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For Sale: 29,656.51306529 Bitcoins

usmarshals.gov

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Re: For Sale: 29,656.51306529 Bitcoins

#301

Post by vidarh »

PeterisP wrote: post #195
conanbatt wrote: post #120

Earlier quoted context omitted.

That is not an irrational consideration: a dump of such a large amount would definitely drop the price of bitcoin. So if the bidder for the coins can get a 20% discount on 16 million dollars, and then drop them of on the market gradually, he might make a 5% of the initial investment. If eh discount is larger, so would the profits. What the market is doing definitely affects the decision to do a bulk purchase and dump…

It does seem an irrational consideration - why is 30k BTC (less than $20m) labeled "such a large amount" instead of "irrelevantly small amount" ? Even for BTC scale, this amount shouldn't be a big deal by itself. $20m or 30k BTC simply is not big in the financial market sense - it's a big amount for an individual or a single small company; but that's not a significant amount at all for supply/demand of any currency w…

One of small the altcoins - ReddCoin recently went from a market cap of ca. $600k to ca. $1m in two days, and everyone were inventing reasons for why. Except it was very simple: Someone had bought about $5k worth to pay his staff 1 week of salary in RDD (there was some tax advantage where he is to treating it as a "bonus" in something not recognised as a currency locally so they had an immediate advantage, and his company is crypto coin related).

Even for such a small coin, $5k was well below the typical daily trade volume. But here's the thing: He very rapidly bought off pretty much all the sell orders at 4 satoshi, and everyone started speculating what happened and prices shot through the roof, even though more coin than that enters the supply in no-time through mining still.

Point being that coins worth a typical daily trade volume can be enough to trigger large reactions in markets that are priced so extensively based on speculation about how other speculators will behave (take a look at the chat at various exchanges, and see the amount of chatter about which coin to buy into because they expect a pump or other forms of manipulation - very little of the chat seems to be related to non-speculative uses of the currencies).

Re: For Sale: 29,656.51306529 Bitcoins

#302

Post by vidarh »

dalore wrote: post #274
knz42 wrote: post #177

Earlier quoted context omitted.

In all fairness, the paper on which $100 bills are printed is quite worthless as well. I think ever since people have stopped using gold and silver bullion (after arrowheads and knives) as currency items, there has been this consensus that money has the value that people give to it, not the value of its material (or, in BTC's case, immaterial) representations.

Isn't money made out of special counterfeit-proof paper? Making that paper valuable since you could use it to make money?

It's ability to be used to make better fake dollar bills would make it worth something, but the years in jail you might be subjected to if caught presumably drive the demand down.

Re: For Sale: 29,656.51306529 Bitcoins

#303

Post by vidarh »

rplnt wrote: post #290
orik wrote: post #288

Earlier quoted context omitted.

If the coins were seized on Silk Road servers they didn't belong to anyone at the time but the Silk Road. We can argue the merits of returning the coins to the last previously associated wallets; but I don't think the U.S. Gov has any intention of returning drug money to drug buyers the same way they wouldn't give gun money back to arms buyers.

A very stretched example follows, be warned: An online shop selling clothing also happens to sell firearms illegally. Its assets are seized. What about money from pending orders for the clothing? It seems to me it's obvious in this case. Couldn't SR users start a class action lawsuit against gov for seizing their assets stored on SR servers? This is assuming not everything sold there was illegal (this might be wrong)…

They could certainly petition the government for the return of money that couldn't be tied to anything illegal. But is the potential demand of return of money a hindrance for the government to auction of the Bitcoins? If anyone demands their money back, and the government agrees, or is forced by a court to pay it back, they can do so without holding BTC in the meantime.

Presumably they've made an assessment and come to the conclusion that either the percentage of assets held that belong to customers of SR that said customer may have a claim to is small enough that it's easier/cheaper to deal with that if/when anyone makes a demand than trying to sort it out before auctioning off the BTC.

Especially given that presumably very few customers of SR have only bought/sold legal goods, and so presumably most of them won't want to identify themselves.

Re: For Sale: 29,656.51306529 Bitcoins

#304

Post by topynate »

throwaway6637 wrote: post #291
orik wrote: post #288

Earlier quoted context omitted.

If the coins were seized on Silk Road servers they didn't belong to anyone at the time but the Silk Road. We can argue the merits of returning the coins to the last previously associated wallets; but I don't think the U.S. Gov has any intention of returning drug money to drug buyers the same way they wouldn't give gun money back to arms buyers.

But SR was not exclusively for drug sellers. Most of the business there was drugs, obviously, but some amount of that money would have bought legitimate items. So what gives them the right to sell off that money?

Users sent bitcoins to SR to hold for them, in return for a promise to return them on demand. So SR's assets and liabilities both increased with each deposit. Then USG seized SR's assets (under what right? That SR was an illegal enterprise established to facilitate narcotics sales). SR still has liabilities to its users, but now it can't meet them. Note that SR's liabilities are no concern of USG.

Come on guys, is it so hard to understand that if you exchange an asset for a security, you don't own the asset anymore?

Re: For Sale: 29,656.51306529 Bitcoins

#305

Post by GFischer »

crdoconnor wrote: post #248
Houshalter wrote: post #236

Earlier quoted context omitted.

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 possibl…

Milton Friedman believed that there should be an increase in monetary supply, irrespective of business cycles, etc:

http://en.wikipedia.org/wiki/Friedman%27s_k-percent_rule

Most mainstream economists agree with a steady expansion of the money supply (which does not necessarily lead to inflation unless the monetary supply grows faster than demand).

Cryptocoins are an interesting example of rule-based monetary policy, I hope economists will learn a lot from them.

Re: For Sale: 29,656.51306529 Bitcoins

#306

Post by artursapek »

sschueller wrote: post #270
marme wrote: post #257

What people should be more concerned with is the fact that the government is selling off someone elses property before they have even been convicted of a crime. Dread pirate roberts plead not guilty and has still not had a trial yet. He has not been convicted of any crime so if these are his coins they are selling them before the trial is even finished

These coins should be removed from the blockchain in a protocol update agreed upon by everyone. No government should be making money this way.

    // TODO: remove after FBI auction

Re: For Sale: 29,656.51306529 Bitcoins

#307

Post by Intermernet »

Is there much difference between this, and if the DEA had busted some meth dealers who had a bunch of gold sitting around? Or if the FBI had busted some mafia family with billions in property?

What are the precedents here? Does this style of US government confiscation / sale have any analog in realms outside the net?

I'm honestly curious, I know that governments are completely within their (self defined, but generally accepted) rights to profit from these seizures, but what are the implications of profiting from the proceeds of crime, and has this raised it's head in more "traditional" areas before?

Re: For Sale: 29,656.51306529 Bitcoins

#308

Post by cinitriqs »

So... they are selling off "illegaly claimed" BTC now? Ah but of course, they have been doing the same thing with everything else for years... (supporting their own departments, making them able to buy tanks, cars, houses and plenty more).

Nothing new here, carry on, carry on!!!

Re: For Sale: 29,656.51306529 Bitcoins

#309

Post by GFischer »

maaku wrote: post #258
digz wrote: post #73

Earlier quoted context omitted.

Actually is does mean that it's worth what it sells for. The nature of seized goods increases the risk premium demanded from a buyer resulting in a lower price. Sources of risk: 1) Goods aren't as they seem. Drug dealers may not have treated the goods as well as average owner. 2) Risk of violence. I wouldn't want to buy some drug dealer's prized yacht... wouldn't sleep well. 3) Illiquid good. If it's hard to resale t…

> Now, if the good was completely fungible, risk-free and totally liquid (think cash), there would be no expected discount because of risk.. just transaction cost. How is that not the case here?

In the "not completely fungible" part.

It is apparently hard to trade that many bitcoins for the equivalent amount of government-backed currency or goods.

To be fair to Bitcoin, it's not the only "currency" with that problem... during the Argentinean crisis, many local governments paid their workers with alternative currencies ("patacones" and others) which rapidly devalued.

http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond)

Re: For Sale: 29,656.51306529 Bitcoins

#310

Post by pbhjpbhj »

ThomPete wrote: post #207
pbhjpbhj wrote: post #176

Earlier quoted context omitted.

Gold and diamonds have inherent value - they're both used industrially. Bitcoin perhaps doesn't have less inherent value than a non-backed currency though; but even being decades passed gold standard, and such, currencies that have a "reliable" government as support are still pretty reliable.

no value is inherrent and it makes no sense to talk about it from that perspective. You are confusing historical with universal facts.

No value is inherent? The universe, say, has no value? I can certainly see possible frameworks in which this is true but they don't really appear to be useful in assessing relative worth. If we agree that things which can be utilised in order to provide gains in efficient production of fulfilment, happiness, [sense of] achievement, etc., then it seems that there are many things with inherent value, no?

For example, Gold is more readily worked than other metals and it's relative inertness makes it useful for carrying charge without causing a reaction (such as oxidation), additionally it has low resistance - these innate properties give it an inherent value by virtue of it's suitability for electrical connections.

If you're speaking on a the level of "value is a human construct"; well that's as may be but doesn't really aid in the discussion of human economics. I'm more than happy to discuss that but it seems we should stay within the locus of human experience here.

Or ...?

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