So if they still have those bitcoins, they're worth twelve billion dollars in theoretical value, assuming the market would cooperate.
It is unclear if the market would be able to execute a currency outflow of that size successfully without cratering value towards zero.
If they still have them, they could single-handedly demonstrate today whether the market can complete a currency exchange of this volume, and the outcome of the transaction would represent its maturity level at "one day of GDP" sized currency changes.
The bitcoin market is huge , and also he could easily sell it in chunks OTC to hedge funds and other large buyers at a discount, and the funds in turn can report it as an instant mark to market profit. Or borrow against it. Tons of ways of turning it into cash. It's not like he would have to deposit it on binance and dump it at once.
It's about having the ability to run a one-time-only unit test against Bitcoin. Yes, there's all sorts of ways to cash out, that's fine. I want to run a specific at-scale load test, a resilience challenge, to be run against Bitcoin.
Can one person succeed at a serious and dedicated effort to withdraw twelve billion dollars USD from Bitcoin at once?
If it succeeds, cool. If it fails, it'll be spectacular. Let's do it. (To me, success is "they get a few billion dollars USD out and bitcoin doesn't crash".)
>Can one person succeed at a serious and dedicated effort to withdraw thirty billion dollars USD from Bitcoin at once?
This seems pretty easy to test. Just go through all the exchanges and sum up their orderbooks. No need to actually test with 259684 BTC and lose a bunch of money through slippage.
Most money in the orderbooks is from HFT MMs, if you start selling on Binance the bids on Huobi/OKEx/etc will dissappear, most likely before you can buy (correction: sell) all.
If you want to sell this much you really do not do it on screen (and definitely not at once). You get a big OTC desk to sell in tranches.
@Bitfinexed (https://twitter.com/Bitfinexed) would argue that order books based on USDT (Tether) are not, and either the rug would be pulled or you will quickly find that you're holding ~2% of filled value (actual backed Tether)
There are many big trading firms trading billions a day willing to do the tether leg for you if you don't trust it yourself (they will take the risk), but a sale like this wouldn't happen at once anyway.
That’s not how the smart money sells a large amount of any asset. There’s plenty of proof that this will either temporarily crater the market (if selling it all by filling any open orders) or take an eternity to execute. That’s just how things traded on exchanges work and it tells us nothing about Bitcoin itself.
Ok, but that would just nuke every order book to 0 and tell us nothing about Bitcoin since trading to USD is completely external to Bitcoin the protocol. Do you understand how markets normally work and just want to see the world burn? Or in the words of Steve Zissou “what would be the scientific purpose of killing it?” “…revenge”
If Bitcoin crashes when any single person sells a billion dollars of bitcoin at once, then what is the true valuation of their ownings after the 'this is too large to cash out' problems take their cut? What is the true value of anyone's holdings?
This is often not a problem for fiat currencies, they have an entire financial sector dedicated to buying and selling a billion dollars at a time. They are slightly demanding from a regulatory perspective, relative to Bitcoin, but they also do usually try not to crash the currency and they do sometimes get it done.
So I consider that ability to cash out a billion dollars at once a direct spot-check measure of Bitcoin's financial maturity. If this is actually possible to transact at all, then it proves something competitive and positive about Bitcoin, even if it's as much about currency exchange and financial instrumentation businesses as it is the blockchain. I think it is unavoidable that we'll evaluate this through a real-world event, what with one of those exchanges having IPO'd recently. I'd just like it to be an intentional test rather than a surprise, from someone who isn't trying to destroy the world, but does require detailed financial records and a written declaration of insolvency in order to forgive payment.
I’m not quite clear what other fiat market you’re comparing BTC to but lets say there are at least some with extremely deep liquidity like USD/EUR where you can do 1B trades all day without crushing the order book. I’m not sure its a knock against BTC that it doesn’t behave the same. For example I think you definitely would need some finesse to sell 1B gold without major slippage, but this is just the nature of markets for anything. You can never just dump a significant percentage of anything, even USD without distorting price.
On the other hand I have no doubt you could realize nearly all of 1B in BTC using proper trading strategies/algorithms over days or weeks, so I don’t see what would be learned from the test except “how deep is BTC liquidity currently” which is kind of what the market is trying to determine all the time anyway.
A large portion of USD's worth is from it being the primary currency in trading oil, the "Petrodollar". If countries switch to a different currency, that will hurt USD. Then again, Libya's president Gaddafi was working on gold-for-oil trade, and then he was overthrown and killed by US-backed rebels.
Not sure this is meaningful. It's similar to asking "I wonder if the stock market could cope with Elon Musk dumping all his Tesla shares at once. Do it!" Of course the stock would crash. Of course it would create a panic among not just Tesla shareholders but investors across the board. Of course the FTC would go and try countermeasures. And similarly, of course BTC would crash, at least temporarily. It's still a market with human actors in it.
Correct! But unlike the Tesla example, Bitcoin doesn’t have an FTC, with market-stabilizing abilities and procedures and tripwires. What does that mean in reality for large asset holders, for market stability, for relative safety of investment? What would Ethereum do in this scenario that Bitcoin cannot do? Is it irrelevant that Bitcoin can’t regulate these things and everything would be fine?
Unless you can find a way to pay for your retirement almost entirely in Bitcoin, you will probably need to transfer it out to something more liquid. No one wants to sell you a house in Bitcoin only for the value to drop significantly overnight before they could convert it to cash all because some tech billionaire made a funny tweet. Maybe a stablecoin has more potential for a payment system but Bitcoin is just too risky to hold onto if you aren't trying to make money off of it. If someone really had that much Bitcoin laying around, they might as well just take out a large chunk now to throw into a stable index fund and just live off the dividends. Even just a yearly return of 1% from $100M would provide a lavish lifestyle where you'd never have to do anything you don't want to ever again. Set your whole family up with trust funds, make a huge donation to get a hospital wing named after you, fill a garage with supercars, the choices are endless. Or you could just sit staring at a computer screen as your crypto bounces around waiting for some huge crash or new legislation to fuck you over.
You say that, but luxury real estate agencies representing multimillion dollar homes in Los Angeles will and do accept Bitcoin. It’s not just a PR stunt, I’ve seen many legitimate brokerages state they’ll accept Bitcoin (the article I link makes it sound like it’s only homes worth tens of millions of dollars, but I’ve seen it for homes as little as $1.2M)
Disclaimer: I have no stake in Bitcoin (0.00 crypto balance), but I did recently buy a home in Los Angeles. You’d be surprised how many sellers said they would treat Bitcoin as better than cash, as if competing for a home wasn’t hard enough already
You will still have to pay capital gains tax in $ once you pay for something in Bitcoin though (assuming that your bitcoin has appreciated versus the $)
It's like how billionaires are able to get loans by putting up collateral and greatly reduce their taxes. Bezos isn't actually worth $200 billion until he sells the stock, which is a bit like what would happen here. He's going to die a very, very rich man with a 3-4% tax rate each year while he's alive.
Are you including the increasing value of the BTC in that calculation? I imagine if all goes well, it would be worth a lot more than what it is today in 19 years. It might be impossible to ever withdraw the whole thing at that rate.
That only works if the loan snapshots the BTC price at the time of the loan.
In the case of the most naive lender in the world who does this, you will be bitten by their incompetence in some other unrelated way almost immediately.
In the case of any competent lender who knows anything about Bitcoin, they would go "way too liquid" and "haha nope".
Isn't that the worst thing to do? I assume that a bank knows that bitcoin is volatile so the terms of the loan would include their ability to call the loan if the value of the bitcoin collateral drops too much.
So you could have your $100M loan in the bank one day, and have to pay it all back (including what you spent) after a bad bitcoin day.
Only if you want to tap into like 10% of your BTC. You'll also have to make sure you put some of the loans to good use in the real estate market for example.
I'm guessing you got this idea from one of those "how rich people dodge taxes" articles? It's a terrible idea, because you still remain exposed to bitcoin. If you borrowed 1M dollars against your 2M in bitcoin holdings, and bitcoin crashes, you'll get margin called and be expected to pay that 1M back.
I think this was a question floating about when companies were putting a lot of BTC on their balance books.
Elon Musk said they sold some Bitcoin to test the liquidity and it was fine. I believe they sold 10% of their BTC which came to about $1B without much of an issue.
It may not have been all at once — whatever that means — or even over a day but it seems you could get it out over weeks or months. They made the sale between quarters so it was a max of 3 months.
The $12b described above is 120% of their BTC, then. To me, I view it as BTC that have no current USD representation in the ecosystem. They were transferred at a tiny USD per coin or something, so the total USD pressure was only $1000 and easily managed without any computer system realizing something big was happening.
So we have two major USD test datapoints: $1b (Tesla), $1000 (guy who bought 259864 BTC guy).
Swell. Let's add $12b to that list! It'll help understand what happens at 10^10 beyond Tesla's 10^9.
But the point is if you can unload $1B in a week or month without influencing the price, that sets a rate and you can drop $12B over 12 weeks or months or whatever the rate was.
I'm no expert or BTC fanatic but it looks like daily volume today was ~$34BB equivalent. Sees reasonably plausible to cash out in 'small' chunks even 200mm
Large share holders in an ipo ditch their shares in a controlled way too so as not to tank the stock price. Why would Bitcoin be held to a higher test?
Tangent: have the MtGox lawsuits finished? It seemed the main personas are bound to secrecy until they conclude, but that there is a lot of incorrect speculation on what happened in the collapse
That's the irony of mtgox, it forced users to hodl that may have sold when they only 10x'd their money or whatever. Or otherwise lost it for good in non-exchange ways.
I worked with Fortress 2019-2021 to get a deal for creditors to have an early out, though. The Trustee agreed to give creditors a rapid exit option in December of 2020, and scheduled the vote for the ‘quick’ exit for .. wait for it.. October 2021. If creditors approve that plan, then they’ll have an option for an early payout. I have no idea what quick means to Kobayashi though, given that the bankruptcy has taken like 7 years at this point.
Don't try to paint yourself as the good guy, Peter Vessenes. You may be able to bamboozle someone who is not familiar with the process but not me. The "option for an early payout" is not something to be proud of. Your company Coinlab, with the ridiculous, meritless, $16 BILLION claim, engineered with the sole purpose to block payments to creditors, so you can extort us, is the sole reason we will not be able to get the full amount that is owed to us, once the voting is done. Instead, we'll be forced to take a 10% cut if we want to take the "early payout".
Don't put this on the trustee. While he may not be moving at the speed we would like, he is following Japanese law and Japanese court orders. You, on the other hand, are a cunning extortionist, trying to get your hands on our money.
Yet you kept this deal secret for those creditors, until the point where they had no option but to accept it. The reality of it is that you just colluded with Fortress to cheat the creditors out of millions.
During volatile moments in the past, I noticed bitfinex could not keep up with order processing and one could enter almost any number to buy and sell crypto. I would put a buy order in for a price 10% under ask and then immediately sell for 10% over the bid. I amassed a good chunk of coin during these times
Such a good story for the history books of humanity’s first attempts at digital currency. It turns out we probably don’t have secure enough code logic or low enough clean power requirements to do crypto this century, but maybe next…
Sure, BTC exists, and governments have an interest in keeping it going since there is great traceability, but a digital currency that you can use everyday and everywhere to but a Coke is probably still a ways out.
Discussed at the time: https://news.ycombinator.com/item?id=2676263
And 2 years later: https://news.ycombinator.com/item?id=6817095