SatoshiDice's 2012 Launch Sparked 50% of Bitcoin Transactions

Bitcoin’s creator, Satoshi Nakamoto, included a graphic user interface for a poker lobby in the first version of the Bitcoin client, but removed the code in the subsequent commit. Erik Voorhees filled this void with SatoshiDice, a provably fair Bitcoin betting game that launched around 2012. The game operated mostly onchain, with players sending bitcoin to various “1dice” vanity addresses, each with unique properties and odds. For instance, depositing between 0.001 BTC and approximately 20 BTC to 1dice7fUk offered a 24.4% chance of quadrupling the coins, while sending up to 0.0025 BTC to 1dice1e6p provided a 0.0015% chance of boosting the original bet by 65,000x.

SatoshiDice determined the outcome of bets based on their transaction hash, using a secondary function to generate a so-called lucky number. If this number fell below a preset threshold, the bet was considered a winner and paid out immediately. Losers received a single satoshi in return. The site later published the secrets used to hash the transaction IDs, allowing players to confirm the game wasn’t rigged. This method laid the groundwork for the Provably Fair system used by many modern crypto gambling sites.

The site’s documentation humorously described SatoshiDice as a subroutine of an advanced artificial intelligence that arose from the U.S. quantitative easing program. It claimed the system existed within an abandoned Nokia 3310 mobile phone in a Tokyo subway station, powered by the ghost of Satoshi Nakamoto. The documentation playfully suggested that Bitcoin was created to enable free individuals worldwide to play SatoshiDice, fulfilling the Intelligence’s Grand Vision.

SatoshiDice gained rapid popularity due to its low-cost bets and quick transaction processing. In a 2014 report, Federal Reserve analysts noted that within weeks, SatoshiDice was responsible for more than half of all bitcoin transactions by volume. The site’s house edge was calculated at between 1% and 1.9%, with one report citing its income at over $50,000 per week. Voorhees listed dividend-paying shares in SatoshiDice on the Bitcoin securities exchange MPEX in August 2012, raising 50,600 BTC ($5 million at the time).

Concerns grew over whether SatoshiDice was spamming the blockchain with non-economic activity, as the number of bets regularly eclipsed BTC transfers. Some miners briefly enforced smaller block size limits, which may have been to avoid managing relatively large volumes of SatoshiDice data. Despite these concerns, a Reddit user shared a case where a SatoshiDice player bet 0.02 BTC to win 1,278 BTC, a 64,000x payout worth nearly $127 million in today’s money.

Voorhees himself was a significant beneficiary of SatoshiDice’s success. He sold his stake in the platform in July 2013 for $11.5 million, paid entirely in bitcoins. The deal, equivalent to 126,315 BTC, would be worth almost $12 billion at current prices. This sale funded ShapeShift, a cryptocurrency exchange Voorhees founded about a year later. The original SatoshiDice is now defunct, and users are advised to conduct their own research before interacting with any modern sites with similar names.