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The beauty is that NOT spending the 600K BTC is economically equivalent to giving a 600K gift to all other bitcoin owners. If the news ever came out that these
by drcode 13y ago
The beauty is that NOT spending the 600K BTC is economically equivalent to giving a 600K gift to all other bitcoin owners. If the news ever came out that these coins are lost for all times, the exchange price for BTCs would most likely increase 600K/11M or about 5.5% in an instant.
(Of course, there's no way this could happen since we don't know what private keys are stored in Ross' head. Also this is based on the efficient market hypothesis and real world results have other complecting factors.)
- darkarmani 13y agoIf you assume they won't be able to break the encryption or coerce him, then you should buy BTC now. If he ever gets out of prison, maybe he'll be able to unlock a backup copy and spend them, but that will be 20 years down the road.
- drcode 13y agoI think another important question is whether it will help his plea if he gives them the keys: He appears to be just an average shmo (no surprise) and I'm sure would be happy to give away his privkeys for a few years off of his sentence. The other question is then whether the FBI would then liquidate the coins via an exchange, or just sit on them.
- nimble 13y agoThis line of reasoning works when you have a fixed number of shares that represent ownership in something real, but I don't see how it works with bitcoins that have no intrinsic value. Bitcoins only hold value by inertia. People think they have value because they're accepted by other people because other people think they have value. I see no rational mechanism by which this feedback loop should jump 5% when 5% of bitcoins are lost.
- drcode 13y agoThe mechanism: Prices of any commodity are determined by supply and demand. If supply goes down, prices go up.
- nimble 13y agoAgain, flawed reasoning. If all bitcoins were destroyed except for one, how much do you think it would be worth? There is no intrinsic demand for bitcoins, only inertia behind perceived value. And it looks to me that the inertia is mostly behind the price per bitcoin rather than total value of all bitcoins.
- drcode 13y agoThe current bitcoin economy is worth about 1.5 billion, so that one coin would be worth about 1.5 billion, if that were to happen. Where is my flawed reasoning?
- nimble 13y agoThat would be a fun conversation to see. You with your 1.5 billion dollar bitcoin trying to haggle someone down from 0.2 bitcoins to 0.00000002 bitcoins for a pair of pants.
- shasta 13y agoFiat currencies (which bitcoin is in one sense) are largely rooted in psychology. Recall this story: http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake-money-saved-brazil http://www.npr.org/blogs/money/2010/10/04/130329523/how-fake...
- brazzy 13y ago> There is no intrinsic demand for bitcoins, only inertia behind perceived value. Not true; anyone who sells something for bitcoins creates some amount of intrinsic demand. Silk Road did, and was probably by far the biggest generator of such demand, but not the only one.
- deleted 13y ago[deleted]
- aestra 13y agoThat's how all fiat currencies work. For example, to use your words: People think dollars have value because they're accepted by other people because other people think they have value. You accept your paycheck in whatever currency you accept it in and believe it has value because you have faith that other people will accept that currency for whatever goods and services you want. It all works as long as everyone believes the currency will keep having value in the future. Bitcoins are no different. As long as a group of people believe they have value in the future, and will be accepted as payment for goods and services, they will continue to have value.
- nimble 13y agoAll true. Now explain why if 5% of bitcoins were destroyed that would result in a 5% increase in the value of the remaining bitcoins.