The legacy of Bitcoin’s BearWhale

Luke Parker , 29 May 2017 - BearwhaleBitcoinMarket


​Image: The Slaying of BearWhale, by  Christopher Edwin Steininger

On Thursday, one of Bitcoin’s most celebrated moments was remembered, and its enduring mystery was finally resolved. The notorious person referred to only as ‘the BearWhale,’ came forward to tell his unexpected story and make a plea to the community.

While refusing to identify himself in many ways, the person in question posted a Bitcoin address and signed message as cryptographic proof that he was in control of at least 36,000 bitcoins in 2013 and 2014. He was initially drawn to bitcoin “after a series of bad experiences with the banking system,” and so he invested “most of life savings” into bitcoin, at a price “around $8.”

The BearWhale held onto the huge cache of coins through years of scandals and other bad news and was worth at least $37 million dollars at the end of 2013, the height of the MtGox bubble. He then rode Bitcoin’s price all the way down to $350, losing over two-thirds of his wealth.

Then on October 5th, 2014, after months of hearing daily about the scaling debate and agreeing with the need for bigger blocks in Bitcoin, the BearWhale lost faith in Bitcoin and transferred 30,000 coins to Bitstamp, which he trusted to sell them fairly. The following morning, he simply placed a sell limit order for $300 per coin. “I could have gotten a better price if I spent more time working the order I guess,” he told Reddit. “I put up the wall because I didn't want to just sit in front of the computer all day.”

There were “no IRS or police visits” after selling them, he revealed, putting an end to conspiracy theories about his motives. “I paid taxes on the gains. I wasn't nervous at all.”

Such a large sale was sure to move the market, and he realized at the time that he could have made much more money if he’d spaced out the sale into smaller trades over time. However, he explained that he was panicked about Bitcoin’s block size debate, and his goal was to unload the coins quickly and without a lot of manual intervention. “It worked,” he recalled. “I did not sell in panic. I just believed, incorrectly, in the ‘small blocks are bad’ narrative.”

At a market price of around $350 that morning, such a large sale on Bitstamp risked taking prices back to 2010 levels. Incredibly, soon after the “attack” on bitcoin’s price started, the community rallied to buy up all of his coins and maintain the market value. After six whole hours of his constant selling, the price jumped back up. The BearWhale had been “slain” - an event much celebrated in the community ever since, and reported in the mainstream media.

Re-live the BearWhale Slaying for yourself

As with a few other events in the space before and since, many Bitcoiners felt a real sense of community or camaraderie in the BearWhale slaying. Reddit user PGerbil admitted that “Watching that video a couple years ago bolstered my faith in Bitcoin.” His feeling wasn’t unique. Poetry, 3-D printed objects, various T-shirts, and more than a few images commemorate the event. Shapeshift CEO Erik Voorhees even held a contest for the best artwork depicting the slaying of the BearWhale. A painted scene on canvas won a 5 Bitcoin prize. While prints have been on sale since, the BearWhale told Redditors that he did not pick one up.

Sometime before writing his recent post, the BearWhale “went all-in on bitcoin again,” with the price “a little above $1,000.” Buying millions of dollars worth of bitcoin moved the price “little to none” this time, on a date which he declines to share for the sake of anonymity. “The market depth is many times greater than it was in 2014,” he states. “Just yesterday we saw over $2b in 24 hour bitcoin volume - that's incredible!”

Speaking to BraveNewCoin, the BearWhale described how he “wasn't waiting for any particular price point” to buy back in. He had watched the price of Bitcoin reach more than $1000 over the interim years, and revisited his reasons for selling. He then explained that his faith was renewed in Bitcoin only after “recognizing that my reasons for selling were wrong.”

The BearWhale believed that the Bitcoin Core developers were in a state of disarray in 2014, and doing a poor job maintaining the code. More recently, however, he examined the bitcoin-core GitHub repository, and calls it his “biggest motivator for going back into BTC.” In his view, the Bitcoin development project “looked very healthy,” with “a steadily increasing amount of participation, great code reviews, lively discussion and debate. Quite the opposite of the ‘governance crisis’."

- The BearWhale

The BearWhale’s reason for sharing his story on Reddit was to drum up support for the Bitcoin upgrade package known as SegWit, and he specifically promoted the community driven plan for SegWit adoption, known as a User Activated Soft Fork (UASF). “Top mining pools want to maintain the illusion of control, and UASF destroys that,” he states. “If miners act irrationally and refuse to adopt SegWit, I think a UASF will be likely.”

He also recognizes the dangers that UASF presents, but feels that there is an unacceptable downside in not acting, and “a huge upside” in removing the “tremendous uncertainty” of the miners control. If successful, he predicts, “we should see the market react positively.”

His hope is that “SegWit will activate naturally as we saw with Litecoin,” based on the threat that UASF makes to miners who he feels are opposing Segwit today. However, “If SegWit doesn't activate this year” he believes “we're going to have a big problem in 2018.” One that he feels “would do significant damage to Bitcoin's reputation as the most liquid coin especially.”

“The nightmare scenario is if both of bitcoin's market cap and 24 hour volume are surpassed by another coin. We need to make sure SegWit activates in its current, soft-fork form (which was brilliantly planned to create the least disruption I might add) either by miners doing the right thing or by UASF, otherwise there are higher risks to Bitcoin's dominant market position. Who wants a coin where the miners can halt useful upgrades?”

- The BearWhale