Someone just made a $147,239,214 Bitcoin transfer
blockchain.info
blockchain.info
A direct (i.e. not based on third party credit, regulations, etc.) transfer of wealth of this magnitude between two entities usually consists of a heavily guarded, insured, physical shipment of cash or gold. Depending how safely you want to make the transfer, and how far the entities are on the globe, it can cost hundreds of thousands to millions of dollars.
Bitcoin has real value. It solves problems on an incredible scale. I wish I realized this months ago.
I'm tempted to conclude this is something that happens so rarely you may as well count the times it happens as a rounding error.
It's a bit like saying government will just work if we only vote for the right candidate.
Everyone's tempted to conclude things like that, but there's a subtle fallacy happening when we do. Generally speaking, we notice government programs of all stripes when they get in our way. When they don't get in our way, we don't. It's very easy for someone paying attention to the news to be able to rattle off incidents where the FDA and FEMA and the SEC screwed up, because the screw-ups are in the news. But when they do their job correctly we never hear about it. Basically, the dataset we carry around in our heads about How Well Government Works is substantially biased toward instances of failure.
The only way to really measure how useful a regulation is or isn't is to determine what it is the regulation is supposed to address and examine a substantial set of "before and after" data points; trotting out vivid but essentially anecdotal examples of WHEN REGULATORS GO BAD makes for great editorializing, but it doesn't actually tell us very much.
I guess, not from you. Is that the reason to question it?
"Was tax paid?"
What makes you think that this money supposed to be taxed?
I believe it also requires that you put your assets one of their accounts if you're going to use it, so you're relying on the credit of the U.S. government (which is pretty good, but still adds risk, and subject to U.S. laws) until you withdraw your funds. And there's probably a lengthy process to deposit and withdraw funds.
You can login to your bank, transfer money to someone elses bank, they'll login, and see the money.
http://www.npr.org/blogs/money/2013/10/04/229224964/episode-...
SWIFT transfers usually are not: SWIFT is a way to communicate messages about transfers between banks, but they would still need a way to do the actual settlement. This could be very fast in the case of two large banks in different countries: if you are a customer in bank A, which has a correspondent account with B, and the recipient is also a customer with bank B. Then bank A can use SWIFT to say “please transfer $1 trillion from our account to the recipient’s account”, and that could happen instantly. (It usually doesn’t.)
But if the final recipient is actually a customer at bank C, then the money needs to get from B to C somehow. That could happen in the recipient country’s RTGS—Fedwire if it’s the United States—but it might also be slower, through ACH or an equivalent.
One problem with fast transfers is that many banks don’t have straight through processing for RTGS. This means that the money can get instantly from bank A to bank B, but may not get posted to the recipient’s account with bank B until a clerk gets around to verifying and booking the transaction.
http://www.federalreserve.gov/paymentsystems/psr_policy.htm#...
Aren't Bitcoin transaction times generally in minutes?
Err, life isn't a james bond movie. For money transfer like this we use bank wires. We dont buy gold and ship it on gunships anymore.
If someone in Argentina wanted to buy something from anywhere else in the world in 2000, for example, they'd basically have to trade natural resources or gold for access to foreign currency, and then spend that.
The political class here is crazy corrupt and rich like in every third world country, and they are known for using piles of 500 euros bills to stay out of the bank system because euros have more wealth density than dollars.
In fact, here we are ranked right under (20th) the US (19th) in terms of transparency:
http://www.transparency.org/country#CHL http://www.transparency.org/country#USA_DataResearch
Argentina is ranked 102: http://www.transparency.org/country#ARG_DataResearch
In all of Latin America, the closest countries to Chile in that transparency ranking are Costa Rica, with the 48th place, then Cuba 58th and then Brazil 69th.
Edit: added justification data with links / I'm proud of Chile
There should be a term for "third-world country that's probably going to stay third-world for the forseeable future, excepting a revolutionary change of government." Maybe... dystopia? Argentina is a dystopia.
Sorry, I don't think so. Chile is doing good nowadays but basically their only export is copper. Copper is a semi-precious metal right now and thats why that country suddenly has so much wealth, but the difference between rich and poor is abysmal and their economy is tied to the price a single non-renewable resource.
Compared to Chile, Argentina still has a huge tech industry capable of exporting value-added products like cars.
Yes, copper is selling very well, and it takes up a large proportion of the country's exports, but you are mistaken to think that this is the driving cause of the country's increase in wealth over the last 20 years.
The increase in wealth comes from the fact that incentives now exist for people to create wealth. Where wealth is created, there is more wealth. It's the same principle we have seen working throughout history.
for 15-20 years, third world in military terms at least, meant the signatory of NAM movement. fourth world was anyone left after that.
They need to fill documents to officially ask the government, which will likely refuse you the right if it is for a huge amount (remember, this 'non-change' policy is exactly for that, avoid flights of capitals).
In an interesting validation of basic economy, the black market rates are much closer to the official ones in rurual tourist hotspots, presumably due to the much bigger supply of foreign currencies.
with Bitcoin, fees are optional
http://rt.com/news/gold-shipment-stolen-france-304/
http://www.reuters.com/article/2013/05/16/us-usa-miami-gold-...
http://rt.com/news/bitcoin-hacking-stolen-million-417/
http://www.nbcnews.com/technology/250-000-worth-bitcoins-sto...
http://www.esecurityplanet.com/network-security/czech-bitcoi...
edit: unrelated, someone should make an index of how many Bitcoin threads hit the front page of HN per day.
The advantage, however, is you don't have to worry nearly as much about the security of a transaction (moving it from one place to another)
It's just much harder compared to doing comparable or greater value destruction to a bitcoin address, especially accidentally.
1) gold can be stolen due to mistakes
2) bitcoin can be stolen due to mistakes
but this does not mean that it is impossible to avoid having either stolen.
I agree that long term storage of both of these can be done very securely, but the risk for both is when trading or using them. Additionally, Bitcoin does require a lot of worry about security - how many people do you think have airgapped wallets?
Aren't the facts that you shouldn't store Bitcoin at exchanges, should use an airgapped storage mechanism, and are otherwise out of luck if your computer is compromised, enough to demonstrate that you also have to worry a lot about the security of Bitcoin transactions? Your stack of gold ingots won't vanish if you take one from the pile in your safe, but your Bitcoins can if you don't take stringent precautions.
If you view a Bitcoin transaction as only what happens on the blockchain, you're missing the context of where it occurs - which gives both gold and Bitcoin risk.
But since Bitcoin is digital, its maximum security is far, far higher. Your private keys can be encrypted and safely stored with any desired level of redundancy. Paper wallets are a big step backwards.
Also, if secret sharing is used, Bitcoins cannot be stolen unless the attacker gets to k of the n involved parties.
Hardware wallets should help immensely as well.
As with _all_ security, there's a tradeoff between security and convenience. Inline wallets are spectacularly convenient - and guess what that implies security-wise?
Paper wallets are much more hassle. But a paper wallet in a bank vault is arguably up there with the most secure bitcoin storage techniques.
As the stored value of your bitcoin varies - so should your security requirements. If I need to keep under $100USD available to pay for my anonymous vpn or my torrent-box vps - an online wallet (who's operator could make off with my half or quarter of a bitcoin at any time) might be a sensible choice. If I'd been mining bitcoin at a reasonable rate since 2009 and was sitting on a house-worth of bitcoins, I'd make a _very_ different choice.
Consider the value of your wallet(s) - if they were piles of $50 notes, how much would you spend securing that? Would you leave it in your pocket? Hide it under you mattress? Buy a lockbox or a safe for your home? Rent a safe deposit box? At what stage is a never-internet-connected laptop a perfectly sensible expense to incur? I'd suggest a lot of people I see posting in forums about how much they lost in onine-wallet-hack-de-jour who should be kicking themselves for not having a dedicated $300 laptop fr storing their wallets on.
Adding a BTC to a transaction doesn't really require any additional infrastructure. But once you've packed your first tanker with gold, you kind of have to hire a second boat.
Given the way each scales, it seems that BTC transfers are easier, at least at some values.
All I was saying was that physical stores of value increase in awkwardness (principally through weight and volume) when you increase their number, not so for digital.
Challenges in movement of large sums of gold: http://blogs.reuters.com/felix-salmon/2011/08/23/how-to-get-...
Here's what $300 Billion in gold looks like: http://www.celebritynetworth.com/articles/entertainment-arti...
(Note that it would be harder to transport, than, say, the amount of gold one can fit in a pocket.)
I don't understand how so many sites can't use password hash generation to secure the private keys, or something to keep it more secure. The first link you posted was a site run by an 18 year old.
Pinkie Pie won his first $50k award by creating a 0-day sandbox escape on Chrome, by chaining 10 different vulnerabilities. He was 19 (now almost 21). Two years before, at 17, he released jailbreakme.com, all by himself, which was a 0-day able to jailbreak all iOS models shipped to date by just visiting a website.
Age means nothing by itself, but the point is correct. The problem is that we don't know how much we can trust bitcoin site owners, as most of them are relatively new with no history to inspect, closed source, and sometimes even run by anonymous users whose experience we can't inspect.
But do you know _anybody_ who would deposit money in a bank run exclusively by an 18 year old?
Coding skills can be created and honed by highschoolers - business, legal, and commercial experience - very much less so.
But I think it's extremely rare in the cases you mentioned.
Think of them as like keeping your change on the bar - the security relies _purely_ on social conventions encouraging the bar owner, bar staff, other customers, and your friends to not take your money.
You would no more store your weekly pay, your rent money, or your new car savings on the counter at a bar - why the hell are people storing those sorts of values of bitcoin in other people's webservices?
Sure, online wallets might be _useful_, but anyone keeping any more value than they can afford to lose in one is insane (or, less critically, very poorly informed).
I may be wrong here - but is the private key only required to send the money? So, if the user kept the key and it wasn't recorded on the server...or if they use some type of password hash for encrypting it, then there wouldn't be hundreds or thousands of wallets stolen at once. The user would enter their password when they want to transfer funds, the hash is calculated, private key decrypted, transaction made, and the private key is never recorded anywhere.
But, this would require the user to NEVER forget their password, or else they lose their money.
Something like that: http://influxdb.org/blog/visualizing_bitcoin_post_frequency_... ?
The equivalent commodity value in BTC can be stored on a tiny rom, and transferred anywhere in the world for free from anywhere with network access.
I hate to be cynical, because the ideals behind this currency seem nobel -- but I can't help but feel dread that it is only a matter of time before bad things start happening here.
Is this outlook too negative?
Corporations and individuals generally do not move wealth via physical assets.
Off the top of my head, I am thinking of ...
- A deep, pervasive culture of gold hoarding and gold wealth transfer for dowries (yes, even in 2013) for Indians.[1]
- Persians/Iranians who have a deep cultural link to carpets as a store of value that can be used in day to day life, but also transported and stored as value.
How about any middle american over the age of 50 who counts his or her "vehicle" as an asset and shops/deals in used cars every 12-18 months. A lot of people think about cars this way.
As for corporations just consider casino counting rooms and exxon tankers full of crude oil.
[1] http://www.bloomberg.com/news/2013-11-17/gold-laden-brides-i...
Like the first google result for payments volume yeilds this: http://www.gfmag.com/component/content/article/119-economic-... As you can see, credit transfers dwarf everything. It's worth noting that all of these payment types are cleared electronically (including checks).
I sincerely doubt gold bugs and Persian carpet fans are trading at total volumes of 100's of trillions of fucking dollars globally.
Yeah and there is a fee involved too, right?
Everyone just keeps (a huge portion of) their gold in a single vault. A gold transfer involves carrying gold bars from one compartment of the vault to a second compartment in the same vault.
You can see the fee amount further down the page. If he had paid a fee, 0.0001 BTC, or $0.04 worth of BTC, would have been enough to ensure the transaction was included in the next block.
https://en.bitcoin.it/wiki/Transaction_fees
Not that $350 would have meant much - your point stands and is well taken. I was convinced of this money transmission use case as the most important when I was writing up something on Bitcoin a while back and talked with a few experts. They were all psyched about this kind of thing, not about "you can buy your groceries with a bitcoin card" stuff, which will have better solutions than this. Global liquidity is what it adds, really.
Sorry about the fencepost error. (Perhaps I was originally intending to say "inflationary finance"?)
Whether it is in bitcoin, CHF, EUR, USD, gold, platinum, Amazon Coins, Zorkmids, yams or sheep skins, insuring a transaction will depend on those factors.
If you meant in terms of escrowing to make sure one party doesn't back out, then I agree that comparison wouldn't apply.
https://en.bitcoin.it/wiki/Contracts#Example_2:_Escrow_and_d...
In the meantime, the $150 million is in limbo.
That's not how it works, sorry. If you don't double spend your transaction and you attach a proper fee it's going to get in the chain, period.
And even if it won't be mined, the worst case scenario is that you would keep your Bitcoins and can try re-sending them later, they won't disappear to anywhere.
That is the justification Satoshi Naakamoto gave in the original paper for waiting for 6 blocks for a full confirmation.
No they did not. Mathematics is about proofs; Bitcoin does not even have the rigorous definitions needed for that.
To put it another way, what you said is the equivalent of saying that Hacker News gives you mathematical guarantees of security because it happens to use TLS.
Until I can use the millions in coins to pay off my house, buy a car easily, pay my taxes and go out to eat with them, or hassle free convert them to cash in my bank, it is still funny money.
Unless you provide me a way to realize bitcoin to actual USD in non trivial amounts with the same amount of effort it would take to convert my stocks or bonds, it is as useful a currency for real life as is my current GTA V Online bank account.
So it's either as easy as stocks or it's useless?
Hmmmmm.
I think you're overstating your case a wee bit there.
Those cable "invest in gold" deals are exactly this but worse - they sell you gold more expensive then the commercial market that can never be redeemed for that price.
But it has a real cost of production that represents its relative industrial worth.
Bitcoin is valueless though. Created Bitcoins do not have any industrial value - you can't use them for anything else, even though they have a cost to create. There's no reason, if they lose value, for anyone to buy them from you - whereas with gold if you sit on it long enough, it will become valuable when someone needs gold for some type of industry at minimum.
Bitcoin is not. No one is obliged to accept Bitcoin as a currency for settling debts anywhere in the world, it has to be converted to something else. Similarly to gold - you don't have to accept gold as payment for debt, but you do have to accept USD.
This is where the problem lies: BTC acts like a commodity, not a fiat currency - and people are treating it like one buying into it. The problem is it has no value as a commodity other then being Bitcoin.
You can at least buy a Ford.
I doubt you can pay your car with stocks alone.
I doubt you can pay taxes with option derivatives alone.
I doubt a lot of people call those funny money.
Bitcoin on the other hand can be made completely useless if some critical flaw is found, or the wealth is too concentrated in a few users and the majority decides to switch to a newer crypto-currency.
Almost all the value is because it's shiny, yellow, and traditional.
Gold asteroid mining isn't too implausible, either.
More plausible than some hacker news post 'bitcoin 2.0 is here - look it's shinier!', though? Or 'new crypto currency approved by the US govt?' You think people won't reinvent this wheel to death?
Sure, you could also synthesize gold from some nuclear reaction, or mine it from space... You pays your money (and you takes your chances)
"Legitimate" uses of a commodity that trades more for its properties as money should be thought more of a really crappy put option, that is it sets a low price floor.
For example, it's been estimated that gold's industrial uses would only allow it to be traded in the low double digits per ounce if people didn't desire it for other reasons.
It's just in the case of something that isn't physical and isn't "backed" by any alternative uses, the floor is 0% of the current price instead of 1%, or similar.
It has a lot of other potential uses that other industries avoid because it is so expensive. If the price ever falls it will be kept up by those uses.
People have been using gold in some form for thousands of years - I don't see that changing anytime soon.
http://www.dailyreckoning.com.au/silver-a-brief-history-of-d...
In the USA, gold was demonetized (1933) before silver (1965) in the currency when used in the USA. The dollar was convertible into gold internationally however.
The international gold window was closed by Nixon in 1971.
Gold's magickal role is largely cultural bias. There's lots of metals that are rarer and pricier than gold, but you don't hear about scandium-bugs or rhodium-bugs.
Every bitcoin is controlled by a private key. The private key can be put in 'cold storage', but if I hand you the USB key with a private key stored in a text file on it, you have no way of being sure that I didn't keep a copy elsewhere and in a few minutes will make a transaction sending it to some other private key (which you don't have). So unless you trusted me an extraordinary amount, you would immediately want to make a transaction transferring from the private key on the USB to a new private key you generated just that moment.
A transaction like this is invisible to the bitcoin network. This would be equivalent to me handing you a 20 USD bill, no one but us (well, there is surveillance, but you get the point) knows what happened. Unlike handing over 20 USD, if I had you a USB drive with a wallet containing 20 BTC, you need to move that money from that wallet to another, because you can't trust it's my only copy. If I have another copy of the private key somewhere I can take that money back at any point by announcing a transaction before you do.
So exchanges like this are done via the bitcoin network by specifying a from address and a to address (simplified, other more detailed explanations are out there detailing the actual cryptographic tools and protocols) and an amount. So you provide me an address, I use my private key to encode a transaction from an address containing my 20 BTC to your address. Everyone knows about this, though they may not know who we are as the addresses are pseudonyms and the connection to our real identities may be virtually non-existent. Now, you control that 20 BTC and its spending, and my 20 BTC are gone from my address, I can't spend them again (legitimately at least). Supposing that address now has less than 20 BTC. If I try to spend 20 BTC again the network will consider it an invalid transaction since I can't spend BTC I don't have.
A lot of people who are claiming that you will need to pay a large % in fees in order to spend your coins are missing the point.... as bitcoin gains traction, you wont need to convert it to USD first.
The same is true of any foreign currency. I could send $150 million in Russian rubles to my sister, and she wouldn't be able to do jack with it until she finds someone willing to give her dollars for it. With the amount of money involved, getting it all converted at once would be extremely difficult.
That doesn't mean that what's transferred doesn't have real value. Just that the assets involved aren't terribly liquid.
That's exactly the point. If you had $150 million in rubles, you could transfer it for only a nominal fee ($20 for my bank, although you can get a lot cheaper if you regularly did transfers like that) to any account in the world that could hold rubles. Exactly the same with bitcoin.
The only real cost in transferring sums of money is either extreme convenience, transferring to a country with an extremely poor banking service or exchanging currencies. None of which bitcoin solves yet.
I have no counterproof, but I find this hard to believe.
http://www.stgeorge.com.au/online-services/business-banking/...
Telegraphic Transfer (TT) Request $20.00 per transaction or item
Pretty sure that would be fine up to ~$1 million. Anecdotally I know TT happen for sums in the range of $10-$100 million (there was a case where ~$150 million was stolen by a rogue TT in Australia to overseas bank accounts).
Source: Someone I trust who works in Private Client Services at JP Morgan (not sure if other banks offer free wires, but I'd be surprised if they don't).
http://www.amagimetals.com/gold
http://www.coinabul.com/index.php/gold-bars-bitcoin.html?a=8...
False. Last summer, I ate at EVR, a bar/restaurant in New York City accepting Bitcoin. I paid in bitcoins and their processor (BitPay) only charged a 1% fee.
Fees from Bitcoin payment processors are actually quite good compared to credit card fees.
I can't afford a sub-orbital tour in USD, let alone bitcoin. Is there any leading supermarket that accepts bitcoin? Literally allowing me to use bitcoin to put food on the table?
Assuming I can pay for Amazon Fresh with a gift card. :-)
Here's a picture of the food on our table, paid with Bitcoin:
But this was likely just moving money around to own accounts.
It could be beneficial to banks to move money more rapidly and make some coin just like funds they have do with their holdings even though it strikes the core of the business model.
If used right it could be helpful like torrent is to distribution, cheaper, faster ways to move things. It would be nice one day when regular bank transfers don't take 3-5 business days or a fee for same day.
There were also statements in some previous comments that this transfer was made for free. It is true enough that a Bitcoin transfer doesn't inherently incur a processing charge from a merchant payment processor, but as merchants learned back in the Middle Ages when charging interest was formally illegal, the price of a transaction can hide financing and processing costs. We don't know what was agreed with whom by whom to make this transfer happen. The transfer may have occurred at a higher than list price for something that was bought, to make up for the ongoing inconvenience of receiving a payment using the new Bitcoin payment mechanism.
[1] One example, among many: http://www.consumerfinance.gov/remittances-transfer-rule-ame...
If someone gave me a copy of a private key, corresponding to some bitcoins, I wouldn't consider it payment, as they still have the private key as well (meaning they could still spend the bitcoins at any time).
It's more like a "shared account" at that point.
I suppose if you try to extract the secret key and the token destroys it, it's pretty secure. Of course, you just lost all your money. I can't think of a non-destructive test.
As Silk Road (and hundreds of years of cash-based money transfers) shows, the fact that BTC is hard to trace hardly makes laws unenforceable.
In other words, the only way you get to have the money is if you never spend it, except in minuscule amounts.
Here’s who (probably) did that massive $150,000,000 Bitcoin transaction (washingtonpost.com)
From the article: "Who was responsible for the transaction? I asked Sarah Meiklejohn, a computer scientist at the University of California, San Diego, for her thoughts. She's the author of a recent paper demonstrating that sophisticated analysis can reveal a lot of information about who is responsible for Bitcoin transactions. She has combined a large database of Bitcoin addresses tagged with their likely owners."
Link to the paper is provided.
1) The feds have finally cracked wallet(s) used by Silk Road, or he managed to give his keys to someone (he had a bail hearing today - it's an odd coincidence);
2) Drug cartels are now accepting BTC for major payments; or
3) Macau-based junket operators, that provide casino credit to Chinese gamblers because they cannot easily move money out of China, have begun accepting it for payment.
Personally, I think it was just one of the exchanges moving some money internally.
www.winklevoss.com
The original social network.
Gates built an empire. Yet the Winklevoss' will eclipse his wealth if BTC goes up just a few factors.
I don't begrudge people their gains, I'm just thinking about the seismic shift in power.
Perhaps you could be a little less specific?
>And considering there probably aren't many (if any) things one can buy with that many bitcoins, theft seems to be most likely scenario.
You could buy a lot of something from a private entity who really values Bitcoin.
Could a contract enforce a bitcoin transfer?
https://blockchain.info/tx/a80f91549f863ccb58603e45a37980e30...
Anonymity is a choice. CoinJoin [1] and other trustless mixing software projects are aiming to make anonymity a push of a button. This is being implemented into DarkWallet [2] where mixing happens automatically in the background.
Thing about mixing is, since any person (or autonomous process) can generate wallets and send BTC to those on the fly, how do you prove that you used a tumbling service and not that you gave coins to a guy who gave coins to a guy who split them up into separate wallets who each gave coins to a guy, etc etc etc.
As Bitcoin picks up steam, this problem only gets harder. Remember that the block chain only consists of hashes and signatures. Proving who owns those is a much more difficult process.
But it's not like that won't stop them from trying. Probably via a bunch of high-profile "busts" to keep the law enforcement agencies financed.
Either way you now have enough evidence to raid their PC to check for further laundered funds and generally make their lives miserable. When people complain just find a fraction of a BTC that was used at some point in the past to fund the social demon of the day (child porn, terrorism, drugs, sex trafficking, etc.) to justify it.
Someone mines coins and gives coins to a guy who gives coins to a guy who gives coins to a guy (repeat n times) who gives coins to you, and every link in the chain is following best practices by generating new wallets for each transaction, how would the adversary prove that you're doing something untoward (and since we're discussing law at this point, beyond a reasonable doubt?)
e.g. if I ask you to pay in bitcoin and you do, can I put any link in your wallet, something like https://openid.somethng.com/id/92856293 ?
The main way to get out of that wallet though is money laundering. Convert the BTC to some real asset, and slowly (and untraceably) funnel to a variety of places.
Talking numbers, you could sell them all on BTC-E right now, bagging you just $7M, and take the price down to ~$36. You can spread that around the exchanges of course, if you're quick, but you're still nowhere near $147M at current market depth.
Most people with this level of wealth diversify their holdings, which makes the total amount less liquid, but much more secure, as well as providing protection from inflation or returns on investments. Real wealth often does not have perfect liquidity, and I would argue in these amounts, almost never does.
Selling 100s of thousands of dollars worth of bitcoins a year for USD would hardly put a dent in the markets, and is probably the most anyone would want to do. The purchase of an asset would instead be made directly with bitcoins in a transaction such as this.
I'm actually serious, there's a service called CDARS [0] that balances a large number of individual CD accounts of varying expiration times and maintains the 250k per individual per institution invariant. It acts like as single (albeit illiquid) bank account.
The post is about a transfer of 195k bitcoins (not dollars) from one wallet to another, all at once. However, as grandparent comment points out, the title is inaccurate: even if this transaction indeed involved an exchange of dollars, it's incorrect to assume that the dollar amount was 195k × (current BTC/USD rate).
You could probably make such an assumption for, say, JPY/USD, because the daily volume of yen trading is measured in hundreds of billions U$. Not so with bitcoin.
Actually you can. Bill Gates sold off over $700M of stock over the course of a week at the end of Oct/beginning of Nov[1] and took a price that deviated by only $0.16 (~0.5%).
[1] http://uk.finance.yahoo.com/q/it?s=MSFT
But you're actually agreeing with me anyway. Absurd valuations for quantities not readily absorbable by the market can't be priced until someone actually tries to sell/buy that quantity. There's no doubt however that if someone want to cash this volume out today their not looking at the market price. Who's going to buy at $700 when someone is trying to rid themselves of 2% of the entire currency base? To put that in perspective, Bill Gates currently owns only 0.4% of MSFT and wouldn't be able to (publicly) sell that much in a day without crashing the market.
The most burning questions: (1) for a miner based in the U.S., does the BTC miner realize a short-term gain the moment a bitcoin is awarded? or can they defer all gains until perhaps a year+ after mining and realize the whole sale as a long-term gain? (2) If short-term gains are due upon mining award, and the value at the time of award is US$1000/BTC, and the tax due on short-term gain would be US$300, and then BTC crashes to be worth $10/BTC before the miner sells the coin and never recovers, is the miner left holding the bag on the $300 short-term tax bill? (Similar things happened to stock option exercisers in the dot-com bust, people who held their exercised stock.) (3) Does tax treatment differ for solo- and pool-mining? I can see pool-mining being treated as offering a service to the pool, and any awards are immediately taxable as revenue, whereas in solo-mining perhaps one could argue the award isn't realized until one actually sells the BTC.
2) If the value of BC crashes between the time earned and the time the tax is paid....then yes, you're SOL and still owe taxes on the value of the BC when received. However, usually there is a corresponding deduction to help alleviate that.
3) Pool mining almost certainly is taxed differently, since it is more akin to investment income than to compensation income.
If there is anyone in Congress with even a quarter of a brain, they might want to take a look at how to keep Bitcoin users in the system. Otherwise, as more people read that guide, say "WTF?!", and decide to pay it all as much heed as "use tax" on interstate retail transactions, they will be forced to lean more heavily on debasement of the currency they can control.
That's not unique to bitcoin, I'm surprised you were surprised. Ask any small business owner around tax time whether filing your taxes is more 'difficult' than simply... not filing your taxes.
At least unless-until you get caught and prosecuted, then you might re-evaluate which path involved more 'difficulty', depending on how difficult you find fines, hearings, trials, jail, etc.
Traditional banking rules require attachment of identities to accounts, and automatically trigger reporting to the tax authority for any significant movement of cash. Any account can be frozen and seized with an official-looking piece of paper. The system has tax compliance built into it.
Bitcoin has no such requirements. It is actually possible to be secretly, anonymously wealthy. Your accounts cannot be seized or frozen unless you give up your private keys.
It is true that people evade taxes in other ways. These often involve foreign accounts in countries that do not strictly comply with tax-reporting demands. Assuming the tax authority cares, it would also have to present evidence, which is somewhat harder to get out of the Bitcoin system.
And it is also true that for most people with dollar income, taxes are as simple as filing 1040EZ. There is no need to calculate basis or holding period or do a million lookups of tax code minutiae. If you make $50000 a year, compliance is easy and the risk is low. If you buy something with 10BTC, you have to hire an accountant to strictly comply with the law.
Tax over selling a property are not dependent on the property (ok, it depends sometimes, like real estate) but in principle they exist regardless of the nature of the property.
Just don't reveal your Bitcoin activities to the authorities, purposefully or accidentally, and they will never find any reason for their flagging algorithm to elevate your account to human scrutiny. Nor will they have evidence that could be used against you.
Anything passing through an exchange that follows state banking rules might get you into trouble, but you don't necessarily need to use an exchange to turn BTC into USD.
It doesn't matter if the stuff is tangible or imaginary. You would owe taxes for mining World Of Warcraft coins if you sell them. You would owe taxes for picking up cans off of the street and recycling.
How much you owe can change with how you earned the money, but if you earned money you owe taxes. Only two things in life are certain. Taxes is one of them.
http://www.irs.gov/uac/Ten-Important-Facts-About-Capital-Gai...
And they say we have a free country.
The only special laws are relaxations to the normal tax rate.
One of the many wonderful elegant qualities of Bitcoin.
It's actually a very public way of transferring value between endpoints but in a way that lets you "tune" the tradeoffs to just the right mix between privacy/anonymity and full-disclosure, to taste. You can't do that with government/bank/fiat systems.
Can you even imagine trying to file this on your taxes? Unless you're a mega-corp, the first thing that will happen is that within 24hrs of the deposit, your bank would call you to say how much they appreciate you using $BANK_NAME for your banking needs and assign you a personal banker that you can reach at anytime to answer any questions. You'll probably also be sent flowers & a mug & all kinds of swag. They'll send you a birthday & holiday cards too..... then a few days later the police will show up....
In terms of tipping off authorities, it's just a matter of finding the right bank to do business with: https://en.wikipedia.org/wiki/Hsbc#Money_laundering. :)
priority = sum(input_value_in_base_units * input_age) / size_in_bytes
https://blockchain.info/tree/98324324
Click the yellow circles to expand the tree nodes.
This is a little misleading. This could be a business etc.
A mining pool or exchange transferring from one wallet to another (ie. to cold storage)?
You wouldn't want a typo in your address for that amount of cash! I'd probably break it up into a bunch of smaller transactions just to be safe.
Ultimately, there's always a price that you can convert ("cash out") anything at. For example, I'd be willing to pay $100 for 100 bitcoins right now. Eventually a seller and buyer will find a meeting ground, a transaction is made, and value is defined.
There's never really many degrees of separation between nodes, but you're probably incorrect in that blockchain.info knows anything about the originator of the transaction. They connect to a large number (abusively) of nodes, but not enough to do this sort of discovery. There's a reasonable portion that never expose themselves to the public network at all.
...or DPR associate moving around his money? ;)
It's the perfect honeypot.
In other words, you don't have to generate a new wallet, just a new address.
every transaction has a new 'address' (if you choose to.. and this is what happens by default); so when i send a tx to virgin; no one (other than virgin and anyone they tell) will know i sent a tx to virgin.
wallets are made up of lists of addresses; so while the network analysis can be done it is actually no where near the issue you seem to believe it is
[1] http://www.bloomberg.com/video/can-the-senate-help-to-legiti...
this is just another reason why bitcoin will not work
when do you decide that bitcoin 'works'? i mean; it is absolutely undeniable 100% certainly no-matter-what-you-say currently working RIGHT NOW; the mental dissonance around bitcoin naysayers is becoming hilarious
Yes, you can! An air travel agency announced today they started accepting bitcoin (cheapair.com): https://news.ycombinator.com/item?id=6784265
Yeah, try moving 150m out of any bank in the world and not having lots of people knowing you just did it. Secret fund transfer on this level is very, very uncommon.
Seems very reckless. All your eggs in one basket.
http://ltc.block-explorer.com/address/LTpYZG19YmfvY2bBDYtCKp...
If you don't understand why, then thank God you are not working in a bank. Banking is one of the most innovative, talent hungry industries in the world, with the anomaly of (and exception in) the US retail market due to legal idiosyncratic US regulation..
Mand
If this same owner splits the holdings up slowly, transfer wallets, and then recombine it again, it might spike up once more. People will definitely catch on, but it might bring up the value a couple hundred dollars in the hype.
Might make millions in the confusion.
https://bitcointalk.org/index.php?topic=54673.1120
can someone do any further checks on the information below as a lot of people have lost out on a lot of bitcoins, including myself. Please check the magento company and if possible further info on 50BTC.
http://myip.ms/info/whois/5.9.245.120/k/1171871757/website/5...
I don't need any sarky should haves or comments, just advice or routes to take. We're all on this earth together no??
Looking at where the funds went from there, they seem to be breaking it up into 4000BTC sections, probably onto paper wallets.
edit: corrected by josephagoss, ty
/ super jaded
and finally mathematicans could get rid of poor now
1) Someone at the NSA 2) Barack Hussein Obama 3) Me
I hope the national-security apparati have a handle on this -- wouldn't want the evidence of a smoking gun to be a mushroom cloud...
Time: 17:30 - 1738
roughly 5pm europe time, past the 9-5 general business hours . If all the parties or just the reciepients are based in europe, between legal and illegal.. I would tap this as illegal. It just doesn't make sense.. for someone doing a legal transfer of this size, after business hours, unless.. senders were based in US.
Going through the direct senders (1 step back), the time with least 1k BTC+ transactions was 0200, 0400, 0500.. while with most big transactions were made around 1300, 1500, 2100 .. suggesting that these transaction were roughly either made from US to Europe, if of legal nature.. or within europe.. suggesting something shady. Very very crudely speaking.
Yeah, everything is possible, and the above is not necessarily true, but it appears so, at least to me.
Amount: 194k bitcoins
Multiple connected accounts who sent to the above address seems to have had 220k+ in total recieved and looking at denomination, it didn't seem like lot of normal people were involved. Besides, with this kind of money involved it is wise to have 10 or less people involved who are highly trusted. This appear so also, with how countable no of bitcoin addresses were used to say "bounce" the trace of that money. Skill wise, these are not normal people.. but given HOW this ended up in public domain, they could have done slightly better.
I get the feeling you get from govt hired people doing such things, no offense.. but somewhere below the elite, but above the average joe. It is also possible that a bigger or equal (more likely) sum was also transferred elsewhere.
Movement seem to have stopped.. due to attention it has already garnered or is it the actual resting place? If it would be illegal, one would have had no problem keeping it in multiple bitcoin wallets in smaller amounts. But if it is someone, with legal force on side.. say govt agency, it would not have problem leaving the bitcoins in such limelight, for a long time, as long as they believe that bitcoin is actually 100% and not 99.9999999% impregnable.
Motive, as discussed slightly above, can be mainly either "convenience of centrality" > or > "hiding a bigger sum" .. well I at least won't be putting my money in BTC for my own reasons. I got that feeling today to use it.. but I resisted.
BTC is genuine, but the currently it seems like a pyramid fraud system which is perfectly legal strictly speaking. More people putting in money in BTC system.. already rich getting richer.. tickle down effect :? Well 150 million.. has really left a lot of questions .. or its nature, motive, ownership, moral, etc. Who would answer? No one.. ironically.. thats a big problem as well a big benefit of BTC. I'm sorry.. lot of things I said above are based on feelings, but to tell you the truth, before today, BTC was in a nutshell somewhat easy to understand.. but 150 million.. is a figure that can give any guy a lot of different vibes, speculative as well as wild goose chase type.
Lets say the IRS are watching this (and why wouldn't they be?). They now know a multi-million dollar transfer has happened, and are beginning to track it down.
The physical Bitcoins (like those by Casascius) work exactly like this: physical coins containing a private key hidden behind a seal.
Lets say I give you a "physical" BTC worth 1 million BTC. Is there any way for me to prove to you that I have erased the private key to this BTC address?
No, there isn't. Anyone who is caught using physical BTC coins is a sucker who doesn't understand the system. They can be very easily scammed by the very man who created the "physical BTC coin". After all, all I need to do is keep a copy of the private address, and transfer the money sometime after I've "sold" you the BTC.
Unless you have some anonymous way of depositing BTCs into random addresses, all transfers into and out of that address will be stored into the BTC Blockchain _for life_.
No, seriously. Forever, for the rest of Bitcoin's history, there will be a record that two addresses transferred BTC between each other.
This will be timestamped, cryptographically signed, and archived by the BTC Network. That is... what Bitcoin is after all. It is the ultimate ledger.
Alternatively, could I use a web wallet to bounce coins around to obfuscate ownership?
Researchers can easily track such trivial ways of "attempted anonymization".
>>> We found out that there is a huge number of tiny transactions which move only a small fraction of a single bit- coin, but there are also hundreds of transactions which move more than 50,000 bitcoins. We analyzed all these large transactions by following in detail the way these sums were accumulated and the way they were dispersed, and realized that almost all these large transactions were descendants of a single transaction which was carried out in November 2010. Finally, we noted that the subgraph which contains these large transactions along with their neighborhood has many strange looking structures which could be an attempt to conceal the existence and relationship between these transactions, but such an attempt can be foiled by following the money trail in a suciently persistent way
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ALL BTC transactions are FOREVER archived in the bitcoin ledger. Its how it works.
That is also a pretty cool paper as well. Thanks for the link.
The recommend use of Bitcoin is that every payment you receive should be to a new address. This maximizes privacy and its necessary when you may have multiple concurrent payment in order to sort out which one you've received. Common wallet software (including the reference client) also always pays change to a new address.
... so it's a bummer that the authors of the paper went on to describe every coin assigned to an address which has never spent as in savings (roughly 60% of them), if not for a couple things engaging in the bad practice of address reuse they would have found 100% in "savings".
This joining means that even if you've been super careful to never link address A to you because you've done sketchy things with A, if at some point in the future (even distant future) you join A with another address that the someone CAN track, they now know you own A.