There will only ever be 21 million Bitcoin. We’re not too far off—around 18 and a half million Bitcoin are already in circulation. But on the 15th of August, 2010, that limit was destroyed by one person who managed to exploit a flaw to produce 184 billion Bitcoin.
Let’s set the scene: back in 2010, Bitcoin peaked at around $0.3—so low, in fact, that in May that year someone spent 10,000 Bitcoin buying a single pizza, now worth over $110 million.
Clearly, Bitcoin wasn’t the cryptocurrency juggernaut it is today; like many new technologies, it experienced growing pains, one of which was a bug that generated billions of Bitcoin in a couple of transactions.
The value overflow incident
In August 2010, Bitcoin’s source code was exploited by someone who to this day remains anonymous. Enter block 74,638, the fateful block that created 184,467,440,737.09551616 Bitcoin, with two addresses receiving just over 92 billion Bitcoin each—92,233,720,368, to be specific.
The anomaly was quickly spotted on the Bitcoin Talk forum by Jeff Garzik, a Bitcoin developer who today is the CEO of Bloq. The issue was termed an “overflow bug”; the code for checking Bitcoin transactions didn't work if outputs were large enough that they overflowed when summed.
The bug that caused the "value overflow incident" was corrected very quickly. It took just five hours before a “soft fork” was rolled out, which reset the Bitcoin blockchain to before the bugged block and included code to reject output value overflow transactions.
A soft fork is a blockchain update. Since the Bitcoin community forked the state of the blockchain before the 184 billion Bitcoin was mined, that means that some blocks that were previously valid were turned into invalid blocks, removing them from the blockchain and restoring it to an earlier state.
The fork erased all transactions and mining that had been recorded on blocks that were produced after the bugged block. It also disposed of the 184 billion bugged Bitcoin. The update, Bitcoin patch 0.3.10, was implemented by Bitcoin’s pseudonymous creator, Satoshi Nakamoto himself (or herself, or themselves).
The rapid implementation of the patch was vital in keeping Bitcoin a viable cryptocurrency. 184 billion Bitcoin would have devalued the currency completely, leaving it at the mercy of the person holding the newly-minted Bitcoin. Even if the breach happened today, the amount of bugged Bitcoin would completely dwarf the current supply of the cryptocurrency, making any Bitcoin worthless.
10 years ago a bug was exploited to create 184 billion BTC. Due to the ability to easily audit the supply it was noticed quickly; bug was patched in 5 hours.
Several protocols have since suffered inflation bugs that went unnoticed for months.
Independent auditability has value.
— Jameson Lopp (@lopp) August 14, 2020
Bitcoin also benefited from this exploit being patched close to its inception, since taking the Bitcoin network offline could be done without significant consequences.
Today, such a disruption would cause widespread chaos; trading would be heavily disrupted and any purchases that were made using Bitcoin would have been canceled. The very fact that a bug could enable the 21 million Bitcoin limit to be breached would also create shockwaves in the crypto community, likely causing the price of Bitcoin to collapse and fatally undermining confidence in the cryptocurrency.
What happened to Bitcoin’s price?
The exploit and subsequent soft fork didn’t dent the price of Bitcoin. Indeed, Bitcoin actually experienced a surge over 2010; its price increased by over 300% between the day of the patch and the end of the year (from $0.07 to $0.30). That Satoshi himself intervened, and did so so quickly, showed that Bitcoin was not as easily hackable as some might have assumed and built confidence in a concept which up to that point remained untested.
To this day, the person behind the exploit remains unknown, and due to the anonymous nature of the blockchain there is no way to trace them. Despite their anonymity, they are still a significant individual in the history of blockchain—quite possibly the first ever blockchain hacker.