Virgin Bitcoin (BTC): Is KYC Raising Demands for Freshly Mined Coins?

Linking addresses to identities means not all Bitcoin (BTC) are created equal, and connections to dubious wallets and addresses may be a burden.

Bitcoin (BTC) will yield even more scarce new coins in just a few months, as the block reward halves in early 2020. But even now, there are signs of demand for unused, unmoved coins.

Exchanges now have the possibility to link a real identity to Bitcoin addresses. Blockchain exploration services work to find obscure connections between wallets. All of this makes every Bitcoin payment fraught with the risk of being connected to shady activity.

For that reason, there are speculations that various investors may be paying a premium for newly mined coins, originating from the wallets of miners. The demand for untainted coins could, hypothetically, create a black market for brand-new BTC, commented Reddit posters.

“The only way to own Bitcoin outside of this surveillance system would be to buy it directly from the source - miners. This would be considered Black Bitcoin, it could only be transacted amongst unregulated wallets and if it was ever sent to a regulated exchange, the government would confiscate it or else, require the sender to submit their identity, an admission of guilt for owning Black Bitcoin.”

But despite the hypothetical risks, brand-new minted coins are being sold at a premium of 10 to 30% of current market prices. This specialized market is also a boon for miners, who have upped their activity based on profitable market prices. But now, miners are also becoming more influential.

The power of a newly minted BTC is such that some believe regimes like Iran may seek to mine new assets to use as a form of bypassing international embargoes. Both China and Iran could benefit from owning and trading in virgin BTC.

“When these standards go into effect, interexchange transactions will require transparency regarding senders and receivers of cryptocurrency. This opens doors to a wide berth of scrutiny as regulators probe different ledgers to determine what wallets participated in illicit crypto exchanges, hacks, etc.”

“Bitcoin remains of interest to institutional investors, but their threshold for risk is much lower. With uncertainty as to how the crypto world will conform to the FATF standards, many traditional investors feel it best to air on the side of caution,” said Flex Yang, CEO of Babel Finance at the most recent G20 summit.

Currently, funds from some of the most notorious hacks and exploits can be traced, such as a recent 30 BTC transaction from coins stolen in 2016 from Bitfinex. Connections to coin mixers or other services used to obscure origin may be also incriminating, as in the case of Bestmixer, where identities and wallet data were seized by the authorities.

Reading now