For Sale: 29,656.51306529 Bitcoins • Hacker News Board

Re: For Sale: 29,656.51306529 Bitcoins

#241

Post by Mandelbug » Fri, Jun 13, 2014, 4:48 AM UTC

mrb wrote: post #239

polshaw wrote: post #217

Earlier quoted context omitted.

Bitcoin proponents tend to have a vested interest and can be.. less than objective. @1: A trade alone does not help BTC stabilise. We ARE seeing an increase in BTC trade, but all of this is pegged to local currency, and usually traded out for that immediately. As it is held for a very short period, there is no real effect on price, and is essentially the same as cashing out.[1] What might help BTC stabilise would be…

1: I did not explain myself clearly. What I meant is: when more and more bitcoins are being used for regular economic transactions, the proportion of bitcoins used by speculators is, by comparison, decreasing. And the smaller this proportion is, the less volatile the currency is. 2: "encouraging hoarding": no, this is not what was observed in practice with Bitcoin. I can't remember if it was Bitpay or Coinbase, but t…

The general literature on deflation is that deflation is much much worse in the long run. In particular, borrowing becomes significantly more difficult and those who have loans are trapped with them, as their wages are pushed downwards by deflationary forces but the nominal loan remains the same.

While run-away inflation and run-away deflation are both awful, an economy which slowly inflates is better than one that slowly deflates.

http://www.nytimes.com/2010/10/17/world/asia/17japan.html?pa...

http://www.businessweek.com/magazine/content/11_06/b42140145...

http://www.bis.org/publ/bppdf/bispap70c.pdf

http://www.kyotobank.co.jp/houjin/report/pdf/201305_02_e.pdf

http://www.nber.org/digest/jun05/w10938.html

Re: For Sale: 29,656.51306529 Bitcoins

#242

Post by vbuterin » Fri, Jun 13, 2014, 5:09 AM UTC

polshaw wrote: post #217

mrb wrote: post #185

Earlier quoted context omitted.

The arguments you make (speculation + deflation) have been discussed many times. The answer is always the same. Bitcoin proponents argue that they are not a problem because: 1. As the use of Bitcoin increases over time, as the exchange markets become bigger and deeper, as economic activity is surpassing speculative activity, etc, the effect of speculation are becoming smaller and smaller. There is evidence that this…

Bitcoin proponents tend to have a vested interest and can be.. less than objective. @1: A trade alone does not help BTC stabilise. We ARE seeing an increase in BTC trade, but all of this is pegged to local currency, and usually traded out for that immediately. As it is held for a very short period, there is no real effect on price, and is essentially the same as cashing out.[1] What might help BTC stabilise would be…

> An upward price trend (existing for whatever reason) encourages hoarding, which reduces liquidity. This creates a feedback loop, resulting in bubbles and crashes.

A downward price trend encourages splurging, which provides excessive liquidity. This creates a feedback loop, resulting in Zimbabwe. Bitcoin opponents have a vested interest; the desire to attack something you missed out on due to your own lack of foresight is a known psychological effect. I don't necessarily believe all of the above, but it's a pretty symmetric mirror image of the opposite argument. You could go up a notch and make the case that inflation is worse because at least an upward bubble has to end eventually whereas a downward crash can keep going down forever until the currency is replaced. I'm known for my stance that finite supply cryptocurrency is probably more deflationary than optimal (though my concerns are more about wealth concentration and the potential for use of seignorage revenue for secondary purposes rather than some idea that spending is good), but there are good reasons why one might think otherwise.

As for gold, an important point is that gold's volatility is quite recent. Before 1971, and especially before 1913, it was actually quite stable:

http://www.zerohedge.com/news/charting-price-gold-all-way-ba...

Yes, that's a 6x margin that maintained itself over six centuries. The 18th century fall and the 16th century fall can likely be attributed to the sudden introduction of new supply in North America; that's an uncertainty that cryptocurrencies do not have. I don't know why gold was stable before but is not now; perhaps it's the fact that a fixed-supply commodity is stable if used as a currency but not stable if used as a form of black-swan insurance. The former use case might have more constant demand, or price stickiness might play a role.

I'm honestly not sure what will happen. Maybe cryptocurrencies will die, maybe BTC will die but others succeed, maybe BTC will become gold 2.0 and other currencies will take on other roles (if this happens, environmentalists at least would be quite happy given gold miners' current track record), or maybe something else entirely. I do agree one-world-currency domination is exceedingly unlikely though.

Re: For Sale: 29,656.51306529 Bitcoins

#243

Post by JacobAldridge » Fri, Jun 13, 2014, 5:17 AM UTC

"All bids must be made in U.S. dollars."

Which dents my plan of offering to buy each of the BTC 3,000 blocks with an offer of BTC 2,000 each.

Re: For Sale: 29,656.51306529 Bitcoins

#244

Post by curun1r » Fri, Jun 13, 2014, 5:23 AM UTC

baddox wrote: post #130

swalkergibson wrote: post #93

Earlier quoted context omitted.

While there are certainly wanton abuses of civil forfeiture statutes, linked to even in this comment thread, applying them here is a no-brainer. Silk Road was very clearly a marketplace for illegal drugs, and the brokerage fee that DPR collected (whoever he or she is) is clearly illegal. Again, there are obviously situations where civil forfeiture is improperly utilized. This is not one of them, in my opinion.

If it's "clearly illegal," the court should have no trouble coming to the correct conclusion. It's no justification for permanent asset forfeiture without a trial.

They're explicitly not selling the Bitcoins seized from his personal wallet(s). They're selling the ones seized from the servers that ran Silk Road.

My bet would be that Ulbricht has denied any connection to those servers as part of his defense since claiming to own/control them would make it too easy for the government to prove its case. If, at this point, those servers belong to anyone else, they're free to come forward and claim to own them...that would stop the sale.

So if no one claims to own them, they're fair game for the government to sell.

Re: For Sale: 29,656.51306529 Bitcoins

#245

Post by samplonius » Fri, Jun 13, 2014, 5:39 AM UTC

GigabyteCoin wrote: post #150

Is anybody else surprised by the urgency with which they seem to be selling these coins? They only made the announcement today and you have to be registered to bid by this coming monday? Is this typical of government auctions?

The gov't announced months ago that unclaimed assets seized from Silk Road would be auctioned. The waiting period has now expired.

And why shouldn't it be fast? There is a single person who holds over $1B USD of Bitcoin, so big Bitcoin positions are normal. If you have the US money on-hand, this is a 5 minute decision. No need to drag it out.

The real story is the losers dumping their Bitcoin positions as the market goes down, while the smart people buy up those coins too. I guess the forums and IRC channels are full of people telling you to sell cheap. And next week, they will be telling you to buy high.

Re: For Sale: 29,656.51306529 Bitcoins

#246

Post by VMG » Fri, Jun 13, 2014, 5:45 AM UTC

crdoconnor wrote: post #226

mrb wrote: post #185

Earlier quoted context omitted.

The arguments you make (speculation + deflation) have been discussed many times. The answer is always the same. Bitcoin proponents argue that they are not a problem because: 1. As the use of Bitcoin increases over time, as the exchange markets become bigger and deeper, as economic activity is surpassing speculative activity, etc, the effect of speculation are becoming smaller and smaller. There is evidence that this…

Deflation will PREVENT economic activity from surpassing speculative activity. This is the problem with deflation - people hoard instead of spending, which is why it is "generally" believed to be detrimental. It is detrimental. Bitcoin's volatility is a direct result of this feature. >Bitcoin is an experiment that will perhaps disprove it. The hilarious thing is that the experiment already proved it. You want a crypt…

> You want a cryptocurrency that isn't absurdly volatile? Make it steadily inflationary, not steadily deflationary.

There are cryptocurrencies that do this, PeerCoin and Dogecoin for example, and they don't seem to work out, maybe because there is a lack of incentive to be an early investor if your investment steadily loses value.

There is no significant barrier to entry for creating a cryptocurrency that represents your economic ideals, so far however, only Bitcoin seems to have the right mix of incentives.

Re: For Sale: 29,656.51306529 Bitcoins

#247

Post by thrownaway2424 » Fri, Jun 13, 2014, 6:19 AM UTC

tinco wrote: post #77

sillysaurus3 wrote: post #49

Earlier quoted context omitted.

There is no logic. Searching for logic behind bitcoin's price is a fool's errand. You'll trick yourself into believing things that aren't true, because the price of bitcoin is determined by a small number of large players. Those large players enter or exit the market for any reason they feel like. It's gambling, plain and simple. News announcements serve as a trigger for the gamblers to initiate gambles (exit/enter t…

There is logic. All speculative trading is driven by two motivations, fear and greed. The balance of these two decides the price. Before this announcement the balance was about $650. It means that greedy people think it will go higher than $650, and fearful people think it would go lower. Now comes this announcement. About 30.000 bitcoins wil sometime in July come into the hands of someone who will have paid signific…

Your scenarios smells wrong to me. Why would anyone pay USD for these seized BTC, then turn around immediately and sell them for USD again? The government is the party dumping BTC on the market. The buyer presumably intends to profit. They would profit by holding until the price goes up, and selling into the market at rates that don't dominate the marketplace.

Re: For Sale: 29,656.51306529 Bitcoins

#248

Post by crdoconnor » Fri, Jun 13, 2014, 6:22 AM UTC

Houshalter wrote: post #236

crdoconnor wrote: post #226

Earlier quoted context omitted.

Deflation will PREVENT economic activity from surpassing speculative activity. This is the problem with deflation - people hoard instead of spending, which is why it is "generally" believed to be detrimental. It is detrimental. Bitcoin's volatility is a direct result of this feature. >Bitcoin is an experiment that will perhaps disprove it. The hilarious thing is that the experiment already proved it. You want a crypt…

If your theory is correct, people would hoard any resource that is increasing in value relative to something else. Currency deflation is just a special case. It's not entirely clear why "hoarding" is an inherently bad thing either. Bitcoin isn't inherently deflationary. It isn't even a fixed supply, it will grow for the foreseeable future. For short periods of time it was deflationary as people speculated that it was…

>If your theory is correct, people would hoard any resource that is increasing in value relative to something else.

People do indeed have a tendency to do exactly that. Take gold hoarders, for instance.

>An inflating currency would never catch on. It's a hot potato situation of "I don't actually want to own it because it's decreasing in value. If I do have some, I want to dump it on the next sucker as fast as possible to minimize my losses."

The point of the inflation would be to offset the natural hoarding instinct with an incentive to actually spend it.

If inflation goes TOO high, you will, of course, end up with everybody trying to dump the currency off on to everybody else.

There is a sweet spot in the middle, however.

Re: For Sale: 29,656.51306529 Bitcoins

#249

Post by riffraff » Fri, Jun 13, 2014, 6:23 AM UTC

VMG wrote: post #246

crdoconnor wrote: post #226

Earlier quoted context omitted.

Deflation will PREVENT economic activity from surpassing speculative activity. This is the problem with deflation - people hoard instead of spending, which is why it is "generally" believed to be detrimental. It is detrimental. Bitcoin's volatility is a direct result of this feature. >Bitcoin is an experiment that will perhaps disprove it. The hilarious thing is that the experiment already proved it. You want a crypt…

> You want a cryptocurrency that isn't absurdly volatile? Make it steadily inflationary, not steadily deflationary. There are cryptocurrencies that do this, PeerCoin and Dogecoin for example, and they don't seem to work out, maybe because there is a lack of incentive to be an early investor if your investment steadily loses value. There is no significant barrier to entry for creating a cryptocurrency that represents…

how do you judge that peercoin and dogecoin don't work out?

They seem to have been the "next big" currency for market cap after BTC and LTC for the last 9 months, which would point in the direction of, at least, inflationary nature not being such a big deal.

Re: For Sale: 29,656.51306529 Bitcoins

#250

Post by crdoconnor » Fri, Jun 13, 2014, 6:25 AM UTC

VMG wrote: post #246

crdoconnor wrote: post #226

Earlier quoted context omitted.

Deflation will PREVENT economic activity from surpassing speculative activity. This is the problem with deflation - people hoard instead of spending, which is why it is "generally" believed to be detrimental. It is detrimental. Bitcoin's volatility is a direct result of this feature. >Bitcoin is an experiment that will perhaps disprove it. The hilarious thing is that the experiment already proved it. You want a crypt…

> You want a cryptocurrency that isn't absurdly volatile? Make it steadily inflationary, not steadily deflationary. There are cryptocurrencies that do this, PeerCoin and Dogecoin for example, and they don't seem to work out, maybe because there is a lack of incentive to be an early investor if your investment steadily loses value. There is no significant barrier to entry for creating a cryptocurrency that represents…

Bitcoin got first mover advantage. I don't think its popularity is due to it getting the incentive mix "just right".

Besides, the characteristics of a "good coin" depend entirely on who you are and what your goals are. Some people want to gamble and get rich, others are looking for a reliable store of value, others are looking to transact. The ideal coin will have different properties for each of these people, but no coin will be able to satisfy all three groups completely. They all need one another and they all have competing goals.