
Bitcoin Billionaires May Have Found a Way to Cash Out - prostoalex
https://www.bloomberg.com/view/articles/2017-12-21/bitcoin-billionaires-may-have-found-a-way-to-cash-out
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adventured
Anybody that has that kind of gain in the last few years from Bitcoin et al.,
would be nuts to not be cashing some of it out. More and more headlines by the
day are sounding like a rehash of the dotcom bubble type insanity that
occurred right before the crash. The lifestyle difference between $300m and
$800m, or $1b and $6b, is not meaningful enough to risk giving 50% or 97% of
it all back in a serious crypto crash.

In my opinion, the crypto boom will follow a nearly identical path to most
bubbles that involve new, valuable technology. The bust will last for several
years, most coins & ICOs will end up entirely worthless, a select few will
remain very valuable, and the new technology services (that touch the real
economy) built on top of blockchain in the following 10-20 years is where all
the lasting wealth & impact will be made (trillions of dollars in new wealth
globally, due to productivity improvements from new services/products,
affecting most aspects of commerce & economy eventually). Most of the bubble
wealth created in the present crypto mania, will never get cashed out (can
never be cashed out), it'll die in the fire as with all bubbles. It's the
classic over-done splurge that you see with all new technology (try every
possible permutation, along with 37 copies of each), it simply means 99% of
the coins will vaporize.

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arisAlexis
Past bubbles didn't involve an economic paradigm shift

~~~
jcranmer
Except for the dot-com bubble, the railway mania, canal mania, South Seas, and
that's just the ones I can think off the top of my head.

One of the classic warning signs of a bubble is people saying "but this time,
it's different." Particularly in response to claims of a bubble.

~~~
klenwell
Don't forget the housing bubble. The first time it occurred to me that housing
was a bubble was when I heard the economist for the National Association of
Realtors say on the radio this time was different because of a paradigm shift.
It reminded me of what I had heard during the dot-com bubble.

Then I saw this map and was convinced:

[http://graphics8.nytimes.com/images/2005/06/15/business/arm3...](http://graphics8.nytimes.com/images/2005/06/15/business/arm3.gif)

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lend000
Lots of articles make this mistake -- they use the distribution of Bitcoin in
wallets to determine the wealth distribution. This is extremely flawed not
only because many miners hold their coins over multiple wallets (e.g. Satoshi)
but moreso because exchange wallets are counted as single individuals.

~~~
jjeaff
Yes. And tons of articles and people are also making the mistake of thinking
the sites tracking BTC transfers are actually transactions either purchasing
or selling Bitcoin for cash. In reality, they are mostly internal transfers.

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justboxing
> the approximately 1,000 people who hold an estimated 40 percent of all
> bitcoin, or an average of around $350 million each.

I've seen this statement over and over again for the last few months in
various news outlets and blogs, but I'm having a hard time wrapping my head
around this statement.

I understand these 1000 people are what are popularly known as the "Bitcoin
Whales" but how did most of them come in possession of a vast majority of
bitcoins?

Traditional FIAT currency, like USD for example first comes into circulation
when the US Government prints it, and then slowly makes it was into the hands
of individuals via contract payments, salary payments etc etc.

With Bitcoin, who was/is that central entity that distributed the original
coins? And in exchange for what? How much does this anonymous 'Satoshi'
individual own? Did he only write the specs and the blockchain stuff for
bitcoins, or did he also create said bitcoins and then grant himself a bulk of
the coins like how Charles Lee did with Litecoins?

I couldn't find an explanation for this -- i.e. how did the BitCoin Whales
come to posses 40% of the Bitcoins between themselves - anywhere, no matter
how much I google it. Anyone?

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adventured
You know the famous pizza for bitcoin story?

The media always tells the story this way: Joe Person traded eg 10,000
bitcoins for some pizza, in what is believed to be the first commercial
transaction.

You know what they always miss in the story? Joe Person did that same deal
several times, which you can see by reading the forum thread that still
exists. Joe Person missed out on a billion dollars in Bitcoin value in
exchange for maybe a dozen pizzas.

How did Joe Person get tens of thousands of bitcoins? That's how easy it was
to mine back then.

~~~
grondilu
> what is believed to be the first commercial transaction.

I'm pretty sure Alpaca socks were sold before that famous pizza.

~~~
cryptodogemoon
How foreboding!

[https://priceonomics.com/when-the-great-alpaca-bubble-
burst/](https://priceonomics.com/when-the-great-alpaca-bubble-burst/)

(1) The asset not the product is the thing being marketed (i.e. live alpacas,
not fiber)

(2) investors have unrealistic expectations (alpaca fiber would replace wool,
despite the lack of infrastructure; and besides the fact that people don’t
really wear that much wool)

(3) information is controlled through industry sources (most of the
information the researchers were able to dig up was put out by breeding
associations)

~~~
eecc
You and parent poster make for a wise conversation. The closing sentence —
telltale signs of a speculative bubble — can be read for BTC, one to one.
Brilliant!

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Clubber
I think once people start cashing out a large amount of bitcoin, the value
will drop (due to additional supply). I'm afraid with all the latest hype and
new investors, a drop off would trigger a massive selloff.

~~~
nske
It wouldn't be the first time in the history of Bitcoin and it might actually
be a good thing. People should start seeing Bitcoin as something else than an
easy profit highway.

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tempestn
"In turn, financial investors get a secure, levered exposure to bitcoin that
is not hostage to an unproven price-setting and without the expense of setting
up a system to hold physical bitcoin."

I realize that securely holding bitcoin at scale isn't _completely_ trivial,
but isn't part of the value of bitcoin supposed to be that these costs are not
large? Especially the use of the term, "physical bitcoin," seems a bit
ridiculous.

~~~
sp332
Bitcoin security is partly based on public-key crypto. So anything you would
do to secure a private key, you can use to secure your BTC from being stolen.
Encrypt it with a passphrase, or store it on a thumb drive and lock it in a
safe, or print it out on paper and put it in your wallet to be scanned (e.g.
in QR code format) only when needed, or even store it in a tamper-proof
hardware dongle.

~~~
nske
Plus the programmability features of Bitcoin open up some other interesting
possibilities -such as setup multi-signature wallets each in a different
physical location.

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arisAlexis
You can cash out with no problems

~~~
tytytytytytytyt
I thought 10's of thousands of transactions were pending. You mean just give
someone your wallet for cash?

~~~
modeless
If you're a billionaire you can just pay the fee to have your transaction in
the next block. The network works perfectly for anyone willing to pay fees.

Selling a billion on exchanges without excessive slippage would be difficult,
but perhaps not impossible considering that the daily volume is above 16
billion right now. Certainly something in the 10-100 million range would be
pretty easy.

~~~
jjeaff
Easy? Which exchange right now will let you sell millions of dollars at once?
My coinbase account is aged, well used and verified. And I think I can't sell
more than $10k a week.

~~~
modeless
Coinbase is not a true exchange. It's more of a broker. Their exchange
offering is called GDAX, and it supports daily withdrawal limits in the tens
of millions of dollars for verified users (possibly higher, I don't know an
upper limit). The initial limits are lower, but if you have the money and
aren't doing anything illegal you can simply request higher limits. Also,
deposits and trades are completely unlimited, so you can sell a billion now
and withdraw later over time.

Other exchanges with high USD volume include Bitstamp and Gemini. Bitfinex is
also an option if you trust them and live outside the US (I don't).

