Winners of First Seized Silk Road Bitcoin Auction Remain Anonymous 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.
One stupid question (Score:3)
Why didn't they just sell these bitcoins at a regular exchange?
Re:One stupid question (Score:5, Informative)
One of those little things that they do to maintain the appearance that they are not corrupt.
Re:One stupid question (Score:4, Interesting)
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 (Score:5, Insightful)
No exchange at all (Score:4, Insightful)
Re: (Score:2)
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 (Score:4, Insightful)
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: (Score:3)
Re: (Score:3)
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: (Score:1)
Re: (Score:2)
Re: (Score:2)
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 techn
Re: (Score:2)
Re: (Score:2)
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 exchan
Re: (Score:1)
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
Re: (Score:2)
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
Re: (Score:2)
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: (Score:2)
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.
It's always annoying when reality contradicts a good theory, isn't it? Almost like the Bitcoin economy itself, which just keeps growing and
Newegg may have caused the rise (Score:1, Interesting)
Newegg.com now accepts bitcoins, which I suspect is at least as important for the rising prices in the last few days.
Re: (Score:1)
Unbelievable (Score:1)
...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: (Score:2)
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: (Score:2)
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. Irration
Re: (Score:2)
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: (Score:2)
And what about the innocents? (Score:1)
There was at least one seller on silk road shipping only legal stuff like glassware. Did he get his coins returned?
Re: (Score:3)
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 (Score:2)
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 (Score:4, Interesting)
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? (Score:2, Insightful)
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 withou
Re: (Score:3)
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: (Score:2)
Re: (Score:2)
Re: (Score:3)
So the coins were not seized, just sold off and the value, at the time of sale, is now waiting a court decision.
Re: (Score:1)
Re: (Score:1)
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 s
Has anyone checked the Winklevii? (Score:2)
CIA, FBI, NSA etc all need coins (Score:1)
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 (Score:1)
Purchase (Score:2)
It would be funny if the buyers used them to buy drugs.
Re: (Score:1)
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.
Pivotal point? (Score:2)
"...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: (Score:2)
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: (Score:2)
Re: (Score:2)
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: (Score:2)
Isn't that the very definition of economic value?
Re: (Score:2)
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 ... (Score:2)
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: (Score:2)
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: (Score:2)
+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 t
Re: (Score:1)
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 hu
Re: (Score:1)
. 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 (Score:1)
Re: (Score:2)
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? (Score:2)
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.
Re: (Score:2)
Re: (Score:2)
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.
We may never know. but... (Score:2)
We do know they won't be using MTGOX as an exchange...
Another possibility (Score:2)
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.
SEC to investigate US Marshals... (Score:2)
When this Ponzi scheme collapses [sec.gov] the SEC will have to investigate the United States Marshals Service.
Should make for interesting spectating.
"Never know" is wrong (Score:2)
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: (Score:1)