I wonder, is BTC liquid enough that you could actually get your $600k if you suddenly were able to recover them? I haven't dabbled in crypto coins, so I have no idea how the exchanges really operate in practice.
This is assuming everyone who acquired BTC held on to them to this point, I very much doubt that's the true for any scenario you mentioned except the MtGox.
Also 650k BTC - could you ever cash that out at anywhere close to current price :|
Not totally liquid. That's a lot of bitcoints being sold. The buyer could not go ahead and sell all of those coins immediately after getting them without severely impacting the price. The buyer would probably need a couple of weeks to unload those BTC without moving prices much. That creates risk as there's a lot of volatility in BTC. As a result, the range of possibilities on what you would eventually sell those BTC for is wide. If you could (and maybe you can... I'm not super aware of all the BTC instruments these days) buy/sell BTC derivatives (options/futures) you would be able to transfer that risk to someone else, but it would be at a cost. This cost would roughly translate to how much you would be willing to pay to be able to sell a bitcoin at a future date at today's market price.
As a result, a buyer would be willing to pay market price - transaction costs - risk transfer cost.
Pricing the risk is of course tough as future volatility is especially tough to predict for BTC. But this is the fundamental rubric for how one would view the transaction.
I really wish I had some BTC just to separate some fools from their money. Either through trading on the market or some sort of BTC based gambling. BTC isn't very liquid but I'd bet you could extract 50K in USD from it a year without too much trouble.
Yeah, but you have to pretty much turn that money back into cash ASAP if the value of BTC is dropping, or else someone pays you 1 BTC for something and that's worth ~$800 one day and $100 another. If it's just in an account, you've lost a lot of value, right?
One concrete claim I found is that many BTC holders might get paid back in USD at the then-price of the coin, which is ~$16K. Bitcoin is currently at ~$65K, which indicates that they could have lost up to 75% of the underlying coins. Just to be clear: this is not the same as being made whole.
To put it in perspective, the daily volume in BTC is a few 100,000s. 5-600'000 BTC is $10B. Sure the Winklevoss twins can't liquidate their entire holding in a week but if you only have a few million dollars worth of bitcoin, you can liquidate in a few days without moving the price significantly.
The other major crypto-currencies are more or less liquid in proportion to their market cap.
You still have to pay your taxes but cashing out a few thousand BTC on one of the large exchanges can be easily done. 24 hour volume at bitfinex is $781MM so you would have to dump a lot of coin to move the needle. A multi-thousand coin sell all at once can cause a brief flash crash though. If you have tens of thousands of coins you go to the OTC market.
Who is buying coin? Like if you seriously found 3 BTC you had on an old hard drive from years ago, remembered that password, who would pay you the $30k? You'd have to try different exchanges, try small amounts first, pay the insane transaction fees and wait for confirmation. Anyone who truly had a huge stash of like 400k USD in BTC would need to grab a lawyer, an escrow company and enter into a pretty strict legal contract with a coin exchange to guarantee that money.
Are there really large amounts being traded? I guess you could just look at the block chain ledger and see. But I'm just wondering how much of this is due to people cashing in/out vs market manipulation.
I don't understand the liquidity of bitcoin, maybe someone can please explain to me.
If I'd bought what today is, say, $100M, and I wanted to cash all of it out tomorrow, could I do it? Could I actually have $100M in my bank account the next day?
Edit: ok, not in one day. Let's say, over 6 months, whatever it takes. Can I withdraw $100M?
Indeed, but it’s not hard to imagine that a service would exist to temporarily lend you that money for a percentage of the wallet value. And assuming the company is credible, you’d probably be happy to get 90% of that BTC back rather than nothing.
The beauty is that NOT spending the 600K BTC is economically equivalent to giving a 600K gift to all other bitcoin owners. If the news ever came out that these coins are lost for all times, the exchange price for BTCs would most likely increase 600K/11M or about 5.5% in an instant.
(Of course, there's no way this could happen since we don't know what private keys are stored in Ross' head. Also this is based on the efficient market hypothesis and real world results have other complecting factors.)
I keep reading about people only being able to take a small number (50 or 80 BTC) out of the market at once, which is why the hacker couldn't do the same.
If that is true, then once you have your 500k BTC in the exchange, it will take you over a decade to get them out, either as cash or as bitcoins.
How would you cash out on a huge BTC gain? What would happen if you sold say $500,000 worth at an exchange, then had them wire that to your bank account? Let's say no account in your name ever had a monthly deposit total greater than $10,000 and suddenly that shows up. Would you be under investigation by several organizations? Would you be flagged for audit every year for the rest of your life?
I'm sure many people are trying. On a slightly related note - I wonder what the market effect would be on bitcoin (and possibly crypto as a whole) if anyone managed to transfer money out of the wallet, would it crash the currency?
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