How Do You Solve A Problem Like Bitcoin?
International Business Times
Published Jun 27, 2014 10:52AM ET
Updated Jun 27, 2014 07:00PM ET
How Do You Solve A Problem Like Bitcoin?
By Kathleen Caulderwood - Last October, federal agents shut down Silk Road and seized its assets -- about $4 million worth of Bitcoin (BTC-eUSD), and a few months later hackers stole hundreds of thousands from the world’s biggest marketplace, many of which will likely never be recovered.
The price of the virtual currency has been in constant flux since it came to life in 2009, ranging from just a few pennies to more than a thousand dollars. High-profile heists and government shutdowns haven’t helped.
But bidders are lining up to participate in a government auction today, to get a piece of a possibly shrinking global supply.
Of the 850,000 bitcoins stolen back in February from Mt. Gox, Mark Karpelès, head of the now defunct exchange has only been able to recover about 200,000.
“As the company head, my mission was to protect customers and employees,”, said to The Wall Street Journal, from his apartment in Tokyo. “I’m deeply sorry. I’m frustrated with myself.”
Earlier this month, officials approved Mt. Gox’s application for bankruptcy protection of its U.S. assets, and Karpelès said he plans to auction off domain names like bitcoins.com to help pay off the debt and keep business running, but does’nt think any more missing coins will turn up.
But that’s not turning off firms who plan to participate in a 12-hour government auction Friday, in which U.S. authorities will try and sell nearly 30,000 bitcoins recovered during the Silk Road shutdown.
Potential bidders include investment firm SecondMarket, Bitcoin Investment Trust, Binary Financial and Pantera Capital, according to a list leaked earlier this month.
“It’s just one of those big plays that you have to be involved with if you’re a big player,” Binary Financial managing partner Harry Yeh said to Coindesk, adding that they may end up selling for up to 20 percent below market value.
Analysts disagree about what the action will do to prices.
“Selling bitcoin with its somewhat liquid market is not the same as auctioning off a 1998 Chevy with a couple of bullet holes in the driver’s door,” said Citigroup research analyst Steven Englander in a Wednesday note.
All bidders had to be vetted by authorities, prove their identities and that they had $200,000 in cash and not affiliated with Silk Road, according to The New York Times.
“The U.S. marshal specifically has never had to auction off this type of asset,” Wedbush Securities analyst Gil Luria said to the Times. “They’re figuring it out for the first time, and maybe that’s why the process hasn’t been completely transparent.
It’s the first time bitcoins have even been auctioned in this way, which is why only a fifth of the total government supply will be sold today, as a kind of test run. Participants will be able to bid on lots of 3,000.
Get The News You Want
Written By: International Business Times
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.