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Comment by jfasi | Hacker News Reader

> The FBI already owns 5 to 10 percent of [bitcoins], which are now out of circulation.

Given that money laundering and drug transactions have become major parts of bitcoin's current use case, law enforcement's tendency to seize bitcoins puts yet another deflationary pressure on the system. The biggest obstacle to bitcoin becoming a currency rather than a speculator's darling is the stability of its value. Meanwhile, the system's incentives seem to promote hoarding in hopes of a price spike.

Not that this is problem in and of itself. Bitcoin's decent anonymity creates very real value, and it looks poised to be a medium of exchange. It just puts a damper on the hopes that future transactions will be denominated in bitcoin rather than dollars.

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That is only if the FBI holds onto them forever. However, unless something has changed, I was under the impression that they plan on auctioning them off just like any other seized asset

http://www.forbes.com/sites/kashmirhill/2014/01/16/the-feds-...

You raise an important point, but I think you state it too strongly. If the FBI shows a tendency to hold an increasing number of bitcoins (on average, over time) it's a deflationary pressure even if they're not "the same bitcoins". It's similar to other demand by people who want to hold, I guess, except that the FBI doesn't need to pay for theirs at market rate.

The FBI does not own anywhere close to 5% of all Bitcoin in existence. Nevermind 10%.

There are ~12M Bitcoin out there right now. There was a total of ~30k seized through Silk Road. That's 0.25%

Actually they have around .5 to 1%. 10% of already mined BTCs would be ~1.2 million coins.

What are the chances of hackers taking them back?

About the same as the chances of hackers deleting the FBI's evidence against them?

Not the case, actually. It's safe to assume that the FBI is very big on backups, probably paper backups, to prevent people doing just that. But stealing the bitcoin from the FBI wouldn't require deleting anything, just access to the private key.

Now admittedly, the FBI also has a lot of experience keeping short bits of data secret (for instance, the real identities of moles and protected witnesses). But they don't exactly have a perfect record on that count.

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