5 ms·

It's not a great look for the BitCoin market if you can buy in bulk at 75%.

by ssharp 12y ago

Alupis 12y ago
Not really. Seized properties often sell for less than half of the market value... doesn't mean the property is worth half now... it means the government can't be bothered to take on the responsibility of selling the property at full retail -- ie. they just want to get rid of the assets and move on.
- egwor 12y ago
  but it does show that bitcoins are NOT considered the same thing as cash. You would not see the case where JPY or GBP or EUR would be sold off at this level of discount...
  - mech4bg 12y ago
    They're not as volatile though. There's a fair amount of risk in taking on that much Bitcoin at once.
  - qbrass 12y ago
    To be fair, the US government doesn't consider it to be currency. They naturally wouldn't treat it like one when selling.
  - marincounty 12y ago
    Where can I walk in with 29,0000 bitcoin x market value and walk out with suitcases full of $100 bills? I wonder if there is any legal implications of the federal government selling Bitcoin. I always felt the majority of bitcoins were mined illegially(on company, and university mainframes--without consent). I'm surprised they are asking for a deposit in cash?
    - fleitz 12y ago
      Let me clear up the legal implications for you: http://en.wikipedia.org/wiki/Sovereign_immunity#Federal_sovereign_immunity http://en.wikipedia.org/wiki/Sovereign_immunity#Federal_sove...
- digz 12y ago
  Actually is does mean that it's worth what it sells for. The nature of seized goods increases the risk premium demanded from a buyer resulting in a lower price. Sources of risk: 1) Goods aren't as they seem. Drug dealers may not have treated the goods as well as average owner. 2) Risk of violence. I wouldn't want to buy some drug dealer's prized yacht... wouldn't sleep well. 3) Illiquid good. If it's hard to resale the good, it's going to introduce risk. For this auction that's the problem... selling tens of millions of dollars of bit coins will have a market impact. Aside from this, there's also a transaction cost component.. it takes time and some money to transact (think opportunity cost of the 200k deposit, lawyer fees, etc.) and this would be reflected. The sale price would reflect both of these. Now, if the good was completely fungible, risk-free and totally liquid (think cash), there would be no expected discount because of risk.. just transaction cost.
  - maaku 12y ago
    > Now, if the good was completely fungible, risk-free and totally liquid (think cash), there would be no expected discount because of risk.. just transaction cost. How is that not the case here?
    - GFischer 12y ago
      In the "not completely fungible" part. It is apparently hard to trade that many bitcoins for the equivalent amount of government-backed currency or goods. To be fair to Bitcoin, it's not the only "currency" with that problem... during the Argentinean crisis, many local governments paid their workers with alternative currencies ("patacones" and others) which rapidly devalued. http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond) http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond)
      - andrewla 12y ago
        I think you mean the liquid part, not the fungible part.
        GFischer 12y ago
- deleted 12y ago
  [deleted]
GigabyteCoin 12y ago
Look at the restrictions, though. Potential bidders must have $200,000 USD Deposit sent to the U.S. Marshalls from a U.S. bank account by 9am June 16th (~2 business days from now). That disqualifies a good 99.9999% of the world from being eligible to bid.
- hueving 12y ago
  They are in blocks of 3000. You obviously can't even bid if you don't have 200k.
- kapkapkap 12y ago
  >> That disqualifies a good 99.9999% of the world from being eligible to bid. Yes, however it doesn't disqualify a single person/party who actually has the capability (and interest) to purchase the minimum block of 3,000 btc (~$1.5M dollars).
- danielweber 12y ago
  The point isn't for Joe Shmoe to go buy them with his credit card. There are people who know exactly how to buy seized goods from the government. They make money doing so. If you think they are making Too Much Money, then you can raise money from your friends and start competing with them. It's very similar to buying distressed houses. You can make a killing there, or end up bankrupt. The market figures out the risk premiums on its own.

It's not a great look for the BitCoin market if you can buy in bulk at 75%.

by ssharp 12y ago

It's not a great look for the BitCoin market if you can buy in bulk at 75%.

Not really. Seized properties often sell for less than half of the market value... doesn't mean the property is worth half now... it means the government can't be bothered to take on the responsibility of selling the property at full retail -- ie. they just want to get rid of the assets and move on.

egwor 12y ago
but it does show that bitcoins are NOT considered the same thing as cash. You would not see the case where JPY or GBP or EUR would be sold off at this level of discount...
- mech4bg 12y ago
  They're not as volatile though. There's a fair amount of risk in taking on that much Bitcoin at once.
- qbrass 12y ago
  To be fair, the US government doesn't consider it to be currency. They naturally wouldn't treat it like one when selling.
- marincounty 12y ago
  Where can I walk in with 29,0000 bitcoin x market value and walk out with suitcases full of $100 bills? I wonder if there is any legal implications of the federal government selling Bitcoin. I always felt the majority of bitcoins were mined illegially(on company, and university mainframes--without consent). I'm surprised they are asking for a deposit in cash?
  - fleitz 12y ago
    Let me clear up the legal implications for you: http://en.wikipedia.org/wiki/Sovereign_immunity#Federal_sovereign_immunity http://en.wikipedia.org/wiki/Sovereign_immunity#Federal_sove...
digz 12y ago
Actually is does mean that it's worth what it sells for. The nature of seized goods increases the risk premium demanded from a buyer resulting in a lower price. Sources of risk: 1) Goods aren't as they seem. Drug dealers may not have treated the goods as well as average owner. 2) Risk of violence. I wouldn't want to buy some drug dealer's prized yacht... wouldn't sleep well. 3) Illiquid good. If it's hard to resale the good, it's going to introduce risk. For this auction that's the problem... selling tens of millions of dollars of bit coins will have a market impact. Aside from this, there's also a transaction cost component.. it takes time and some money to transact (think opportunity cost of the 200k deposit, lawyer fees, etc.) and this would be reflected. The sale price would reflect both of these. Now, if the good was completely fungible, risk-free and totally liquid (think cash), there would be no expected discount because of risk.. just transaction cost.
- maaku 12y ago
  > Now, if the good was completely fungible, risk-free and totally liquid (think cash), there would be no expected discount because of risk.. just transaction cost. How is that not the case here?
  - GFischer 12y ago
    In the "not completely fungible" part. It is apparently hard to trade that many bitcoins for the equivalent amount of government-backed currency or goods. To be fair to Bitcoin, it's not the only "currency" with that problem... during the Argentinean crisis, many local governments paid their workers with alternative currencies ("patacones" and others) which rapidly devalued. http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond) http://en.wikipedia.org/wiki/Patac%C3%B3n_(bond)
    - andrewla 12y ago
      I think you mean the liquid part, not the fungible part.
      - GFischer 12y ago
deleted 12y ago
[deleted]

GigabyteCoin 12y ago

Look at the restrictions, though. Potential bidders must have $200,000 USD Deposit sent to the U.S. Marshalls from a U.S. bank account by 9am June 16th (~2 business days from now). That disqualifies a good 99.9999% of the world from being eligible to bid.

hueving 12y ago
They are in blocks of 3000. You obviously can't even bid if you don't have 200k.
kapkapkap 12y ago
>> That disqualifies a good 99.9999% of the world from being eligible to bid. Yes, however it doesn't disqualify a single person/party who actually has the capability (and interest) to purchase the minimum block of 3,000 btc (~$1.5M dollars).
danielweber 12y ago
The point isn't for Joe Shmoe to go buy them with his credit card. There are people who know exactly how to buy seized goods from the government. They make money doing so. If you think they are making Too Much Money, then you can raise money from your friends and start competing with them. It's very similar to buying distressed houses. You can make a killing there, or end up bankrupt. The market figures out the risk premiums on its own.