Bitcoin Whale Moves Billions, Sparking Debate on Security
A major Bitcoin investor, often referred to as a “whale,” executed three significant transactions on Tuesday, moving a total of R$ 6.9 billion (approximately $1.26 billion USD). These coins had been dormant for several years, suggesting a renewed interest or strategic shift by the investor.
This activity follows similar large-scale movements earlier in the month, when 80,000 Bitcoins that had been inactive since 2011 were transferred to new wallets. These events have captured the attention of the cryptocurrency market, prompting discussions about the security of older Bitcoin holdings.
Some experts suggest potential vulnerabilities in older versions of Bitcoin could be the cause, while others believe simple communication with these addresses might explain the activity.
Lookonchain Identifies Whale Activity
The unusual activity was first noticed by Lookonchain, an on-chain analytics firm, early Wednesday morning. According to their analysis, the pattern suggests that all three transactions originated from the same investor.
“Three wallets (likely belonging to the same whale) just transferred 10,606 BTC (US$ 1.26 billion/R$ 6.9 billion) after being dormant for 3 to 5 years,” Lookonchain stated. They further noted, “All 3 wallets received $BTC on December 13, 2020, when the price of BTC was US$ 18,807.”
Currently, each of the original three addresses retains a balance of 1 BTC, possibly as a symbolic gesture by the investor.
Vulnerability Concerns Addressed by Experts
Concerns about potential vulnerabilities in older Bitcoin wallets have surfaced, with one Brazilian commentator suggesting that older versions of Bitcoin Core had low entropy, making wallets containing millions of BTC susceptible to attacks.
This individual claimed that “the entropy of the nonce came directly from the operating system” and that “the same nonce could be reused in two different signatures in systems without reliable sources of randomness (such as old distros without a reliable /dev/urandom).”
However, Narcélio Filho, a respected Brazilian Cypherpunk and Bitcoin expert, has dismissed these theories. He stated on social media that “no bug has been found, Bitcoin remains the same as always.”
“Obviously, if a ‘nonce’ is reused in digital signatures, it could allow for exploitation of the algorithm. This has always been known and always avoided in good wallets. The only people who lost money were victims of inexperienced programmers,” he explained.
“Every book, document, or tutorial on elliptic curves mentions this precaution, which every wallet of any cryptocurrency or any encryption program needs to take.”
Filho emphasized that developers of secure systems always prioritize entropy in cryptography. If a weak private key is generated due to insufficient entropy, the fault lies with the wallet developer, not the Bitcoin protocol itself.
The Bitcoin protocol provides the cryptographic foundation and system rules, but wallet developers must ensure:
- A secure entropy source.
- Correctly written code.
- Adequate security support from the environment.
Using poor libraries, ignoring best practices, or inadequate software testing can lead to vulnerable wallets. Such vulnerabilities have been exploited in the past, such as with Blockchain.info (now Blockchain.com), which had several wallets compromised due to a weak RNG on older Android devices in 2013.
Cases like ‘Milk Sad’ have highlighted the importance of randomness during wallet generation.
“There is no evidence of failure in the keys generated by it so far. Only failures have been discovered in other wallet programs, written by third parties,” Filho concluded.
João Dias (jaonoctus), another Cypherpunk and Bitcoin developer, echoed these sentiments, stating, “Reusing the nonce is a problem in ECDSA? Yes. That’s why no serious implementation does it.”
The Bottom Line
While the possibility of hacking or exploiting old Bitcoin wallets is intriguing, it is extremely unlikely in practice.
Speculation about theft or exploitation often arises when large amounts of BTC are moved after years of inactivity, but it rarely finds technical support. Most older wallets use good security practices and remain untouched due to choice or owner forgetfulness.
Known flaws in older signature generation systems are well understood, easily detectable, and very rare on the main Bitcoin network.
If a private key were derived from a pair of vulnerable signatures, it would likely attract immediate attention from the community and blockchain analysts. Modern on-chain monitoring tools track such anomalies in real-time. A successful attack on old wallets would be a major technical and media event, not a recurring or discreet occurrence.
Generally, movements attributed to “whales” correspond to legitimate actions: custody changes, internal fund reorganizations, movements by exchanges, ETFs, or large funds.
Our theory, based on on-chain analysis, is that recent whale movements are related to Bitcoin pioneers announcing the creation of companies focused on the Bitcoin strategy.
Such transfers may seem mysterious at first glance, but they almost always have a traceable origin and do not indicate exploitation.
Therefore, while exploiting old wallets is a theoretical possibility, its current occurrence is highly improbable. There is no information about failures in Bitcoin, and easily accessible data points to the owners of these wallets moving their funds.
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