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Consider this: They paid $0.00 for the transfer of $150 million dollars. A direct (i.e. not based on third party credit, regulations, etc.) transfer of wealth
by fragsworth 13y ago
Consider this: They paid $0.00 for the transfer of $150 million dollars.
A direct (i.e. not based on third party credit, regulations, etc.) transfer of wealth of this magnitude between two entities usually consists of a heavily guarded, insured, physical shipment of cash or gold. Depending how safely you want to make the transfer, and how far the entities are on the globe, it can cost hundreds of thousands to millions of dollars.
Bitcoin has real value. It solves problems on an incredible scale. I wish I realized this months ago.
- kmfrk 13y agoI really am not a bitcoin fan, but my hatred towards PayPal's payment monopoly may one day weigh more heavily than my reservations about cryptocurrency. :)
- oijaf888 13y agoHow often is there a direct transfer of this size? Fedwire moves about 2.7T/day and I believe it would have cost $0.26 to transfer this amount, assuming that its at the upper end of their sliding scale ($0.08 - $0.26/transfer).
- latj 13y agoBesides cost there is also risk- a transfer of this size in the light of day would raise a lot of questions- Where did this money come from? Was tax paid? And depending on the reason for the transaction regulators may interfere or freeze the funds.
- glesica 13y agoYes, because making sure someone isn't buying a nuke on the black market and is paying the taxes they owe is just terrible. Don't get me wrong, the regulatory framework for money transfers seems to suck, but I don't want to go from "shitty regulation" to "zero regulation", I want to go from "shitty regulation" to "smart regulation".
- Sambdala 13y ago>I want to go from "shitty regulation" to "smart regulation". I'm tempted to conclude this is something that happens so rarely you may as well count the times it happens as a rounding error. It's a bit like saying government will just work if we only vote for the right candidate.
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- chipotle_coyote 13y agoI'm tempted to conclude this is something that happens so rarely you may as well count the times it happens as a rounding error. Everyone's tempted to conclude things like that, but there's a subtle fallacy happening when we do. Generally speaking, we notice government programs of all stripes when they get in our way. When they don't get in our way, we don't. It's very easy for someone paying attention to the news to be able to rattle off incidents where the FDA and FEMA and the SEC screwed up, because the screw-ups are in the news. But when they do their job correctly we never hear about it. Basically, the dataset we carry around in our heads about How Well Government Works is substantially biased toward instances of failure. The only way to really measure how useful a regulation is or isn't is to determine what it is the regulation is supposed to address and examine a substantial set of "before and after" data points; trotting out vivid but essentially anecdotal examples of WHEN REGULATORS GO BAD makes for great editorializing, but it doesn't actually tell us very much.
- thenmar 13y agowhoa whoa whoa, that would never happen in bitcoin libertarian paradise
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- shitgoose 13y ago"Where did this money come from?" I guess, not from you. Is that the reason to question it? "Was tax paid?" What makes you think that this money supposed to be taxed?
- fragsworth 13y agoNot everyone can participate in Fedwire. I believe it also requires that you put your assets one of their accounts if you're going to use it, so you're relying on the credit of the U.S. government (which is pretty good, but still adds risk, and subject to U.S. laws) until you withdraw your funds. And there's probably a lengthy process to deposit and withdraw funds.
- gorrillamcd 13y agoKeep in mind though, this transaction was nearly instantaneous. Bank Wire transfers take 3-4 days to complete (at least, as far as I know with normal-person quantities of money). Instant international money transfer is amazing!
- gergles 13y agoNo, that's ACH. SWIFT (or even FedWire) transfers happen within a few minutes.
- csomar 13y agoMy experience tell me otherwise with both of them. It can take from a few days to a couple weeks.
- booyaa00 13y agoWhat country are you in? In the UK bank transfers happen within a couple of minutes. You can login to your bank, transfer money to someone elses bank, they'll login, and see the money.
- dprice1 13y agoMy guess is the previous commenter is in US. There's an excellent episode of the podcast "planet money" which addresses exactly this question, and which also explains why the system in the UK is much faster. http://www.npr.org/blogs/money/2013/10/04/229224964/episode-489-the-invisible-plumbing-of-our-economy http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
- csomar 13y agoNope. Third-world here. I don't think it'll take a couple weeks in the US.
- guan 13y agoFedwire and other real time gross settlement services (RTGS) are almost instantaneous. SWIFT transfers usually are not: SWIFT is a way to communicate messages about transfers between banks, but they would still need a way to do the actual settlement. This could be very fast in the case of two large banks in different countries: if you are a customer in bank A, which has a correspondent account with B, and the recipient is also a customer with bank B. Then bank A can use SWIFT to say “please transfer $1 trillion from our account to the recipient’s account”, and that could happen instantly. (It usually doesn’t.) But if the final recipient is actually a customer at bank C, then the money needs to get from B to C somehow. That could happen in the recipient country’s RTGS—Fedwire if it’s the United States—but it might also be slower, through ACH or an equivalent. One problem with fast transfers is that many banks don’t have straight through processing for RTGS. This means that the money can get instantly from bank A to bank B, but may not get posted to the recipient’s account with bank B until a clerk gets around to verifying and booking the transaction.
- JackFr 13y agoI believe FedWire has a $50M pert transaction max, thus $1T would cost around $5K.
- gopher1 13y agoSorry but you can wire transfer $150 million dollars and it will not cost you millions.
- sidko 13y agoActually if you look carefully, the fees is 0 and not 0.5 BTC. 0.5 BTC in fees is quite high actually. That's right, he paid $0 to move $150 million.
- nadaviv 13y agoThat 0.5 BTC you see there is another output, not the fees. They didn't pay any fees for that transaction.
- drzaiusapelord 13y ago>between two entities usually consists of a heavily guarded, insured, physical shipment of cash or gold. Err, life isn't a james bond movie. For money transfer like this we use bank wires. We dont buy gold and ship it on gunships anymore.
- endlessvoid94 13y agoAny transfer over 10,000 requires a signature.
- derefr 13y agoThat's only if the two entities can both interact with the global banking infrastructure (i.e. they hold money in reserve currencies, their accounts aren't frozen, etc.) If someone in Argentina wanted to buy something from anywhere else in the world in 2000, for example, they'd basically have to trade natural resources or gold for access to foreign currency, and then spend that.
- muzzamike 13y agoIn 2000...
- derefr 13y agoYes, in 2000, because that was during the period Argentina's currency was collapsed. Any other country's currency could collapse at any time, putting some other group in the same situation.
- aortega 13y ago2013 Argentinian here. To buy a house right now you usually have to pay dollars cash because nobody accepts a currency that devaluates 25% per year. The political class here is crazy corrupt and rich like in every third world country, and they are known for using piles of 500 euros bills to stay out of the bank system because euros have more wealth density than dollars.
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- aminok 13y agoA slight correction, he paid zero fee. The 0.5 bitcoin is change, that he got back. You can see the fee amount further down the page. If he had paid a fee, 0.0001 BTC, or $0.04 worth of BTC, would have been enough to ensure the transaction was included in the next block.
- fragsworth 13y agoYou're right, I misread it. Even better though.
- teraflop 13y agoIsn't it quite possible that the 0.5 BTC is the actual transfer, and the other 194993 BTC is the change?
- fragsworth 13y agoYes, but that makes for a very uninteresting story
- zwily 13y agoI'm not sure why he would use that many inputs to transfer 0.5 Btc.
- devindotcom 13y agoI don't think they paid anything at all, actually. Transactions above a certain priority are free, as I understand it: https://en.bitcoin.it/wiki/Transaction_fees https://en.bitcoin.it/wiki/Transaction_fees Not that $350 would have meant much - your point stands and is well taken. I was convinced of this money transmission use case as the most important when I was writing up something on Bitcoin a while back and talked with a few experts. They were all psyched about this kind of thing, not about "you can buy your groceries with a bitcoin card" stuff, which will have better solutions than this. Global liquidity is what it adds, really.
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- gfodor 13y agoCall me crazy but if I am ever in a position to transfer $150M I'd probably also want a third party involved to make sure the transaction goes smoothly, like a bank. Like we do today. With wire transfers.
- nostromo 13y agoChoice is good. People shouldn't be forced to use banks or bitcoin.
- mpyne 13y agoWho's forcing anyone to use a bank even without Bitcoin?
- SilasX 13y agoTwo words: inflation.
- ceejayoz 13y agoThat's one, and banks hardly help with inflation at today's 0.01% interest rates.
- SilasX 13y agoTrue, but other than the recent years it was necessary and effective to put your money in a bank to counteract inflation. Sorry about the fencepost error. (Perhaps I was originally intending to say "inflationary finance"?)
- foobarian 13y agoYou mean you didn't actually intend to make that clever and subtle joke? :-(
- wallzz 13y ago
- jonknee 13y agoAnd they received $0 worth of assurance that it would be successful. If it were my $150M I would not want to leave it up to the block chain and hope it works.
- mithras 13y agoHuh, if you make a valid transaction there is no reason why it would fail.
- unreal37 13y agoNot true. The transaction has to be verified by multiple other people before it can be trusted. If you spend the same bitcoin twice in a short time period, it's a toss-up as to which one gets accepted into the official blockchain.
- mithras 13y ago>The transaction has to be verified by multiple other people before it can be trusted. That's not how it works, sorry. If you don't double spend your transaction and you attach a proper fee it's going to get in the chain, period.
- nadaviv 13y agoThey received a mathematical assurance that it would work. The relying nodes, blockchain, miners and priority rules are all well-known and straightforward to account for. If you pay enough fees given your transaction priority, it'll get into a block eventually. If you want it to be mined sooner, you can pay higher fees. And even if it won't be mined, the worst case scenario is that you would keep your Bitcoins and can try re-sending them later, they won't disappear to anywhere.
- mpyne 13y agoExcept for that pesky blockchain split that happened once...
- jganetsk 13y agoUtterly incorrect. They did not transfer a single dollar. For them to turn those Bitcoins into dollars, they will have to pay more than $0.00. Possibly A LOT more. They may not even be able to turn those bitcoins into dollars for a while, and in all likelihood it will not be $150 million dollars.
- dguaraglia 13y agoThis is the correct answer. People rave about how "cheap" it is to transfer bitcoin. What about actually buying anything with that 'money'? Sure, you might be able to buy some crap on the internet with bitcoin, but it won't put food in your table anytime soon without you having to pay a good % in fees to convert it to real currency.
- guyht 13y agoAlthough I agree with the point you are making, saying "you might be able to buy some crap on the internet with bitcoin" is slightly short of the truth. While you might not be able to live off 100% bitcoin purchases (although some people are doing it), acceptance is growing every day. A lot of people who are claiming that you will need to pay a large % in fees in order to spend your coins are missing the point.... as bitcoin gains traction, you wont need to convert it to USD first.
- vinceguidry 13y agoYou're conflating liquidity with value. The same is true of any foreign currency. I could send $150 million in Russian rubles to my sister, and she wouldn't be able to do jack with it until she finds someone willing to give her dollars for it. With the amount of money involved, getting it all converted at once would be extremely difficult. That doesn't mean that what's transferred doesn't have real value. Just that the assets involved aren't terribly liquid.
- mehwoot 13y agoThe same is true of any foreign currency. I could send $150 million in Russian rubles to my sister, and she wouldn't be able to do jack with it until she finds someone willing to give her dollars for it. With the amount of money involved, getting it all converted at once would be extremely difficult. That's exactly the point. If you had $150 million in rubles, you could transfer it for only a nominal fee ($20 for my bank, although you can get a lot cheaper if you regularly did transfers like that) to any account in the world that could hold rubles. Exactly the same with bitcoin. The only real cost in transferring sums of money is either extreme convenience, transferring to a country with an extremely poor banking service or exchanging currencies. None of which bitcoin solves yet.
- glesica 13y agoSo maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else. Do we even know? Don't you think there are vulnerabilities in the system for transferring Bitcoins just like there are vulnerabilities in the system for transferring other valuable things?
- gwern 13y ago> So maybe I'm ignorant here, but did they do the transfer over the Internet, or was it a thumb drive taken out of "cold storage" and handed off to someone else. Every bitcoin is controlled by a private key. The private key can be put in 'cold storage', but if I hand you the USB key with a private key stored in a text file on it, you have no way of being sure that I didn't keep a copy elsewhere and in a few minutes will make a transaction sending it to some other private key (which you don't have). So unless you trusted me an extraordinary amount, you would immediately want to make a transaction transferring from the private key on the USB to a new private key you generated just that moment.
- Jtsummers 13y ago> or was it a thumb drive taken out of "cold storage" and handed off to someone else A transaction like this is invisible to the bitcoin network. This would be equivalent to me handing you a 20 USD bill, no one but us (well, there is surveillance, but you get the point) knows what happened. Unlike handing over 20 USD, if I had you a USB drive with a wallet containing 20 BTC, you need to move that money from that wallet to another, because you can't trust it's my only copy. If I have another copy of the private key somewhere I can take that money back at any point by announcing a transaction before you do. So exchanges like this are done via the bitcoin network by specifying a from address and a to address (simplified, other more detailed explanations are out there detailing the actual cryptographic tools and protocols) and an amount. So you provide me an address, I use my private key to encode a transaction from an address containing my 20 BTC to your address. Everyone knows about this, though they may not know who we are as the addresses are pseudonyms and the connection to our real identities may be virtually non-existent. Now, you control that 20 BTC and its spending, and my 20 BTC are gone from my address, I can't spend them again (legitimately at least). Supposing that address now has less than 20 BTC. If I try to spend 20 BTC again the network will consider it an invalid transaction since I can't spend BTC I don't have.
- orblivion 13y agoNo, the Bitcoin system has real value. Or rather, it would have real value, if Bitcoins themselves had real value.
- res0nat0r 13y agoUnfortunately for me right now bitcoin has zero value. Until I can use the millions in coins to pay off my house, buy a car easily, pay my taxes and go out to eat with them, or hassle free convert them to cash in my bank, it is still funny money.
- toozap 13y agoI think you might be missing the point. Bitcoin right now operates more like gold. You can't pay off your house, buy a car, pay your taxes or go out to eat with gold. However, there is a healthy market for exchanging gold for currency. You wouldn't call gold funny money. I think it would be more appropriate to compare bitcoin to gold right now. I have no idea how healthy the market is for exchanging bitcoin for other currency, though.
- XorNot 13y agoGold is a physical good with actual useful value. It is hugely overvalued right now, and anyone telling you to "buy gold" usually holds gold and benefits a lot from that. Those cable "invest in gold" deals are exactly this but worse - they sell you gold more expensive then the commercial market that can never be redeemed for that price. But it has a real cost of production that represents its relative industrial worth. Bitcoin is valueless though. Created Bitcoins do not have any industrial value - you can't use them for anything else, even though they have a cost to create. There's no reason, if they lose value, for anyone to buy them from you - whereas with gold if you sit on it long enough, it will become valuable when someone needs gold for some type of industry at minimum.
- codexon 13y agoWhile that is true, Bitcoin is far from a bulletproof preserve of wealth. Gold has other uses if it isn't used as a currency anymore. Bitcoin on the other hand can be made completely useless if some critical flaw is found, or the wealth is too concentrated in a few users and the majority decides to switch to a newer crypto-currency.
- indrax 13y agoI'm pretty sure that if we consider only the industrial uses of gold, and the available supply, it would have a low value. Probably even if we count jewelery as a non-currency use. Almost all the value is because it's shiny, yellow, and traditional. Gold asteroid mining isn't too implausible, either.
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- penguindev 13y ago> Gold asteroid mining isn't too implausible, either. More plausible than some hacker news post 'bitcoin 2.0 is here - look it's shinier!', though? Or 'new crypto currency approved by the US govt?' You think people won't reinvent this wheel to death? Sure, you could also synthesize gold from some nuclear reaction, or mine it from space... You pays your money (and you takes your chances)
- Sambdala 13y agoGold's other uses wouldn't make gold worth much on their own. "Legitimate" uses of a commodity that trades more for its properties as money should be thought more of a really crappy put option, that is it sets a low price floor. For example, it's been estimated that gold's industrial uses would only allow it to be traded in the low double digits per ounce if people didn't desire it for other reasons. It's just in the case of something that isn't physical and isn't "backed" by any alternative uses, the floor is 0% of the current price instead of 1%, or similar.
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- fat0wl 13y agoso what? i just paid $0 to transfer 1000 unicorns from Narnia to Neverneverland
- pbreit 13y agoOr a $50 wire transfer. Used ALL the time. But this was likely just moving money around to own accounts.
- INTPenis 13y agoMonths ago? I was considering buying some coin when it cost only a few dollars. You can imagine how I'm kicking myself now.
- mml 13y agoYou think you feel bad? I _did_ buy some at $4. 250BTC. Now worth around $120k. Sold at $23.
- conjecTech 13y agoFinally, someone mentioning good reasons why bitcoin is actually great. You're absolutely correct, and this is why bitcoin will continue to remain relevant. Taking service fees out of transactions is a huge boon for businesses and consumers everywhere. My mother is the CFO for a large retailer, and I believe service fees are the third largest cost they have after rent and personnel.
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- jonahx 13y agoFlouting
- drawkbox 13y agoThat is the side I think many in the financial world are realizing and what hits banks the most. It hits the fees. Daily transfer fees, rates, management etc. It could be beneficial to banks to move money more rapidly and make some coin just like funds they have do with their holdings even though it strikes the core of the business model. If used right it could be helpful like torrent is to distribution, cheaper, faster ways to move things. It would be nice one day when regular bank transfers don't take 3-5 business days or a fee for same day.
- jrockway 13y agoBanks don't make money from fees. Banks make money from lending out your deposits with only a fractional reserve.
- PhasmaFelis 13y agoSolving problems is nice in the abstract, but I can't really get excited that someone has solved the problem "I wanna move $150 million without paying for it." In terms of things that actually make a positive difference in the world, it's right up there with "that breastplate I want for my Warcraft paladin won't drop."
- stretchwithme 13y agoCouldn't it also be done by writing a check?
- akulbe 13y agoI have 1BTC. I wish I could turn the money in that into more. Wish I would have bought more initially.