The pursuit of rare bitcoin is approaching its conclusion

Billy Restey, a digital artist based in Seattle, runs a studio by day and pursues rare bitcoin sats in his spare time. He describes it as akin to collecting Magic: The Gathering or Pokémon cards, driven by the thrill of finding something rare and valuable.

Bitcoin is composed of 100 million satoshis (sats), and not all sats are created equal. Those minted in bitcoin’s early years are considered vintage and are highly sought after. Some sats are linked to transactions made by bitcoin’s creator, while others mark significant milestones. These unique properties make some sats extremely scarce and valuable—some have sold for millions of times their face value.

Restey is part of a small, close-knit community of sat hunters who comb the bitcoin network for these rare sats. They deposit and withdraw batches of bitcoin on crypto exchanges to sift through the received sats, using third-party software to automate the process. Restey has manually sifted through approximately 230,000 bitcoin, uncovering thousands of rare sats that he sells to cover transaction fees and make a small profit.

However, as more large organizations enter the market, individual hunters like Restey face increasing competition and risk being pushed out. Despite this, Restey remains committed to sat hunting, driven by his passion for the pursuit.

Rarity out of thin air

Bitcoin has been in existence for 15 years, but the concept of rare sats has only emerged in the past 15 months. In January 2023, computer scientist Casey Rodarmor introduced the Ordinals protocol, which overlays the bitcoin network. His goal was to introduce a bitcoin equivalent to non-fungible tokens (NFTs), where ownership of digital media is represented by a sat, which he termed “inscriptions.”

Before the Ordinals protocol, there was no way to differentiate one sat from another. Rodarmor solved this by ordering sats by number from oldest to newest, thus creating rarity where there was none. “It’s an optional, sort of pretend lens through which to view bitcoin,” Rodarmor explains. “It creates value out of nothing.”

The introduction of the Ordinals system initially divided the bitcoin community. While inscriptions were popular, some felt they detracted from bitcoin’s original purpose as a system for peer-to-peer payments. The controversy led to network congestion and increased transaction fees, with calls from some developers to ban inscriptions altogether. Those involved in trading rare sats, like Danny Diekroeger, faced criticism from bitcoin maximalists. “Bitcoin maximalists hate this stuff—and they hate me,” Diekroeger says.

Despite the initial backlash, Rodarmor notes that the controversy has largely subsided, although a vocal minority remains opposed to inscriptions. “I wish hardcore bitcoiners understood that people are going to do things with bitcoin that they think are stupid—and that’s okay,” Rodarmor comments. “Just, like, get over it.”

The pursuit of rare sats, a quirky offshoot of the bitcoin system, fits into this category. “It’s highly wacky,” Rodarmor concludes.

A band of merry sat hunters

A growing ecosystem of software tools and services is emerging around the market for rare sats, with specialized marketplaces, wallet features, and business services catering to this niche. Danny and Kenny Diekroeger founded Deezy Labs in 2022, shifting their focus to automation tools for sat hunting and connecting buyers with sellers. They’re part of a tight-knit community of hunters who share strategies and celebrate discoveries on platforms like Discord and Telegram. Deezy’s automation tools, including a Telegram bot, streamline the hunting process, offering a fun and collaborative experience.

There’s a wide range of rare sats with unique attributes that collectors value, from palindrome sats to those associated with significant bitcoin transactions. While some hunters treat it as a business, others like Restey collect their favorites for aesthetic reasons. Selling rare sats is relatively easy, with a thriving secondary market where sought-after sats are quickly snapped up. However, as the hunt for rare sats becomes more mainstream, it may become professionalized, akin to bitcoin mining, potentially changing the dynamics of the market.

The recent influx of spot bitcoin exchange-traded funds (ETFs) has flooded the market with previously untouched bitcoin, making it easier to find rare sats. However, as time goes on, the density of rare sats will decrease, posing challenges for hunters. Some may turn to lesser-known platforms to search for untouched bitcoin, but this carries risks. Additionally, as the competition increases, hunters will need larger pools of bitcoin to maintain profitability, potentially pricing out individual hunters. Despite these challenges, enthusiasts like Restey remain committed to the hunt, drawn to the allure of uncovering hidden treasures on the largest digital network in the world.