The U.S. Government Has $5B in Bitcoin
wsj.com
wsj.com
The bitcoin trading market is much thinner than it looks -- wash trading is ubiquitous [0] and BTC's price is systematically propped up by a likely fraudulent stablecoin [1]. High prices benefit the organized crime orgs that transact with it [2], but none of the putatively legitimate web3 projects rely on high valuations to work, in theory. If blockchain solves a real problem, it should do it at BTC = $100 or whatever.
IMO, if the US government floods the market, it could do a lot of damage to organized crime groups, potentially lead to unbacked stablecoin's death spiral (as people attempt to redeem more cash than they actually have on hand), and perhaps lead to a healthier, less mania-prone crypto market.
[0] https://cepr.org/voxeu/columns/wash-trading-centralised-cryp...
[1] https://www.coindesk.com/markets/2018/06/13/tether-manipulat...
[2] https://dialogo-americas.com/articles/china-sells-fentanyl-f...
Also, I think that if BTC falls below, say, 10K, a lot of loans are going to get called in suddenly, and we're going to see that a lot of people were swimming without trunks [0], i.e. mismanaging customer funds and assuming that the crypto market would go up indefinitely. In other words, I think the story we're learning now about Alameda is going to turn out to be a lot of people's story.
But we shall see!
[0] https://money.com/swimming-naked-when-the-tide-goes-out/
https://ia801508.us.archive.org/25/items/gov.uscourts.nysd.5...
Aww do you? :'(
A record amount of BTC not moved on chain for the long term has reached all time highs, "wash trading" or not, that can't be faked, it's being held as it's primary value proposition, a store of value.
I can't believe the Tether FUD is still widespread after all these years, all completely unproven and wrong time and time again.
If the USG stopped to think for just a second maybe they'd ask themselves why they'd sell absolute digital scarcity for something they can just print out of thin air for themselves.
How much of this is due to people losing access to their wallets and the BTC being lost forever?
The number of BTC lost forever was already pretty high from what I remember. My suspicion is post-FTX there was a surge in self custody and many of these people likely lost access to their wallets from any number of the issues self-custody can bring. Or they just can’t figure out how to get it out.
Self-custody is completely impractical for 99.999% of the people walking around. The UX is horrible and the entire process overall has the most foot guns anyone will ever see.
It’s also worth pointing out that the “primary purpose” as a store of value now claimed today is only a result of bitcoin failing at the other claimed “purposes” over the years.
This one is especially entertaining to hear from crypto/BTC advocates as the title of the BTC paper is “Bitcoin: A Peer-to-Peer Electronic Cash System”.
As usual on this site, the assumption that 99% of people are complete drooling idiots for anything remotely tech-related runs firm. Believe it or not, a surprisingly large percentage of the population can rather quickly learn to manage relatively non-complex things like holding their own crypto and so forth without having to be specialized devops or top-tier tech workers.
Not everyone outside a certain bubble is blindly stupid just because they do other things with their lives.
What I am saying is that everyone forgets things and makes mistakes. Have you ever had to do a password reset? I know I have. Have you ever messed up a backup or deleted something accidentally? I know I have. HNers are in many cases lifelong technology professionals and all of this and more still applies to us. Just like how even the best and most brilliant physicians in the world still carry malpractice insurance. People mess things up all of the time. This is basic and fundamental being human stuff.
Extrapolate this to large numbers and the general population with varying levels of technical proficiency. Bank of America has over 60 million customers. How many times a day do you think they click a password reset link? How many times a day do you think someone calls customer service because they can't get in their banking app or account online? How many times do you think someone ends up walking in a branch to get it figured out? How many times a day do you think someone does an "oops" transferring funds, etc?
The answer is almost certainly a staggering number of people, every single day. Even 100k is just 0.16% of those 60 million customers so I would put that on the low side. Banks like Bank of America don't operate call centers, branches, etc because they're running a jobs program and like to waste money on unnecessary payroll. They have these resources because they're necessary. In the real world people forget things, lose stuff, mess things up, and occasionally need help.
The crypto self-custody mantra combined with irreversible transactions essentially depends on never make a mistake, never forget, and never lose anything. Combine that with the poor UI and UX I mentioned and it's a recipe for disaster.
It fundamentally goes against everything we universally know about human beings.
Until crypto FINALLY realizes it needs to bend to the real world and not the other way around it will continue to have some of the poorest adoption numbers of any technology from the past 100 years.
> I can't believe the Tether FUD is still widespread after all these years, all completely unproven and wrong time and time again.
is false.
Tether knowingly falsified documents when applying for bank accounts [0], lied about its backing [1], and is the currency of choice for pig butchering scams [2] and Hamas [3].
Overall, a really bad, obviously criminal org, and someone who responds to that with "FUD!" is generally either on the payroll [4] or soon to be in for a very rude awakening [5].
[0] https://www.wsj.com/articles/crypto-companies-behind-tether-...)
[1] https://www.cftc.gov/PressRoom/PressReleases/8450-21
[2] https://www.trmlabs.com/post/pig-butchering-scams-what-the-d...
[3] https://www.wsj.com/world/middle-east/militants-behind-israe...
[4] https://protos.com/astroturfing-and-fake-support-for-tether-...
[5] https://www.coindesk.com/policy/2022/10/31/us-tether-bank-fr...
I thought it was supposed to be a currency?
1. Unit of Account (https://en.wikipedia.org/wiki/Unit_of_account)
2. Store of Value (https://en.wikipedia.org/wiki/Store_of_value)
3. Medium of Exchange (https://en.wikipedia.org/wiki/Medium_of_exchange)
So think about a couple examples of these:
Goats would be terrible money. A unit of account that is "goats" would be subject to birth- and death-rates.
Sports game tickets would be terrible money - they're significantly more valuable before the game, and after the game, they're far less valuable.
Mountains would be terrible money. How could you exchange them, unless you were able to keep track of who owned the mountain?
Dollars are actually pretty good at all three. They don't die. They're pretty stable in terms of value. It's pretty easy to give someone Dollars.
Bitcoin are... ok... at some of these. It's pretty good as a unit of account - if you can secure your wallet. It's... ok... at being a store of value - there have been some very high-profile sudden value fluctuations that left people holding a bag. It's pretty easy to give someone Bitcoin, but not trivial. It looks like it costs about $1 to make a bitcoin transaction happen, where I can transfer a few dollars for free.
I'm not a Bitcoin supporter, but I don't think it's fair to malign the tech for things it actually can do.
2. Yeah, I was trying to come up with a simple "can't be exchanged easily" things and I (pretty obviously) failed. Got any ideas of "can't be exchanged easily" stuff?
The Rai stones are just a curious example of how creative people can get with their ledgers. And by extension - what happens when people who can manufacture your unit of account out of thin air come along.
I hope you have a great day.
[1] https://www.coindesk.com/markets/2017/12/07/the-bulgarian-go...
There was an acquisition of F-16s in 2022 for $1.3 billion, which still leaves 1.5 billion EUR from the seized money.
many such cases
https://www.marketwatch.com/story/the-u-s-debt-will-rise-by-...
https://www.marketwatch.com/story/congressional-budget-offic...
That is not what the article says. The article says the debt will rise each day. Think of the deficit as the 1st derivative of the debt, or the rate of change. If date is increasing at a constant rate, then the deficit is staying mostly flat.
So, the article is saying something like "John is running away from us, and will get 5 miles further away every hour", and you're saying "John is running away from us, and he gets 5mph faster every hour".
> Why the U.S. Government Has $5 Billion in Bitcoin
Answer:
> … Uncle Sam’s stash of some 200,000 bitcoin was seized from cybercriminals and darknet markets. It is primarily offline in encrypted, password-protected storage devices known as hardware wallets that are controlled by the Justice Department, the Internal Revenue Service or another agency.
And if it is a thing, one has to be serious about understanding what one can and cannot do about it, love or hate.
an understanding sharing much in common with the eye-sore casinos propped up slowly over time in towns and cities around me, especially: pity the denizens who participate, move on with my life.
Gold currently has a market cap about 20x that of Bitcoin.
So the US has a bigger share of the world's gold than of the world's Bitcoin.
And if the government seizes $5B in something perishable like pumpkins, does it have a responsibility to offload those seized items before they're worth nothing?
Bitcoin doesn't exactly suffer from the problem pumpkins do, but I'm curious where that divide is between, "we've put it in the evidence locker" and "it will decay to nothing so we need to act on it, even if the legal matters have yet to be resolved."
Cryptocurrency is actually specifically mentioned.
IMHO Yes! The Government holding BTC indefinitely is equivalent to just taking it off the market and enriching all existing BTC owners by increasing scarcity.
* China 194,000
* Ukraine 46,351
* El Salvador
* Finland
* Georgia (the country, not the US state)
Well by definition wash trading results in no change of price, so none of the movement in the NYSE is a result of wash trading.
Further more, wash trading is illegal and every order entered into the CLOB is recorded as to which trader sent it so its trivial it detect if a trader did wash trade.
I'm not going to comment on whether that's realistically achievable on the NYSE specifically, but it's definitely not true that wash trading doesn't change prices "by definition". To the contrary -- that's one of the reasons it was made illegal.
It's use is to increase volume.
From teh SEC who over sees this.
If you aren't happy with their definition you can take it up with them but you don't get to redefine the term for your own use;)
https://www.sec.gov/files/litigation/aljdec/id78grl.txt
> -[1]- Wash trades are purchases and sales of securities that match each other in price, volume and time of execution, and involve no change in beneficial ownership.
Because you're missing the part that in certain circumstances, when you are performing both the sale and the purchase, you can choose whatever sale price you want.
E.g. most recent genuine market trades were at $0.50, but you offer for sale at $0.60 and buy your offer at $0.60. Then do the same at $0.65 and $0.70.
Then it looks to outsiders like the price really is going up, and that can be used for all sorts of things.
You can look it up in Wikipedia if you want, which explicitly gives one of the motivations for wash trading as:
"- Falsely driving up asset prices by fabricating trade history with increasing prices" [1]
I'm not redefining anything at all. ;)
(It is also used for increasing volume, but that's not the only motivation.)
The SEC has the job of handling this in the US and I cited them. You cited Wikipedia. I'm happy with using the definition that the SEC uses.
Maybe someone somewhere now uses wash trading to mean raising the prices but if you actually think about the name its meant to mean nothing changes after the trade, meaning no price change.
Given we're talking about the NYSE and therefor the SEC, i'm happy using their definition vs the wikipedia definition but I understand why you came to your opinion. Thanks for sharing!!
The SEC definition is obviously correct insofar as each individual wash trade is executed at the same price -- it is sold at price X and bought at price X.
But then multiple wash trades can create a sequence of seemingly rising prices. Even though each individual pair has a matching price. Nothing in the SEC definition from that case contradicts this. Nothing in the SEC definition requires that the offer (first) half of a wash trade be a legitimate market price -- it can be made at a price artificially higher than the market, which is sometimes the whole point.
It's easy to read up further on this, there's lots of material available online which explains this -- how each half of a wash trade uses the same price, but a sequence of them are used to raise the apparent market price.
Again, this is 100% in line with the SEC definition.
It's obviously not 0.
So way more than 0.
[1] https://www.investing.com/news/cryptocurrency-news/bitcoin-l...
[2] https://www.coindesk.com/markets/2023/04/27/bitcoins-estimat...
{Meta, I just noticed GP comment is from 'eli', lol.}
With regard to currencies they all have slight concerns, but the dollar is safer as people run to it in a crisis which keeps the value relatively high. This will change eventually, but could happen next year or decades hence. If I could predict it, I would be far wealthier.
With regard to Bitcoin, it is a relevant question despite my flippant response. The exchanges are well known to be corrupt and have a vested interest in keeping the price of Bitcoin high. Leveraging can happen there or off chain as was done with the relatively recent debacle with Terra/Luna.
Still, manipulating is such a high risk thing, that most avoid doing it.
Bitcoin has had such a wild ride. Cool hipster currency to libertarian wet dream to silk road fueling to a hedge against multiple country's money printer(I particularly remember some South Korea event cause a huge jump) to the really boring of heavily paper-trail super scare asset we know today.
Given my perception of what I thought Bitcoin would do, I should probably sell what I have. However, this added legitimacy is good for my bags.
A trading method that shorts BTC as soon as the stock market opens and goes long QQQ, closing both the BTC short and the QQQ long at the closing bell, would have posted a strong return despite BTC being up for the year, indicative of liquidations by a large entity to take advantage of increased liquidity when stock market is open--I would surmise the US government selling its 50k seized James Zhong Silk Road coins.
https://www.coindesk.com/business/2023/03/31/us-government-s...
It all adds up. This selling puts constant pressure on BTC during the market hours and sometimes those sudden 100-200+ pt BTC dumps. Very profitable trading method..
2011 - it's a scam, nobody uses it
2013 - it's a scam, only criminals use it
2015 - it's a scam, no companies accept it
2017 - it's a scam, only small companies accept it
2019 - it's a scam, no countries officially recognize it
2021 - it's a scam, only small countries officially recognize it
2023 - it's a scam, it's not the world reserve currency
[1] Number Go Up by Zeke Faux tries actually using BTC in El Salvdor. Many don't know how, some people tell him to leave, some try but it's strictly inferior to existing payment methods.
I have actively tried to use bitcoin to pay for daily life stuff in 2022/2023 and its basically impossible without converting to fiat. The only 2 bills I can pay directly with it is my VPS host and AT&T. I can't buy groceries with it, pay my rent, fuel my car, or see a doctor. I was once able to buy steam games and Chinese food with it but both have since dropped it.
I would not call bitcoin a scam but I also would not say it is useful currency for Americans.
2023 - still nobody uses it
A real world example of how Bitcoin didn't work, even though it could have worked is Steam[1]. They tried, and while gamers are more likely to be able to handle the intricacies of crypto than most of the rest of the population, there are just some really difficult issues to solve with using raw Bitcoin.
Virtualized networks on top of Bitcoin like Lightning[2] seek to solve some of those issues, but bring their own complexity and issues including finding enough VC money to bootstrap the network into even having money to function.
1. https://steamcommunity.com/games/593110/announcements/detail...
2. https://finance.yahoo.com/news/bitcoin-lightning-network-sca...
Bitcoin is the currency that nobody uses and a collectible that doesn't behave like a collectible.
He also questioned its role as a hedge, stating, "It's gone up as stocks have gone up, it goes down when stocks go down. This is not the way a collectible is supposed to behave."
With that logic.
Afaik that's still an unsolved mystery with several competing theories.
Historically, money backed by weak reserves has always lost against money backed by stronger reserve assets. I find it funny that people believe that infinite debt creation is superior and will win against absolute digital scarcity.
Can you say more about where this has actually happened, and how it's applicable in this situation? (I'm actually curious)
Then short it.
https://www.treasury.gov/resource-center/faqs/Currency/Pages...
> Federal Reserve notes are not redeemable in gold, silver or any other commodity, and receive no backing by anything
that is not quite right. historically USD has been backed by the USA military
funnily enough you CAN actually redeem the banknotes for these things but most people don't typically enjoy the experience
Apparently, Hal Finney may have been Satoshi, and he was cryopreserved back in 2014:
I’m not particularly up to speed here, is there some substantial evidence that seems to indicate that in fact they were one and the same?
If you were going to store a series of words for up to centuries without being able to check the backup, and without being able to make any changes to protect it, what would you use?
if he kicked off a treasure hunt puzzle through some time-released clue in the future he'd basically be Ready Player One's James Halliday :D
Bonus points if the NSA/CIA can steal it to fund black ops.