally, few people want to spend it, lest they risk missing out on monumental future fortunes.



Of course, it wasn’t always this way. In February 2012 — almost two years after <a href="https://blockworks.co/news/bitcoin-pizza-day-price-record-billion">Laszlo’s pizzas</a> — a fertility doctor named C. Terence Lee set about a personal and professional quest to onboard his patients to Bitcoin by accepting BTC for his services. He started with a “Bitcoin accepted here” sign in his window, and then a Reddit post.



“Jumping in to do my part to support the BTC economy. This may be a historic first?” Lee wrote in a <a href="https://web.archive.org/web/20130617014247/https://www.reddit.com/r/BitMarket/comments/pzczn/wtsusa_male_fertility_evaluation/">post</a> on the BitMarket subreddit, titled: “[WTS][USA] Male Fertility Evaluation.”



Lee was offering a 15-minute consultation to discuss fertility questions and a sperm analysis in exchange for 15 BTC, valued at $70 or so at the time. “Actual value over $100,” he wrote.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfaOkew5xucTzm3Hi_0dB_0oG0_WXjiTps_iZctywl_BxccmvOPOvQ9O1KbIAOgI8q8b5pv8QK0AcRT0t4V_jrl4RL6zFplNbZj1I4OBMAZxEMZH7jfTvVf1eIUdYeLE0OCyCBW?key=ke2Vj3Y57wrz-FJ9GrG0Nw" alt="" style="width:692px;height:auto"/></figure>



Within three months, he’d found a Bitcoin customer.&nbsp;



“The patient turned out not&#8230;so much having a burning desire to know about his fertility, but he was a Bitcoin enthusiast, and he liked the idea of participating in history, in this ritual ceremony of what could be perhaps the world&#8217;s first Bitcoin medical transaction,” Lee <a href="https://www.youtube.com/watch?v=E4Mqm9F0V30">explained</a> at a 2013 conference in San Jose.



“So we chatted about Bitcoin. He taught me a lot about mining. That&#8217;s how he acquired bitcoin. And we did a sperm test, and it turned out he had really good sperm…after it was done he sent me 15 bitcoins… “



<figure class="wp-block-embed is-type-video is-provider-youtube wp-block-embed-youtube wp-embed-aspect-16-9 wp-has-aspect-ratio"><div class="wp-block-embed__wrapper">
<iframe loading="lazy" title="Bitcoin 2013 conference - C Terence Lee, MD - A Physicians Experiences with Bitcoin" width="1024" height="576" src="https://www.youtube.com/embed/E4Mqm9F0V30?feature=oembed" frameborder="0" allow="accelerometer; autoplay; clipboard-write; encrypted-media; gyroscope; picture-in-picture; web-share" referrerpolicy="strict-origin-when-cross-origin" allowfullscreen></iframe>
</div></figure>



From there, Lee experimented with various ways to attract customers to pay with bitcoin. He’d ask them directly if they’d heard of it, which produced mixed results.&nbsp;



“In some cases, when I brought up Bitcoin they stopped, and they looked at me like I was a telemarketer or used car salesman,” Lee said. “In some cases, when I explained the best that I could about what Bitcoin was, they even started reacting with suspicion or disapproval — as if I had suggested that I wanted to be paid in vials of crack cocaine or something like that.”



Lee changed up his strategy to only quiz his most trusted patients. There was one couple, who, on their fourth attempt at IVF, agreed to pay in bitcoin for a 50% discount, with Lee walking them through exchanging US dollars for bitcoin via CryptoXChange, a now-defunct exchange operating out of Australia.



The sperm stuck, leading <a href="https://money.cnn.com/2013/06/10/technology/innovation/bitcoin-baby/index.html">CNN to reveal</a>, on this day in 2013, “the world’s first Bitcoin baby” — a baby bought entirely with bitcoin. Thirty bitcoin to be exact, an amount then worth $500, or $3 million today.



<figure class="wp-block-image is-resized"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXfPGZcWLgvjBE_d3Y58OJz70P8WhnKhbNzlHG8MZtN2yhxKRgPQM3cj6n_oHfzRWeHTIOJELRalaAJYyL2enL2dLZQMWJRCWL-dgNZxuVORlvXTix8x9atkoMJjGfcMa9goJgt5WQ?key=ke2Vj3Y57wrz-FJ9GrG0Nw" alt="" style="width:642px;height:auto"/></figure>



Lee said in his presentation that multiple other patients paid in bitcoin following that milestone, resulting in more Bitcoin babies. We’ve reached out to his practice for more info about how it’s gone since then.



Still, with the way Bitcoin’s narratives have played out, it’s almost as if the efforts of early adopters like Lee worked too well, too quickly.&nbsp;



Using bitcoin as money today just isn’t as relevant to the uninitiated as buying and HODLing it. (Interestingly, the term “HODL” would be <a href="https://bitcointalk.org/index.php?topic=375643.0">coined</a> only six months following the announcement of the first Bitcoin baby.)



It’s not impossible for Bitcoin to go full circle and return to its money proposition once more. When it’s done with price discovery, perhaps, in another few generations.



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<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
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The first Bitcoin baby: how a fertility doctor encouraged early adoption

This is a segment from the Supply Shock newsletter. To read full editions, <a href="https://blockworks.co/newsletter/supplyshock" target="_blank" rel="noreferrer noopener">subscribe</a>.



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There’s no questioning that Supply Shock is deep in the nostalgia business. Sometimes, it’s meant to be deeper than that.



Maybe you lived the first few years of Bitcoin, and get a kick out of revisiting the major narratives and forgotten side plots. Perhaps you missed out and are now living vicariously as an early adopter through our deep dives.



Today&#8217;s throwback is more an expression of mourning than reminiscence: 



RIP, the age of Bitcoin idealism.



<h2 class="wp-block-heading">On This Day</h2>



Exactly 15 years ago, <a href="https://blockworks.co/news/happy-bitcoin-mmo-day-tale-in-the-desert">Andrew “teppy” Tepper</a> started what would become a fateful <a href="https://bitcointalk.org/index.php?topic=175">thread</a>: “A Heroin Store.”



Teppy wrote: “As a Libertarian, the thing I love most about the Bitcoin project is the chance that it could be truly disruptive. I think that drug prohibition is one of the most socially harmful things that the US has ever done, and so I would like to do a thought experiment about how a heroin store might operate, accepting Bitcoins, and ending drug prohibition in the process.”



It would work like this: A drug dealer sets up a website that accepts bitcoin for heroin. The buyer makes an order, sends BTC and supplies a physical address for shipping. The dealer then mails out the order to the buyer — and another order of the exact same size to a random address.



In that universe, because random packages of heroin would then be regularly arriving at addresses all across the US, simply receiving one would supposedly not imply that someone at the address had ordered the drugs in the first place. There would be plausible deniability.



Sure, the post office could spot a package and inform the police, who then might stake out your mailbox to see who collects the mail, then get a warrant to search the house to see if the package had been opened — confirming intent to buy.



Teppy thought of that: “It would be important for buyers to not open any package that they suspect may contain their heroin, until they wish to consume it: they would only be in danger of possession between when the package was opened and when the contents was consumed.” 



“Can anyone see a way to attack the store?” he asked.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXcdjVGylGsGLES8EHNtxhxsb-vov0bCC1ZLlMlsgWs1ztuW63WF1NjK3-nOzJd6Fq7M0cY-5uCTntH3avE9qK20_Od-7GUXdKUNUXbXd0mUKF13h6RnQd7e2mYmBs0K17Bt77nEvg?key=Jaz0Aun0rkI2W5QaLkFANw" alt=""/><figcaption class="wp-element-caption">Not everyone was interested: A shadow economy doesn’t need to be shady.</figcaption></figure>



Teppy was clear that it was all hypothetical; he was not planning to start a heroin store. It was enough cover for a number of early high-profile Bitcoin users to join in on the experiment, including Laszlo Hanycez, Martti Malmi, Michael Marquadt, Bruce Wagner, Mike Caldwell and more.



Of course, the plan has a number of obvious attack vectors: Police could trace the packages back to certain mailboxes to catch the dealer, which is a common and effective tactic for busting actual dark web drug dealers. Teppy was, however, adamant that it would be practically impossible if the hypothetical store was operating out of a big city like New York.



There’s also the matter of forensics. Even in 2010, authorities could easily intercept and analyze the packages, tracing whatever materials were used back to the vendor and ultimately the dealer themselves.&nbsp;



Such an investigation would likely be prioritized due to the public safety risks of mailing dangerous drugs to random addresses nationwide.



The thread itself is famous for its connection to the case against Ross Ulbricht. Under the Bitcointalk alias “altoid,” UIbricht had taken the opportunity to advertise his then-brand-new Silk Road marketplace.



“What an awesome thread! You guys have a ton of great ideas. Has anyone seen Silk Road yet? It&#8217;s kind of like an anonymous amazon.com. I don&#8217;t think they have heroin on there, but they are selling other stuff … Let me know what you guys think,” altoid wrote.



<figure class="wp-block-image"><img decoding="async" src="https://lh7-rt.googleusercontent.com/docsz/AD_4nXd8PaTo9nul6i3aJmLSHdK2BUpao-NF5KcNS4BkzutQpfiOQjh9KqntT6eXwvli5G5aTBRkIek-qf5sahCLwH8169yidq2ZhJdtp5-wN7GRKQJSRTQsqtW2E2ZL3XsLYw3ALcKX?key=Jaz0Aun0rkI2W5QaLkFANw" alt=""/><figcaption class="wp-element-caption">Narrator: It did not take very long.</figcaption></figure>



Investigators ultimately linked Ulbricht to altoid in a <a href="https://www.nytimes.com/2015/12/27/business/dealbook/the-unsung-tax-agent-who-put-a-face-on-the-silk-road.html">number of ways</a>, including Ross’ use of a personal email address to recruit developers to help with Silk Road under the pseudonym. Ross’ posts in the thread also led to Bitcointalk receiving its first-ever subpoena.



It’s always difficult to know the true intentions of people on the internet, but I doubt that teppy realized his hypothetical could one day bleed over into real-world consequences.&nbsp;



Luckily, legendary Bitcointalk user Timo Y already captured the complexity of it all in October 2013, about a week after Ulbricht’s arrest in the sci-fi section of a San Francisco library. Authorities had referenced the thread in Ulbricht’s official indictment.



“Back then this forum was a more innocent place, full of dreamers discussing what at the time felt like improbable scenarios out of a William Gibson novel,” Timo Y wrote.



“I was really taken by surprise how soon this fantasy became reality, how soon this whole bitcoin experiment became serious fucking business. Very surreal to read this thread in retrospect.”



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Get the news in your inbox. Explore Blockworks newsletters:



<ul class="wp-block-list">
<li><a href="https://blockworks.co/newsletter/thebreakdown">The Breakdown</a>: Decoding crypto and the markets. Daily.</li>



<li><a href="https://blockworks.co/newsletter/empire">Empire</a>: Crypto news and analysis to start your day.</li>



<li><a href="https://blockworks.co/newsletter/forwardguidance">Forward Guidance</a>: The intersection of crypto, macro and policy.</li>



<li><a href="https://blockworks.co/newsletter/0xresearch">0xResearch</a>: Alpha directly in your inbox.</li>



<li><a href="https://blockworks.co/newsletter/lightspeed">Lightspeed</a>: All things Solana.</li>



<li><a href="https://blockworks.co/newsletter/thedrop">The Drop</a>: Apps, games, memes and more.</li>



<li><a href="https://blockworks.co/newsletter/supplyshock">Supply Shock</a>: Bitcoin, bitcoin, bitcoin.</li>
</ul>