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Winners of First Seized Silk Road Bitcoin Auction Remain Anonymous

Unknown Lamer posted about 2 months ago | from the wait-until-they're-blacklisted dept.

Bitcoin 88

ASDFnz (472824) writes with news that the first block of bitcoins seized from the Silk Road have been auctioned off, and for a pretty high price. The winners are unknown, and Bitcoin has bumped from trading at ~$600 to $650 (USD). From the article: ...In the absence of information speculation both on the markets and on the Internet is building. First Barry Silbert, Founder of SecondMarket and BitcoinTrust has tweeted that they were outbid on all blocks. Since then Alex Walters (a former core Bitcoin developer and the then chief technology officer of Bitinstant) has posted on reddit saying 'I Lost' in his $400 to $500 per coin. That post was closely followed by another reddit user saying that his bid of $451.13 per coin was also unsuccessful. ... Meanwhile the actual price of bitcoins of the various exchanges has risen close to 15% from just under $600 a coin to close to $650. In the end, we may never know who bought the confiscated coins or how much they bought them for but it does seem that it will be a pivotal point in Bitcoin's evolution.

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One stupid question (2)

StripedCow (776465) | about 2 months ago | (#47358803)

Why didn't they just sell these bitcoins at a regular exchange?

Re:One stupid question (4, Informative)

roninmagus (721889) | about a month ago | (#47358851)

How do they choose the exchange? Government property must be auctioned off to the highest bidder, otherwise they are favoring a business over others.

One of those little things that they do to maintain the appearance that they are not corrupt.

Re:One stupid question (3, Interesting)

FireFury03 (653718) | about a month ago | (#47359001)

How do they choose the exchange? Government property must be auctioned off to the highest bidder, otherwise they are favoring a business over others.

One of those little things that they do to maintain the appearance that they are not corrupt.

I'm curious how they handle foreign currency which is seized - if they seize a truck full of euros, do they auction them or of just exchange them for dollars? If the latter, what's the difference between that and doing the same with bitcoins?

Re:One stupid question (4, Insightful)

risom (1400035) | about a month ago | (#47359053)

The difference is liquidity. Bitcoins market depth is tiny. A truck full of Euros (about the same market value as the bitcoins) sold at market rate wouldn't be noticable on the charts. 30k of bitcoins sold at market rate would absolutely crush the market.

Re:One stupid question (0)

Anonymous Coward | about a month ago | (#47362587)

[...] A truck full of Euros (about the same market value as the bitcoins) [...]

I'm pretty sure a truck full of Bitcoins has a higher market value as a truck full of Euros.

No exchange at all (3, Insightful)

JcMorin (930466) | about a month ago | (#47359065)

Since it's a big volume, picking one particular exchange would disturb the price of Bitcoin temporarily. That's why they decided to auction them instead. They could have sold it to the market, but to be wise the would should to sell like 10 BTC per hours unless they willing to go into [bigger] Chinese exchanges... The beauty of bitcoin is that you don't need clearing house, exchange or bank. You can trade them directly.

Re:One stupid question (1)

thevirtualcat (1071504) | about a month ago | (#47360371)

They would probably just exchange the currency at market rates.

Remember, though, that the US Government doesn't consider bitcoins currency, but property.

http://www.bloomberg.com/news/... [bloomberg.com]

Auctioning them off is in line with that.

Re:One stupid question (0)

Anonymous Coward | about a month ago | (#47361073)

Corruption isn't a binary state and if it were then everyone with any power would be corrupt rendering the concept meaningless.

Re:One stupid question (0)

Anonymous Coward | about a month ago | (#47358861)

That would apply downward pressure on the market, reducing the proceeds. Auctioning is more effective for these volumes.

Re:One stupid question (3, Insightful)

nitehawk214 (222219) | about a month ago | (#47359039)

The buyers of these auctions probably are exchanges. The exchanges themselves do not want them all dumped into the market at once to prevent the prices from crashing.

I would say this arrangement benefits the buyers, exchanges and the government at once. It has the added benefit of appearing to not trying to manipulate coin prices too much.

Re:One stupid question (2)

itzly (3699663) | about a month ago | (#47359277)

Why would exchanges care about the price crashing ? The more the price swings, the higher the trade volume, and the higher the profit for the exchanges.

Re:One stupid question (2)

alexander_686 (957440) | about a month ago | (#47359567)

Except that most exchanges are "long" on bit coins. That is they have a inventory of bit coins. If the market crashes so does the value of inventory. Some volatility encourages trading but they are still interested in the long term health and stability of BitCoins. Wild swings tends to shut the markets down.

Re:One stupid question (1)

Anonymous Coward | about a month ago | (#47359775)

You're now just talking out of your asshole. You have no idea if "most" exchanges are "long" on bitcoin. Just shut up and leave your useless commentary inside your own empty head.

Re:One stupid question (1)

itzly (3699663) | about a month ago | (#47360325)

Which exchange carries an inventory of bitcoins for their own use, rather than just maintaining customer accounts ?

Re:One stupid question (1)

alexander_686 (957440) | about a month ago | (#47360823)

I am thinking about the exchanges where one can exchange BitCoins for other currency. If one can exchange BitCoins for US Dollars, Euros, etc., somebody has to be willing to be on the other side of those transactions, and spend US Dollars, Euros, etc. to hold an inventory of BitCoins. If we are talking about "wallets", they would not have that exposure.

I will admit that I am extending my deep and technical knowledge of other trading exchanges (commodity, FX, bond, stock) to BitCoin but I can't see any technical way to get around the fact that somebody (exchange, bank, middlemen, speculator) has to hold inventory and that their profits and losses will not just be dictated by not just be the trading fees made but also by the appreciation / deprecation in value of their inventory of BitCoins.

Re:One stupid question (1)

itzly (3699663) | about a month ago | (#47361261)

Yes, somebody is on the other side of the transaction with some amount of bitcoin, but the exchange just facilitates trade between these two parties. They don't have to get any exposure to bitcoin themselves. It's the same with any other trading exchange.

Re:One stupid question (1)

alexander_686 (957440) | about a month ago | (#47362343)

You are technically correct when the exchange clears its own trades (i.e. has a clearing house) and fully insulates traders from each other and from counterparty risk. Even then the clearing house would bear counterparty and operational risk (the amount of risk depends on how it is being run.). However, this is not true for Over-The-Counter (OTC) trades. Here the people you are exchanging with are risking their own capital and inventory.

And here we may be entering the real of metaphysics. What is an exchange? You are prying apart the exchange into 2 separate entities, the trading floor and the traders. They are two separate legs but without those two separate legs the system would not stand up. The traders are normally partners (in the legal sense) or members. As volatility increases, the cost of holding inventory gets higher, the cost of trading gets higher. If volatility gets too high the trades will leave. The exchange would solvent and would be up and running but what is the point of there is no trading to be done?

Out of curiosity, when you are referring to exchanges, exactly which exchanges are you talking about? I am looking at Coinbase and from the outside I would guess that they would have some inventory of BitCoin.

Re:One stupid question (1)

ezdiy (2717051) | about 2 months ago | (#47369525)

Coinbase is more like OTC currency exchanger. Retail broker. Indeed moneychangers also often source coins on actual exchanges as their volumes are often skewed only in one direction (very few sell on coinbase).

But your typical bitcoin exchange is a tad bit of different beast - notably, it is not Forex OTC at all, but more like capital markets. In fact very few forex parallels can be drawn. All they care about is volume. Federated digital currency forex networks do exist though - Ripple - but it has it's share of problems and is nowhere near as popular.

Re:One stupid question (0)

Anonymous Coward | about a month ago | (#47364621)

Fees are generally paid in coins.

Re:One stupid question (1)

tlhIngan (30335) | about 2 months ago | (#47366365)

Which exchange carries an inventory of bitcoins for their own use, rather than just maintaining customer accounts ?

All of them. It's called "liquidity". And they carry both currency (be it US dollars or whatever) and bitcoins.

E.g., let's say I want to buy a bitcoin. I go to an exchange, give them several hundred dollars. I expect a bitcoin in return. But the exchange has to own a bitcoin in order to sell it to me!

Or I want to sell a bitcoin, so I give it my bitcoin and expect several hundred dollars back in return. Except the cxchange has to have currency to give me!

Now, you can treat an exchange as a "market" where you match up bitcoin sellers and bitcoin buyers, but that's not liquid at all. If I want to sell a bitcoin, I need to set a price, and put it on the market, and wait for a buyer who would trade me currency for that bitcoin. If the sellers are priced higher than the buyers, little trading happens. And after all the trades are done, you're left with the lowest ask price that's a bit higher than the highest bid price, where trading stops until either a buyer decides they really need the bitcoin and ups their bid enough so it meets a sellers ask, or a seller desperately needs currency and lowers their ask price enough that it meets the highest bid.

If the bid-ask spread is particularly big, the market is said to have low liquidity - the only trades happen are those who are desperate and sell at the low price, or buyers who are desperate and bid at the high price.

It's a market. You can only buy stuff when a seller is willing to sell you at that price. And you can only sell stuff when there's a buyer willing ot buy at the price.

Low liquidity is a bad thing because it literally means you're options are to pay a high price, or to sell way too low.

Oh, and this is how every market works - be it your store, eBay, the Steam market, the "real money auction houses" of games, stock markets, etc.

Perhaps you saw something in a store that you wanted, but thought, "it's too expensive, I'll wait for a sale". Well, you just put up a bid to buy it lower than the asking price. When it goes on sale (i.e., the seller lowers their ask), you then buy it. And meeting in the middle can happen - if the price is too high for you, and too low for them, perhaps they'll discount it partway, at which point you go "good enough" and buy it at the higher than you wanted, but lower than before price.

Re:One stupid question (1)

i kan reed (749298) | about a month ago | (#47359967)

Another question:

Why would prices spike as a result of more supply? The behavior of bitcoin markets always seems to be opposite of the imagined super free market principles it claims to be founded on.

Re:One stupid question (1)

ultranova (717540) | about a month ago | (#47360953)

Why would prices spike as a result of more supply?

Probably because for all anyone knew the Fed might have dumbed the coins half-free, while a private buyer is unlikely to do so, so the expected near-future supply has actually been lowered.

The behavior of bitcoin markets always seems to be opposite of the imagined super free market principles it claims to be founded on.

It's always annoying when reality contradicts a good theory, isn't it? Almost like the Bitcoin economy itself, which just keeps growing and spawning copycats rather than dying. It's almost like there was a niche for digital cash in world economy.

Newegg may have caused the rise (1, Interesting)

Anonymous Coward | about 2 months ago | (#47358807)

Newegg.com now accepts bitcoins, which I suspect is at least as important for the rising prices in the last few days.

Re:Newegg may have caused the rise (0)

Anonymous Coward | about a month ago | (#47361329)

Newegg don't really accept bitcoins, they accept USD. Bitcoins is only a means of paying for USD, via Bitpay who immediately covert bitcoins into USD.

Newegg don't quote prices in bitcoins, they quote them in USD, so the exhange rate of usd-bitcoins is really irrelevant in the transaction.

The only company that is exposed to any risk is Bitpay and currently they are flush with VC $'s. Bitpays busines model is almost exactly the same as a credit card company, they move usd from customers to merchants and skim a percentage off the top of the merchants cut for the risk of being the one holding the bag.

Re:Newegg may have caused the rise (1)

themusicgod1 (241799) | about a month ago | (#47364733)

Newegg takes your bitcoins, and gives you goods. That is "accepts bitcoins". Bitpay is their means of doing so. The hair-spliting over whether or not they "accept" bitcoin completely misses the point. So they use a payment processor? Many websites use paypal or credit cards for the same reason, yet you wouldn't say they don't "accept USD" because of this.

This AC remains Anonymous (0)

Anonymous Coward | about 2 months ago | (#47358809)

bam FP!

Unbelievable (1)

Anonymous Coward | about a month ago | (#47358835)

...Apparently with BitCoin, the more uncertain and insecure the news, the higher the exchange rate.

Shouldn't 'uncertainty' and 'risk' be detrimental to the value of anything that is subject to it, instead of increasing it? It appears to me that BitCoin is one of the most irrational products of technology of recent times. Probably even more so then the Metro UI. Or am I overlooking something really really obvious?

Re:Unbelievable (1)

OneSmartFellow (716217) | about a month ago | (#47358891)

Shouldn't 'uncertainty' and 'risk' be detrimental to the value of anything that is subject to it
Not necessarily. Many financial instruments are inversely price sensitive to risk. Although why a bit coind exchange rate for hard currency would be so is a mystery.

It appears to me that BitCoin is one of the most irrational products of technology of recent times
Appearances can be deceptive. Watch and learn.

Re:Unbelievable (-1)

Anonymous Coward | about a month ago | (#47359025)

Every test of bitcoin's resiliency that it survives increases faith that it is a long term project. It will keep rising in price as it survives these tests until it is TBTF (probably leveling at 100-10000x current exchange rate) or something kills the project.

Re:Unbelievable (1)

alexander_686 (957440) | about a month ago | (#47360075)

While there are a few special products that increase in value with risk (such as the VIX Index), the higher the risk the lower the price. Of course one has to separate out the upside risk against the downside risk and those could be very different risks. That is, a dot com stock's risk is asymmetrical – it could go up by 1,000% or go down by 100%. Currency risk tends to be more symmetrical.

Personally, I can't point to any rational reason why increased volatility would increase BitCoins value. Irrational reasons – a.k.a. speculation – the sense of excitement, etc. Maybe.

Re:Unbelievable (-1)

Anonymous Coward | about a month ago | (#47358899)

What's the matter you lil' kike? Mad your usurious jew bank empire is crumbling before your eyes? that's right, technology has made yids like you irrelevant, go cry to paul krugman, bitch. we don't wanna hear it.

Re:Unbelievable (0)

Anonymous Coward | about a month ago | (#47358951)

Actually, a large proportion of the banking industry was founded by Quakers, rather than Jews. Those same Quakers found themselves uncomfortably wealthy and did many things for the community with their money. What went to the US from Europe was mostly all the bad bits without the good bits, but your racist vitriol has no real basis.

Re:Unbelievable (1)

alexander_686 (957440) | about a month ago | (#47360253)

Actually, most of banking (and accounting, financial options, etc.) comes from Italian city states from the Middle Ages, and thus Catholic. See Florence and Venice. They heavy into trading. See the Medici family as a classic example. They predate the Quakers.

Re:Unbelievable (1)

PRMan (959735) | about a month ago | (#47360263)

You are overlooking many things, but they aren't that obvious to newcomers.

Re:Unbelievable (0)

Anonymous Coward | about a month ago | (#47361623)

It did crash the price, down to about $560, check the charts. Then as others have said, held its resilience while still being adopted rapidly by businesses and investors.

And what about the innocents? (1)

Anonymous Coward | about a month ago | (#47358843)

There was at least one seller on silk road shipping only legal stuff like glassware. Did he get his coins returned?

Re:And what about the innocents? (2)

fuzzyfuzzyfungus (1223518) | about a month ago | (#47359017)

There was at least one seller on silk road shipping only legal stuff like glassware. Did he get his coins returned?

Not to worry, he is free to make himself known to us and fight a legal battle that will cost more than the coins were worth. We will then classify his wares into 'crack pipes', 'bongs (for the mexican loco-weed)' and 'miscellaneous, probably for meth cooks' and charge him accordingly.

And he had better not have shipped any to Texas without a suitable license...

Value (1)

necro81 (917438) | about a month ago | (#47358959)

If bitcoin was trading at something like $600 beforehand, why would anyone bidding $450 be surprised that they lost out? If these bitcoin boosters are so firm in their belief that bitcoin is as fungible as any other currency, shouldn't they have bid at something like the going rate?

Put differently, if the U.S. was auctioning off a briefcase filled with €100,000, and the exchange rate is presently €1 = $1.37, would anyone be surprised if a hedge fund bidding $1/€ lost out?

Re:Value (0)

Anonymous Coward | about a month ago | (#47359011)

Because bitcoin is just magic internet money with no real value, the price is 100% speculative, it's going to crash soon due to deflation, it's a scam, it's a ponzi, and it's too hard to understand. /s

Re:Value (4, Interesting)

codebonobo (2762819) | about a month ago | (#47359055)

If bitcoin was trading at something like $600 beforehand, why would anyone bidding $450 be surprised that they lost out? If these bitcoin boosters are so firm in their belief that bitcoin is as fungible as any other currency, shouldn't they have bid at something like the going rate?

This was a test in the fungibility of Bitcoin. Some investors underbid in hopes that the hurdle of a minimum of 200,000usd deposit would lower competition and the demand would not be so fierce to be able to purchase 30,000 extra bitcoins in a single day.

What this auctioned has shown is that the market can easily take large amounts of bitcoin being liquidated and demand s so high that over 20 million dollars in investor money was brushed aside where they will have to turn to exchanges to satisfy their investments.

How Can The USMS Sell These? (2, Insightful)

Anonymous Coward | about a month ago | (#47358971)

Please excuse my ignorance, but I'm curious under what authority the USMS can sell off these coins? Their web site indicate that these coins belonged to "Silk Road" but not to Ross Ulbricht. As far as I know, there was no "Silk Road, Inc." so wouldn't the coins technically belong to Ulbricht or whoever owned / leased the seized servers? Without any kind of corporation Ulbricht would be, in essence, the "sole proprietor" of Silk Road. And if that's the case, how can the marshalls sell off his property without a conviction? It seems like selling his property now is a violation of due process. But then... IANAL.

Re:How Can The USMS Sell These? (2)

SuricouRaven (1897204) | about a month ago | (#47359227)

It's fairly common practice when drugs are concerned - I'm not really knowledgeable on the legal theory, but they are essentially 'convicting the property.' They can prove that the coins are proceeds of crime, even if they can't prove ownership, which is good enough to seize them.

Re:How Can The USMS Sell These? (1)

PRMan (959735) | about a month ago | (#47360273)

These were the "Silk Road" bitcoins, not Dread Pirate Roberts' (Ross Ulbricht's) bitcoins. He said, "they aren't mine". The government gave time for anyone to claim them. Nobody did.

Re:How Can The USMS Sell These? (1)

gregor-e (136142) | about a month ago | (#47360449)

Unlike most currency, these bitcoins can forever be traced back to their seamy past, allowing owners to potentially extract value from their history.

Re:How Can The USMS Sell These? (0)

Anonymous Coward | about 2 months ago | (#47367857)

The history is available to anyone. We know which coins they are.

Re:How Can The USMS Sell These? (0)

Anonymous Coward | about a month ago | (#47362899)

In a more ludicrous case, the U.S. Marshals took care of three hundred horses formerly owned by the comptroller of a small Illinois town who embezzled ludicrous amounts of money into her horse-breeding business.

Re:How Can The USMS Sell These? (0)

Anonymous Coward | about a month ago | (#47364645)

They didn't have to prove the coins are proceeds of crime, since no one claimed them.

This is fortunate for them, since not all the coins were proceeds of crime.

Re:How Can The USMS Sell These? (2)

will_die (586523) | about a month ago | (#47359411)

It was agreed that Ulbriht is the only person who has a possible right to the bitcoins so he and USMS agreed that because of the volatility of the Bitcoin markets that the USMS would have the right to sell the coins as they want and then the monies from that sale would go into a deposit fund until the court case has been decided upon.
So the coins were not seized, just sold off and the value, at the time of sale, is now waiting a court decision.

Re:How Can The USMS Sell These? (0)

Anonymous Coward | about a month ago | (#47364663)

It was agreed that Ulbriht is the only person who has a possible right to the bitcoins

Not at all. The people who had the right to the bitcoins were the people who had them on deposit.

Re:How Can The USMS Sell These? (1)

h0oam1 (533917) | about a month ago | (#47360243)

I believe all these coins came from wallets that were physically located on seized Silkroad servers. Thus, they may or may not belong to Mr. Ulbricht, depending on whether he is found to have actually been the power behind the Silkroad. The actual bitcoin contained in these wallets, however, were definitely used for illegal activity.

Re:How Can The USMS Sell These? (1)

nolife (233813) | about a month ago | (#47360623)

They could belong to anyone. All that person(s) has to do if file a claim and prove ownership.

Obviously no one including Ulbright himself attempted to claim them. Therefore, no claim of ownership so it goes to auction. There is a risk involved with claiming property that was involved with illegal activity. At no point were the owners of these bitcoins ever held back or hindered from officially claiming them. If you were doing nothing illegal, there is very little reason not to claim ownership.

This is standard procedure and has been this way for decades. No different then the local police confiscating stolen car stereos and iPads. If no one claims them, they are auctioned off.

Has anyone checked the Winklevii? (1)

fuzzyfuzzyfungus (1223518) | about a month ago | (#47358975)

Somebody should probably get out their protractor and see if the Winklevoss twins are smirking slightly more than usual today, that might be informative...

CIA, FBI, NSA etc all need coins (1)

Anonymous Coward | about a month ago | (#47358987)

CIA, FBI, NSA etc all need the coins to be able to trap criminals and non criminals in to trades that can be later used to prosecute them and everyone else involved.
     

greeatful (1)

ajaykumar1 (3725487) | about a month ago | (#47359013)

it is Extremly Very Good

Purchase (1)

nitehawk214 (222219) | about a month ago | (#47359045)

It would be funny if the buyers used them to buy drugs.

Re:Purchase (1)

codebonobo (2762819) | about a month ago | (#47359333)

It would be funny if the buyers used them to buy drugs.

I can pretty much guarantee this ... those investors just made between 3 to 4.5 million in a single day off their smart investment. Knowing how these institutional investors work there is plenty of coke, champagne, and women being purchased right now.

who gives a fuck (0)

Anonymous Coward | about a month ago | (#47359051)

Even if a person were interested in bitcoin, why should they even give a fuck who might have bought some certain bitcoins? Is this is like TMZ for nerds? Useless info that makes no difference to anyone watching/reading about it.

Re:who gives a fuck (0)

Anonymous Coward | about a month ago | (#47359613)

Is this is like TMZ for nerds?

Finally, you get it.

Pivotal point? (1)

QilessQi (2044624) | about a month ago | (#47359109)

"...but it does seem that it will be a pivotal point in Bitcoin's evolution."

Why? This has nothing to do with the technology itself, nor regulation or adoption of that technology, nor has the price been pushed up to anything beyond what it has been before. The government seized some assets, and then auctioned them off.

Re:Pivotal point? (1)

SuricouRaven (1897204) | about a month ago | (#47359243)

And in doing so, they acknowledged that bitcoins have value and can be auctioned. This is the government implicitly declaring that bitcoins are real property, rather than worthless tokens in the latest online nerd-game.

Re:Pivotal point? (1)

itzly (3699663) | about a month ago | (#47359323)

All they've done is acknowledging that the bitcoins have a value to some people. But we already knew that.

Re:Pivotal point? (0)

Anonymous Coward | about a month ago | (#47359327)

The government already explicitly declared that Bitcoins are real property when the IRS stated that they fall under capital gains tax, and before that when FINCEN issued guidance regarding the operation of virtual currency exchanges.

Re:Pivotal point? (1)

jratcliffe (208809) | about a month ago | (#47359785)

And in doing so, they acknowledged that bitcoins have value and can be auctioned. This is the government implicitly declaring that bitcoins are real property, rather than worthless tokens in the latest online nerd-game.

If the gov't had seized 30,000 Magic cards, or 300 lbs of rusty scrap metal, they would have done the same thing. The USMS isn't making ANY comment about the value of bitcoins, merely that it appears others will pay money for them.

Re:Pivotal point? (1)

ultranova (717540) | about a month ago | (#47361157)

The USMS isn't making ANY comment about the value of bitcoins, merely that it appears others will pay money for them.

Isn't that the very definition of economic value?

Re:Pivotal point? (1)

jratcliffe (208809) | about a month ago | (#47361939)

The gov't is saying anything about their value. The buyers in the auction are.

Gain/Loss on those coins used to buy a coffee ... (1)

perpenso (1613749) | about a month ago | (#47360217)

And in doing so, they acknowledged that bitcoins have value and can be auctioned. This is the government implicitly declaring that bitcoins are real property, rather than worthless tokens in the latest online nerd-game.

The US government already declared that bitcoins are real assets that experience a gain or loss in value. The IRS says that people must record such a gain or loss since the time of coin acquisition until the coin is sold or spent. In other words you have to calculate a gain or loss every time you buy a coffee with bitcoins.

Re:Pivotal point? (2)

codebonobo (2762819) | about a month ago | (#47359255)

Why? This has nothing to do with the technology itself, nor regulation or adoption of that technology, nor has the price been pushed up to anything beyond what it has been before. The government seized some assets, and then auctioned them off.

Many people feared that the market and demand for Bitcoin could not satisfy 30,000 or ~18 million dollars worth of coins being liquidated within a single day. Instead this auction proved both liquidity, fungibility and that their are many institutional investors sitting on the sidelines waiting to invest in Bitcoin but are looking for opportunities like these in order to invest in large sums of bitcoins.

Re:Pivotal point? (1)

QilessQi (2044624) | about a month ago | (#47360077)

+1 Interesting, thanks.

Although I can't help but view this as just short-term speculation. If you've got the money, then buy a huge mass of Bitcoins at $600 in a very public event like this one, creating renewed interest as the news breaks, which increases demand, which drives the price up. Then as upward momentum slows (e.g., at $720) sell gradually over the course of many days so as not to induce panic with a single high-volume dump. Now you've made a 20% gain on a multimillion dollar investment over the course of a week.

Look at the 6 month history of BTC price: http://bitcoincharts.com/chart... [bitcoincharts.com] . The volatility is pretty apparent, and it's not like we haven't seen both sides of $600 (i.e., rising and falling) before.

Re:Pivotal point? (1)

fatwilbur (1098563) | about a month ago | (#47361171)

Many people feared that the market and demand for Bitcoin could not satisfy 30,000 or ~18 million dollars worth of coins being liquidated within a single day. Instead this auction proved both liquidity, fungibility and that their are many institutional investors sitting on the sidelines waiting to invest in Bitcoin but are looking for opportunities like these in order to invest in large sums of bitcoins.

So? The same was true of stock certificates of worthless companies during the dot com boom. The same huge "institutional" investors were lining up paying exorbitant sums for pieces of paper with no intrinsic value.

I'm not saying bitcoin is worthless, but temper your enthusiasm based on where investor money is going. Remember, there aren't many bitcoins, less than 13 million total as of today. News media has brought a lot of speculation from the class of slightly more educated investors, typically upper middle class folks. Even if a tiny fraction of the world wanted just one bitcoin, it would be enough demand to drive up prices very high.

No, I think the big problem is that the only people buying them are holding them, expecting them to be worth more in the future. There is no driver for higher demand other than more profit seekers willing to pay a higher price.. it's not that good as a currency. Investments like this, by and large (we don't know what will happen), do not turn out good.

Re:Pivotal point? (1)

codebonobo (2762819) | about 2 months ago | (#47365203)

. it's not that good as a currency.

Me and my friends and family spend bitcoin all the time. I find it to be easier and more secure than credit cards. Businesses like them as well because they dramatically lower merchant fees. You will begin to understand it once you start using it.

Guessing some of the buyers (1)

PsyMan (2702529) | about a month ago | (#47359121)

are good friends of governer Jerry Brown?

Re:Guessing some of the buyers (1)

perpenso (1613749) | about a month ago | (#47360245)

are good friends of governer Jerry Brown?

Likely the former owners were too, and bitcoin enthusiasm had nothing to do with it. :-)

BNP Paribas exec? (1)

GameboyRMH (1153867) | about a month ago | (#47359165)

Maybe he/she wants to use them to anonymously get some of that sweet Sudanese blood money, after their bank was smacked with a fine for violating sanctions. The demand for money laundering will be even greater now.

Can bitcoins be blacklisted? (0)

Anonymous Coward | about a month ago | (#47359645)

Pardon my ignorance, but it it possible or even practical to identify a bitcoin as having been a "direct descendant" of a coin involved in a given transaction and/or as a coin that has been "co-mingled" with such a coin?

If someone finds a practical way to do this, it may make it practical to for major players and for that matter anyone who uses BC to "locally blacklist" seized bitcoins. If many major players do this, it could effectively make government-seized coins worthless or at least "worth less" at auctions such as this one.

The idea is that if someone "important" enough for major players to want to "defend" him in this way says "My coins have been seized," those major players can step up to the plate and announce that they will not accept any coin that has ever been co-mingled with the seized coins until the person whose coins have been seized is "made whole" by the government or other entity that seized them. This in turn would force other players to make sure they didn't accept such coins or risk being stuck with one that isn't universally accepted.

The same principle can be used to invalidate coins in case of theft - if the theft is proven to the satisfaction of major players before they are "spent" and in the hands of an innocent party, the coins can be blacklisted.

Re:Can bitcoins be blacklisted? (1)

mrlibertarian (1150979) | about a month ago | (#47359917)

It probably isn't practical, because there are ways to anonymize coins, such as Dark Wallet. But if bitcoins could be black listed, then they would no longer be fungible. Therefore, any company who attempted to do this would probably be shunned by the bitcoin community. In short, a blacklist maintained by "the powers that be" is fundamentally incompatible with the philosophy of a decentralized currency such as bitcoin.

Re:Can bitcoins be blacklisted? (1)

kasperd (592156) | about a month ago | (#47361373)

it it possible or even practical to identify a bitcoin as having been a "direct descendant" of a coin involved in a given transaction and/or as a coin that has been "co-mingled" with such a coin?

Definitely. That is easy to do. However since each transaction can have multiple inputs and outputs, the set of descendants is likely to grow over time, until eventually most bitcoins are descendants of that transaction.

it may make it practical to for major players and for that matter anyone who uses BC to "locally blacklist" seized bitcoins.

If there isn't any consensus in the "community", then such a blacklist is unlikely to have any effect.

If some miners decide to blacklist transactions involving certain coins, then other miners are just going to pick them up. If only a minority of miners are in on the blacklisting, then this is going to cause a fork in the blockchain. Other miners have to decide, which fork they are going to bet their resources on. If there isn't consensus on what to blacklist, there could be so many forks blacklisting different subsets, that each fork is going to become irrelevant leaving only the chain with no blacklisting as viable.

Even if you could manage to get a majority of miners to agree on exactly what should be blacklisted, it is of questionable value to the miners to attempt blacklisting. It could be seen as introducing a dangerous precedence for introducing blacklists. This would introduce a new and even more unpredictable danger to anybody owning bitcoins.

Traders could decide to blacklist certain bitcoins. This would mean you would refuse to accept blacklisted coins. But if you are selling goods for bitcoins, then you'd have to announce in advance, which coins you consider blacklisted, otherwise you'd have disputes where the buyer of goods says they have paid, but seller of goods says the received bitcoins are no-good. And as receiver of bitcoins you'd also have to decide how diluted the blacklisted bitcoins would have to be, before you'd accept them. And in all, there'd have to be consensus about both the set of blacklisted bitcoins and the dilution threshold. Otherwise nobody will know, if the bitcoins they are accepting are good or not, and without such knowledge blacklisting wouldn't have the intended effect, instead you'd just be rejecting arbitrary payments, you might as well flip a coin and say no-thanks to a certain payment.

I think the only consensus that has a real chance of being reached is that bitcoins are not blacklisted.

Anonymous Purchaser? (0)

Anonymous Coward | about a month ago | (#47359755)

That's the part that surprises me that it would be legal. I would have thought that, for the sake of transparency, the winning bidder of any government auction would have to be a matter of public record. Oh, well, shows what I know....

We may never know. but... (1)

Virtucon (127420) | about a month ago | (#47359801)

We do know they won't be using MTGOX as an exchange...

itt (0)

Anonymous Coward | about a month ago | (#47359813)

itt: butthurt neckbeards who missed the btc train while compiling gentoo

Re:itt (1)

buckfeta2014 (3700011) | about a month ago | (#47360087)

For what it's worth anonymous loser, most bitcoins generated today are done on ASICs. Shove your gentoo hate up your ass.

Another possibility (1)

ndogg (158021) | about a month ago | (#47359833)

Another possibility is that the winner is lying about losing. I know personally that I wouldn't want to be known for winning that auction.

FOIA (0)

Anonymous Coward | about a month ago | (#47360829)

OP is a retard. This is a standard govt property auction, if Marshals are being retarded and not answering, just send them a FOIA and you'll get all the results you want.

SEC to investigate US Marshals... (1)

Martin S. (98249) | about a month ago | (#47360869)

When this Ponzi scheme collapses [sec.gov] the SEC will have to investigate the United States Marshals Service.

Should make for interesting spectating.

Re:SEC to investigate US Marshals... (0)

Anonymous Coward | about a month ago | (#47361941)

What scheme? They turned the bitcoins, which the feds consider property not currency, into cash. The feds aren't a part of bitcoin as currency so they don't care about its currency value.

"Never know" is wrong (1)

Martin S. (98249) | about a month ago | (#47360959)

The claim "we may never know who bought the confiscated coins" is wrong.

The original address of these bitcoin is well documented, so they are be easily traced once they are transfered.

1Ez69SnzzmePmZX3WpEzMKTrcBF2gpNQ55 [blockchain.info]

1i7cZdoE9NcHSdAL5eGjmTJbBVqeQDwgw [blockchain.info]

Re:"Never know" is wrong (0)

Anonymous Coward | about a month ago | (#47362375)

but the BTCs that are being tracked could just be sold. Then the BTCs could continue to be tracked, but we might never know who it was that bought them today.
If someone bought the BTCs, then the money used to the BTCs needs to go somewhere. Would a FOIA request or some other process be able to review to submitted the funds that paid for the BTCs?

Re:"Never know" is wrong (1)

codebonobo (2762819) | about 2 months ago | (#47365241)

Here is the new owners address- https://blockchain.info/addres... [blockchain.info] It is funny reading some of the spam comments sent to the blockchain before and after.

No he wasn't. (0)

Anonymous Coward | about a month ago | (#47362945)

> Alex Walters (a former core Bitcoin developer

Alex Walters was never a "core bitcoin developer" by any sane definition of the phrase.

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