Anatomy of a $40M+ Bitcoin heist
thinkdifferent.lyDoes anyone gain anything from these graph visualisations? The first few times I saw one I was impressed, but this one is so huge and nondescript, I think it's impossible to take much away from it. They're kind of like info graphics; you see a few that make sense, but many more are just jumping on the bandwagon.
I see no interesting features in this visualization. What part am I supposed to be looking at?
So the '324 is FBI on phone handset' comment, is this the FBI transferring $40M from Silk Road wallets to some other wallet? Or is it something else?
Also one wonders what is done with the 'evidence' after the case. I could imagine the FBI simply deleting the wallets but does anyone know their actual policy?
> I could imagine the FBI simply deleting the wallets but does anyone know their actual policy?
In the US, law enforcement gets to keep a portion of whatever they seize. You can bet your ass they will not destroy millions worth of assets -- entire departments will get bonuses for years for this.
Law requires them to liquidate the assets through auctions, they cannot simply sell them at an exchange, or set a price for them and sell them at that price. There are plenty of companies that specialize in organizing such events.
An exchange is an auction, but I'm sure there's some regulatory capture here that won't allow the government to use any existing exchange. There may be a business opportunity here.
"Regulatory capture" means the regulators are working with the regulated organization instead of controlling it.
Yes, that's what I meant. I suspect some government contractors have convinced the government that everything (e.g. selling seized property) needs to be done by specialized government contractors rather than normal businesses or by the government itself.
> I could imagine the FBI simply deleting the wallets but does anyone know their actual policy?
Pretty sure whatever their policy is, it isn't "throw away $150million of seized assets"
Except that it's not $150 million of seized assets, it's a bunch of electronic money that could or would at one point potentially sell for approximately $150 million if there were enough buyers for the offered digital product.
What does the FBI or other agencies do with intercepted drug money and criminal possessions? Drugs get destroyed, that much I know, but not sure about the other stuff.
Like other seized assets they will get repurposed for other investigations. When the feds seize a boat, car, or home they either sell them or use them for operations, undercover and the like.[0]
I imagine the btc will be saved until the case is closed then try to be used for other investigations, I don't think the feds would try converting and selling it.
Why not convert it and sell it? Spending BTC doesn't destroy any evidence, you'll still have a record of the original BTC to trace. I imagine there is some legal procedure to go through before they can dispose of the assets, but I can't imagine them simply shredding the keys.
In typical cases, money is sent to the U.S Marshalls, and then disposed of according to a judge's instructions. In this case, the FBI can't easily redeem the seized BTC for USD, so it will likely stay in evidence.
If the FBI deleted the wallets, I could imagine someone privately keeping a copy of the crucial key digits. A nice little retirement nest egg for 30 years time, once this incident has been forgotten. If the bitcoins have been officially deleted, it seems reasonable that the government bureaucracy would then cease to be interested in them.
Is't this relaties to sheep market?
At first I imagined a prosecutor frustratedly trying to convince a judge of the validity of an audit trail like this... but in reality it would probably just come down to an expert witness testifying that it is valid.
One great thing about bit coin is that all the metadata is available to everyone. You would be hard pressed to make a fancy chart like this with fiat currency.
just a minor nitpick, but bitcoin is also fiat currency.
> just a minor nitpick, but bitcoin is also fiat currency.
Bitcoin is not "fiat currency" by the most common definition(currency whose value is supported by the mandate -- or "fiat" -- of a government for its use in certain domains, but which is neither a directly-useful commodity on its own nor backed by a promise of exchange for a commodity.)
Bitcoin is "fiat currency" by another broader definition ("currency that is neither a generally-useful commodity on its own nor backed by a promise of exchange for a commodity"), which has historically largely been equivalent to the more common definition, because prior to Bitcoin and similar cryptocurrencies, no one was using unbacked currency that weren't supported by government fiat.
Its probably better to use a different term for the broader definition, since there is no fiat necessarily involved, there are meaningful differences between unbacked currencies supported by government fiat and those that aren't, and there are now meaningful examples of unbacked currencies without the support of a government fiat.
I wonder how many people knew what a fiat currency was before bitcoin... actually wait.
http://www.google.com/trends/explore#q=%22fiat%20currency%22
By that, do you mean that bitcoin does not have any intrinsic value?
I understand the idea of everything having subjective value but I believe people actually mean 'utility' when they claim bitcoin has no 'intrinsic value.'
In response to this, I think of the service provided by bitpay.com. They offer merchants the ability to accept payment in dollars (or many other currencies) on their website/app and receive the payments in dollars (or other currency). There is a middle step where bitcoins are bought and sold. There are some benefits to the merchant as versus 'traditional' online payment methods ie. better security and "cash-like" online purchases. It is abstract, but I believe that this example illustrates utility that bitcoins (or other crypto-currencies) provide.
Nothing has intrinsic value.
I think most people would argue that items with uses other than exchange medium generally have some intrinsic value. A dollar has no intrinsic value, but a dollar bill can be used as kindling. Even if no one values it, you can drink water, etc.
Dollar bills have some [quite limited IMO] utility like the paper being burned as kindling or, "Oh, aren't these neat scraps of paper".
Utility != intrinsic value. Nothing has intrinsic value.
> Nothing has intrinsic value.
I think what you are actually saying is that "intrinsic value" is actually meaningless.
If "intrinsic value" is actually a meaningful statement about something (even if you believe that nothing has that quality), then I think we can indeed find things that have it, which disproves your statement in the first place.
The first definition of "value" that I found is "the regard that something is held to deserve; the importance, worth, or usefulness of something." Note that this is by definition subjective - i.e. "value" is a perceived quality. More specifically, it is a quality perceived by humans.
Therefore I propose a definition of "intrinsic value": something that all entities to whom "value" has meaning universally believe has that quality. For example, oxygen.
One could argue that there are entities to whom "value" is meaningful but that do not value either of those things, such as aliens who do not need either substance. However, since we are not aware of any such entities, it doesn't prove this wrong.
On the other hand, I suppose a person who is deliberately trying to asphyxiate themselves may not value oxygen after all. Perhaps this disproves my own point...
Either way, it's an interesting debate.
>I think what you are actually saying is that "intrinsic value" is actually meaningless.
No, I mean exactly what I said. Nothing has intrinsic value, ever.
>Therefore I propose a definition of "intrinsic value": something that all entities to whom "value" has meaning universally believe has that quality. For example, oxygen.
If I already have many lifetimes' worth of oxygen for my breathing apparatus, I might have no interest in and place no value upon your stock of oxygen.
Maybe the beings in question are some sort of alien life form that live in volcanos and breathe nitrous oxide. The type of error you are making is similar to calling air "superabundant" and then conflating that with "unlimited".
> If I already have many lifetimes' worth of oxygen for my breathing apparatus, I might have no interest in and place no value upon your stock of oxygen.
And yet, clearly you value oxygen enough to stock up many lifetime's worth of it - a testament to its intrinsic value.
> Maybe the beings in question are some sort of alien life form that live in volcanos and breathe nitrous oxide.
You have no evidence that such beings exist, however - so this is purely hypothetical.
On giving this more thought, however, perhaps objects or substances are too simple to consider from the perspective of intrinsic value. So how about something completely different, such as wisdom? Does wisdom have intrinsic value?
Those who do not value it are not wise, and are therefore not qualified to judge whether or not it has intrinsic value...
I stocked up on oxygen in the first place because I had an end—sustaining my own life—and the means for this was, in part, supplying myself with oxygen. Oxygen only ever was considered valuable because of my purposeful human action. It was never valuable "just because" as the concept of "intrinsic value" implies.
You seem to be partially accepting my argument that "intrinsic value" doesn't exist but trying to win by redefining "things having intrinsic value" as "things necessary to sustain human life". Okay, things that humans need to survive are "intrinsically valuable" to that end but that isn't what we're talking about.
I was just listening to let's talk bitcoin and it was mentioned that gold has intrinsic value whereas bitcoin doesn't and how people viewed it. Ultimately nothing was resolved and to the outsider listening in it seems that a conversation about intrinsic value is a conversation about semantics at best and philosophical rhetoric at worst. Ultimately, the whole idea of intrinsic value is a waste of time and adds nothing to the conversation for bitcoin or gold.
Maybe the only things that have intrinsic values are the atoms that make up our world and us as without them we have nothing and don't exist. So I guess on that point gold... fuck.
Nothing has intrinsic value. I think what the presenters you are talking about are trying to say is that gold has some utility while bitcoin has none. Bitcoin has utility in that it is an incorruptible ledger of transactions, that transactions can take place outside of the legal purview of various states, etc.
Bitcoin has no utility absent the present state of affairs where people believe in statism and government agents actively forbid money besides their fiat regime's. Some Austrian economists fail to see why bitcoin really is money, but it is because it has utility in this manner I mentioned.
So intrinsic value is a myth. Now we are getting philosophical.
>Value is not intrinsic, it is not in things. It is within us; it is the way in which man reacts to the conditions of his environment. Neither is value in words and doctrines, it is reflected in human conduct. It is not what a man or groups of men say about value that counts, but how they act. --Ludwig von Mises
A 'price' is a historical datum of an exchange. I valued my thing at X of your things, probably in terms of monetary units; you likewise valued my things in some sort of agreeable way that we voluntarily made an exchange.
"Intrinsic value" implies, "People will like this shit no matter what." Real value is subjective and only created by acting human beings.
Well, I think living human beings have intrinsic value, at least.
That sounds nice but holds no water. I mean, what sort of monster could not value human life? Please, pay strict attention to what I am saying about what really having "intrinsic value" means.
I think a government needs to back the currency before it becomes a fiat currency.
Interesting. What's $40MM in bitcoin?
I ask because most of these articles are trying to shock you with the exchange value rather than the BTC value.
How is it any different from "one ton of gold" versus "$40 million in gold"? Surely the latter provides more useful information to the general public?
Gold is generally less volatile, so saying "$40mm in gold" would likely have some lasting significance. But in a month, that $40mm in Bitcoin could be worth $20mm or $60mm or something else entirely. Giving the actual value in BTC would let us know how much exactly.
"Useful" for somebody, sure. I don't think that fact has any use for the pubic.
The overwhelming majority of Bitcoin users are concerned with the exchange value, so it makes sense to give that rather than the "native" value.
So you're saying it's not a currency, but a speculative play?
For most buyers of bitcoin currently, yes. In the future that might change.
Article says 5500BTC.
96000 btc i believe was the figure being thrown around however I also saw 39000 btc at the every early stages and that is much closer to the $40million estimate given in OP.