6 ms·

I've heard rumblings of this from some big players who are trying to sell some of their bitcoin, but network transactions are so backlogged that it's an illiqui

I've heard rumblings of this from some big players who are trying to sell some of their bitcoin, but network transactions are so backlogged that it's an illiquid market for them at the volumes they are looking to trade. They are worried that they won't be able to move in time if the market drops because they are sitting on such huge sums. Any market panic is only going to compound the transaction volume problem, leading to greater panic like people experience when there's a bank run. It's kind of a self-fulfilling prophecy until the block size / transaction volume issue is resolved, but the community's inability to address this problem could be the death of it.

xorcist 9y ago
That doesn't make sense. Transactions aren't slower if you move more Bitcoins. In fact, if you move a big stash then the transaction fees probably doesn't matter much and your transaction can be first in line. Most exchanges still need those six confirmations however, so any bank run would be limited by that. If you need instant sells you have to keep that stash with an exchange at all times. That requires a fair bit of trust in them, which I wouldn't recommend for regular users, but for an institutional investor that's probably how they would do it anyway. Those guys don't exactly walk around with an USB stick carrying their private keys.
- KingMob 9y ago
  You're technically correct, but people trying to sell off millions of dollars worth of bitcoins can almost never do that in a single sale. What happens in a market is, if a large enough bid order hits the market, people freak that a large player is selling off the asset (Do they know something we don't? Maybe we should sell now, too, just in case!). Bitcoin, with its small size (relative to fiat currencies) and slow confirmation rate, exacerbates that. So to actually sell off a million in BTC, you have to do it in regular, steady small sales that won't spook anyone. This takes time, which is not your friend if you expect the value to go down.
  - xorcist 9y ago
    What you're saying is that Bitcoin markets is illiquid. That's something I can understand and perhaps even try to give a reasonable answer to. That "network transactions are so backlogged that it's an illiquid market" is not. (Backlogs doesn't make for illuquid markets, and even if it did it doesn't affect the "big players" at all.) Trading on exchanges is off-chain in the sense that no transactions takes place on the public blockchain. Bitcoin markets used to be rather thin, but volumes haven't dropped in proportion to rising value. Which is to be expected with a more mature market. Your specific example of a million (US dollars, I presume) would hardly be noticable on any of the big exchanges today. That's just 500 bitcoins. I wouldn't worry about it. Keep in mind that Bitcoin is still inflationary and four times that amount is mined every day, most of which is sold. That's just what's visible, and who knows what's going on off the order books.
grandalf 9y ago
> it's an illiquid market for them at the volumes they are looking to trade This is the case with any market. Try liquidating a few million shares of any stock. There are large volume desks already (associated with major financial institutions) who can handle very large transactions. They will take a bit of a margin on the transaction, but that is a function of market dynamics and has nothing do do with cryptocurrency vs fiat currency.
pavel_lishin 9y ago
I wonder if anyone trades by having split their bitcoin holdings into multiple wallet, and simply giving up private keys to those wallets. Of course, there's the issue of the seller super-duper swearing that they won't use the private key until the buyer gets around to moving the new bitcoins to a new wallet...
- sayurichick 9y ago
  if the buyer is going to move the coins anyways, it doesn't bypass the problem of stuck transactions. plus, if they are in multiple wallets, you're paying fees for each transaction, which is already artificially high.
kentt 9y ago
> I've heard rumblings of this from some big players who are trying to sell some of their bitcoin, but network transactions are so backlogged that it's an illiquid market for them at the volumes they are looking to trade. This is false for two reasons. 1. It makes no sense. If a big player wants to move some Bitcoin, getting it in the next block is no problem. For a few bucks in fees you can pretty much guarantee your million bucks will be in the next block. I'm sure that's negligible as compared to moving that money afterwards. 2. If there are numerous big players trying to make huge exits, then the price would reflect that. Comments like these make it so difficult to read about Bitcoin on hn. It appears that people are blindly and desperately hoping that Bitcoin goes down to the extent they'll abandon their otherwise clear thinking. Is it just frustration that they missed out or don't understand the complexities of money?

xorcist 9y ago

That doesn't make sense. Transactions aren't slower if you move more Bitcoins. In fact, if you move a big stash then the transaction fees probably doesn't matter much and your transaction can be first in line. Most exchanges still need those six confirmations however, so any bank run would be limited by that. If you need instant sells you have to keep that stash with an exchange at all times. That requires a fair bit of trust in them, which I wouldn't recommend for regular users, but for an institutional investor that's probably how they would do it anyway. Those guys don't exactly walk around with an USB stick carrying their private keys.

KingMob 9y ago
You're technically correct, but people trying to sell off millions of dollars worth of bitcoins can almost never do that in a single sale. What happens in a market is, if a large enough bid order hits the market, people freak that a large player is selling off the asset (Do they know something we don't? Maybe we should sell now, too, just in case!). Bitcoin, with its small size (relative to fiat currencies) and slow confirmation rate, exacerbates that. So to actually sell off a million in BTC, you have to do it in regular, steady small sales that won't spook anyone. This takes time, which is not your friend if you expect the value to go down.
- xorcist 9y ago
  What you're saying is that Bitcoin markets is illiquid. That's something I can understand and perhaps even try to give a reasonable answer to. That "network transactions are so backlogged that it's an illiquid market" is not. (Backlogs doesn't make for illuquid markets, and even if it did it doesn't affect the "big players" at all.) Trading on exchanges is off-chain in the sense that no transactions takes place on the public blockchain. Bitcoin markets used to be rather thin, but volumes haven't dropped in proportion to rising value. Which is to be expected with a more mature market. Your specific example of a million (US dollars, I presume) would hardly be noticable on any of the big exchanges today. That's just 500 bitcoins. I wouldn't worry about it. Keep in mind that Bitcoin is still inflationary and four times that amount is mined every day, most of which is sold. That's just what's visible, and who knows what's going on off the order books.

grandalf 9y ago

> it's an illiquid market for them at the volumes they are looking to trade This is the case with any market. Try liquidating a few million shares of any stock. There are large volume desks already (associated with major financial institutions) who can handle very large transactions. They will take a bit of a margin on the transaction, but that is a function of market dynamics and has nothing do do with cryptocurrency vs fiat currency.

pavel_lishin 9y ago

I wonder if anyone trades by having split their bitcoin holdings into multiple wallet, and simply giving up private keys to those wallets. Of course, there's the issue of the seller super-duper swearing that they won't use the private key until the buyer gets around to moving the new bitcoins to a new wallet...

sayurichick 9y ago
if the buyer is going to move the coins anyways, it doesn't bypass the problem of stuck transactions. plus, if they are in multiple wallets, you're paying fees for each transaction, which is already artificially high.

kentt 9y ago

> I've heard rumblings of this from some big players who are trying to sell some of their bitcoin, but network transactions are so backlogged that it's an illiquid market for them at the volumes they are looking to trade. This is false for two reasons. 1. It makes no sense. If a big player wants to move some Bitcoin, getting it in the next block is no problem. For a few bucks in fees you can pretty much guarantee your million bucks will be in the next block. I'm sure that's negligible as compared to moving that money afterwards. 2. If there are numerous big players trying to make huge exits, then the price would reflect that. Comments like these make it so difficult to read about Bitcoin on hn. It appears that people are blindly and desperately hoping that Bitcoin goes down to the extent they'll abandon their otherwise clear thinking. Is it just frustration that they missed out or don't understand the complexities of money?