The "Satoshi Test" and how to fail it.

Satoshi Test: Send a small transaction from your wallet to confirm ownership.

This is what some exchanges will introduce in 2025 when you make a deposit from a private wallet which they don't already know/have verified to belong to you.

Basically, it's yet another form of KYC/AML and identification of who owns what on blockchains.

But that's neither a very new nor very interesting concept.

I want to point out that blockchains with high fees will make this test very expensive.

On any Bitcoin chain, to prove your ownership of the key related to an address should NOT require you to SEND coins from that address.

You could simply provide a valid signature using that private key, of a challenge message provided by the exchange.

The exchange could verify easily in this way that it is you who control the funds, since they would already ask your personal identifying information.

On chains with high fees, the described test would generate a lot of running costs if people deposit smaller amounts from wallet addresses.

On chains with severely limited capacity, this would also generate extra on chain transactions that might congest the network, leading to delays and even higher fees.

Modern Bitcoin chains like Bitcoin Cash do not suffer from those problems. You could transfer a single cent (at a fee cost of a fraction of a cent) even if you were too lazy to figure out how to generate a digital signature with your private key. (Hint: It's very simple with a wallet like Electron Cash which has a menu item for it).

TL;DR there are blockchains which will fail this "Satoshi Test" because it simply isn't economical¹ , apart from being unnecessary when digital signatures could already meet the requirement without losing the user more money than necessary).

^{1 - Imagine you send of a couple of satoshis from your coin's address to the exchange, but your fee is insufficient and your transaction gets stuck on your chain and doesn't make it to the exchange on time. Now you have to make another, and pray ... you will already lose 2x the fee at least, before you even get to make a real deposit! And proving via coin sending also means you need to consolidate the amount you wish to exchange, into a single address. Happy fee paying once again on high-fee blockchains...}