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FOR SALE: 29,656.51306529 bitcoins
June 12, 2014 10:50 PM   Subscribe

The US Marshals Service is auctioning off the bitcoins seized from the servers of the Silk Road online drug marketplace last year, in lots of 3000 coins. You have until June 23rd register as a bidder and wire your $200,000 deposit. (Silk Road previously)
posted by silby (79 comments total) 10 users marked this as a favorite

 
And in response the price of Bitcoins has just dropped 10% in a matter of hours.

Or that could just be because it's Thursday.
posted by chelant at 10:59 PM on June 12 [22 favorites]


Well, that's interesting, and as good as indication as any that Bitcoins are assets and not currency.

Because when the U.S government seizes cash from alleged drug dealers, the public never sees or hears of it ever again.
posted by drjimmy11 at 11:04 PM on June 12 [14 favorites]


And since the sale is happening in advance of any conviction, this would likely be the FBI's spoils thanks to Civil Asset Forfeiture.
Wouldn't it be cool to trace the proceeds of the gov't's sale and follow the money?
posted by Fupped Duck at 11:13 PM on June 12 [1 favorite]


I'm burying my dogecoin in the backyard
posted by fallingbadgers at 11:16 PM on June 12 [8 favorites]


I'm burying my dogecoin in the backyard

wow
very dig
so conspiracy
posted by threeants at 11:22 PM on June 12 [69 favorites]


With Wallstreet creating investments and exchanges around Bitcoin, and the fed printing cheap money chasing asset bubbles, and more vendors accepting it, and electricity prices kept in check by regulation and cheap natural gas, it seems like the stars are aligned for higher bitcoin values.
posted by stbalbach at 11:24 PM on June 12


drjimmy, I can't speak to all agencies in the country, but those under the DOJ have been required to submit an annual civil asset forfeiture audit since 2000 (28 U.S.C. §524(c)(6)). I'm not sure why the public would "see" the cash as the only reason for an auction is to convert non-cash assets.

Although I imagine a coke-smeared dollar bill might be worth slightly more than face value.
posted by dhartung at 11:27 PM on June 12 [5 favorites]


The sale of that many Bitcoins would devalue the market. Why don't they just donate them to a charity or something, to feed homeless people who are hungry?
posted by Orion Blastar at 11:37 PM on June 12


Orion Blastar: "Why don't they just donate them to a charity or something, to feed homeless people who are hungry?"

Hungry people eat bitcoins?
posted by Bugbread at 11:39 PM on June 12 [21 favorites]


The sale of that many Bitcoins would devalue the market.

I and the feds give one fuck for every instance of the letter between p and r in this sentence.
posted by Pope Guilty at 11:43 PM on June 12 [7 favorites]


I and the feds give one fuck for every instance of the letter between p and r in this sentence.

inclusive?
posted by aubilenon at 11:46 PM on June 12 [2 favorites]


Nope, just Q.
posted by Pope Guilty at 11:49 PM on June 12


Buried dogecoin in backyard. Doge keeps digging them up. Much Keynesian. Wow
posted by fallingbadgers at 11:49 PM on June 12 [40 favorites]


The sale of that many Bitcoins would devalue the market. Why don't they just donate them to a charity or something, to feed homeless people who are hungry?

Some deflation would arguably be good for Bitcoin. Whenever the currency goes through a boom, the people who want it to be thought of as a stable medium of exchange all get some hives about the fact boom-and-bust cycles make people into hoarders. This is bad for folks who are hoarding, but might actually help get it moving. (Or not? If one person buys them in bulk, it's just another hoard.)
posted by Going To Maine at 11:50 PM on June 12 [1 favorite]


Nah, just transfer the Bitcoins to a faith-based organization and allow them to determine which of the homeless and hungry deserve to be fed.
Minus, of course, all administrative costs...
posted by Pudhoho at 11:51 PM on June 12 [3 favorites]


Well, they aren't selling off all the seized Bitcoins at once. This is less than one-quarter of what was taken from Ulbricht. They're just trying to move it fairly quickly (i.e., before Ulbricht's trial) because they recognize the potential for the market to self-correct all the way down to Bitcoin's actual value.
posted by chelant at 12:04 AM on June 13 [4 favorites]


The USMS does not make any representations or warranties regarding Bitcoin.

I'll bet.


transfer the Bitcoins to a faith-based organization

And faith-based organizations are uniquely equipped to deal with the bitcoin market too. It's a win all around.
posted by Tell Me No Lies at 12:36 AM on June 13 [8 favorites]


Wow, the price of Bitcoins seems to bouncing back just as fast.

Or maybe that's because it's Friday.
posted by anonymisc at 12:41 AM on June 13 [7 favorites]


Excuse my naivety, but how can they sell off seized assets before a trial? Until he's convicted, they aren't the proceeds of crime - they're his possessions (or other ppls possessions that he's looking after) that they have decided to steal and sell on
posted by sodium lights the horizon at 12:42 AM on June 13 [6 favorites]


...Bitcoin's actual value.

Which is... three dogecoin, a secret decoder ring, and a dog-eared copy of Atlas Shrugged?

I'll take two, thanks!
posted by anonymisc at 12:45 AM on June 13 [1 favorite]


I suppose he could come out and say that he owned the silk road and have the sale halted. That might make things easier for the Feds.
posted by johnpowell at 12:51 AM on June 13


sodium lights the horizon: "Excuse my naivety, but how can they sell off seized assets before a trial? Until he's convicted, they aren't the proceeds of crime - they're his possessions (or other ppls possessions that he's looking after) that they have decided to steal and sell on"

This article discusses it a bit (not the Silk Road case, but a similar situation). Apparently it's fairly common to auction things off before a trial even starts. It's horrible, but it's not unique to this case.
posted by Bugbread at 12:54 AM on June 13 [1 favorite]


Excuse my naivety, but how can they sell off seized assets before a trial? Until he's convicted, they aren't the proceeds of crime

Not strictly true. It has already been proven that Silk Road was profiting from illegal transactions and thus is forfeit under U.S. Law -- his culpability for those transactions is all the trial is about.
posted by Tell Me No Lies at 12:59 AM on June 13 [6 favorites]


And in response the price of Bitcoins has just dropped 10% in a matter of hours.

Well, it's a bit more complicated than that. The price has run up 40% in the past couple of weeks for no good reason and without a correction, there's the sale of bitcoins and the ongoing issues with the largest mining pool approaching 50% of the hash rate.

Basically it was bound to drop a bit sooner or later, and that news was the catalyst for it. It also bounced back really quickly.

The amount of bitcoins they're selling is large, but it's really only a couple weeks worth of bitcoin mining. It'll be a one time hit to the bitcoin price, then it should recover pretty quickly.
posted by empath at 1:11 AM on June 13 [1 favorite]


I've been following bitcoin forums for a few months now, and have been buying them (I've made a decent profit on them, even buying all the way down from $800, because I kept buying more as the price went lower).

Basically, at least small time traders are full of paranoia about 'bitcoin whales' manipulating the market, and china driving down the price, and people reading the tea-leaves of technical analysis trying to figure out where the hell the price is going, and I've come to the conclusion that it's all bullshit.

China doesn't matter, the news doesn't matter, market manipulators don't matter. The price bounces around at random, but is basically tracking upwards and will continue to track upwards as long as adoption increases. That's really all you need to know about it. As long as more and more people use bitcoin the price is going to go up, long term, and I've seen nothing to indicate that adoption rates are slowing down.
posted by empath at 1:18 AM on June 13 [2 favorites]


The amount of bitcoins they're selling is large, but it's really only a couple weeks worth of bitcoin mining.

Could you expand on that thought? It seems like if it were true bitcoin would be completely devalued by this point.
posted by Tell Me No Lies at 1:25 AM on June 13


Aren't they kind of already? People keep seeming to forget that Bitcoin is designed to replace cash, not gold.
posted by DoctorFedora at 1:28 AM on June 13 [1 favorite]


Who actually "uses" bitcoin though? Just the silkroad replacements right? Dogecoin is the cryptocurrency that people actually spend.
posted by jeffburdges at 2:00 AM on June 13 [1 favorite]


Could you expand on that thought? It seems like if it were true bitcoin would be completely devalued by this point.

Why? Coins are being produced at a slow but steady rate, but the adoption rate is increasing at a faster rate. The miners generally only sell enough to pay for operations and hold the rest, anyway.

Who actually "uses" bitcoin though? Just the silkroad replacements right? Dogecoin is the cryptocurrency that people actually spend.

There's lots of use cases for them, like remittances, etc... And more and more stores are taking them as payment all the time, and it's getting easier to buy and spend them. With Coinbase, it takes about a week to get set up (they have to verify your checking account), but then after that buying and selling coins is simple. It takes 2-3 days for them to actually get into your account because of the time it takes to transfer money, but the price is locked in. Selling them takes the same amount of time, goes right into your bank. You can also receive and spend bitcoins directly from there, which is basically instant.

Ebay and paypal are also making noises about bitcoins recently, apple is about to approve bitcoin wallets (my friends that work at apple are big bitcoin fans). Whatever concerns people have about buy in or alternative currencies taking over are pretty much moot at this point. Bitcoin is going to happen now.

Now, do I know what the price is going to be? No, I have no idea. It's very possible that once there's a real bitcoin economy with coins flowing around freely, the price could be a lot lower than it is today. But they are going ot have and maintain some value for the forseeable future. The only thing that will stop it is a flaw in the protocol at this point.
posted by empath at 2:08 AM on June 13 [1 favorite]


someone is probably going to start crapping on me for this, but i think it really says something that they're selling these off ASAP and not sitting on them.

At least, with relation to the people saying "the value will keep going up!" and stuff. I'm not saying the government is loaded with geniuses, but if this was bricks of gold or something i kinda doubt they'd just be auctioning them off.

They're assets, but they're not some surefire appreciating asset the government wants to touch. It's more like a garbage can full of rolexes, but worse.
posted by emptythought at 2:31 AM on June 13


I still don't really get the point of bitcoins. The point of currency (for me as an individual) is to have a (relatively) safe way to store the value of things I have earned through my life without having to convert it all into non-liquid assets. Put simply, I can take that money and buy things with it immediately.

So what benefit do bitcoins get me? I am aware that one can speculate on bitcoins and sell them off again, even if can be a bit difficult to sell large numbers of them, but currencies shouldn't really exist for speculation. Thats surely not a desirable quality for money to have?
posted by Cannon Fodder at 2:37 AM on June 13 [3 favorites]


someone is probably going to start crapping on me for this, but i think it really says something that they're selling these off ASAP and not sitting on them.

The government doesn't have any accounting systems or anything configured to manage bitcoins. They're well acquainted with managing dollars. This amount of money is a drop in the bucket for both the market cap of bitcoins and for the federal budget.
posted by empath at 2:37 AM on June 13 [2 favorites]


The point of currency (for me as an individual) is to have a (relatively) safe way to store the value of things I have earned through my life without having to convert it all into non-liquid assets.

Dollars are a horrible store of value, compared to basically anything else, from gold to stocks to bonds. Its value is more or less stable, but it definitely declines over time. The use of dollars is that you can pay taxes and debts with them, which means that basically everyone accepts them.

So what benefit do bitcoins get me?

I would say for most people, nothing right now. But wait until you get a critical mass of vendors online that accept them. The real benefits don't start until not only do places like Overstock take bitcoins, but their suppliers also take them, and their suppliers' suppliers'. A lot of the benefits of bitcoins are kind of negated by the fact that there is so much overhead involved in exchanging them for dollars. Once then need to do that is sufficiently lessened, you'll see them explode.
posted by empath at 2:47 AM on June 13 [2 favorites]


bitcoin could dramatically increase the safety of any independent and mobile workers that handle a lot of cash today, particularly sex workers.
posted by Mistress at 2:49 AM on June 13 [1 favorite]


Oh, also it is good for clandestine stuff - but remember not all clandestine stuff is bad! When bitcoin got big in China for a while I was hopeful that it could really help democracy activists there.
posted by Mistress at 2:51 AM on June 13 [3 favorites]


So what benefit do bitcoins get me? I am aware that one can speculate on bitcoins and sell them off again, even if can be a bit difficult to sell large numbers of them, but currencies shouldn't really exist for speculation. Thats surely not a desirable quality for money to have?

They're deflationary by design (that is, if they have any value at all, that value will tend to increase over time), and they're a way to do non-reversible digital transactions without a gatekeeper (eg Visa, Mastercard, Paypal). That's about it.

There's some stuff about more complex transaction types and tying physical objects into the blockchain, making it a distributed vehicle for more general-purpose contracts, but I don't think anyone's ever going to use that stuff in anger.
posted by Leon at 2:58 AM on June 13 [1 favorite]


bitcoin could dramatically increase the safety of any independent and mobile workers that handle a lot of cash today, particularly sex workers.

I really wish people would find and replace "a digital transaction processor or cryptocurrency" in these sentences. Bitcoin can drag but with finalizing transactions. And if you're talking about just holding it til the end of the day, something like doge that runs them quickly would be superior.

I don't see what value-add this has over like, square or(shudder) paypal though. And i see what value subtracts it has in the current inconsistency of the process of extracting funds, and slow transaction times.

There's things like, yea, sex work where i could see not wanting to directly process credit cards or deal with services like i described being an advantage, but the disadvantages of bitcoin don't just vaporize there either.

Not going to hear any disagreement from me that digital payment will make, and for some(ie lyft drivers) has already made mobile workers safer though. Nor that i could see cryptocurrency taking off in those sorts of situations. Transactions just need to reliably run in say, 5 seconds. And cashing out needs to be something that takes a couple hours at most, not days to ???
posted by emptythought at 3:14 AM on June 13 [2 favorites]


Yeah, currency is a medium of exchange, not a store of value. A small amount of inflation is the best state for a capitalist economy to be in, as it rewards investing and spending over saving, thus driving economic growth and activity. Deflation is really, really bad, because it makes it a bad idea to spend money even one second before you absolutely, positively cannot wait a second longer to spend it, and you really can't have a healthy economy that way.
posted by Pope Guilty at 3:15 AM on June 13 [5 favorites]


And cashing out needs to be something that takes a couple hours at most, not days to ???

From coinbase, cashing out literally just takes as long as it takes for your bank to process an eft. It's no slower than paypal or anything else that uses eft.

Nor that i could see cryptocurrency taking off in those sorts of situations. Transactions just need to reliably run in say, 5 seconds. And cashing out needs to be something that takes a couple hours at most, not days to ???

For small amounts of money, you can just do a 0 confirmation transaction. You can wait longer and longer as the transaction amounts go up to be more and more sure that they'll go through. Insurance companies are coming up with loss compensation plans for bitcoins now, though, so it's not that big a deal any more.

Deflation is really, really bad, because it makes it a bad idea to spend money even one second before you absolutely, positively cannot wait a second longer to spend it, and you really can't have a healthy economy that way.

That's really only a problem if bitcoins replace dollars as the standard unit of account. I really doubt that will ever come to pass.
posted by empath at 3:34 AM on June 13 [1 favorite]


Yeah, currency is a medium of exchange, not a store of value

It's both and a unit of account to boot. If a currency cannot store value it's worthless e.g. Zimbabwe abandoned its currency not long after the last official report showed inflation of 231,150,888.87%.
posted by ersatz at 4:14 AM on June 13 [2 favorites]


The distributed peer-to-peer network that actually implements Bitcoin is currently handling around 60,000 transactions per day, so not even 1 per second -- there's 86,400 seconds in a day. The average amount of time it takes for a transaction to be confirmed (i.e. how long you have to wait after initiating a transaction before you can be reasonably sure that a consensus has been reached and that coins can't be double-spent, etc.) is between 7 and 8 minutes. I have never read a convincing argument as to why these figures are not completely disastrous to Bitcoin's chances of actually becoming more widespread. Who is going to wait in line at Target for 5+ minutes waiting for confirmation? And what is that wait time going to be like when there are thousands of transactions per second?

I know that you can pay transaction fees to induce miners to give your transaction priority over others, but isn't that just removing one of the selling points of Bitcoin, that you don't have to pay the 2-4% (or whatever) credit card fee off the top of every sale?
posted by Rhomboid at 4:26 AM on June 13 [6 favorites]


I have never read a convincing argument as to why these figures are not completely disastrous to Bitcoin's chances of actually becoming more widespread. Who is going to wait in line at Target for 5+ minutes waiting for confirmation? And what is that wait time going to be like when there are thousands of transactions per second?

The easy answer is that you just have a bitcoin processing company deal with it and don't accept bitcoins directly. They'll have insurance to cover loss. The payment processor will have direct connections to a lot of bitcoin nodes and will be able to propagate the transaction fast enough that it won't be an issue.

Doublespend attacks are extremely difficult to pull off and not really worth the effort for most everyday transactions.

Secondly the 1mb throttle is almost completely unnecessary now that mining has been more-or-less centralized into huge datacenters full of asics with broadband connections. If it ever becomes necessary to increase it, they can implement the change pretty quickly.
posted by empath at 4:39 AM on June 13 [1 favorite]


I have never read a convincing argument as to why these figures are not completely disastrous to Bitcoin's chances of actually becoming more widespread.

A merchant gets final credit card confirmation weeks after the purchase, at the point when you can no longer execute a chargeback. You aren't made to stay in the store for that time. In any case, seconds after you cryptographically "sign" your Bitcoin transaction the information has propagated through the network, waiting to be incorporated into the blockchain.

And what is that wait time going to be like when there are thousands of transactions per second?

The Bitcoin protocol adjusts periodically for volume and processing speed so that blocks are confirmed about every ten minutes. It's not as if an increase in transactions will slow this rate down, which you seem to be assuming.
posted by Mapes at 4:44 AM on June 13 [2 favorites]


Okay, but now you have this payment processor gatekeeper that you're dependent on, who might not want to deal with illicit things like adult services, and who will surely require some fee, and who will probably have to be a fully stand-up, documented, legit corporation in order to be able to buy said insurance, and... how is this any different than a credit card merchant as it exists today?
posted by Rhomboid at 4:45 AM on June 13 [4 favorites]


"Why don't they just donate them to a charity or something, to feed homeless people who are hungry?"

It's true! The federal government deals with neither homelessness nor hunger.
posted by anotherpanacea at 4:49 AM on June 13


Okay, but now you have this payment processor gatekeeper that you're dependent on, who might not want to deal with illicit things like adult services

Then you just use bitcoin directly and wait 10 minutes.

For some people, having a decentralized system is important. They can use bitcoin directly with all of the issues with confirmations and so on, and not deal with middle men. For other people, they just want low fee transactions, in which case using a payment processor is fine.

There's going to be a whole ecosystem of companies built around it that will tailor the bitcoin experience to whatever people's particular needs are. No particular implementation needs to be one-size-fits all.

In fact, I wouldn't at all be surprised to see paypal, Visa or Mastercard set up bitcoin accounts for people in the not-too-distant future.
posted by empath at 4:50 AM on June 13 [2 favorites]


In any case, seconds after you cryptographically "sign" your Bitcoin transaction the information has propagated through the network, waiting to be incorporated into the blockchain.

But that's meaningless until it's actually confirmed. If I had a wallet with 1 BTC I could initiate 100 simultaneous purchases of 1 BTC. One of them will succeed and the other 99 won't, but any given merchant won't know whether they actually got their money or not until they wait for those ~10 minutes for confirmation. What merchant would ever allow someone to leave the store during that period? That would be suicide. You'd have to farm the risk out to a payment processor with insurance like empath said.
posted by Rhomboid at 4:52 AM on June 13


I was talking to an older woman the other day who wanted to hear my suggestions for a good place to sell her collection of Beanie Babies and "recover the investment".
posted by Benjy at 5:01 AM on June 13 [4 favorites]


This is where escrow and multisig might come in handy I believe.
posted by yoHighness at 5:01 AM on June 13 [1 favorite]


What merchant would ever allow someone to leave the store during that period? That would be suicide. You'd have to farm the risk out to a payment processor with insurance like empath said.

In person, use cash. Over the internet, a ten minute delay doesn't matter. Like empath said, one size doesn't fit all.
posted by Leon at 5:21 AM on June 13


If I had a wallet with 1 BTC I could initiate 100 simultaneous purchases of 1 BTC.

So you're going to commit obvious criminal fraud every time you go into Target? It will be immediately noticeable to Loss Prevention that you've propagated the other 99 transactions and that the purchase isn't being made honestly. It's like arguing that stores can't survive because the goods are right out there for the customer to pocket and steal. Yes, people try, but commerce moves on.

And note that we're discussing one of the least useful areas for Bitcoin. It's already easy to use cash or credit cards at Target. It's at the other end of the spectrum from quickly transmitting money internationally and/or anonymously. And we've only had a couple years so far for people to dream up connections to fascinating areas like cryptographically secure voting, for example.
posted by Mapes at 5:22 AM on June 13 [2 favorites]


I did mean currency is a unit of exchange, yes. But as such I don't see one set being "better" than another. I don't sit around in the UK wishing we used dollars, for instance, and if I did that would probably because our economy had collapsed with respect to America's. I guess I can do illegal things with bitcoin, but is that really the only benefit?
posted by Cannon Fodder at 5:39 AM on June 13


I used bitcoin for the fist time to buy some MetaFilters recently and was struck by how slow the entire process was. Admittedly, some of that was first-time setup and overhead, but the 10 minute blocktime seems like a real drag. I'm used to Dogecoin's snappy transaction time and I was definitely feeling the 5 years of age on BTC.
posted by BeerFilter at 5:39 AM on June 13


Doublespend attacks are extremely difficult to pull off and not really worth the effort for most everyday transactions.

Except when you have >50% of the hash rate and the Ghash.io mining pool just crossed that barrier...
posted by PenDevil at 5:41 AM on June 13


Excuse my naivety, but how can they sell off seized assets before a trial? Until he's convicted, they aren't the proceeds of crime - they're his possessions (or other ppls possessions that he's looking after) that they have decided to steal and sell on

This PDF has the order of forfeiture. These bitcoins were stored on the actual Silk Road servers, so they were seized from Silk Road itself. If someone stepped up and said,"I own Silk Road", they wouldn't be forfeited, but no one is that stupid. So the goverment got a summary judgement again the Silk Road website, and thus the forfeiture.

There are another $84 million worth of bitcoins on the defendant's personal computer, which he did claim as his, and which are not being auctioned.
posted by smackfu at 5:56 AM on June 13 [4 favorites]


The general argument against a 51% attack* being likely is that it would render your $MM computational setup worthless, because confidence in bitcoins would drop to near-zero even as you are the fastest miner of them in the world. So why not just make money instead? But I haven't heard a good argument (except the startup cost) against a nefarious actor conducting an attack because they have shorted bitcoins (presumably by a tremendous amount, which may be infeasible), or because they have another reason for the system to fail.

*This is where one has >50% of the crypto computational power in the network, and in the long run can therefore decide which existing transactions to confirm. It would still not be possible to produce coins beyond the 21M limit nor change others' account balances.
posted by Mapes at 6:00 AM on June 13


So, aren't they just rushing to get those bitcoins out there so folks can buy more drugs so they have more people to arrest?
posted by valkane at 6:08 AM on June 13


Except when you have >50% of the hash rate and the Ghash.io mining pool just crossed that barrier...

They don't have 50% of the hash rate, it's in the 40s. They do happen to get more than 50% of the coins sometimes, though, because who gets the coins is variable
posted by empath at 6:34 AM on June 13


The sale of that many Bitcoins would devalue the market. Why don't they just donate them to a charity or something, to feed homeless people who are hungry?

Your first sentence is the answer to your "why" question. They want bitcoin's value to plummet so they can stick it to the people performing shady transactions. This causes chaotic movement in the criminal trade and chaotic movement creates both tappable communications chatter and criminals to make mistakes that lead them to get caught and/or expose networks.
posted by The 10th Regiment of Foot at 6:56 AM on June 13


Your first sentence is the answer to your "why" question. They want bitcoin's value to plummet so they can stick it to the people performing shady transactions. This causes chaotic movement in the criminal trade and chaotic movement creates both tappable communications chatter and criminals to make mistakes that lead them to get caught and/or expose networks.

This is complete nonsense. The federal government has had ample opportunity to fuck with bitcoin, and instead, the federal reserve, IRS and various state regulatory agencies have just given guidance on how to use them legally and safely. And also, while the amount of bitcoins is large compared to a normal day of volume on the exchanges, it's not a market breaking amount. hell the price has already recovered most of what it lost in the flash crash it had on the news.
posted by empath at 7:00 AM on June 13


They don't have 50% of the hash rate, it's in the 40s. They do happen to get more than 50% of the coins sometimes, though, because who gets the coins is variable

How much is controlled by the other pools which are secretly controlled by the same folks who are in charge of Ghash.io?
posted by Pope Guilty at 7:01 AM on June 13


Hungry people eat bitcoins?

Sean's Outpost in Florida has done quite a bit of work to provide food and shelter to those in need through bitcoin donations. The website doesn't have much info, but the founder is still active in raising bitcoins to help people.
posted by msbrauer at 7:04 AM on June 13


The federal government has had ample opportunity to fuck with bitcoin, and instead, the federal reserve, IRS and various state regulatory agencies have just given guidance on how to use them legally and safely.

You talk about "the federal government" as if it is one entity with one set of missions and goals that communicates within itself to accomplish a joint task. The US Marshals Service are not even in the same cabinet department as the IRS or the Fed. Their mission is to trap "bad guys" not to facilitate the legal and safe use of bitcoin.
posted by The 10th Regiment of Foot at 7:06 AM on June 13


You talk about "the federal government" as if it is one entity with one set of missions and goals that communicates within itself to accomplish a joint task. The US Marshals Service are not even in the same cabinet department as the IRS or the Fed. Their mission is to trap "bad guys" not to facilitate the legal and safe use of bitcoin.

I absolutely guarantee you they talked to the treasury department before going ahead with this.
posted by empath at 7:07 AM on June 13


They want bitcoin's value to plummet

They're selling 30,000. Routine mining generates 3,600/day (until 2016, when the rate halves as happens periodically to asymptotically approach a hard 21M total). Why would the value "plummet"?
posted by Mapes at 7:13 AM on June 13


In fact, I would be surprised if the auction went very far below the current market price -- if you wanted to buy 30,000 coins with the current order book, you'd have to pay up to $5,000 a coin...
posted by empath at 7:18 AM on June 13


For anyone else wondering, a BitCoin is worth about $600 today (being Friday). So this sale is about $18M worth of Bitcoin. There's 12.88M BitCoin in circulation right now, so this is 0.2% of all BitCoin. About 120,000 BTC/day changes hands, so this transaction will be roughly a 25% increase to a typical day.
posted by Nelson at 7:20 AM on June 13 [4 favorites]


To the limited extent that the Federal Government has a single coherent mission, they're not going to be jumping through hoops to help or hinder Bitcoin. FinCEN and the IRS have established policies in line with how they have always operated.

Even speaking as somebody who openly regards Bitcoin as being the financial equivalent of "Ow, My Balls", I don't see this auction as having that much of a longterm macro effect. The lot will sell for below market value, to a well-monied bidder. Life will go on for everybody, pro and anti.

I wonder if some small-time BTC enthusiasts aren't already pooling their money together to try to get some cheap-ish BTC.

Also, according to the SA fora, it looks like some Gox BTC moved today.
posted by Sticherbeast at 7:22 AM on June 13


Honest question: let's say that the feds found a big lot of prepaid gift cards under similar circumstances. They would just auction those off, too, right?
posted by Sticherbeast at 7:26 AM on June 13


I absolutely guarantee you they talked to the treasury department before going ahead with this.

Maybe they told Treasury what they were doing, but they wouldn't have gone looking for buy in and especially not permission. Unless the seizure was a coordinated effort with treasury agents, why would they seek or need their clearance?

let's say that the feds found a big lot of prepaid gift cards under similar circumstances

Found? No. Seized? Maybe.
posted by The 10th Regiment of Foot at 7:30 AM on June 13 [1 favorite]


Found and then seized, yes. It's not as if they could seize them without having found them!
posted by Sticherbeast at 7:32 AM on June 13


They would just auction those off, too, right?

Yep! Looks like the winner paid $2800 for $3700 of gift cards.
posted by smackfu at 9:04 AM on June 13 [3 favorites]


ghash.io

Maybe this is my issue, but I'm suspicious entities whose domain names are in Black Speech. What's next, burzum.org?

(Holy crap, there's already a burzum.org. The Internet has EVERYTHING!)
posted by The Tensor at 9:35 AM on June 13 [2 favorites]


The Internet has EVERYTHING!

Including Varg Vikernes' tabletop RPG!
posted by Sticherbeast at 9:36 AM on June 13


If it ever becomes necessary to increase [transaction frequency limits], they can implement the change pretty quickly

I know a lot of aspects of bitcoin, such as this one, are policies rather than technical limitations which can, theoretically, be changed. But I don't at all understand the practical aspects of how that can ever happen. If bitcoin has no centralized management, then what would the process be? Would this effectively be a branch and if 51% of the miners decided to switch over to it, it becomes the new reality? Or what?

[Deflation] is really only a problem if bitcoins replace dollars as the standard unit of account

I don't know much about macroeconomics, but I would need to hear more explanation before I am willing to believe that just talking in terms of dollars alone is enough to make deflation unimportant.

The limit to how small a transaction you can make without a fee is expressed in bitcoin - right now it's 0.01 BTC. I guess that's probably a policy that can be updated ... to track the dollar? By whatever process that can also change transaction limits?

Over the internet, a ten minute delay doesn't matter

If you're buying something physical that will be mailed to you, yeah, totally. If you're buying digital goods or stocks or something, it does matter. It also matters if bitcoin gets too volatile.
posted by aubilenon at 12:29 PM on June 13


If bitcoin has no centralized management, then what would the process be? Would this effectively be a branch and if 51% of the miners decided to switch over to it, it becomes the new reality? Or what?

Well, both miners and users. Miners are publishing the blocks but regular clients also check things make sense according to the client's version of the code and parameters. In practice to get such a change adopted it works certainly help to convince the core devs to commit it to the reference implementation.

One problem with Bitcoin the specific coin is that I think we'll see a tendency to protect the value of their 8 billion or so from any change that marginally affects the spot price, ossifying what should be a flexible prototype technology. 8 billion is not that much in the grand scheme... Some changes still seem like they'd happen without much fuss, such as increasing the maximum transactions per block, but I think there'd be resistance on decreasing block time, for example.

Dogecoin has "inflation" or more precisely a continuing mining subsidy of 5 billion per year after the initial 100 billion are mined by early 2015, though there's every chance that scheme will need tweaking.
posted by save alive nothing that breatheth at 1:02 PM on June 13


> Could you expand on that thought? It seems like if it were true bitcoin would be completely devalued by this point.

Why? Coins are being produced at a slow but steady rate, but the adoption rate is increasing at a faster rate. The miners generally only sell enough to pay for operations and hold the rest, anyway.

Ah, I misunderstood. I thought that you meant that every mining operation out there was generating $30,000,000 a week.
posted by Tell Me No Lies at 10:16 AM on June 14


They don't have 50% of the hash rate, it's in the 40s. They do happen to get more than 50% of the coins sometimes, though, because who gets the coins is variable

And just 24 hours later...
posted by Pope Guilty at 1:42 PM on June 14 [1 favorite]


The auction is over, the price is already higher than it was when this thread was posted.
posted by empath at 7:35 PM on July 1


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