Topic: Now we have 750,000 less bitcoins in circulation ? (Read 3385 times)

I liked your write-up Peter, but what happened to the 424242 coins. Are they still largely untouched?

I wrote up what I thought happened in narrative form here: https://bitcointalksearch.org/topic/peter-r-rizuns-theory-on-the-collapse-of-mtgox-and-its-effect-on-the-price-of-bitcoin-497289  and it shares similarities with the falkvinge article.  I think most of the coins were already gone sometime around June 2011. 

I think this convincingly argues that the biggest part of this theft must have happened long ago.

http://falkvinge.net/2014/02/28/the-gox-crater-crowd-detectives-reveal-billion-dollar-heist-as-inside-job/

And people lost their real money as well, so they have lost some of their purchasing power.
Some people had huge amounts of dollars or bitcoins at mtgox, purchasing power that is gone now.
Even if they want to buy the same amount of "real" bitcoin they have to work hard and save dollars to buy bitcoin again, it takes time.

Has it been confirmed that they were not all stolen at once recently and thus sitting in on someone with unknown intention's wallet?

I hope it was stolen by many over time, or lost, or anything but above... but was wondering if there is an update I have not heard?

Totally agree. The question isn't whether or not there will be an impact on the market due to this fractional reserve collapse, but how big the impact will be. Even if all those coins weren't up for trade at the moment Gox went down, they were still considered available by the owners to pay for life's little expenses like lawyers and plane tickets to fly to Japan and protest.

The owners of a majority of those coins are in a tough spot, since we can assume at least a certain percentage will want to buy back into bitcoin while prices are still relatively low compared to a few weeks ago. I think we are seeing the beginning of that trend now as fiat transfers arrive. The market is now even more vulnerable to manipulation though, which should scare bulls and bears.

If they thought like that it means they were going to sell them, which would push the price downwards. Their loss translates into a higher bitcoin price even if they don't rebuy.

My ass he owned 345k bitcoin and didnt do anything with him

If he did.. wow.

According to some reports 100,000 of the coins belong to Gox, and 345,000 belonged to Mark.
It is a nice thought that they stuffed themselves...if it were true

I dunno, speaking as someone who bought my few coins at about $5, and didn't bother to withdraw remaining loose change at Gox and other exchanges, then ignored bitcoin for a year, it wouldn't surprise me if many of Gox's customers bought some coins for fun/drugs years ago, and haven't really paid attention to how flaky Mt.Gox has been.

For that reason, I wouldn't expect a large proportion of Gox account-held-BTC owners to rebuy. They're not going to think "damn it, the $200 in coins I bought 2 years ago could have bought me a new car--now I'm going to chase after $500 BTC!" They'd probably think more along the lines of "easy come, easy go."  That's certainly what I would have done if I hadn't withdrawn almost all my goxBTC in late January.

I am surprised people didn't know better too - but think about the number of coins kept at mining pools when for years there have been examples of pools having the wallets emptied or going bust due to bugs.  And yet, miners still keep BTC at the pools!  They should at least have an auto-payout at 0.1 BTC or use instant payout pools.

:-)

edit: e.g. bitclockers, slush (vps web host inside job they thought), Hashcows etc...it has been an ongoing problem for years.

How 750,000 butcoins can just vanish? If it is a hack and someone has tolen it then there is someone who now own it and probably in future he'll use it. Maybe it's a time to try to figure out (I don't know how exactly) who is the new master of the coins? Maybe he'll show himself by using his coins and we'll see it in blockchain ?

Specifics are very difficult, but generally, sure. Now the question is how that is mitigated by the latter two points I raised earlier. This doesn't happen in a vacuum.

You'd be surprised. Until April 2013 I kept a good amount of coins in Gox. A workmate of mine has all of his stash on Stamp as of today.

I still can't imagine that 6% of all coins have been held at gox, at a time when everybody should have known for month what kind of company they are dealing with.

If only a smaller fraction of these coins were liquid (say, 100k), then the remaining 650k were for holding, presumably using Gox as a wallet.  

Now these holders are no longer holding.  So I would imagine that some of them would purchase new coins to replace the ones they thought they had.  If we imagine that even 20% would be replaced with new purchases, then this represents an additional demand for 130k coins.  

Do you agree?

750k is not inconceivable. What is inconceivable is that a significant portion of those "coins" were highly liquid. I agree that if the numbers are that high, it is largely in part due to the use of Gox as a web wallet. The fact that Gox was an exchange is not evidence in and of itself that all coins held there were readily available on the market. Just take a look at the order books -- it puts things in perspective.

They had 1kk customers, but only 120.000 accounts were funded. Source: Every news coverage today (so might be bogus number)

Exacty, I have been trying to explain this yesterday, but a lot of people just don't understand.

There were a total of 12 million BTC + 750.000 (gox) BTC in existence, so a total of close to 13 million.


Now the fake 750.000 coins are gone, and we are back to 12 million coins in existance, the total supply just shrunk by 6%.

Also a very important factor to consider is that those 750.000 coins were higly LIQUID, because they were at an exchange, ready to be traded/sold, not in cold storage to be kept for a very long time.

The supply of liquid coins is most important for price discovery.

lol

Stop! I think I have found the flaw in this argument.

I questioned the 750,000 BTC figure too.  It seems an order of magnitude greater than I imagined.  For this to be true, I must assume that a great deal of investors were using MtGox as a wallet.  MtGox had 1 million customers, right?  Stick 750mBTC in each account and you get to 750,000 BTC, so it's not inconceivable.  Perhaps the value in GoxBTC dwarfed the value in fiat because of the "wallet effect."

I think the average bitcoin speculator invests a small percentage of their portfolio in bitcoin, say 2%.  So Joe Speculator has his entire stash of 3 BTC at Gox ($2,000) and $98,000 in other financial investments.  MtGox goes bankrupt.  Joe loses 2% of his net worth, but 100% of his bitcoins.  If Joe still values bitcoin in the same way, and if he acts logically, he would immediately rebalance his portfolio  by converting 2% of his other investments into bitcoin (this would produce new demand).  

But probably Joe is mad for a while, cursing bitcoin, but knowing deep down that bitcoin was not to blame.  Bitcoin start to rally again and he decides to give it another shot.  Bashful this time, he invests 1% of his portfolio and moves the coins to cold storage.  

In conclusion, if MtGox lost 750,000 BTC along time ago, I think the net effect (after anger fades to acceptance) will be an increase in demand and a decrease in the effective bitcoin supply.  

A few things I've been pondering:

1) The entirety of the "coins" were not liquid. In fact, a small fraction were. Take a look at Gox's order book. 39k to $1 billion. Yes, that's not the full story, but to suggest that 750k coins were available on the market to begin with is absurd.
2) Presumably a majority of fiat on Gox was intended to be invested in BTC (as opposed to being withdrawn as fiat). That's a very considerable sum of fiat lost specifically by those with the ability to drive price performance.
3) While the markets can easily be moved by whales, the average investor is necessary to push up price past a certain point. What kind of fallout could we see from the Gox closure, in terms of "fresh fiat"? What time frames are we all talking about here?

I completely agree with you, zeroday.  I don't think many people have wrapped their minds around the implications if this theory turns out to be true.  

It's funny because if a new found stash of 750,000 BTC was likely to be hitting the market, we'd have people saying that bitcoin was going to crash back to double digits.  If the opposite is true, and you have a sudden demand spike for 750,000 BTC (or even a quarter of that), it could really move the market too--in the upwards direction.  

And they will never get them out without a several years long and very expensive lawsuit. Only big holders will bother with that.

People paid real money for fake bitcoins. I suppose gox still has loads of fiat on their bank accounts. Isn't it?

Whatever was on gox is no longer part of the market. It's irrelevant. The important part is what gox customers will do now. Are they out? Will they buy in again? What about non-gox bitcoiners? It could take a while before we see the full effects.

Well, buy the same reasoning, $$$ assigned to buy these coins are out of circulation now - or if you believe in fake bitcoins theory, perhaps they were fake, too?

I mean that coins were stolen long time ago and were probably already cashed out.
The point is that Gox traded virtual non-existing coins and now bitcoin market is notably contracted. There is much less coins for sale than it was expected a few weeks ago.

First of all, Mt. Gox says it is missing 850k bitcoin (1.75 M is just CNN licentia poetica). Most importantly, according to Mt. Gox leaked strategy documents these coins were stolen, so there is no reason to believe they will be out of circulation - to the contrary.

Nevertheless, post like this appear regularly last couple days  

Max phantom coins 750k

But yes, its possible. However I doubt its anywhere near significant.

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.

What, Another one of those bear traps?

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?