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A commodity is only worth what someone will pay for it. It would be impossible to offload 1M BTC at the market mid (currently $962) so it seems ridiculous to va

A commodity is only worth what someone will pay for it. It would be impossible to offload 1M BTC at the market mid (currently $962) so it seems ridiculous to value Satoshi's bitcoin wallet at $1B. The market isn't sufficiently well developed and doesn't have sufficient depth to support transactions of that size. Combine a lack of liquidity with the fact that BTC have no intrinsic value, and that the market has shown itself to be vulnerable to price shocks in the past, and I would value 1M BTC at significantly less than $1B (probably not even 10% of that).

lazyjones 13y ago
> A commodity is only worth what someone will pay for it. It would be impossible to offload 1M BTC at the market mid (currently $962) so it seems ridiculous to value Satoshi's bitcoin wallet at $1B. Conversely, it seems unlikely that e.g. Google's shares would be worth the current market cap if they were all sold at the same time. But we still accept the current share price as a basis of e.g. Page and Brin's net worth, so we should also accept Satoshi's wallet's current value (even if it fluctuates more than typical stock prices).
- army 13y ago
  There's a far stronger floor though on the price for Google shares, given that they're a very profitable company with good future prospects. The share price doesn't have to drop too much before it starts looking like a bargain to the many deep-pocketed stock market investors out there. With Bitcoin the value is so speculative at the moment that I think, if anything, a sell-off that large would trigger a self-sustaining run on Bitcoin.
- fragsworth 13y ago
  > Conversely, it seems unlikely that e.g. Google's shares would be worth the current market cap if they were all sold at the same time. Not really true. Google's shares have a value that is based mostly on analysis of expected value. If they offloaded a bunch of their shares at once, the analyzed value wouldn't change, so the market would only crash for a very short time while everyone else realizes Google is a better deal than their other stocks. There is no revenue from Bitcoin, on the other hand. Much like gold, its value is almost entirely based on speculation, but with some added value on account of people needing to buy a little bit to do certain things. The market cap of Bitcoin is not based on anything tangible.
brianbreslin 13y ago
I don't think he would need to cash out. That is a simplistic view of money. He could leverage his asset to borrow money from the incumbent banking system at super low rates as he uses his BTC stash as collateral. Then he could start diversifying his assets and buying cash-flow properties or other investments to generate even MORE money (whatever currency or form that may be).
- saraid216 13y ago
  > he uses his BTC stash as collateral Doesn't collateral require that you provide the ability to transfer ownership?
  - jganetsk 13y ago
    It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.
  - jganetsk 13y ago
    It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.
  - jganetsk 13y ago
    It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.
bushido 13y ago
Your premise regarding the market not being of sufficient size to support a 1M BTC transaction is flawed. You're assuming: 1. That it would be a block transaction, where a block doesn't refer to a BTC block but a single transaction. Most institutional/sophisticated/smart traders scale out of their positions. 2. There may be an underlying assumption that just because someone (satoshi etc.) sell their bitcoin's for X price they would want to withdraw it in another currency. If the goal is to own more BTC, they would transfer in BTC to a trading account, sell said BTC while scaling out and buy back BTC when prices drop below their average sell price. If someone was extremely cautious they would do these trades under multiple accounts, most BTC trading accounts need verification for deposits/withdrawal only. This could be done on multiple exchanges. The average weekly trading volume of mtgox is >130,000BTC/week, therefore over 7 million BTC were traded which is sufficient volume to liquidate 70-100% of 1M BTC.
- army 13y ago
  The market is so volatile at the moment, especially with speculative momentum traders, that it's hard to say what would happen. There's no real way to value Bitcoin on fundamentals, so there's nothing much to keep the market stable around a particular valuation.
adventured 13y ago
This is incorrect. If bitcoin is successful over the coming years, the best approach to monetizing that wallet, other than very gradual diversification into other currencies, would be to set up a bitcoin bank or flex agent, providing liquidity to other bitcoin businesses in exchange for a small fee. Basically, that wallet should be used to nurture and feed the bitcoin ecosystem, and in doing so it can become worth vastly more. It becomes the JP Morgan - circa 1910 - of the bitcoin financial world. With the profit generated from the business, it can be used to calm panics, and help lessen volatility, a form of pressure regulator.

lazyjones 13y ago

> A commodity is only worth what someone will pay for it. It would be impossible to offload 1M BTC at the market mid (currently $962) so it seems ridiculous to value Satoshi's bitcoin wallet at $1B. Conversely, it seems unlikely that e.g. Google's shares would be worth the current market cap if they were all sold at the same time. But we still accept the current share price as a basis of e.g. Page and Brin's net worth, so we should also accept Satoshi's wallet's current value (even if it fluctuates more than typical stock prices).

army 13y ago
There's a far stronger floor though on the price for Google shares, given that they're a very profitable company with good future prospects. The share price doesn't have to drop too much before it starts looking like a bargain to the many deep-pocketed stock market investors out there. With Bitcoin the value is so speculative at the moment that I think, if anything, a sell-off that large would trigger a self-sustaining run on Bitcoin.
fragsworth 13y ago
> Conversely, it seems unlikely that e.g. Google's shares would be worth the current market cap if they were all sold at the same time. Not really true. Google's shares have a value that is based mostly on analysis of expected value. If they offloaded a bunch of their shares at once, the analyzed value wouldn't change, so the market would only crash for a very short time while everyone else realizes Google is a better deal than their other stocks. There is no revenue from Bitcoin, on the other hand. Much like gold, its value is almost entirely based on speculation, but with some added value on account of people needing to buy a little bit to do certain things. The market cap of Bitcoin is not based on anything tangible.

brianbreslin 13y ago

I don't think he would need to cash out. That is a simplistic view of money. He could leverage his asset to borrow money from the incumbent banking system at super low rates as he uses his BTC stash as collateral. Then he could start diversifying his assets and buying cash-flow properties or other investments to generate even MORE money (whatever currency or form that may be).

saraid216 13y ago
> he uses his BTC stash as collateral Doesn't collateral require that you provide the ability to transfer ownership?
- jganetsk 13y ago
  It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.
- jganetsk 13y ago
  It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.
- jganetsk 13y ago
  It is easy to do that. You just need a trusted third party, and you can set up a BTC contract.

bushido 13y ago

Your premise regarding the market not being of sufficient size to support a 1M BTC transaction is flawed. You're assuming: 1. That it would be a block transaction, where a block doesn't refer to a BTC block but a single transaction. Most institutional/sophisticated/smart traders scale out of their positions. 2. There may be an underlying assumption that just because someone (satoshi etc.) sell their bitcoin's for X price they would want to withdraw it in another currency. If the goal is to own more BTC, they would transfer in BTC to a trading account, sell said BTC while scaling out and buy back BTC when prices drop below their average sell price. If someone was extremely cautious they would do these trades under multiple accounts, most BTC trading accounts need verification for deposits/withdrawal only. This could be done on multiple exchanges. The average weekly trading volume of mtgox is >130,000BTC/week, therefore over 7 million BTC were traded which is sufficient volume to liquidate 70-100% of 1M BTC.

army 13y ago
The market is so volatile at the moment, especially with speculative momentum traders, that it's hard to say what would happen. There's no real way to value Bitcoin on fundamentals, so there's nothing much to keep the market stable around a particular valuation.

adventured 13y ago

This is incorrect. If bitcoin is successful over the coming years, the best approach to monetizing that wallet, other than very gradual diversification into other currencies, would be to set up a bitcoin bank or flex agent, providing liquidity to other bitcoin businesses in exchange for a small fee. Basically, that wallet should be used to nurture and feed the bitcoin ecosystem, and in doing so it can become worth vastly more. It becomes the JP Morgan - circa 1910 - of the bitcoin financial world. With the profit generated from the business, it can be used to calm panics, and help lessen volatility, a form of pressure regulator.