For Sale: 29,656.51306529 Bitcoins

http://www.usmarshals.gov/assets/2014/bitcoins

by jc123 • 12 years ago

580 400 12 years ago

usmarshals.gov

notindexed• 12 years ago

https://blockchain.info/address/1F1tAaz5x1HUXrCNLbtMDqcw6o5G...

https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4...

sp3322• 12 years ago

Whoa, almost the whole balance from that first address was just moved to here https://blockchain.info/address/1Ez69SnzzmePmZX3WpEzMKTrcBF2...

danielweber7• 12 years ago

USG almost assuredly hired a few Bitcoin experts to help them handle this.

codeddesign• 12 years ago

wait...so you have to deposit $200k in order to bid???

yellowapple• 12 years ago

Well considering that's around $16.7 million, I'm not surprised.

What's more amusing is that the auction is "cash only".

jarrett3• 12 years ago

I take that to mean cash in the sense of liquid assets, as opposed to something leveraged or what have you. Not cash in the sense of a briefcase full of cash.

marincounty2• 12 years ago

Why can't I bid in Dodgecoin?

ubernostrum• 12 years ago

I think it's pretty standard when auctioning high-dollar-value items to require some sort of verifiable deposit to prove you actually could make the purchase if you're the high bidder...

bthrn2• 12 years ago

Yes, since they're being sold in 3000 BTC blocks, the deposit is understandably high. I imagine the blocks will sell for much more than that.

wmf4• 12 years ago

Considering that each asset is worth over $1M I imagine the deposit keeps out the riff-raff.

evan_• 12 years ago

Standard Operating Procedure. They're not treating this any differently than any other auction. For instance this truck requires a $2070 deposit to bid: http://gsaauctions.gov/gsaauctions/aucdsclnk?sl=41QSCI142190...

wnevets• 12 years ago

if you have $17 million to spend, is $200k that big of a deal?

VMG4• 12 years ago

You can bid on a single block of 3k Bitcoin (~$1.5m @ 500$/Btc)

anigbrowl2• 12 years ago

That's completely normal - it's just a way of ensuring the bidder is making a serious offer and can follow through with it. Same thing if you buy a house, when you put in your offer you need to write a check for 'earnest money' (anywhere from a few thousand to 5% of the list price) to show you mean business.

saganus2• 12 years ago

Anyone care to take a guess as to how will this affect Bitcoin price?

drcross• 12 years ago

It will only serve to legitimize bitcoin if anything causing a possible increase in price and won't directly affect the price through the sale.

davidgerard• 12 years ago

* price goes up * price goes down * price stays the same * anything else happens

"THIS IS GREAT NEWS FOR BITCOIN!!"

aqme28• 12 years ago

It's dropped about 10% since the news.

lucb1e• 12 years ago

That's not a guess.

drcode4• 12 years ago

I think this is the best publicity imaginable. I can't see any reason why the price wouldn't go through the roof over the next month, but bitcoin prices are tough to predict.

tlrobinson• 12 years ago

Can you explain why?

Glyptodon2• 12 years ago

This seems insane. Shouldn't it be cheaper and more efficient to just sell them on an exchange or something? (Over time, even, rather than all at once, obviously.)

"Let's sell them all in blocks of 3000 and require a deposit of $200k to bid" ... yeah ...

jarrett3• 12 years ago

If you were the US Marshals, would you entrust the government's money[1] to an unregulated Bitcoin exchange?

[1] As to whether the government is morally, ethically, or legally entitled to the seized properties, I have no opinion. I don't know anything about the situation.

Omniusaspirer• 12 years ago

I'm not sure one could possibly argue that this is morally or ethically "right". Legally it's apparently a-ok though.

These coins were technically owned by all the people with accounts on the Silk Road and were not necessarily going to be used for illegal transactions. For all we know this is basically government stolen money from some guy who wanted to buy a sandwich with Bitcoin just for the laughs and to say he did.

adestefan2• 12 years ago

The government doesn't see Bitcoin as money. Instead it's just selling seized property like it always does.

bthrn2• 12 years ago

-Large sales are usually done off exchanges because it's easier to agree on a price and leave the market unaffected by such a large transaction.

-The government is probably not interested in taking a long time to sell these blocks.

-Lastly, I imagine there are easily more than 10 individuals who are both financially willing and able to purchase blocks of this size.

adwf• 12 years ago

I imagine it's just official government procedure. ie. You seized an asset, this is how you sell assets, therefore this is how you sell bitcoins.

slewis• 12 years ago

Does the government sell seized USD?

jessriedel• 12 years ago

That only work if there is an exchange that is widely considered reputable so that the market value is accepted by observers as fair, and those places just don't exist yet for bitcoin. (Obviously, having stolen good sold at the agent's nephews's yardsale is not OK.) Sometimes there are inefficiencies involved with transparency.

cmelbye• 12 years ago

Signing up for an account on $EXCHANGE_THAT_ISNT_COMPROMISED_YET so you can unload $17,000,000 worth of Bitcoin sounds far more insane to me than this does.

dkural• 12 years ago

The question is, what is cheaper & more efficient to sell all seized assets, not one particular class. Global optimization.

wmf4• 12 years ago

Since you get a bill of sale from the US government I guess these will be the cleanest Bitcoins ever.

Alupis3• 12 years ago

Street value of approx: $17,330,000 USD

I'd wager it will sell for much less, likely 3/4 of that street price.

ssharp• 12 years ago

It's not a great look for the BitCoin market if you can buy in bulk at 75%.

extrapolate• 12 years ago

On the contrary, virtually no exchange can currently provide that kind of liquidity, so if someone is looking to be a Bitcoin bag-holder this is a great entry point. So I wouldn't be surprised if it went for > market value.

JohnTHaller3• 12 years ago

Bitcoin being as volatile as it is, we need to clarify street value as of when...

Street value this morning: $18,752,406.34

Street value now (2014-06-12 @ 7pm NYC time): $17,220,321.22 (it lost $110,000 in value in the hour since you posted)

I'd wager it will sell for around 1/2 its street value when the auction is completed.

bicknergseng• 12 years ago

Looks like a good deal for the Winkleviis?

Benferhat• 12 years ago

The price of bitcoins has already dropped 10% since the news.

0x02• 12 years ago

Will they announce the winning bidders?

Those coins will then be linked to the winners' identities permanently in the block chain. Talk about painting a target on oneself.

Alupis3• 12 years ago

I'd imagine a business or bank will make the purchase, and they likely don't care about the anonymity aspects.

GigabyteCoin4• 12 years ago

Does Donald Trump or Bill Gates have to shy away the fact that they have seemingly endless amounts of money?

0x02• 12 years ago

Can you irrevocably transfer all their money in seconds to an anonymous & untouchable account by coercing them to give up, or hack in and steal, a private cryptokey consisting of a handful of bytes?

gojomo• 12 years ago

I love this part:

The USMS will not transfer bitcoins to an obscene public address, a public address apparently in a country restricted by the Office of Foreign Assets Control (OFAC), a public address apparently associated with terrorism, other criminal activities, or otherwise hostile to the United States.

So, be sure to pre-calculate your auction-winning vanity-address to be some simple transformation of your obscene/anti-American message, rather than the message itself!

13throwaway4• 12 years ago

1osamasjnHLJ1jwuXq5dZxQ7UZCgHe66N

bsder• 12 years ago

It would be funnier if the bitcoin exchanges blocked those blockchains as having been permanently compromised.

It would prevent the feds from having an incentive to seize bitcoins.

leorocky• 12 years ago

It would prevent the feds from having an incentive to seize bitcoins.

No it wouldn't. Law enforcement seizes to deprive criminals of gain from illicit activities, not to make a profit. They sell because they can.

It also wouldn't be funny. The US Marshall's service is doing what it is supposed to. If you have problems with federal law enforcement try a country that lacks a professional police force.

ansimionescu• 12 years ago

I find it hilarious that someone had to explain this.

mfisher87• 12 years ago

If you have problem with federal law enforcement try a country that lacks a professional police force.

Genius statements like these are why I read HN!

qq662• 12 years ago

Plenty of law enforcement organizations seize money to make a profit, with very little regard to whether the owners are criminals or whether the money is the fruit of illicit activities:

http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...

praxeologist2• 12 years ago

Doubt it, but I would love for it to happen. I see this as criminal theft by the USMS.

dylz• 12 years ago

It is not theft, it is sale of abandoned property as they offered for people to claim their BTC and no one did.

VMG4• 12 years ago

That's a sword that cuts both ways. If you infrastructure for that kind of filtering became pervasive, you can be sure that government would be dictating which coins (transaction outputs) are compromised and which are clean.

Luckily a fork of Bitcoin that included these filter mechanism is unlikely to succeed. Let's keep law enforcement on a separate layer, we didn't put it into TCP either.

drdeca2• 12 years ago

Wouldn't this just be the particular exchange making the decision though?

Just, the exchange voluntarily deciding whether or not to accept the trade?

Or did they mean that if the coins were tracked regardless of who they were passed to or through how many people?

I don't see how a person deciding not to trade with a given address(govt), or any address that traded directly with that address(person who bought from govt), is creating any sort of infrastructure.

It could be worked around with by additional transfers of course, or just used directly to purchase things,

But in at least one similar type of thing I don't think it would inherently cause or require any harmful infrastructure/modification to infrastructure, even if it would be pointless.

viraptor• 12 years ago

Could someone explain the logic behind the price drop? Is that related to the fact that those 30k will be sold below the standard price? For some reason it seems counter-intuitive for me, since the money connected to those coins have been already paid once (whether for mining them or via exchange). So in practice it's more like they've been actually paid for ~twice now, so the effect "should" be opposite.

anigbrowl2• 12 years ago

People had priced in the freeze on these coins, which might have continued indefinitely. The price drop is out of proportion ot the actual (re)inflationary effect of these bitcoins, but people are irrational.

supergauntlet• 12 years ago

It's possible they're trying to drive the price down.

DougWebb• 12 years ago

Maybe some of the people who are looking to bid on these bitcoins are driving the price down, so that they won't have to bid as much to win them. Then when they price recovers they can start selling them off slowly at a profit.

SolarNet3• 12 years ago

That's an interesting understanding of how currency works. There is no currency connected to bitcoin. There is an exchange rate. Someone out there willing to give you X dollars for Y bitcoins. (Consider the concept of X dollars for Y barrels of gas, or Z oz of gold).

Money is used multiple times. The dollar you spend at the store is then split up and spent again, and again, and again. So the value of the whole currency is what is important, how much buying power the currency you have is based on how many dollars there are, what they can be spent for, how often they are spent, etc. By offering X dollars for Y bitcoins, what people really mean is: offering x% of all the dollars for y% of all the bitcoins.

This sale adds more bitcoins (because portions of the markets believed them unrecoverable, and they haven't been in circulation for a while), so Y bitcoins is now a smaller percentage of the whole buying power available for bitcoins, which means they are also worth less dollars. Similar effects are seen in fiat currency (like dollars) when more money is printed, it affects the money supply, and allows the government a modicum of control on inflation (when used correctly) but also can let the government to let inflation get out of control (re: most cases of Hyperinflation[1]).

The simpler explanation is simply: Because the supply of bitcoins went up, with a constant demand of bitcoins, the value goes down because more people are trying to sell them, and the price goes down due to competition etc (e.g. basic supply and demand).

[1] http://en.wikipedia.org/wiki/Hyperinflation

PeterisP5• 12 years ago

The increased [bit-]money supply doesn't explain the observed price drop - it would explain a price drop, but much, much smaller than this one; those 30k bitcoins is a rather tiny part of the whole bitcoins in circulation; so obviously some other reasons dominate this particular price change.

If US treasury prints a billion dollars, then that doesn't trigger a 10% drop in value of a US dollar - it's a comparably tiny change with a tiny effect; similarly an extra 30k BTC is not by itself a reason for large fluctuation if the market is functioning properly.

sillysaurus37• 12 years ago

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

Until bitcoin achieves a critical mass among both consumers and merchants, searching for reasons for a price drop or jump may as well be numerology.

The trouble with opinions about the price of bitcoin is that they're very hard to disprove, because no one is privy to the information that's causing the price fluctuations except the people causing the price fluctuations. But remember, that's my point: you won't ever know why the price rises or falls. It's beyond your knowledge, unless your friends include those who are actually moving the price.

Until the price of bitcoin is determined by more than a couple hundred people, you simply cannot reason about its price in any meaningful way. Even talking about "downward price pressure due to mining costs" is mistaken at this point. The price of bitcoin is a function of the whims of those couple hundred people.

tinco2• 12 years ago

There is logic. All speculative trading is driven by two motivations, fear and greed. The balance of these two decides the price.

Before this announcement the balance was about $650. It means that greedy people think it will go higher than $650, and fearful people think it would go lower.

Now comes this announcement. About 30.000 bitcoins wil sometime in July come into the hands of someone who will have paid significantly below market rate for them.

Is this good news or bad news for the market? It's bad of course. In the most optimum case, the buyer will keep the bitcoin, and the market won't move at all. In the worst case, the buyer will sell all the bitcoin the second he receives the bitcoin.

Between these two extremes there is a range of possibilities, but you can see that the range is from 0 to negative something, so overall we predict a negative outcome for the market.

So, the fearful people will become a little stronger, and the balance will drop accordingly.

baddox12• 12 years ago

There is no logic. Searching for logic behind bitcoin's price is a fool's errand.

The logic is that people (or algorithms that people put in control of their bitcoins) offered to sell bitcoins at a certain price, and other people (or algorithms) decided to accept that offer. One side decided that they prefer x USD to y bitcoins, and the other side decided that they prefer y bitcoins to x USD. So they agreed to swap. That is precisely the same logic that goes into literally every commercial transaction.

To look for some concise one-sentence explanation for the aggregate preferences of a bunch of people, however, is a fool's errand. And that doesn't change when "more than a couple hundred people" are trading.

sbierwagen• 12 years ago

http://en.wikipedia.org/wiki/Supply_and_demand

Increasing supply always reduces the market price.

bcsmith2• 12 years ago

But the supply hasn't increased. These bitcoins existed prior to the offer of sale. The only thing that increased was the free float.

Confusion• 12 years ago

Only when increased supply doesn't cause an even higher increase in demand. There are some examples of this in history, although they are few and far between.

jashmenn• 12 years ago

It's plausible that folks who are interested and able to buy these coins have a position in BTC. They may be selling BTC in order to have the cash to purchase the Silk Road blocks. This has the duel effect of driving the price down, which makes the "list" price (i.e. the exchange rate) of the SR blocks lower which, in turn, may make the competing bids lower.

smrtinsert2• 12 years ago

If there was logic, it would be repeatable, and all those providing advice on said logic would be millionaires therefore doing something other than answering this very question.

Same goes for capital markets which is why only brokers and Warren Buffett "make money".

artursapek4• 12 years ago

The price has tanked today as a result of this. http://cryptowat.ch/btce/btcusd/1hr/

Market started going crazy earlier today when DPR's seized coins started to move. https://blockchain.info/address/1FfmbHfnpaZjKFvyi1okTjJJusN4... The downtrend is only accelerating.

alex_duf• 12 years ago

time to buy.

ryan_j_naughton5• 12 years ago

Damn, I was planning on waiting until it hit a local minimum and then buy a few, but while I was writing the above comment, the price already rebounded from $550 to $590.

ryan_j_naughton5• 12 years ago

The volatility in the bitcoin price just demonstrates how the majority of the people trading it have no conception of how to value the underlying asset (i.e. demand for a low cost transaction system) and thus it is speculators leading speculators a la the blind leading the blind.

The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis.

Why would someone go long bitcoins (i.e. buy them and in such quantity) through such a difficult process as dealing with the US gov't to so quickly exit their position?

My hypothesis is that it will be either rich institutional investors, hedge funds, or similar large investors who see this as an opportunity to acquire bitcoins at an undermarket price.

I think many of those groups would sit on their position (and not sell them). Further, if they were to sell them, they would want to do so in a way that didn't dramatically affect the price (thus over many days, weeks, or months). Given that 30K bitcoins is far less than the total bought/sold on exchanges every day, it should be presumed that they can exit this position over a sufficient timeline in order to not cause negative pressure on the price (if the auction winners even want to sell -- which as I analyzed above, I don't think they would).

polshaw2• 12 years ago

It has very limited use as a serious transaction system while there is so much volatility. Prices are therefore pegged to local currencies, and if you want to keep that then it's no longer low cost because conversion to/from local currency costs just as much. The speculation and (eventually) deflationary nature of BTC significantly hinders the chances of it ever stabilising, and therefore a true 'bitcoin economy' emerging (ie. where people do not need to peg to or convert to local currencies).

Then there is the fact that it is not a limited good-- someone could quite easily come along with a BetterCoin making BTC almost useless-- there are various things that could be improved, eg privacy, or the slow confirmation times.

E: also, there will be an 'oversupply'-- Whoever buys these bitcoins won't be buying other BTC because of it -- it's irrational to think that the auction is creating a significant new demand that wouldn't have existed otherwise! Selling over weeks/months would still affect the price, although more in the normal supply/demand manner than causing a crash/panic. But that could be happening before any of these BTC are sold anyway!

conanbatt2• 12 years ago

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

Addition: I once read that off-shore accounts and hidden illegal USD dollars are estimated in the trillions of dollars. If such amount of money were input into the system immediately, it would definitely tank the dollar in comparison to the EURO. Even worse, it would have way more side effects, like inflation and such ,that bitcoin doesnt have because its not a primary "currency".

It just takes a lot less to tank bitcoin than the dollar.

Ologn5• 12 years ago

no conception of how to value the underlying asset

They have no conception of how to value the underlying asset because the underlying asset has absolutely no value. Bitcoin is one of the purest scams that has ever been conceived. Even subprime real estate, pets.com stock, dutch Tulip Bulbs etc. had some value. You're buying and selling a hash - a number. It's absolutely worthless. That people are being suckered into buying these, ASICs costing tens of thousands and backordered to make them etc. is a real close-up seat to how a bubble works, how a scam works, and how the luminaries in the tech field can be lined up in a row to endorse the scam. Is there a tech bubble? "Bitcoin" is the word that can answer that question as easily as "pets.com" and "Webvan" did 15 years ago. At least those companies actually performed a valuable service, Bitcoins are worthless.

mtdewcmu• 12 years ago

>The volatility in the bitcoin price just demonstrates how the majority of the people trading it have no conception of how to value the underlying asset (i.e. demand for a low cost transaction system) and thus it is speculators leading speculators a la the blind leading the blind.

True, but discovering prices for things that otherwise have no price is something markets do routinely every day.

>The current sharp price decrease is because people are worried that whoever wins this auction (and the subsequent auction of DPR's coins) will want to exit that position. Thus their will be an oversupply in the market and cause the price to decrease. Expecting this, people are taking that into account and trying to get out before the oversupply, causing a self fulfilling prophecy based on bad underlying analysis.

There's nothing unique about this situation from the standpoint of how markets work; the only unique thing is nature of the asset itself. Even so, bitcoins are not fundamentally different from a precious metal like gold. The price of gold isn't based on the value of the products you could make from it; very little gold gets put to any actual use. Gold is valuable primarily as a result of it's being scarce and the fact that people have given it value arbitrarily, just like bitcoin.

What I read in to the price shock is that the U.S. Marshalls probably should have anticipated this result of dumping the entire quantity at once, and they probably should have released it gradually to smooth out the effect on prices. The Marshalls may not have had the right backgrounds and somebody at the top failed to see it coming.

dusklight• 12 years ago

Can you please disclose how many bitcoins you own and if you have any vested interests in keeping the bitcoin exchange rate high. Thanks.

Ologn5• 12 years ago

Bitcoins are absolutely worthless. If there is any sign of a tech bubble, it is these worthless hashes that people pay hundreds of dollars for.

One of the genius aspects of the Bitcoin scam is the limited output and increasing difficulty as it goes on. This keeps the scam going longer. If it were like tulip bulbs, or subprime real estate, or pets.com type stocks, the bubble would eventually burst. With the types of bubbles we've seen, and the big names in tech willing to associate their names with this scam, keeping a <$15 billion market cap going is feasible for a little while.

Also keep in mind that the float is not all that high. Many bitcoins have never been traded, especially early ones. That 30k of Bitcoins are going on the market can tank the price so much shows how weak demand is for this worthless "currency".

One aspect of the pied pipers of this scam is that their theories of its value are not falsifiable. My theory is falsifiable - Bitcoins are going to go from a current market cap of over $7 billion to well below $1 billion. There theory is not falsifiable "it's valuable because it's valuable". So if it goes up they're right, if it goes down they're right.

Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash.

It's possible a real online currency might happen. The Bitcoin scam is certainly postponing that day. When Bitcoin crashes, possibly with much legal involvement afterward, VCs will be very hesitant to fund an online currency for years to come.

To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that.

I would short Bitcoins if I could find a reliable party to do it with, and it were easier to do. That doing that is so difficult is another sign how it's not a real currency.

That this post and any post not buying into the Bitcoin hype is bound to be downvoted is yet another sign of the scam. I rarely have posts downvoted on HN, but any time I am slightly skeptical of Bitcoin's value, the Bitcoin hucksters pile on and downvote anyone questioning the scam into oblivion. It reminds me of how MLM people act on the Internet.

ghshephard2• 12 years ago

Bitcoins have value because they let you buy things.

jnbiche3• 12 years ago

I didn't downvote, but I have to wonder what you're threshhold for not being a scam is? What companies will have to accept it, and how long will it have to be around?

I'm pretty amazed that people still think it's a scam when huge companies with massive legal departments are accepting it. That's some pretty extreme skepticism.

BTW, there are plenty of easy, legitimate ways to short Bitcoin, but given your extraordinarily high threshold for "non-scam", I won't bother mentioning them.

PS: Bitcoins are valuable because people are willing to buy them. Despite what most people think, money is not magic, it's just an agreement.

13throwaway4• 12 years ago

Do you believe that there are not any people who want an anonymous(Edit: pseudononymous), decentralized currency?

ThomPete4• 12 years ago

I didn't downvote you because it's important that people realize why you are wrong.

The value of any fiat, piece of gold, diamond etc isn't falsifiable either. You are assuming that other types of currency has inherent value. They don't.

baddox12• 12 years ago

For any remotely plausible definition of "worthless," bitcoins are just as worthless as any representative money, which inclues fiat money (like a USD) and commodity-backed money (like a gold certificate). The only reason money can be used in general transactions is that people choose to accept it, and they choose to accept it because they are reasonably confident they will be able to trade it again in the future for something of at least equal value.

This is the fundamental answer to "why is any representative money valuable?" If people don't have confidence that they can offer the money in the future, they won't accept the money today.

To me the real currency would have to be something in the realm of Folding@home. I'm not sure how it would work of if its computationally feasible, but I do know people would pay for the results of useful computations such as that.

As far as I know, that can't happen, at least not in a proof of work system. The work in a proof of work system can't be severable from the specific information it is designed to secure (in Bitcoin, that would be transactions on the block chain). This isn't exactly a scholarly source, but it's from the "Chief Cryptographer for the Ripple protocol": http://bitcoin.stackexchange.com/questions/11649/intrinsical...

I'm not very familiar with other cryptocurrency systems, like proof of stake, but I know there are some attempts at cryptocurrencies that use computation with unrelated useful side effects.

mrb4• 12 years ago

People downvote you because if this post is similar to previous ones you wrote (I did not read your history), then it contains no argument whatsoever, no line of thoughts, nothing. You say "it is a scam, it is going to crash" without explaining why. For example you seem unaware that Bitcoin is decentralized and what fundamental advantages this gives it over any other currency. So, of course, if you seem uneducated about Bitcoin, people will see no value in your posts and downvote you. I suggest you read the original white paper http://bitcoin.org/bitcoin.pdf as a starting point. (No, this is not sarcasm, I am serious.)

wcummings• 12 years ago

The gold bubble is thousands of years old, I wouldn't hold my breath

argaba• 12 years ago

Why are Bitcoins valuable? Anyone thinking of buying an ASIC or a Bitcoin should read from the Bitcoin boosters the answer to this question. There is no answer. Which is why Bitcoin is bound to crash.

Simple answer: Supply and demand. There is demand, you just have to research for more than 20 minutes to find the reasons for the demand aside from the artificial one created from people using it as a means for returns in investment.

Why do you jump to conclusions on topics in which you are clearly uninformed?

smrtinsert2• 12 years ago

That interface is inspired. Bollinger bands, slick dark theme, nice font, real time, restful url (looking at 4 hour right now)... very cool.

artursapek4• 12 years ago

Oy, thanks mate. I've had a lot of fun building it

dalore2• 12 years ago

But if you read the link, they aren't selling DPR coins, but the ones seized from SR

mathattack• 12 years ago

Was this a deliberate attempt to tank the price and weaken the currency? Or just no different than the government selling the Ferraris that it confiscates from drug dealers?

TamDenholm• 12 years ago

Surely this creates precedent of US government recognised legitimacy? While it might hurt the markets in the short run, i reckon it'll overall help bitcoin as a currency in the long term.

adestefan2• 12 years ago

It does nothing of the sort. All this does is confirm that Bitcoin is property that can be sold which is exactly what the government has said previously.

wmf4• 12 years ago

It reinforces existing government policy that Bitcoin isn't intrinsically illegal, but nothing more than that.

dragonwriter8• 12 years ago

Surely this creates precedent of US government recognised legitimacy?

It confirms that the government recognizes that bitcoins are real things which can be bought and sold, but that is both so patently obvious and so well established in legal actions that the government has taken around bitcoin already that confirming it is like confirming that the earth isn't flat.

joosters• 12 years ago

Isn't this a bit presumptuous?

Ross William Ulbricht hasn't yet been convicted of anything. I know that they aren't selling his personal bitcoins, but in the (highly unlikely) event that he is found innocent, wouldn't that mean that the Silk Road assets need to be returned to him? How then can they sell them now?

ars2• 12 years ago

https://news.ycombinator.com/item?id=7886226

ryan_j_naughton5• 12 years ago

It is presumptuous, but that is how civil forfeiture works. Its atrocious.

Take a look at this well written article by the New Yorker Taken: The Use and Abuse of Civil Forfeiture http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...

josephschmoe• 12 years ago

That is indeed blood boiling. I am now upset after reading this...

dragonwriter8• 12 years ago

While there are real issues with civil forfeiture raised in that article, they largely don't apply here -- this isn't a case where the government said "let us seize your assets and we won't prosecute you" (using it as an extortion mechanism) or where the cost of contesting forfeiture exceeds the value of the assets.

Its a case where Ulbricht chose to assert a claim on certain seized property and not on others, either because he is not, in fact, DPR (which is what he claims) and didn't want to steal property that wasn't his, or because he is actually is DPR but admitting that he owned the Silk Road servers and bitcoins would make his conviction more likely because it would make it harder for him to deny being the guy behind Silk Road.

ahallock• 12 years ago

That's disgusting. FTA: 'Many states, facing fiscal crises, have expanded the reach of their forfeiture statutes, and made it easier for law enforcement to use the revenue however they see fit.' How are they any better than the criminals they're supposed to be protecting us from?

vacri• 12 years ago

Jello Biafra sang about this as far back as the late 1980s - "property seized and sold before trial", where he had assets siezed in a raid, and the sheriff was legally able to sell his gear before Biafra had seen the inside of a courtroom.

grondilu• 12 years ago

If this happens (though it is very unlikely indeed), the bitcoins could be bought back or Ulbricht could receive an indemnity in US dollars.

dragonwriter8• 12 years ago

No, if Ulbricht had claimed the bitcoins were his (which would be kind of hard when he is also claiming that he isn't the guy behind the Silk Road), they would have remained seized as evidence but would not have been forfeited without further proceedings. They were forfeited because no one, including Ulbricht, claimed them (unlike the bitcoins that were seized from his personal computer that he did claim.)

danielsju6• 12 years ago

Actually forfeiture sucks hard, even if you are found not-guilty you don't really have a chance in hell of recovering assets seized during a drug bust—like your car for instance.

You can try to prove your innocence but it doesn't really work in practice.

swalkergibson3• 12 years ago

While there are certainly wanton abuses of civil forfeiture statutes, linked to even in this comment thread, applying them here is a no-brainer. Silk Road was very clearly a marketplace for illegal drugs, and the brokerage fee that DPR collected (whoever he or she is) is clearly illegal.

Again, there are obviously situations where civil forfeiture is improperly utilized. This is not one of them, in my opinion.

swalkergibson3• 12 years ago

I thought the same thing.

However, if he is found not guilty, then the presumption is that he was not involved and therefore would not be the "rightful owner" of the seized property anyway.

meowface• 12 years ago

I agree. These coins were the property of the Silk Road website/enterprise.

dragonwriter8• 12 years ago

Ross William Ulbricht hasn't yet been convicted of anything. I know that they aren't selling his personal bitcoins, but in the (highly unlikely) event that he is found innocent, wouldn't that mean that the Silk Road assets need to be returned to him?

If they aren't his bitcoins, why would they return them to him? The assets they are selling aren't the ones he has claimed a property interest in, they are the ones that were unclaimed (by him or anyone else) when the forfeiture action was initiated.

http://www.justice.gov/usao/nys/pressreleases/January14/Silk...

GigabyteCoin4• 12 years ago

I am under the impression that they are auctioning off bitcoins that belonged to "The Silk Road" and not "Ross Ulbricht".

There is no doubt in anyone's mind that the bitcoin sitting inside the silkroad wallets was free for the taking by U.S. authorities.

Whether or not Ross Ulbricht's wealth is owed to the U.S. government they're not sure, so they're keeping them until the trial has completed.

waterlesscloud• 12 years ago

I'm not sure they really belonged to The Silk Road. Didn't they really belong to the users, who had them on deposit on The Silk Road?

I guess the law would see that as belonging to the business holding them, but I'm not sure that's morally correct.

rbobby• 12 years ago

Meh... a bitcoin is a bitcoin is a bitcoin. If in the future the gov't is ordered to return X number of bitcoins they can simply go to the marketplace and buy them.

Cthulhu_3• 12 years ago

Well no, because it's been proven already that Silk Road was a drug exchange, and thus the money is dirty drug money and confiscated by the government. Whether Ulbricht was the mastermind behind the exchange and should be incarcerated is yet to be determined (I believe), that takes a longer lawsuit than a court order to shut SR down and seize its assets.

mscman• 12 years ago

I don't think so. Since the assets were on SR servers, which weren't technically Ross's personal property, and the business was used for selling drugs (admittedly along with other things), civil forfeiture laws allow the government to take those assets. Doesn't matter what happens with the lawsuit.

landryraccoon• 12 years ago

As others have pointed out, Ulbricht has not claimed that they are his bitcoins. In fact he would be undermining his own legal defense if he claimed the bitcoins were his, so the government is taking them unopposed. So if he were found innocent, probably part of the basis for finding him innocent would be that he successfully convinced the government that those were NOT his bitcoins.

adambom• 12 years ago

Someone should steal these before they can sell them

deadfall• 12 years ago

They should try http://coinbase.com ($591.11 right now)

NAFV_P• 12 years ago

I've been watching [0] for the past ten minutes or so.

Fucking hell, individual instances of radon-222 are more predictable.

[0] http://bitcointicker.co

GigabyteCoin4• 12 years ago

Is anybody else surprised by the urgency with which they seem to be selling these coins?

They only made the announcement today and you have to be registered to bid by this coming monday?

Is this typical of government auctions?

drcode4• 12 years ago

That's weird, because whenever the government spends my tax dollars they usually work so hard to make sure they are used in the most prudent way possible, planning well ahead into the future to maximize the value of the resources available to them.

samplonius• 12 years ago

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

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

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

kyledrake• 12 years ago

I doubt these are going to be liquidated once purchased. Someone is going to buy them cheaper than market rate and probably go long with them.

vijayboyapati• 12 years ago

This is good in a way. It's yet another tacit admission of the legal legitimacy of bitcoin by USG. It's not like USG would seize 20kg of cocaine then sell it into the market in an auction!

smtddr• 12 years ago

"This is actually good news!" -- http://thisisactuallygoodnews.com/

But seriously, I'm a bit suspicious about what gov would do with the list of all the people willing to buy those coins.

kev009• 12 years ago

I see a long haul future for bitcoin, but you made my day with that link :)

cpayne• 12 years ago

If you read the criteria for bidder registration ($200,000 deposit) I wouldn't be too worried.

alextgordon• 12 years ago

Cocaine was once legal too.

smoorman1024• 12 years ago

They could probably get more value out of the bitcoins by selling them slowly in the market rather than issuing a block sale. That's like Ackman running to the market and yelling for sale 20,000,000 shares of JCP. He instead slowly acquires or divests his stake.

chuckup2• 12 years ago

This is only what is currently being minted every 8.2 days. I predict the price will go up due to the media attention - this is a very cool story, expect lots of news coverage. When/if a Silk Road based movie ever comes out, expect "the moon".

You couldn't ask for a better story - the opposite of what Bitcoin really is when you think of it - finance, computers - stuff that bores the hell out of most people. Instead: drugs! conspiracy! magic internet money! Now, add "Satoshi" - mysterious inventor who's vanished. Seriously, you can't write this stuff!

imrehg• 12 years ago

"Transfer Fees. Any transfer fees associated with the transfer of the bitcoins will be paid by the buyer."

Dear officers, these are zero fee transactions, if there were any :)

JacobAldridge• 12 years ago

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

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

marme• 12 years ago

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

adamfeldman• 12 years ago

How is this possible?

badfortrains• 12 years ago

Civil forfeiture. From wikipedia: http://en.wikipedia.org/wiki/Civil_forfeiture#United_States "In civil cases, the owner need not be judged guilty of any crime; it is possible for the Government to prevail by proving that someone other than the owner used the property to commit a crime. In contrast, criminal forfeiture is usually carried out in a sentence following a conviction and is a punitive act against the offender."

Or if you're up for a long read: http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...

malka2• 12 years ago

THIS AUCTION DOES NOT INCLUDE THE BITCOINS CONTAINED IN WALLET FILES THAT RESIDED ON CERTAIN COMPUTER HARDWARE BELONGING TO ROSS WILLIAM ULBRICHT, THAT WERE SEIZED ON OR ABOUT OCTOBER 24, 2013 (“DPR SEIZED COINS”).

Seems to me that only BTC that are directly linked to SR that are sold.

rplnt4• 12 years ago

What about coins of SR users? Are those included here? Shouldn't they be returned to the users?

sschueller2• 12 years ago

These coins should be removed from the blockchain in a protocol update agreed upon by everyone.

No government should be making money this way.

baq• 12 years ago

so it's perfectly fair to profit from selling drugs that kill people, but when the profits from illegal activity are seized, the public shouldn't be able to reuse them?

scrollaway4• 12 years ago

Brilliant precendent you're trying to set here Einstein.

artursapek4• 12 years ago

    // TODO: remove after FBI auction

steven777400• 12 years ago

This has been proposed before in other situations. For example, the Mt. Gox coins were proposed to either be "destroyed" or sent back to their purchasers with a blockchain update.

This introduces serious problems with the question of "who is everyone" (when you say, agreed upon by everyone). In other words, is the community going to set up a centralized board to hear complaints and reverse transactions? Does this turn into "I bought a trinket on ebay and the guy didn't send me the thing, reverse the transaction"?

Part of the strength of bitcoin is a permanent historical record. There's been some suggestion that the true long-term benefit of bitcoin is not in the "money" part, but the blockchain itself. As soon as the blockchain becomes mutable, then this value becomes suspect, and the line for "how bad does it have to be before we edit the blockchain" might get weaker and weaker.

spindritf• 12 years ago

I don't think it is in this case.

Bitcoin is pretty fungible, almost like cash. If it turns out that he's innocent, he can sue the government for the money. It's not like they're selling some unique piece of art, or his family seat.

rayiner3• 12 years ago

Disclaimer: I think civil forfeiture laws are applied without sufficient discretion in drug cases. And it's troubling that they apply not just to illegally-obtained assets, but those that are "instrumentality of a crime." That said, there's an important wrinkle here that you're glossing over, and that is usually glossed over in discussions about civil forfeiture.

Civil forfeiture is not confiscation of your property as punishment for committing a crime. It's a determination that the property was never yours to begin with, because it was obtained in an illegal transaction.[1] That's why the standard for civil forfeiture isn't whether the person is guilty "beyond a reasonable doubt" but rather whether the property is the fruits of a crime by the "preponderance of the evidence." Any civil dispute over the rightful ownership of property is evaluated according to a preponderance of the evidence standard, and the dispute about the status of the property can be resolved without resolving the issue of criminal guilt.

The very important distinction to make here is that the issue of whether Ulbricht is guilty is distinct from whether the money is the proceeds of illegal activity. Maybe Ulbricht gets acquitted because he creates enough reasonable doubt that he isn't DPR, as he claims. Or because he succeeds in getting key evidence excluded because of a procedural failure by the feds. His acquittal doesn't mean that the money wasn't the product of illegal activity. Indeed, he has tremendous incentive to try and prove that he never owned these Bitcoins, because that goes to proving he isn't DPR!

[1] At least when we're talking about cash. There's a whole host of more questionable issues when it comes to things like forfeiture of vehicles and guns used in crimes. See: http://scholarworks.gsu.edu/cgi/viewcontent.cgi?article=1459...; see also: http://ij.org/pennsylvania-judge-calls-civil-asset-forfeitur... (for a particularly egregious example).

talmand3• 12 years ago

How do they determine the property is the result of illegal activity if the owner of the property has yet to be convicted of illegal activity?

That way of thinking opens up our current problems of police seizing everything within grasp during an arrest or traffic stop claiming the property is the result of illegal activity. "Hello, I pulled you over because it's late at night and I'm wondering if you're okay. Oh, you happen to have $10,000 in cash on hand? Drug money, I'll take that."

If this is the way the law is being interpreted then we gave up property rights a long time ago.

euroclydon• 12 years ago

Here is a great NYT piece on how civil forfeiture is abused in one Texas town:

http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_...

maaku3• 12 years ago

This has nothing to do with the man accused of being DPR. This is like the police showing up to a drug deal and both the buyer and supplier scattering and miraculously getting away. The police then take the coccaine and cash onto a giant podium and ask "This belong to anyone? No? We're going to claim it if no one does." Now it is legitimately government property.

wyager• 12 years ago

Except for that people are claiming ownership of some of the SR funds. There was an article posted here recently about a guy in the UK trying to recover his Silk Road funds.

eyeareque2• 12 years ago

What happens if he is found not guilty, and they've already sold all of his assets?

DanBC• 12 years ago

Different burdens of proof?

Criminal trial requires "beyond reasonable doubt" while civil forfiture requires "balance of probabilities"?

smackfu4• 12 years ago

There's a lot of confusion around this. They are selling the Bitcoins that were on the Silk Road servers. There were other Bitcoins on his computers. He said he owned the ones on his computer, but not the ones on the Silk Road servers (because he denies being involved with Silk Road.) At that point, the DOJ posts a notice saying "hey, anyone who thinks they own these, come forward and make a claim." No one did, so they are now at the "sell them off" stage.

InclinedPlane• 12 years ago

This has been the way asset forfeiture has worked since the '80s. People complain about the war on terror, but it's a sideshow compared to the deep and long lasting erosion of civil liberties that has been happening as part of the war on drugs for decades and decades.

DogeDogeDoge• 12 years ago

$200 000 seems to be a big anti troll bid blocker. But i bet someone is going to get rich and buy them way below market price.

danielweber7• 12 years ago

Almost by definition, they will be sold at "market price." It's the "market price" of buying 3K blocks of Bitcoin as opposed to the "market price" of the daily Bitcoin exchanges.

If the government somehow seized a giant comic book collection, they wouldn't try to sell them off individually on eBay. They would auction it off in 1 block, and interested parties who know how to maximize its value would bit on it.

It's basically "Storage Wars."

mschuster91• 12 years ago

Insane. The USMS with this announcement massively devalued it.

It would have been far better to quietly sell these BTC evenly spread across the major exchanges at market prices.

danielweber7• 12 years ago

Their job isn't to protect the Bitcoin market.

If you have a plan to get 98% of the value of these Bitcoins and think that someone else will only get 70%, then dig through your couch cushions to raise 15 million bucks and outbid the other guy.

These are totally normal market mechanisms.

Rulero• 12 years ago

This is very shocking.

So the government makes it illegal to sell narcotics, regardless, some individuals take a risk and deal drugs to be able to sustain themselves or finance a lifestyle of their choice.

Now the government start prosecuting someone, seize their assets (Which were turned over through illicit methods) and release this dodgy money back to the market.

What's more disturbing about this whole scenario is the fact that someone is getting done over. What if the government kept prosecuting dealers and then selling their assets back to the market? Those assets should be "destroyed" - just the way narcotics are destroyed when dealers get caught.

This is a joke.

danielweber7• 12 years ago

If the government found a drug dealer with a suitcase full of Canadian dollars, the government wouldn't destroy them.

Bitcoins aren't what made Silk Road illegal.

halviti• 12 years ago

That's a silly analogy.

The government has already stated that bitcoin is property, and they are treating it like any other legal property, selling it just like they would sell seized cars or houses.

You really want bitcoin to be on the same level as illegal narcotics? Why?

dragonwriter8• 12 years ago

Those assets should be "destroyed" - just the way narcotics are destroyed when dealers get caught.

Why? You keep rephrasing the claim that what the government is doing is wrong and then say they ought to be destroying seized assets seized as instrumentalities or proceeds of crime the way they (generally) do seized items that are illegal-in-themselves like narcotics, but you actually don't make any argument for why this is the case.

Why should the government ever destroy property that is legal to own and possess and has value in the market? That seems to be a net loss to society anyway you slice it.

Intermernet2• 12 years ago

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

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

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

cinitriqs• 12 years ago

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

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

CoreSet• 12 years ago

Probably a dumb question, but I seem to have trouble understanding the post: Are the bitcoins being sold in one discreet chunk (you buy the entire wallet or nothing) or are they being parceled out (it mentions auctioning off blocks)?

Also, is it possible to use these bitcoins in a transaction, or would you simply be paying for the still-encrypted wallet?

lutador1986• 12 years ago

Here's a crowdfunded bid to win the bitcoin: https://news.ycombinator.com/item?id=7889904

lifeformed• 12 years ago

Why must they sell all of them as one bundle? Can't they sell smaller amounts to many different buyers? Or is that too complicated?

For Sale: 29,656.51306529 Bitcoins

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