Topic: What is the foundation doing for FBI to help bitcoin markets? (Read 1613 times)

The US Government has made it pretty clear that the use of virtual currencies, and specifically bitcoin, is NOT illegal.  And if their plan was to "make it illegal" while in the world would they do that in the first place.  

The US Government is still trying to figure this out and what to do about it.  You can actually read the latest here.

Bitcoin: Questions, Answers, and Analysis of Legal Issues
http://www.fas.org/sgp/crs/misc/R43339.pdf

If I was going to worry it would be about the tax implication of bitcoin.  The United States Government Accountability Office issues a report to the US Senate Committee on Finance entitled:
"VIRTUAL ECONOMIES AND CURRENCIES Additional IRS Guidance Could Reduce Tax Compliance Risks"
http://www.gao.gov/assets/660/654620.pdf

Here is a podcast with the James R. White, the GAO's Director of Tax Issues
http://www.gao.gov/multimedia/podcasts/654442

You put that nicely there, like a little New Years poem to the government.

Another thought just came to me: They can't sell off anything illegal, so they can only sell of BTCs as long as they are legal.

Which would mean BTCs stay legal in the US at least till some time after the end of the trial.

Yeah, that's basically what I meant, but thanks for the detailed explanation anyways!

I think you are absoluetely right.

That would require long term planning that is difficult for government officials to do. The General Schedule pay grades are more like time clock punchers that worry more about their benefits than doing their jobs. Elected officials can only see forward to the election. If they had a real grasp of future economics the 2008 recession would have had a very different outcome. Never make a plan today for what you can bail out tomorrow.

If the USG saves those BTC for a few years maybe they could use it to pay down the debt.

Eventually, the Bitcoins will probably show up on the U.S. Marshals auction site. They'll probably be divided into smaller lots to allow easier sale.

If there was a US federally licensed broker/dealer for Bitcoins, the Marshals Service could liquidate them through that route. That's how they liquidate seized stocks and bonds, and other financial instruments. But the forfeiture rules require a licensed broker/dealer for that. Otherwise, they have to go the auction route, along with the cars, auto parts, and other stuff they're unloading.

I think you've got the purpose of TBF wrong. They exist to protect USA member business interests. I think this is evident when you consider the election of Elizabeth Ploshay and the constant march on Washington they've been doing. They might not feel it's in the best interest of the US business members to say anything.

Why would you not want the price to crash down. Being an early adopter was fun the first time, wasn't it? Let's do it again. I would love to see dollar Bitcoins again but I think that's highly unlikely considering the comparatively small amount of btc the FBI is holding.

The "wall" as the bitcoiners have something of an obsession with this. We call it market depth in real world. If (and it is very unlikely) they seold 144,00 BTC with a market order they would crash the market for a few minutes, see "flash crash" for insight.

What happens (as you can see looking at the wall) is there are resting bids and resting offers at different prices. So the sell would wipe out the 144,000 resting bids at whatever price they are resting. Hypothetically if the price were 900 you would have bids like this..

100 @ 899

100 @ 898

100 @ 897

600 @ 896

So the price would drop to meet each of those bids. At 896 then 900 coins would be sold and it would keep dropping.


Two very important points, the resting bids can be cancelled or added to, they are not static. So it's not a fixed rate of decline. If the market had foreknowledge via announcement or leak that the coins were being liquidated, spec buyers would pile in as the sell off climaxed. Even without knowledge of it though, they (we) would figure it out pretty fast. Once the supply was absorbed people would need to be willing to sell more above and beyond the fbi stash. This is possible if a panic took hold but I would buy the creak and expect the price drop to bring spec buyers in droves.

This market is nowhere near a top, there are millions of people trying to figure out how to get in, no 100k or even 200k sell is going to break the market. in my humble opinion. The distribution of holdings makes that almost impossible unless the early adopters panic, and I would bet against that ever happening. They would sooner go down with the ship.

Government will NOT be selling seized BTC on open market.
They will be selling them in lots on their own auction.
Organizations that will buy those lots will not be dumping them.
The whole process will take long time (few weeks at least).
Therefore, there will not be any significant drops/spikes in price because of that sale.

However, the likely course of action is not to sell those coins at all.

This is a very interestingly-worded question.
I almost broke my brain trying to take it apart.
Basically, there are 3 questions:
What help does Bitcoin market need?
What of that help could FBI provide? Brain Explosion
What assistance could foundation give FBI to help provide that help?

Then they shouldn't panic.

My $.02.

oh no another crash    ... when they want to sell, then they sell. there will be enough people who want cheap coins.

Does one really calculate it that way? Because 110k volume just means buyers and sellers meet to exchange 110k BTCs. But if the whole 144 000 BTC stash of silk road is brought in at once, I guess the question should be how many of the buy offers/ till which price are soaked up by it.

Can anybody shed some light in this?

The government owned a pretty good chunk of the stock market after the 2008 bailouts. Lots of GM and a few others.

They understand selling gradually to get the best price. They would lose if they tanked the market and got lower fills.

Maybe they'd have some incentive to do that with bitcoin, but even if they did you are overestimating the effect by a lot.

Daily volume has been over 100k only on Gox alone. Dec 17th (highest volume trading day for Dec) the volume was nearly 110,000. You know what happened? The market bottomed. That is what would happen if they dumped all the SR stash at once too. Major liquidation, sharp move down, and specs will pile in and bid it right back up because they know it was an artificial decline.

So they will almost surely ease out of them slowly, and given the uptrend and no risk to them, would expect them to wait for higher prices anyway.

Volume chart...volume can tell you a lot about what price is doing also.


http://bitcoinwisdom.com/

They can dump them, market will handle it fine.

On an exchange, you are automatically fullfilling the highest bids when you sell. Nobody can sell with his home-made fantasy price at an exchange.

Besides, look into that other thread where they say the FBI is going to follow protocol and auction its BTCs.

We are save, believe me!

You do make a good point their, I still don't know. I think if they sold them cheap enough they would crash the market.

I'm assuming those are the only wallets, because they are the only ones ever talked about. Even if it's double or triple the amount, it wouldn't do much.

It's the same as if all the BTCs ever mined in the world were worth 68$, and you are in possession of BTC by the value of 1$. How far do you think you could move the market when you sold all your BTCs at once?

30million is still 5X less than DPR's wallet and who knows they could have access to more of his bitcoins we don't know about.

So for the sake of getting closer to the core of this discussion (and because I feel very lonely in that other, 3rd thread):

DPR wallets are 150 mio.$ at the moment. The whole amount makes around a mere 1/68th or so of the total BTC market cap, so this shouldn't really move markets very far.  I have seen stashes of about 30 mio.$ bought on days on which the market stayed in a 40$ range for the whole day. No worries there.

True but this is why the foundation is around, to protect bitcoins.


Ummm if it was only that simple, crashing the markets can hurt them for a lot longer than a regular crash remember people want cheap bitcoins and this could cause panic sellers to let lose.

Oh, piffle!

If the sale causes a drop in price just buy the Hell out of it and wait for it to rise.

My $.02.