20 ms·

The Wealthy Are Hoarding $10B of Bitcoin in Bunkers

211 points by spking 9y ago

al2o3cr 9y ago
“You couldn’t pay me to keep it with a bank.” Because if there's one thing banks are known for, it's running off with client assets suddenly and without warning. Oh wait, that's cryptocurrency startups...
- zerostar07 9y ago
  Forgot Cyprus? it was only 5 years ago.
  - mantas 9y ago
    EU has mandatory insurance for €100k in savings accounts. Of course, there're all kinds of scams running all the time disguised as "investment saving accounts"...
- martindale 9y ago
  If you don't hold the keys, you don't own the money!
- blackbrokkoli 9y ago
  Well the entire point of crypto is not relying on centralised institutions. Also, Bitcoin is not a startup.
  - will_brown 9y ago
    At what point are the miners/network considered the centralized institution? Are corporations considered “decentralized institutions” in the world of bitcoin enthusiasts? After all corporations are made up of decentralized shareholders that can vote for and change the directors. If that doesn’t fit...what about a credit union? Like bitcoin there are no “owners/shareholders” of credit unions they are simply comprised of members.
    - Cthulhu_ 9y ago
      > At what point are the miners/network considered the centralized institution? Very much this; I'm fairly sure that if there is an organization that wants to direct / control btc, all they have to do is open up their (real money) wallet and get the majority mining capacity. If they first drop the value of BTC by selling or whatnot, miners / automatic miners will switch to more profitable currencies so the total hashes / second will lower, making a hostile takeover easier.
      - jsutton 9y ago
        You make it sound so easy, just open up your wallet and get the majority mining capacity! Tell me, how would someone with near-unlimited money go about doing that? Will they just conjure up the hardware needed to make 15 Trillion hashes per second?
      - blackbrokkoli 9y ago
        In theory yes, but as the other answer states, you would raise an immense amount of money WITHOUT the public realising who would than just abandon whatever mining-based Crypto we're talking about
    - blackbrokkoli 9y ago
      Not sure if representative for "bitcoin enthusiasts", but here is how I see it: As the written word spread in Europe after BC, it layed an important cornerstone for democracy and changed the world for good. Noone would argue with that, right? Ok, so let's look at Europe from 500BC-1300BC. Corrupt monks forging official documents, under some goverments up only about 60-80% of the were real. Monks were people of god, so noone really investigated. For a long time, the emperor would sign with a simple line, because he couldn't actually write. Wow, how is that more valuable than spoken word?! Where is your democracy? Women can't read, poor can't read. Knowledge is stored exclusively by the church. Turns out writing things down is actually a really backward philosophy! Or is it? And that's where we're with Crypto right now, IMO. I'm not saying this is as revolutionary as writing, not even close. I'm not even saying it will turn into a good thing. BUT I really like the underlying idea, the concept, of it. Of course there are greedy shitheads, companys taking advantage, fraud and projects which are uterly useless. But yet I didn't came across an argument which convinced that the concept of non-centralizing via blockchain can't work. So, to actually answer your question, I think we shouldn't mix up the discussion about the philosophy, potential and future of Blockchain with individual cases like "is this pump and dump worse than 2008 greed of banks" (which is also an important discussion, but a seperate one). Does that make any sense?
- dec0dedab0de 9y ago
  Lehman Brothers
  - notyourday 9y ago
    Did not run out with client's money.
- epanchin 9y ago
  Two things they are known for; Not allowing very large balances to be withdrawn at once. Complying with asset freeze orders.
  - Cthulhu_ 9y ago
    And you think this bank (re: the article) falls outside of those? You won't be able to get your btc out quickly in this one either. Same with online exchanges for that matter. They also have much lower transaction fees.
    - coryfklein 9y ago
      Exchanging directly for cash at or above market rates is definitely practical with LocalBitcoins. There are a large number of brokers there that do it professionally and value their reputation on the platform much higher than they value the potential for ripping you off. Of course, if you need to liquidate $1B in Bitcoin, that's going to take time, but you can still do it much faster than you could get it out of a Cypress bank in 2014.
      - st1ck 9y ago
        AFAIK those who had more than €100k in deposits just plainly lost a portion of their money: https://www.reuters.com/article/cyprus-bankofcyprus/cyprus-central-bank-announces-47-5-percent-haircut-on-large-bank-of-cyprus-deposits-idUSL6N0G033120130730 https://www.reuters.com/article/cyprus-bankofcyprus/cyprus-c...
  - UncleMeat 9y ago
    What is this threat model where if a government tries to freeze your assets having BTC stops everything bad? If a government is trying to freeze your assets you have a lot of other problems that are bigger than simply not having access to your bank account.
  - gamblor956 9y ago
    Not allowing very large balances to be withdrawn at once. Wait, are we talking about MtGoX? Or Coinbase? Or Bitfinex? Or any of the many smaller exchanges that did the same thing right before they collapsed?
- imgabe 9y ago
  I guess you weren't around in 2008. Oh remember those securitized mortgages we sold you? Yeah, they're worthless now. By the way we bought insurance on them becoming worthless, because we were pretty sure this would happen when we sold them to you.
  - Clubber 9y ago
    There's a difference between keeping cash in a bank which is FDIC insured and putting money in investments; particularly in the US where robbery was/is called investment strategy.
    - dumbfounder 9y ago
      Coinbase is FDIC insured.
      - will_brown 9y ago
        But do you know what that covers? Coinbase supports wallets for USD...is it only USD wallets that are FDIC insured?
      - snikeris 9y ago
        * Your USD wallet at Coinbase is FDIC insured.
        dumbfounder 9y ago
        Yikes, that is indeed a very important distinction that I missed. https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- https://support.coinbase.com/customer/portal/articles/166237...
      - wyldfire 9y ago
        Yes but it's important to note that the FDIC insurance is only for your USD-denominated balance. Your BTC (or all crypto?) balance is insured by Lloyd's. I assume this is only insured against thefts/failures of Coinbase's, so if your balance were stolen by attackers who had your Coinbase credentials I suspect your balance would not be covered. But this might be similar to your liability from normal online banking fraud/theft? The fact that Coinbase pays those private insurance premiums makes them the no-brainer suggestion to people who are considering holding some BTC.
- jabgrabdthrow 9y ago
  Sarcastic historical case study of opposite Long argument about instrinsic value Peaceful resolution where we agree not to kill each other if our portfolios fuck us over
- anjc 9y ago
  > Because if there's one thing banks are known for, it's running off with client assets suddenly and without warning. Capital controls are real
gcb0 9y ago
so btc was part of this crazy fake news narrative all along or is this just being made up on the fly and this is your regular click bait churn that is the new norm in journalism? the writing on this has all the telltales of a unresearched fakenews/paid advert, e.g.: "Hackers have also proven adept at setting traps on computers to access cold-storage devices the moment they’re online. More traditional criminals have committed home invasions and kidnappings. Some Bitcoin tycoons have resorted to hiding their identities, fortifying their homes and studying self-defense." ...and that's not a crazy person being interviewed quote, this is the author saying.
- jabgrabdthrow 9y ago
  Those are all true? I mean sure "some X" is a great way to say almost nothing about X, but the literal statement is true
  - Clubber 9y ago
    Some say the Earth is flat.
vthallam 9y ago
It makes sense that Goldman Sachs and Newyork Stock Exchange are working on Bitcoin trading allowing wealthy clients to own Bitcoin. At this point it's definitely mainstream and if enough of the billionaires own it, they can definitely manipulate the price. Not sure how would Governments control this
simias 9y ago
>the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting. It also demonstrates the costs associated with non-reversible transactions, these vaults aren't storing gold ingots or priceless artifacts, just private keys. Banks around the world don't need to worry too much about this (well, within reason) because if somebody manages to break into their digital vault not everything is lost and they can mitigate the damages retroactively. With bitcoin "if you don't hold the keys, you don't own the coins" but if you do hold the keys you better be absolutely paranoid with them because there's no plan B if they get compromised or destroyed. For this reason I think that even if cryptocurrencies manage to become mainstream many people (including myself) would rather let a bank manage and insure their wallet than manage it themselves. Too stressful otherwise.
- kfrzcode 9y ago
  > in the future people hoard currency People hoard(ed) currency in the past and present as well
  - buckthundaz 9y ago
    Indeed. The stockholm syndrome of Keynesianism is pervasive and unnoticed by many. The correct response to erosion of value is hoarding.
    - api 9y ago
      The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.
pavlov 9y ago
According to its proponents, Bitcoin is digital gold. (Interestingly it’s not an “electronic currency” anymore even though that was the original title of the 2008 whitepaper. I suppose Lightning Network or something is supposed to fix that with new transaction layers backed by the Bitcoin gold.) One aspect of gold’s historical value is that it’s traditionally recognized even in societies in collapse. I’ve never understood how Bitcoin is supposed to hold its value in such an event — something on the scale of nuclear war, or Germany in 1945. After an EMP wipes out data centers and cell phone towers, you can probably still bribe people with Krugerrands. Who’s going to accept Bitcoin transfers when the infrastructure is either gone or under military control? Or is the idea that Bitcoin will be valuable again when the wealthy finally crawl out of their New Zealand bunkers and reestablish the financial system?
- wyldfire 9y ago
  > Or is the idea that Bitcoin will be valuable again when the wealthy finally crawl out of their New Zealand bunkers and reestablish the financial system? The idea is that the transactions are irreversible and you cannot rely on any number of police officers or judges to fix a theft. The bunkers are for security's sake, not preserving-wealth-in-an-apocalype's sake.
  - pavlov 9y ago
    The police officers and judges can put you in jail, which is generally worse than having your assets confiscated. I’m not sure how Bitcoin helps. What I’m trying to understand is how Bitcoin advocates’ promise of it being a store of value independent from governments can be valid when the system depends on extremely sophisticated infrastructure that was built and enabled by governments.
    - TeMPOraL 9y ago
      > the system depends on extremely sophisticated infrastructure that was built and enabled by governments. ... and which continued existence and operation requires stable governments keeping most of the planet bound by the rule of law.
ct0 9y ago
$10B at what point in time?
- emodendroket 9y ago
  They're storing $10b... wait, sorry, $20b... sorry, no, it's $5b now.
tomglynch 9y ago
Why does he hold it in 5 continents? In case 4 get wiped out? Surely, all it is is an encrypted private key they are storing.
lerie82 9y ago
Bitcoin wasn't mean to be "hoarded", this will just destroy crypto currency value to the public. I think most people have already checked out anyway. It's pointless if nobody wants it anymore.
chiefalchemist 9y ago
Bunkers? Like prepper bunkers? To survive what? If things go __that__ sideways, a hoard of crypto-currency will be the least of their worries. Apparently, even the financially wealthy can be common sense poor.
- Kiro 9y ago
  Alternatively, if things really go that sideways bitcoin will be the only valuable currency in the world.
  - api 9y ago
    Bitcoin requires an Internet, computers, and electricity to function.
    - andirk 9y ago
      I does not require internet. You can make a wallet without, although it wont be very useful without moving btc into it which will require internet or some peer to peer network with the blockchain on it.
  - st26 9y ago
    That seems like nonsense. If things are that much of a mess, internet & electricity will presumably be spotty and computers will cease manufacture (& slowly decay until failure). Better to have tangible currency. Will that be USD, or precious metals, or ammunition? I don't know, but I'd bet on something you can touch.
  - oflannabhra 9y ago
    In such a scenario, bitcoin will have no value. Localized disasters occur more frequently than one would expect, and in such disasters, a pure barter economy exists. During the Bosnian War, things that became highly valuable were: bullets, liquor, antibiotics, lighters, and of course food [0]. Bitcoin, or any other currency, was the last thing on anyone’s mind. [0] - http://www.shtfplan.com/emergency-preparedness/a-survival-q-a-living-through-shtf-in-the-middle-of-a-war-zone_10252011 http://www.shtfplan.com/emergency-preparedness/a-survival-q-...
devit 9y ago
Probably not the best idea to give Bitcoin to someone to keep in their vault.
anentropic 9y ago
great, I wish they'd buy more of it
harlanji 9y ago
I heard an interesting analysis of long term crypros, by Jeff Berwick IIRC, that BTC will become the holding coin and transactions will happen on alts. My intuition agrees, tho I hold no coins so am impartial. He is sharp generally and claims to nail predictions, have not verified, so I lean toward agreeing but would obv research before I buy into any strategy. Another video I saw examined the amount of BTC in terms of some unit of energy relative to current global usage. I don’t wish I bought some in 2010/11 but I’d sure be sitting pretty if I had less regard for the polar bears!
apo 9y ago
If you want to understand just how difficult managing cryptographic material is for the technically illiterate, look no further than Xapo. It's not "Bitcoin" that Xapo stores, but private keys. In underground bunkers. This no doubt gives some people a warm fuzzy. But Bitcoin's history is littered with the wreckage of companies that took it on themselves to store private keys on behalf of others. I don't know when Xapo will fail, but if history is any guide it's just a matter of time. The weakest link in their system is the people involved. Consider this tortured statement: If Xapo’s deep cold storage vaults were hacked, Xapo would cover the loss from its own reserve but the hack could be bigger than the reserve which would cause a net loss to our customers. https://blog.xapo.com/what-would-happen-if-xapo-got-hacked/ https://blog.xapo.com/what-would-happen-if-xapo-got-hacked/ In other words, a Xapo depositor would eat the loss in the event of a successful attack on the cold storage system. The funny thing about all of this is that private key management isn't difficult when you know how. Given the vast sums of money being stored, you might think that certain big fish would want to take the time to do it right.
- sillysaurus3 9y ago
  In other words, a Xapo depositor would eat the loss in the event of a successful attack on the cold storage system. The same is true of Coinbase. Somehow they've been fine.
unit91 9y ago
This kind of debate by selective vocabulary is frustrating. If a poor or middle class person sits on the cash he has, he's "saving". If a wealthy person sits on the cash he has, he's "hoarding". Regardless of the topic at hand, let's be consistent enough in our terms to think and discuss the issues fairly and clearly without all the pejorative terms. If we have to resort to name-calling, we might not have a very good point.
- dota_fanatic 9y ago
  A person has 250 units of food sitting in a room, earns them at 2 units per day, and can consume them at 1 unit per day. They have saved 250 units such that if they stopped earning, they'll be alright. Another person has 2,500,000,000 units of food sitting in a room, earns them at 200,000 units per day, and can consume them at 100 units per day (not as filling but tastier let's say). They are... also only saving? C'mon.
  - unit91 9y ago
    The problem with this line of thinking is it assumes a specific purpose, then name-calls based on that premise. Maybe consumption isn't the goal and you're unaware of it. If I have as much food as a grocery store, I'm a hoarder because consumption is my goal. The grocery store isn't hoarding (or even saving) food because consumption isn't the goal. Retail sales are the goal. Again, I'm not here to fight about economics. That wasn't my point. My point was ridicule isn't an argument. Calling someone a hoarder may make you feel good, but it isn't an argument.
    - dota_fanatic 9y ago
      Degree matters, it often makes all the difference; as such, we have different adjectives to describe those different degrees. In my hypothetical, while technically true that both are "saving", it is more descriptive to use "hoarding" for the latter case, both in an objective sense to describe the degree and in a subjective sense to describe how that degree of storage should be evaluated. Their goal is to save obscene amounts of wealth that will never ever be used, could never ever be used by a single person in a natural lifetime, "I've saved so much WAOW!" Who cares. Wealth is gained on the shoulders of giants, all the people and technology that came before us. Maybe it should be harder, much harder for people to save levels of money that most everyone would describe as hoarding. The wealthy saving/hoarding so much money, having so much power relative to the masses is leading to super great outcomes?
Sean-P 9y ago
At this point, it would stick it to the man more to abandon bitcoin than to continue pursuing its naive ideals.
pbreit 9y ago
So...not a lot? It’s a surprisingly small number. Tiny fraction of their wealth and of aggregate crypto market cap.
thisisit 9y ago
I am sure someone is going to talk about banks and how they steal money so I will leave it here for anyone who wants to learn more: https://www.forbes.com/sites/francescoppola/2018/04/21/bitcoin-banks-and-a-whole-lot-of-fud/#55e2cc1c21f1 https://www.forbes.com/sites/francescoppola/2018/04/21/bitco...
jsutton 9y ago
Key Management Systems will be an extremely lucrative business if anyone can come along and get it right. Coinbase could be a leading candidate to operate one, but the opportunity is there for a small player with top tier security talent.
kajumix 9y ago
The word 'hoarding' demonizes 'saving,' which in most Keynesian economies is considered leakage. It's really a question of values. Inflationary currencies encourage consumption; deflationary ones encourage savings. High consumption does increase demand, and apparently a faster growth in the economy. One could argue that this almost forced consumption for the sake of faster economic growth is what causes malinvestment and the associated boom-and-bust cycles. One could be hesitant about spending away their Bitcoin to buy a shiny new bigger TV, while they'd happily part with USD for the same expense. Former, I'd say, has a more natural alignment with our incentives to spend thoughtfully. Also, I am not sure if everyone shares the value of eating the planet at a faster rate for employment and GDP numbers.
- empath75 9y ago
  > Inflationary currencies encourage consumption You mean "investment" > deflationary ones encourage savings I'm not sure why encouraging people to bury their wealth in the ground instead of doing something useful with it is something we want to be doing.
  - loco5niner 9y ago
    > I'm not sure why encouraging people to bury their wealth in the ground instead of doing something useful with it is something we want to be doing. Savings is not "burying their wealth in the ground", it's building a safety net for the future. At least for everyday people. Most people would be better off doing that than blowing it on big screen tv's, boats, and cigarettes. If more people did that, society would be better off too.
- cpplinuxdude 9y ago
  I don't really get why when it comes to crypto energy consumption, the discussion board becomes reactionary. I mean portugal is now running on 100% renewables. Shouldn't this point be more about renewables? You know, what about the electric car? That'll consume lots of energy too.
  - 9y ago
DEFCON28 9y ago
I wouldn’t expect the poor to hoard $10B
hogu 9y ago
if everything goes to shit why wouldn't xapo just steal all the btc?
mbrumlow 9y ago
Oh man, "The Wealthy" are at it again...
clarkmoody 9y ago
Inflationists / consumptionists have been demonizing savers and sound money since the 1700s, if not earlier. They enjoy the artificial boom induced through inflation of the money supply and then blame gold or speculation or "animal spirits" for the bust. They think that if we could only got back to the consumption levels of the boom, then we'd be "back on track." This never works, and the calls for consumption are usually special pleading by bank-connected interests that stand to benefit from monetary inflation. We will see the pattern continue with Bitcoin, the most sound money the world has ever known (no matter how high the price goes, you cannot increase supply beyond the scheduled issuance). This time is different, however. The consumer can (and should) control her own private keys, which means not trusting a bank, which historically will inflate the money supply to its own benefit. Forced confiscation of privately-held Bitcoin will be much more expensive than previous confiscations of gold already held in vaults. Unfortunately, those wealthy savers with their money in the vaults mentioned in the article will have their Bitcoin confiscated when things get bad enough. Too many in the space have already learned the hard way what happens when you trust your coins to a centralized institution.
- empath75 9y ago
  > Inflationists / consumptionists have been demonizing savers and sound money since the 1700s, if not earlier. And as we all know, it's been one long, slow economic collapse since the 17th century.
  - clarkmoody 9y ago
    The long-term trend is caused by gains in productivity brought about by saving and investment with private property protections. The boom-bust cycle is brought about by inflationary banking.
hnaccy 9y ago
Why wouldn't they just store it in a Swiss bank box or something? Can the wealthy not just use their art/gems/gold storage choice. Do hardware wallets need power?
a-dub 9y ago
This is just more evidence that my theory on why Bitcoin was developed, may actually hold water. It was never about the GFC, failing banks or some crazy libertarian dream. It was all because someone was upset that the "million dollar bank transfer codes (or the two keys geographically separated that have to be turned at the same time, or the special secret crypto laptop in the zero halliburton that can transfer billions instantly and untracably)" trope from all those crime films was complete bullshit, and that in reality most money is protected by horrifyingly thick layers of mediocre bureaucracy and somebody wanted to be the mahatma gandhi of making those sorts of situations actually plausible in the real world.
cletus 9y ago
In case of what? If something so major happens that the US dollar, the Euro, the British pound and other reserve currencies collapse or the financial system breaks down completely, what exactly is going to keep the Internet running such that the blockchain consensus will even be there? It's a bit like there's really no point (IMHO) preparing for a massive nuclear war by stockpiling food, water and guns and having a generator and a bomb shelter because if we have a nuclear war we're all kind of fucked anyway, so what's the point?
xchaotic 9y ago
Its not $10B worth. If you tried to liquidate, convert into another currency or asset etc there wouldn't be enough buyers at $9500, $1 would be much more likely towards the end of selling...
- xtracto 9y ago
  I don't think it would go all the way down to $1. I made a simple analysis of BitStamp's order book (https://www.bitstamp.net/market/order_book/ https://www.bitstamp.net/market/order_book/ ) considering all the bids and, in total, only in that market you have $22.5 millions available in bids going from $9275 to $7429 for a weighted average of $8462 in price. This for a portfolio of BTC that at the current market price ($9275) would be $24.5 millions. This means that the slippage will take ~9% of the price It is safe to assume that CoinBase has a larger order book, so I think that the slippage could go down to 50% if you wanted to sell $10B worth of BTC, so it would be more like $5B. Sure, that is if you want to sell it in one go, but usually you make a stop order or a limit order to protect you.
georgeecollins 9y ago
There is this myth that wealthy people are more savvy investors than ordinary folk. Sometimes they are but often not. They get scammed the most because that is where the money is.
erdojo 9y ago
I would argue that Bitcoin in this case isn't an investment or speculation. It's insurance. These wacky boys think their Bitcoin will save them someday. Whether they foresee a societal meltdown or government breaking down their door and seizing assets, they're living in fear. This wacky company is has found the perfect message and the perfect product for the perfect market.
mrnobody_67 9y ago
~10% of that is also Wences own money. Not sure why he got left off the crypto rich list.

211 points by spking 9y ago

“You couldn’t pay me to keep it with a bank.” Because if there's one thing banks are known for, it's running off with client assets suddenly and without warning. Oh wait, that's cryptocurrency startups...

zerostar07 9y ago
Forgot Cyprus? it was only 5 years ago.
- mantas 9y ago
  EU has mandatory insurance for €100k in savings accounts. Of course, there're all kinds of scams running all the time disguised as "investment saving accounts"...
martindale 9y ago
If you don't hold the keys, you don't own the money!
blackbrokkoli 9y ago
Well the entire point of crypto is not relying on centralised institutions. Also, Bitcoin is not a startup.
- will_brown 9y ago
  At what point are the miners/network considered the centralized institution? Are corporations considered “decentralized institutions” in the world of bitcoin enthusiasts? After all corporations are made up of decentralized shareholders that can vote for and change the directors. If that doesn’t fit...what about a credit union? Like bitcoin there are no “owners/shareholders” of credit unions they are simply comprised of members.
  - Cthulhu_ 9y ago
    > At what point are the miners/network considered the centralized institution? Very much this; I'm fairly sure that if there is an organization that wants to direct / control btc, all they have to do is open up their (real money) wallet and get the majority mining capacity. If they first drop the value of BTC by selling or whatnot, miners / automatic miners will switch to more profitable currencies so the total hashes / second will lower, making a hostile takeover easier.
    - jsutton 9y ago
      You make it sound so easy, just open up your wallet and get the majority mining capacity! Tell me, how would someone with near-unlimited money go about doing that? Will they just conjure up the hardware needed to make 15 Trillion hashes per second?
    - blackbrokkoli 9y ago
      In theory yes, but as the other answer states, you would raise an immense amount of money WITHOUT the public realising who would than just abandon whatever mining-based Crypto we're talking about
  - blackbrokkoli 9y ago
    Not sure if representative for "bitcoin enthusiasts", but here is how I see it: As the written word spread in Europe after BC, it layed an important cornerstone for democracy and changed the world for good. Noone would argue with that, right? Ok, so let's look at Europe from 500BC-1300BC. Corrupt monks forging official documents, under some goverments up only about 60-80% of the were real. Monks were people of god, so noone really investigated. For a long time, the emperor would sign with a simple line, because he couldn't actually write. Wow, how is that more valuable than spoken word?! Where is your democracy? Women can't read, poor can't read. Knowledge is stored exclusively by the church. Turns out writing things down is actually a really backward philosophy! Or is it? And that's where we're with Crypto right now, IMO. I'm not saying this is as revolutionary as writing, not even close. I'm not even saying it will turn into a good thing. BUT I really like the underlying idea, the concept, of it. Of course there are greedy shitheads, companys taking advantage, fraud and projects which are uterly useless. But yet I didn't came across an argument which convinced that the concept of non-centralizing via blockchain can't work. So, to actually answer your question, I think we shouldn't mix up the discussion about the philosophy, potential and future of Blockchain with individual cases like "is this pump and dump worse than 2008 greed of banks" (which is also an important discussion, but a seperate one). Does that make any sense?
dec0dedab0de 9y ago
Lehman Brothers
- notyourday 9y ago
  Did not run out with client's money.
epanchin 9y ago
Two things they are known for; Not allowing very large balances to be withdrawn at once. Complying with asset freeze orders.
- Cthulhu_ 9y ago
  And you think this bank (re: the article) falls outside of those? You won't be able to get your btc out quickly in this one either. Same with online exchanges for that matter. They also have much lower transaction fees.
  - coryfklein 9y ago
    Exchanging directly for cash at or above market rates is definitely practical with LocalBitcoins. There are a large number of brokers there that do it professionally and value their reputation on the platform much higher than they value the potential for ripping you off. Of course, if you need to liquidate $1B in Bitcoin, that's going to take time, but you can still do it much faster than you could get it out of a Cypress bank in 2014.
    - st1ck 9y ago
      AFAIK those who had more than €100k in deposits just plainly lost a portion of their money: https://www.reuters.com/article/cyprus-bankofcyprus/cyprus-central-bank-announces-47-5-percent-haircut-on-large-bank-of-cyprus-deposits-idUSL6N0G033120130730 https://www.reuters.com/article/cyprus-bankofcyprus/cyprus-c...
- UncleMeat 9y ago
  What is this threat model where if a government tries to freeze your assets having BTC stops everything bad? If a government is trying to freeze your assets you have a lot of other problems that are bigger than simply not having access to your bank account.
- gamblor956 9y ago
  Not allowing very large balances to be withdrawn at once. Wait, are we talking about MtGoX? Or Coinbase? Or Bitfinex? Or any of the many smaller exchanges that did the same thing right before they collapsed?
imgabe 9y ago
I guess you weren't around in 2008. Oh remember those securitized mortgages we sold you? Yeah, they're worthless now. By the way we bought insurance on them becoming worthless, because we were pretty sure this would happen when we sold them to you.
- Clubber 9y ago
  There's a difference between keeping cash in a bank which is FDIC insured and putting money in investments; particularly in the US where robbery was/is called investment strategy.
  - dumbfounder 9y ago
    Coinbase is FDIC insured.
    - will_brown 9y ago
      But do you know what that covers? Coinbase supports wallets for USD...is it only USD wallets that are FDIC insured?
    - snikeris 9y ago
      * Your USD wallet at Coinbase is FDIC insured.
      - dumbfounder 9y ago
        Yikes, that is indeed a very important distinction that I missed. https://support.coinbase.com/customer/portal/articles/1662379-how-is-coinbase-insured- https://support.coinbase.com/customer/portal/articles/166237...
    - wyldfire 9y ago
      Yes but it's important to note that the FDIC insurance is only for your USD-denominated balance. Your BTC (or all crypto?) balance is insured by Lloyd's. I assume this is only insured against thefts/failures of Coinbase's, so if your balance were stolen by attackers who had your Coinbase credentials I suspect your balance would not be covered. But this might be similar to your liability from normal online banking fraud/theft? The fact that Coinbase pays those private insurance premiums makes them the no-brainer suggestion to people who are considering holding some BTC.
jabgrabdthrow 9y ago
Sarcastic historical case study of opposite Long argument about instrinsic value Peaceful resolution where we agree not to kill each other if our portfolios fuck us over
anjc 9y ago
> Because if there's one thing banks are known for, it's running off with client assets suddenly and without warning. Capital controls are real

gcb0 9y ago

so btc was part of this crazy fake news narrative all along or is this just being made up on the fly and this is your regular click bait churn that is the new norm in journalism? the writing on this has all the telltales of a unresearched fakenews/paid advert, e.g.: "Hackers have also proven adept at setting traps on computers to access cold-storage devices the moment they’re online. More traditional criminals have committed home invasions and kidnappings. Some Bitcoin tycoons have resorted to hiding their identities, fortifying their homes and studying self-defense." ...and that's not a crazy person being interviewed quote, this is the author saying.

jabgrabdthrow 9y ago
Those are all true? I mean sure "some X" is a great way to say almost nothing about X, but the literal statement is true
- Clubber 9y ago
  Some say the Earth is flat.

vthallam 9y ago

It makes sense that Goldman Sachs and Newyork Stock Exchange are working on Bitcoin trading allowing wealthy clients to own Bitcoin. At this point it's definitely mainstream and if enough of the billionaires own it, they can definitely manipulate the price. Not sure how would Governments control this

simias 9y ago

>the global currency of the future, that they need to buy some, and that he’s the man to safeguard it. Looks like in the future people hoard currency instead of spending and investing it then. That ought to be interesting. It also demonstrates the costs associated with non-reversible transactions, these vaults aren't storing gold ingots or priceless artifacts, just private keys. Banks around the world don't need to worry too much about this (well, within reason) because if somebody manages to break into their digital vault not everything is lost and they can mitigate the damages retroactively. With bitcoin "if you don't hold the keys, you don't own the coins" but if you do hold the keys you better be absolutely paranoid with them because there's no plan B if they get compromised or destroyed. For this reason I think that even if cryptocurrencies manage to become mainstream many people (including myself) would rather let a bank manage and insure their wallet than manage it themselves. Too stressful otherwise.

kfrzcode 9y ago
> in the future people hoard currency People hoard(ed) currency in the past and present as well
- buckthundaz 9y ago
  Indeed. The stockholm syndrome of Keynesianism is pervasive and unnoticed by many. The correct response to erosion of value is hoarding.
  - api 9y ago
    The correct response to erosion of value is investing as long as there are good investments to be found. This is the idea behind inflationary money (which is a broader concept than Keynesianism). The important ideas of Keynes in a nutshell: * Monetary velocity: wealth is a verb, not a noun. The wealth of nations is measured in their rate of transactions, not how much cash or idle assets they are hoarding. * Idle vs. productive investment: if currency is deflationary people will store currency, a non-productive investment. If currency is inflationary people will invest it in productive activities. I don't agree absolutely 100% with these, but I think Keynes was at least onto something especially with the first. The problem with the first is that velocity also includes transactions that don't actually do anything or that even "create" negative value. Gambling increases monetary velocity but doesn't accomplish anything and may actually destroy value. A real value-centric velocity statistic is impossible because value is a biological/humanistic concept and is non-computable. The main problem with the second is that if people are pessimistic about investments they will still hoard, but using things like real estate and gold. Another problem with the second point is that over-using this strategy to drive investment creates bubbles, as we have seen. Finally I must point out that Keynes gets a ton of flak for stuff he did not advocate, like insane levels of public and private debt. Keynes would have been shocked and horrified at the levels of debt in our current system, and in fact his whole counter-cyclic government spending strategy was designed to prevent this. Blame politicians and banks for the debt problem, not Keynes. Politicians invoke Keynes when they want to ratchet up spending during downturns but then they conveniently forget the other part-- namely that Keynes also advocated reducing government spending and repaying debt proportionally during times of abundance. Keynes basically argued that government could be used as ballast against economic oscillation.

pavlov 9y ago

According to its proponents, Bitcoin is digital gold. (Interestingly it’s not an “electronic currency” anymore even though that was the original title of the 2008 whitepaper. I suppose Lightning Network or something is supposed to fix that with new transaction layers backed by the Bitcoin gold.) One aspect of gold’s historical value is that it’s traditionally recognized even in societies in collapse. I’ve never understood how Bitcoin is supposed to hold its value in such an event — something on the scale of nuclear war, or Germany in 1945. After an EMP wipes out data centers and cell phone towers, you can probably still bribe people with Krugerrands. Who’s going to accept Bitcoin transfers when the infrastructure is either gone or under military control? Or is the idea that Bitcoin will be valuable again when the wealthy finally crawl out of their New Zealand bunkers and reestablish the financial system?

wyldfire 9y ago
> Or is the idea that Bitcoin will be valuable again when the wealthy finally crawl out of their New Zealand bunkers and reestablish the financial system? The idea is that the transactions are irreversible and you cannot rely on any number of police officers or judges to fix a theft. The bunkers are for security's sake, not preserving-wealth-in-an-apocalype's sake.
- pavlov 9y ago
  The police officers and judges can put you in jail, which is generally worse than having your assets confiscated. I’m not sure how Bitcoin helps. What I’m trying to understand is how Bitcoin advocates’ promise of it being a store of value independent from governments can be valid when the system depends on extremely sophisticated infrastructure that was built and enabled by governments.
  - TeMPOraL 9y ago
    > the system depends on extremely sophisticated infrastructure that was built and enabled by governments. ... and which continued existence and operation requires stable governments keeping most of the planet bound by the rule of law.

ct0 9y ago

$10B at what point in time?

emodendroket 9y ago
They're storing $10b... wait, sorry, $20b... sorry, no, it's $5b now.

tomglynch 9y ago

Why does he hold it in 5 continents? In case 4 get wiped out? Surely, all it is is an encrypted private key they are storing.

lerie82 9y ago

Bitcoin wasn't mean to be "hoarded", this will just destroy crypto currency value to the public. I think most people have already checked out anyway. It's pointless if nobody wants it anymore.

chiefalchemist 9y ago

Bunkers? Like prepper bunkers? To survive what? If things go __that__ sideways, a hoard of crypto-currency will be the least of their worries. Apparently, even the financially wealthy can be common sense poor.

Kiro 9y ago
Alternatively, if things really go that sideways bitcoin will be the only valuable currency in the world.
- api 9y ago
  Bitcoin requires an Internet, computers, and electricity to function.
  - andirk 9y ago
    I does not require internet. You can make a wallet without, although it wont be very useful without moving btc into it which will require internet or some peer to peer network with the blockchain on it.
- st26 9y ago
  That seems like nonsense. If things are that much of a mess, internet & electricity will presumably be spotty and computers will cease manufacture (& slowly decay until failure). Better to have tangible currency. Will that be USD, or precious metals, or ammunition? I don't know, but I'd bet on something you can touch.
- oflannabhra 9y ago
  In such a scenario, bitcoin will have no value. Localized disasters occur more frequently than one would expect, and in such disasters, a pure barter economy exists. During the Bosnian War, things that became highly valuable were: bullets, liquor, antibiotics, lighters, and of course food [0]. Bitcoin, or any other currency, was the last thing on anyone’s mind. [0] - http://www.shtfplan.com/emergency-preparedness/a-survival-q-a-living-through-shtf-in-the-middle-of-a-war-zone_10252011 http://www.shtfplan.com/emergency-preparedness/a-survival-q-...

devit 9y ago

Probably not the best idea to give Bitcoin to someone to keep in their vault.

anentropic 9y ago

great, I wish they'd buy more of it

harlanji 9y ago

I heard an interesting analysis of long term crypros, by Jeff Berwick IIRC, that BTC will become the holding coin and transactions will happen on alts. My intuition agrees, tho I hold no coins so am impartial. He is sharp generally and claims to nail predictions, have not verified, so I lean toward agreeing but would obv research before I buy into any strategy. Another video I saw examined the amount of BTC in terms of some unit of energy relative to current global usage. I don’t wish I bought some in 2010/11 but I’d sure be sitting pretty if I had less regard for the polar bears!

apo 9y ago

If you want to understand just how difficult managing cryptographic material is for the technically illiterate, look no further than Xapo. It's not "Bitcoin" that Xapo stores, but private keys. In underground bunkers. This no doubt gives some people a warm fuzzy. But Bitcoin's history is littered with the wreckage of companies that took it on themselves to store private keys on behalf of others. I don't know when Xapo will fail, but if history is any guide it's just a matter of time. The weakest link in their system is the people involved. Consider this tortured statement: If Xapo’s deep cold storage vaults were hacked, Xapo would cover the loss from its own reserve but the hack could be bigger than the reserve which would cause a net loss to our customers. https://blog.xapo.com/what-would-happen-if-xapo-got-hacked/ https://blog.xapo.com/what-would-happen-if-xapo-got-hacked/ In other words, a Xapo depositor would eat the loss in the event of a successful attack on the cold storage system. The funny thing about all of this is that private key management isn't difficult when you know how. Given the vast sums of money being stored, you might think that certain big fish would want to take the time to do it right.

sillysaurus3 9y ago
In other words, a Xapo depositor would eat the loss in the event of a successful attack on the cold storage system. The same is true of Coinbase. Somehow they've been fine.

unit91 9y ago

This kind of debate by selective vocabulary is frustrating. If a poor or middle class person sits on the cash he has, he's "saving". If a wealthy person sits on the cash he has, he's "hoarding". Regardless of the topic at hand, let's be consistent enough in our terms to think and discuss the issues fairly and clearly without all the pejorative terms. If we have to resort to name-calling, we might not have a very good point.

dota_fanatic 9y ago
A person has 250 units of food sitting in a room, earns them at 2 units per day, and can consume them at 1 unit per day. They have saved 250 units such that if they stopped earning, they'll be alright. Another person has 2,500,000,000 units of food sitting in a room, earns them at 200,000 units per day, and can consume them at 100 units per day (not as filling but tastier let's say). They are... also only saving? C'mon.
- unit91 9y ago
  The problem with this line of thinking is it assumes a specific purpose, then name-calls based on that premise. Maybe consumption isn't the goal and you're unaware of it. If I have as much food as a grocery store, I'm a hoarder because consumption is my goal. The grocery store isn't hoarding (or even saving) food because consumption isn't the goal. Retail sales are the goal. Again, I'm not here to fight about economics. That wasn't my point. My point was ridicule isn't an argument. Calling someone a hoarder may make you feel good, but it isn't an argument.
  - dota_fanatic 9y ago
    Degree matters, it often makes all the difference; as such, we have different adjectives to describe those different degrees. In my hypothetical, while technically true that both are "saving", it is more descriptive to use "hoarding" for the latter case, both in an objective sense to describe the degree and in a subjective sense to describe how that degree of storage should be evaluated. Their goal is to save obscene amounts of wealth that will never ever be used, could never ever be used by a single person in a natural lifetime, "I've saved so much WAOW!" Who cares. Wealth is gained on the shoulders of giants, all the people and technology that came before us. Maybe it should be harder, much harder for people to save levels of money that most everyone would describe as hoarding. The wealthy saving/hoarding so much money, having so much power relative to the masses is leading to super great outcomes?

Sean-P 9y ago

At this point, it would stick it to the man more to abandon bitcoin than to continue pursuing its naive ideals.

pbreit 9y ago

So...not a lot? It’s a surprisingly small number. Tiny fraction of their wealth and of aggregate crypto market cap.

thisisit 9y ago

I am sure someone is going to talk about banks and how they steal money so I will leave it here for anyone who wants to learn more: https://www.forbes.com/sites/francescoppola/2018/04/21/bitcoin-banks-and-a-whole-lot-of-fud/#55e2cc1c21f1 https://www.forbes.com/sites/francescoppola/2018/04/21/bitco...

jsutton 9y ago

Key Management Systems will be an extremely lucrative business if anyone can come along and get it right. Coinbase could be a leading candidate to operate one, but the opportunity is there for a small player with top tier security talent.

kajumix 9y ago

The word 'hoarding' demonizes 'saving,' which in most Keynesian economies is considered leakage. It's really a question of values. Inflationary currencies encourage consumption; deflationary ones encourage savings. High consumption does increase demand, and apparently a faster growth in the economy. One could argue that this almost forced consumption for the sake of faster economic growth is what causes malinvestment and the associated boom-and-bust cycles. One could be hesitant about spending away their Bitcoin to buy a shiny new bigger TV, while they'd happily part with USD for the same expense. Former, I'd say, has a more natural alignment with our incentives to spend thoughtfully. Also, I am not sure if everyone shares the value of eating the planet at a faster rate for employment and GDP numbers.

empath75 9y ago
> Inflationary currencies encourage consumption You mean "investment" > deflationary ones encourage savings I'm not sure why encouraging people to bury their wealth in the ground instead of doing something useful with it is something we want to be doing.
- loco5niner 9y ago
  > I'm not sure why encouraging people to bury their wealth in the ground instead of doing something useful with it is something we want to be doing. Savings is not "burying their wealth in the ground", it's building a safety net for the future. At least for everyday people. Most people would be better off doing that than blowing it on big screen tv's, boats, and cigarettes. If more people did that, society would be better off too.
cpplinuxdude 9y ago
I don't really get why when it comes to crypto energy consumption, the discussion board becomes reactionary. I mean portugal is now running on 100% renewables. Shouldn't this point be more about renewables? You know, what about the electric car? That'll consume lots of energy too.
- 9y ago

DEFCON28 9y ago

I wouldn’t expect the poor to hoard $10B

hogu 9y ago

if everything goes to shit why wouldn't xapo just steal all the btc?

mbrumlow 9y ago

Oh man, "The Wealthy" are at it again...

clarkmoody 9y ago

Inflationists / consumptionists have been demonizing savers and sound money since the 1700s, if not earlier. They enjoy the artificial boom induced through inflation of the money supply and then blame gold or speculation or "animal spirits" for the bust. They think that if we could only got back to the consumption levels of the boom, then we'd be "back on track." This never works, and the calls for consumption are usually special pleading by bank-connected interests that stand to benefit from monetary inflation. We will see the pattern continue with Bitcoin, the most sound money the world has ever known (no matter how high the price goes, you cannot increase supply beyond the scheduled issuance). This time is different, however. The consumer can (and should) control her own private keys, which means not trusting a bank, which historically will inflate the money supply to its own benefit. Forced confiscation of privately-held Bitcoin will be much more expensive than previous confiscations of gold already held in vaults. Unfortunately, those wealthy savers with their money in the vaults mentioned in the article will have their Bitcoin confiscated when things get bad enough. Too many in the space have already learned the hard way what happens when you trust your coins to a centralized institution.

empath75 9y ago
> Inflationists / consumptionists have been demonizing savers and sound money since the 1700s, if not earlier. And as we all know, it's been one long, slow economic collapse since the 17th century.
- clarkmoody 9y ago
  The long-term trend is caused by gains in productivity brought about by saving and investment with private property protections. The boom-bust cycle is brought about by inflationary banking.

hnaccy 9y ago

Why wouldn't they just store it in a Swiss bank box or something? Can the wealthy not just use their art/gems/gold storage choice. Do hardware wallets need power?

a-dub 9y ago

This is just more evidence that my theory on why Bitcoin was developed, may actually hold water. It was never about the GFC, failing banks or some crazy libertarian dream. It was all because someone was upset that the "million dollar bank transfer codes (or the two keys geographically separated that have to be turned at the same time, or the special secret crypto laptop in the zero halliburton that can transfer billions instantly and untracably)" trope from all those crime films was complete bullshit, and that in reality most money is protected by horrifyingly thick layers of mediocre bureaucracy and somebody wanted to be the mahatma gandhi of making those sorts of situations actually plausible in the real world.

cletus 9y ago

In case of what? If something so major happens that the US dollar, the Euro, the British pound and other reserve currencies collapse or the financial system breaks down completely, what exactly is going to keep the Internet running such that the blockchain consensus will even be there? It's a bit like there's really no point (IMHO) preparing for a massive nuclear war by stockpiling food, water and guns and having a generator and a bomb shelter because if we have a nuclear war we're all kind of fucked anyway, so what's the point?

xchaotic 9y ago

Its not $10B worth. If you tried to liquidate, convert into another currency or asset etc there wouldn't be enough buyers at $9500, $1 would be much more likely towards the end of selling...

xtracto 9y ago
I don't think it would go all the way down to $1. I made a simple analysis of BitStamp's order book (https://www.bitstamp.net/market/order_book/ https://www.bitstamp.net/market/order_book/ ) considering all the bids and, in total, only in that market you have $22.5 millions available in bids going from $9275 to $7429 for a weighted average of $8462 in price. This for a portfolio of BTC that at the current market price ($9275) would be $24.5 millions. This means that the slippage will take ~9% of the price It is safe to assume that CoinBase has a larger order book, so I think that the slippage could go down to 50% if you wanted to sell $10B worth of BTC, so it would be more like $5B. Sure, that is if you want to sell it in one go, but usually you make a stop order or a limit order to protect you.

georgeecollins 9y ago

There is this myth that wealthy people are more savvy investors than ordinary folk. Sometimes they are but often not. They get scammed the most because that is where the money is.

erdojo 9y ago

I would argue that Bitcoin in this case isn't an investment or speculation. It's insurance. These wacky boys think their Bitcoin will save them someday. Whether they foresee a societal meltdown or government breaking down their door and seizing assets, they're living in fear. This wacky company is has found the perfect message and the perfect product for the perfect market.

mrnobody_67 9y ago

~10% of that is also Wences own money. Not sure why he got left off the crypto rich list.