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FBI's way of estimating "1.2 billion" involved pricing the net turn-over in Bitcoin (over the course of silk roads existence) at it's highest values in order to

by hurin 12y ago

FBI's way of estimating "1.2 billion" involved pricing the net turn-over in Bitcoin (over the course of silk roads existence) at it's highest values in order to give the news a sensational effect. Silkroad is a joke compared for example to some 300% increase in heroin production that Afghanistan saw after America invaded - it's just the later isn't favorable to publicize. Notice - Even wikipedia blatantly quotes the misinformation published in the document in it's article: It noted that, "From February 6, 2011 to July 23, 2013... The total revenue generated from these sales was 9,519,664 Bitcoins, and the total commissions collected by Silk Road from the sales amounted to 614,305 Bitcoins. These figures are equivalent to roughly $1.2 billion in revenue and $79.8 million in commissions. But - for the bitcoins to amount to 1.2 billion dollars they would have to be priced at a relatively high 2013 mark at least 100 magnitudes above 2011 prices (from which their estimate begins). For the record the world-drug market is estimated at around $400 billion, so if silkroad over the course of 2.5 years had a turn over of 213 million, that would place it as accounting for .02% of the drug trade. Not the staggering blackmarket the FBI and US media have made it out to be.

rgbrenner 12y ago
You're really stretching the truth here. 1.2b/10m = $120. That's a reasonable value. Instead of simply saying that, you say "it's highest values" and "they would have to be priced at July 2013 high on MT. Gox." Just so we're clear.. July 2013 was in the midst of the Mt Gox scandal, and the price had just recently tanked from $220 in april, down to $66 in early july. In June Mt Gox had suspended withdrawls. http://blogs.wsj.com/moneybeat/2013/07/05/bitcoin-operator-mt-gox-resumes-withdrawals/ http://blogs.wsj.com/moneybeat/2013/07/05/bitcoin-operator-m...
- hurin 12y ago
  (that was a typo) > You're really stretching the truth here It's a huge stretch of the truth to estimate all values over 2.5 years in real time. They are retroactively estimating the number of bitcoins that passed through from February 2011 (when bitcoin was worth some $0.10 or something near there) but pricing the net total over 2.5 years as of the 2013 value. (That's already a magnitude of 100, so the difference between 200-130 there is quite little). You're right I didn't give accurate pricing numbers, I'll double check next time before I specify months and values, but my main point still stands. (Actually prior to Feburary 2013 Bitcoin was under $10 - so again their estimate is several magnitudes off.)
  - rgbrenner 12y ago
    Where are you getting these prices from? Bitcoin definitely was not $0.10 at any time during the operation of Silk Road. Here's a chart: https://blockchain.info/charts/market-price?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/market-price?timespan=all&sho... Most of the time, it seems to be around $10. Of course, if he kept his earnings in Bitcoins (which he did), then they would fluctuate with the market price.. to about $120, which was about the market price when he was arrested. And the truth is, Bitcoin's price was above that amount for most of 2013, and all of 2014, and today it stands above that price. So he could have sold his Bitcoins for even more than $120.
    - hurin 12y ago
      Future potential incoming isn't an estimate of market-price of goods. We are discussing the size of the drug business, not their potential gain as investors in Bitcoin (that would be investment income). Sure it's not $0.10, it's $0.7 - and yes the price is mostly around $10 - which is my point; that the estimate they given is incredulous unless literally 95% of their transactional volume over 2 years occurred between April 2013 - July 2013.
      - rgbrenner 12y ago
        yes the price is mostly around $10 - which is my point Ok.. thanks.. that was my point. The FBI estimate might be off by an order of magnitude, but the amount you made up was off by TWO orders of magnitude. At least the FBI estimate had some tie to reality (the value at the time he was arrested).
  - mikeyouse 12y ago
    > They are retroactively estimating the number of bitcoins that passed through from February 2011 (when bitcoin was worth some $0.10 or something near there) but pricing the net total over 2.5 years as of the 2013 value. Surely the bulk of the activity came later on in Silk Road's life though right? It's not like each day had the same number of transactions.. For all we know, the FBI looked at all of the transactions into and out of SR and did a perfectly weighted average pricing query.
deleted 12y ago
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by hurin 12y ago

rgbrenner 12y ago

You're really stretching the truth here. 1.2b/10m = $120. That's a reasonable value. Instead of simply saying that, you say "it's highest values" and "they would have to be priced at July 2013 high on MT. Gox." Just so we're clear.. July 2013 was in the midst of the Mt Gox scandal, and the price had just recently tanked from $220 in april, down to $66 in early july. In June Mt Gox had suspended withdrawls. http://blogs.wsj.com/moneybeat/2013/07/05/bitcoin-operator-mt-gox-resumes-withdrawals/ http://blogs.wsj.com/moneybeat/2013/07/05/bitcoin-operator-m...

hurin 12y ago
(that was a typo) > You're really stretching the truth here It's a huge stretch of the truth to estimate all values over 2.5 years in real time. They are retroactively estimating the number of bitcoins that passed through from February 2011 (when bitcoin was worth some $0.10 or something near there) but pricing the net total over 2.5 years as of the 2013 value. (That's already a magnitude of 100, so the difference between 200-130 there is quite little). You're right I didn't give accurate pricing numbers, I'll double check next time before I specify months and values, but my main point still stands. (Actually prior to Feburary 2013 Bitcoin was under $10 - so again their estimate is several magnitudes off.)
- rgbrenner 12y ago
  Where are you getting these prices from? Bitcoin definitely was not $0.10 at any time during the operation of Silk Road. Here's a chart: https://blockchain.info/charts/market-price?timespan=all&showDataPoints=false&daysAverageString=1&show_header=true&scale=0&address= https://blockchain.info/charts/market-price?timespan=all&sho... Most of the time, it seems to be around $10. Of course, if he kept his earnings in Bitcoins (which he did), then they would fluctuate with the market price.. to about $120, which was about the market price when he was arrested. And the truth is, Bitcoin's price was above that amount for most of 2013, and all of 2014, and today it stands above that price. So he could have sold his Bitcoins for even more than $120.
  - hurin 12y ago
    Future potential incoming isn't an estimate of market-price of goods. We are discussing the size of the drug business, not their potential gain as investors in Bitcoin (that would be investment income). Sure it's not $0.10, it's $0.7 - and yes the price is mostly around $10 - which is my point; that the estimate they given is incredulous unless literally 95% of their transactional volume over 2 years occurred between April 2013 - July 2013.
    - rgbrenner 12y ago
      yes the price is mostly around $10 - which is my point Ok.. thanks.. that was my point. The FBI estimate might be off by an order of magnitude, but the amount you made up was off by TWO orders of magnitude. At least the FBI estimate had some tie to reality (the value at the time he was arrested).
- mikeyouse 12y ago
  > They are retroactively estimating the number of bitcoins that passed through from February 2011 (when bitcoin was worth some $0.10 or something near there) but pricing the net total over 2.5 years as of the 2013 value. Surely the bulk of the activity came later on in Silk Road's life though right? It's not like each day had the same number of transactions.. For all we know, the FBI looked at all of the transactions into and out of SR and did a perfectly weighted average pricing query.

deleted 12y ago

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