
The Wealthy Are Hoarding $10B of Bitcoin in Bunkers - spking
https://www.bloomberg.com/news/articles/2018-05-09/bunkers-for-the-wealthy-are-said-to-hoard-10-billion-of-bitcoin
======
simias
>the global currency of the future, that they need to buy some, and that he’s
the man to safeguard it.

Looks like in the future people hoard currency instead of spending and
investing it then. That ought to be interesting.

It also demonstrates the costs associated with non-reversible transactions,
these vaults aren't storing gold ingots or priceless artifacts, just private
keys. Banks around the world don't need to worry too much about this (well,
within reason) because if somebody manages to break into their digital vault
not everything is lost and they can mitigate the damages retroactively.

With bitcoin "if you don't hold the keys, you don't own the coins" but if you
do hold the keys you better be absolutely paranoid with them because there's
no plan B if they get compromised or destroyed. For this reason I think that
even if cryptocurrencies manage to become mainstream many people (including
myself) would rather let a bank manage and insure their wallet than manage it
themselves. Too stressful otherwise.

~~~
Cthulhu_
That's because - and everyone but the uninformed or idealists know this - it's
an investment product. It's simply not suitable as a currency, because one,
inflation / instability, and two, it can only do what, a dozen transactions a
second, if that? That's not nearly enough to become a viable currency.

~~~
mkirklions
Speak for yourself. I use bitcoin all the time for payments.

Peer to peer using coinbase(email) for free and instant to friends.

Shift card for free and instant at merchants.

Bitcoin is beyond blockchain, companies have built products to trade BTC
instantly, free, using the infrastructure already existing. The transaction
time 'problem' doesnt really exist if you are into crypto, you know how to use
it.

And I dont trust USD like I trust BTC. Historically Fiat currencies are awful.

~~~
spookthesunset
> Bitcoin is beyond blockchain, companies have built products to trade BTC
> instantly, free, using the infrastructure already existing

If bitcoin is "beyond blockchain", than what is it? Just a table of
transactions in a Real Database™? If yes, whats the point?

You've just layered a very bank-sounding, very-centralized construct on top of
your space-age "trustless" decentralized blockchain. How is it at all
revolutionary since you've basically gone and re-invented a much shitter
version of the credit card and traditional (evil) fiat banking.

> And I dont trust USD like I trust BTC. Historically Fiat currencies are
> awful.

I feel like bitcoin people live in some kind of alternate reality that I
simply don't understand. Is it the fact that they have so much invested in the
concept that they lose the ability to think clearly? Is it a cult? A religion?

I'm not sure, but it sure is an interesting phenomenon.

~~~
mkirklions
>I feel like bitcoin people live in some kind of alternate reality that I
simply don't understand.

I can tell. You seem to think Bitcoin is another inflationary currency.

The excitement is that, Donald Trump doesnt have control over Bitcoin. China
doesnt have control over bitcoin. No government does. People with computers
have control over it. There are 21,000,000 Bitcoin ever ever ever. No amount
of awful government can change that.

>How is it at all revolutionary since you've basically gone and re-invented a
much shitter version of the credit card and traditional (evil) fiat banking.

Like I said, Bitcoin is rare and digital. I think you are complaining about
payment processing companies. I have had an excellent experience using these
companies with no fees on instant transactions.

~~~
spookthesunset
> There are 21,000,000 Bitcoin ever ever ever.

Provably false. Bitcoin has been forked into multiple chains numerous time,
creating many more then 21 million tokens. Given that there is no trademark on
the term "Bitcoin", some of these forks can rightfully claim themselves to be
The True Bitcoin.

In addition, there are thousands of other non-forked blockchains that are
nearly identical to bitcoin, save for a few minor configuration changes.

> Bitcoin is rare and digital.

Absolutely false. Bitcoin is digital and infinitely creditable. This has been
proven over and over again.

~~~
hisabness
i think you're arguing semantics. if most people dont view the forked chain as
valid and prefer the original, then a new bitcoin isn't created per se.

~~~
UncleMeat
That's why BTC's value went down when BCH forked, right? Even a moderately
successful fork will hurt BTC's value.

~~~
ric2b
It actually went up, somehow.

------
al2o3cr

        “You couldn’t pay me to keep it with a bank.”
    

Because if there's one thing banks are known for, it's running off with client
assets suddenly and without warning.

Oh wait, that's cryptocurrency startups...

~~~
epanchin
Two things they are known for;

Not allowing very large balances to be withdrawn at once.

Complying with asset freeze orders.

~~~
Cthulhu_
And you think this bank (re: the article) falls outside of those? You won't be
able to get your btc out quickly in this one either. Same with online
exchanges for that matter.

They also have much lower transaction fees.

~~~
coryfklein
Exchanging directly for cash at or above market rates is definitely practical
with LocalBitcoins. There are a large number of brokers there that do it
professionally and value their reputation on the platform much higher than
they value the potential for ripping you off.

Of course, if you need to liquidate $1B in Bitcoin, that's going to take time,
but you can still do it much faster than you could get it out of a Cypress
bank in 2014.

~~~
st1ck
AFAIK those who had more than €100k in deposits just plainly lost a portion of
their money:

[https://www.reuters.com/article/cyprus-
bankofcyprus/cyprus-c...](https://www.reuters.com/article/cyprus-
bankofcyprus/cyprus-central-bank-announces-47-5-percent-haircut-on-large-bank-
of-cyprus-deposits-idUSL6N0G033120130730)

------
pavlov
According to its proponents, Bitcoin is digital gold. (Interestingly it’s not
an “electronic currency” anymore even though that was the original title of
the 2008 whitepaper. I suppose Lightning Network or something is supposed to
fix that with new transaction layers backed by the Bitcoin gold.)

One aspect of gold’s historical value is that it’s traditionally recognized
even in societies in collapse. I’ve never understood how Bitcoin is supposed
to hold its value in such an event — something on the scale of nuclear war, or
Germany in 1945.

After an EMP wipes out data centers and cell phone towers, you can probably
still bribe people with Krugerrands. Who’s going to accept Bitcoin transfers
when the infrastructure is either gone or under military control?

Or is the idea that Bitcoin will be valuable again when the wealthy finally
crawl out of their New Zealand bunkers and reestablish the financial system?

~~~
21
> After an EMP wipes out data centers and cell phone towers

If such a thing happens on a large scale there will be hundred of millions of
deaths. All major cities will simply collapse.

See recent articles how London can only survive for 4 days without
electricity, after that there will be no food.

The modern society is incredibly fragile. Everything is just in time, there
are no stocks or buffers. Bitcoins will be the least of your worries in such
an event. Your Krugerrands will also not be of much value. Nobody will be
stupid to give you food or gas for a piece of metal.

~~~
013a
I really think this opinion is short-sighted. And it comes from a less extreme
version of the same place that 9/11 deniers operate from; normal humans don't
want to naturally think about loss of control and what that loss of control
would look like. So its easier to just say "if this happens we're all fucked,
don't even try"

There is practically no evidence in history where gold had fungible value then
became worthless. Nothing else matters; everything else is conjecture,
opinion, and extrapolation.

Yes, we live in a very fragile society. Yes, if complete collapse happened,
there would be a period of extreme chaos when millions, hundreds of millions,
die.

But the chaos would stabilize, barring any extenuating factors like a T-Virus.
And in that world, maybe US Dollars would still hold some value. History says
Gold probably will. Bitcoin though? Bitcoin requires a global network of
miners. It would require having access to the _original blockchain_ that gives
your wallet value. In the best likelihood, the currency would splinter into
every small network that can still run miners. And when energy is so expensive
that you need all of it to power your lights, vehicles, and medical equipment,
why would anyone spend it on an expensive mining rig, even _if_ all the
complex computer equipment necessary to make it run were widely available?

And then a guy walks into town with a bag full of gold. Suddenly Bitcoin isn't
looking all that valuable as a currency. I'll sell my extra food to the guy
with the gold, because the guy with antibiotics down the street would also
sell to the guy with the gold, and the guy in the town over with car parts
would also sell to the guy with the gold. That's what makes currency work;
people, not software.

~~~
21
That guy with a bag full of gold will most likely not be the one who had that
bag of gold when chaos erupted, that was my point.

Those who survive the chaos will be the ones strong enough and ruthless enough
to organize themselves into powerful gangs. The nerd with a bag of gold will
most likely be killed and it's gold stolen.

Being a prepper with an underground bunker will also not be of much value, you
will just be seiged out.

If you are rich, what you'll need is a small private army to protect you, a
small working force to feed you and the army, and the political skills to be
able to enter into the right alliance after that.

------
kajumix
The word 'hoarding' demonizes 'saving,' which in most Keynesian economies is
considered leakage. It's really a question of values. Inflationary currencies
encourage consumption; deflationary ones encourage savings. High consumption
does increase demand, and apparently a faster growth in the economy. One could
argue that this almost forced consumption for the sake of faster economic
growth is what causes malinvestment and the associated boom-and-bust cycles.

One could be hesitant about spending away their Bitcoin to buy a shiny new
bigger TV, while they'd happily part with USD for the same expense. Former,
I'd say, has a more natural alignment with our incentives to spend
thoughtfully.

Also, I am not sure if everyone shares the value of eating the planet at a
faster rate for employment and GDP numbers.

~~~
empath75
> Inflationary currencies encourage consumption

You mean "investment"

> deflationary ones encourage savings

I'm not sure why encouraging people to bury their wealth in the ground instead
of doing something useful with it is something we want to be doing.

~~~
loco5niner
> I'm not sure why encouraging people to bury their wealth in the ground
> instead of doing something useful with it is something we want to be doing.

Savings is not "burying their wealth in the ground", it's building a safety
net for the future. At least for everyday people. Most people would be better
off doing that than blowing it on big screen tv's, boats, and cigarettes. If
more people did that, society would be better off too.

------
apo
If you want to understand just how difficult managing cryptographic material
is for the technically illiterate, look no further than Xapo.

It's not "Bitcoin" that Xapo stores, but private keys. In underground bunkers.
This no doubt gives some people a warm fuzzy.

But Bitcoin's history is littered with the wreckage of companies that took it
on themselves to store private keys on behalf of others.

I don't know when Xapo will fail, but if history is any guide it's just a
matter of time. The weakest link in their system is the people involved.

Consider this tortured statement:

 _If Xapo’s deep cold storage vaults were hacked, Xapo would cover the loss
from its own reserve but the hack could be bigger than the reserve which would
cause a net loss to our customers._

[https://blog.xapo.com/what-would-happen-if-xapo-got-
hacked/](https://blog.xapo.com/what-would-happen-if-xapo-got-hacked/)

In other words, a Xapo depositor would eat the loss in the event of a
successful attack on the cold storage system.

The funny thing about all of this is that private key management isn't
difficult when you know how. Given the vast sums of money being stored, you
might think that certain big fish would want to take the time to do it right.

~~~
sillysaurus3
_In other words, a Xapo depositor would eat the loss in the event of a
successful attack on the cold storage system._

The same is true of Coinbase. Somehow they've been fine.

------
vthallam
It makes sense that Goldman Sachs and Newyork Stock Exchange are working on
Bitcoin trading allowing wealthy clients to own Bitcoin.

At this point it's definitely mainstream and if enough of the billionaires own
it, they can definitely manipulate the price. Not sure how would Governments
control this

------
chiefalchemist
Bunkers? Like prepper bunkers? To survive what? If things go __that__
sideways, a hoard of crypto-currency will be the least of their worries.

Apparently, even the financially wealthy can be common sense poor.

~~~
Kiro
Alternatively, if things really go that sideways bitcoin will be the only
valuable currency in the world.

~~~
oflannabhra
In such a scenario, bitcoin will have no value. Localized disasters occur more
frequently than one would expect, and in such disasters, a pure barter economy
exists.

During the Bosnian War, things that became highly valuable were: bullets,
liquor, antibiotics, lighters, and of course food [0]. Bitcoin, or any other
currency, was the last thing on anyone’s mind.

[0] - [http://www.shtfplan.com/emergency-
preparedness/a-survival-q-...](http://www.shtfplan.com/emergency-
preparedness/a-survival-q-a-living-through-shtf-in-the-middle-of-a-war-
zone_10252011)

~~~
oflannabhra
I'd also make the comment that the parent was suggesting a _world-wide_
scenario. If such a scenario were localized, Bitcoin would make a lot of
sense, assuming migration were a possibility (that is not always the case, as
in the Bosnian War). An example of this would be the current situation in
Venezuela.

------
thisisit
I am sure someone is going to talk about banks and how they steal money so I
will leave it here for anyone who wants to learn more:

[https://www.forbes.com/sites/francescoppola/2018/04/21/bitco...](https://www.forbes.com/sites/francescoppola/2018/04/21/bitcoin-
banks-and-a-whole-lot-of-fud/#55e2cc1c21f1)

------
jsutton
Key Management Systems will be an _extremely_ lucrative business if anyone can
come along and get it right. Coinbase could be a leading candidate to operate
one, but the opportunity is there for a small player with top tier security
talent.

------
harlanji
I heard an interesting analysis of long term crypros, by Jeff Berwick IIRC,
that BTC will become the holding coin and transactions will happen on alts. My
intuition agrees, tho I hold no coins so am impartial. He is sharp generally
and claims to nail predictions, have not verified, so I lean toward agreeing
but would obv research before I buy into any strategy. Another video I saw
examined the amount of BTC in terms of some unit of energy relative to current
global usage. I don’t wish I bought some in 2010/11 but I’d sure be sitting
pretty if I had less regard for the polar bears!

------
cletus
In case of what? If something so major happens that the US dollar, the Euro,
the British pound and other reserve currencies collapse or the financial
system breaks down completely, what exactly is going to keep the Internet
running such that the blockchain consensus will even be there?

It's a bit like there's really no point (IMHO) preparing for a massive nuclear
war by stockpiling food, water and guns and having a generator and a bomb
shelter because if we have a nuclear war we're all kind of fucked anyway, so
what's the point?

------
erdojo
I would argue that Bitcoin in this case isn't an investment or speculation.
It's insurance.

These wacky boys think their Bitcoin will save them someday. Whether they
foresee a societal meltdown or government breaking down their door and seizing
assets, they're living in fear. This wacky company is has found the perfect
message and the perfect product for the perfect market.

------
clarkmoody
Inflationists / consumptionists have been demonizing savers and sound money
since the 1700s, if not earlier. They enjoy the artificial boom induced
through inflation of the money supply and then blame gold or speculation or
"animal spirits" for the bust. They think that if we could only got back to
the consumption levels of the boom, then we'd be "back on track." This never
works, and the calls for consumption are usually special pleading by bank-
connected interests that stand to benefit from monetary inflation.

We will see the pattern continue with Bitcoin, the most sound money the world
has ever known (no matter how high the price goes, you cannot increase supply
beyond the scheduled issuance). This time _is_ different, however. The
consumer can (and should) control her own private keys, which means not
trusting a bank, which historically will inflate the money supply to its own
benefit. Forced confiscation of privately-held Bitcoin will be much more
expensive than previous confiscations of gold already held in vaults.

Unfortunately, those wealthy savers with their money in the vaults mentioned
in the article will have their Bitcoin confiscated when things get bad enough.
Too many in the space have already learned the hard way what happens when you
trust your coins to a centralized institution.

~~~
empath75
> Inflationists / consumptionists have been demonizing savers and sound money
> since the 1700s, if not earlier.

And as we all know, it's been one long, slow economic collapse since the 17th
century.

~~~
clarkmoody
The long-term trend is caused by gains in productivity brought about by saving
and investment with private property protections.

The boom-bust cycle is brought about by inflationary banking.

------
xchaotic
Its not $10B worth. If you tried to liquidate, convert into another currency
or asset etc there wouldn't be enough buyers at $9500, $1 would be much more
likely towards the end of selling...

~~~
xtracto
I don't think it would go all the way down to $1. I made a simple analysis of
BitStamp's order book
([https://www.bitstamp.net/market/order_book/](https://www.bitstamp.net/market/order_book/)
) considering all the bids and, in total, only in that market you have $22.5
millions available in bids going from $9275 to $7429 for a weighted average of
$8462 in price. This for a portfolio of BTC that at the current market price
($9275) would be $24.5 millions. This means that the slippage will take ~9% of
the price

It is safe to assume that CoinBase has a larger order book, so I think that
the slippage could go down to 50% if you wanted to sell $10B worth of BTC, so
it would be more like $5B. Sure, that is if you want to sell it in one go, but
usually you make a stop order or a limit order to protect you.

------
georgeecollins
There is this myth that wealthy people are more savvy investors than ordinary
folk. Sometimes they are but often not. They get scammed the most because that
is where the money is.

------
hnaccy
Why wouldn't they just store it in a Swiss bank box or something?

Can the wealthy not just use their art/gems/gold storage choice. Do hardware
wallets need power?

------
a-dub
This is just more evidence that my theory on why Bitcoin was developed, may
actually hold water.

It was never about the GFC, failing banks or some crazy libertarian dream. It
was all because someone was upset that the "million dollar bank transfer codes
(or the two keys geographically separated that have to be turned at the same
time, or the special secret crypto laptop in the zero halliburton that can
transfer billions instantly and untracably)" trope from all those crime films
was complete bullshit, and that in reality most money is protected by
horrifyingly thick layers of mediocre bureaucracy and somebody wanted to be
the mahatma gandhi of making those sorts of situations actually plausible in
the real world.

------
tomglynch
Why does he hold it in 5 continents? In case 4 get wiped out? Surely, all it
is is an encrypted private key they are storing.

------
mrnobody_67
~10% of that is also Wences own money. Not sure why he got left off the crypto
rich list.

------
devit
Probably not the best idea to give Bitcoin to someone to keep in their vault.

------
DEFCON28
I wouldn’t expect the poor to hoard $10B

------
pbreit
So...not a lot? It’s a surprisingly small number. Tiny fraction of their
wealth and of aggregate crypto market cap.

------
hogu
if everything goes to shit why wouldn't xapo just steal all the btc?

------
ct0
$10B at what point in time?

~~~
emodendroket
They're storing $10b... wait, sorry, $20b... sorry, no, it's $5b now.

------
anentropic
great, I wish they'd buy more of it

------
mbrumlow
Oh man, "The Wealthy" are at it again...

------
unit91
This kind of debate by selective vocabulary is frustrating.

If a poor or middle class person sits on the cash he has, he's "saving". If a
wealthy person sits on the cash he has, he's "hoarding".

Regardless of the topic at hand, let's be consistent enough in our terms to
think and discuss the issues fairly and clearly without all the pejorative
terms. If we have to resort to name-calling, we might not have a very good
point.

~~~
dota_fanatic
A person has 250 units of food sitting in a room, earns them at 2 units per
day, and can consume them at 1 unit per day. They have saved 250 units such
that if they stopped earning, they'll be alright.

Another person has 2,500,000,000 units of food sitting in a room, earns them
at 200,000 units per day, and can consume them at 100 units per day (not as
filling but tastier let's say). They are... also only saving? C'mon.

~~~
unit91
The problem with this line of thinking is it assumes a specific purpose, then
name-calls based on that premise.

Maybe consumption isn't the goal and you're unaware of it. If I have as much
food as a grocery store, I'm a hoarder because consumption is my goal. The
grocery store isn't hoarding (or even saving) food because consumption isn't
the goal. Retail sales are the goal.

Again, I'm not here to fight about economics. That wasn't my point. My point
was ridicule isn't an argument. Calling someone a hoarder may make you feel
good, but it isn't an argument.

~~~
dota_fanatic
Degree matters, it often makes all the difference; as such, we have different
adjectives to describe those different degrees.

In my hypothetical, while technically true that both are "saving", it is more
descriptive to use "hoarding" for the latter case, both in an objective sense
to describe the degree and in a subjective sense to describe how that degree
of storage _should_ be evaluated.

Their goal is to save obscene amounts of wealth that will never ever be used,
could never ever be used by a single person in a natural lifetime, "I've saved
so much WAOW!" Who cares. Wealth is gained on the shoulders of giants, all the
people and technology that came before us. Maybe it _should_ be harder, much
harder for people to save levels of money that most everyone would describe as
hoarding.

The wealthy saving/hoarding so much money, having so much power relative to
the masses is leading to super great outcomes?

------
Sean-P
At this point, it would stick it to the man more to abandon bitcoin than to
continue pursuing its naive ideals.

------
gcb0
so btc was part of this crazy fake news narrative all along or is this just
being made up on the fly and this is your regular click bait churn that is the
new norm in journalism?

the writing on this has all the telltales of a unresearched fakenews/paid
advert, e.g.: "Hackers have also proven adept at setting traps on computers to
access cold-storage devices the moment they’re online. More traditional
criminals have committed home invasions and kidnappings. Some Bitcoin tycoons
have resorted to hiding their identities, fortifying their homes and studying
self-defense." ...and that's not a crazy person being interviewed quote, this
is the author saying.

~~~
jabgrabdthrow
Those are all true? I mean sure "some X" is a great way to say almost nothing
about X, but the literal statement is true

~~~
Clubber
Some say the Earth is flat.

