Thanks for the link.

I was referring to 'net profit' (assumed $1m, after tax). If I'm not mistaken, they can charge the amount of stolen bitcoins as an expense and do the same with interest on the (hypothetical) $5m loan, effectively reducing taxable profit (to a loss) and don't pay any tax (for a few years) which could speed up the loan repayment.

Wasn't aware of that $10m from Pantera. That's indeed a lot. And if that's true, they're likely to have a lot of that left (depends on the terms of the funding), so they don't need any extra funds to cover the hacked wallet.

Also, if Pantera invested such capital, you can be sure they won't let BitStamp die.


If BitStamp goes under, the $10m will be lost forever, so it makes perfect sense for Pantera to further capitalise the business (if that's needed) and have realistic chance for ROI, even if it takes a long time.

Edit. The loans are not repaid from net profit, so it can take less than 5 years to get those $5m back.

Yup. It's relatively new, they've added it around 2 weeks ago.

No one knows (apart from BitStamp) what % of the cold wallet are their own funds. My guess is it's a tiny %. They do have to convert to fiat pretty often, they got bills, salaries, expenses to be paid (in fiat) on monthly basis.

Also, they cannot just take the revenue (collected fees) and cover for the stolen deposits. They also need to cover their operating expenses with it.

I don't know whether is bad or very bad for BitStamp, but I think in either way it's a problem they can manage with (if they have experienced,competent people on-board). Don't think we'll see Gox 2.0 here.

If both cold and hot wallets are clients deposits, then yes, they've lost some small % of everyone's deposits. If they have sufficient reserves/source of funding to cover such loss, then it's no problem for the customers, BitStamp owners would be the only ones who got hit. But if they can't afford it - that's when the shit goes down.

It's fair to assume that BitStamp is generating ~ $1m profit per year (after tax, salaries etc). The last thing you want is to close such business.

If any of the shareholder's (say Pantera Venture Fund LP) can afford to provide such loan - they'd likely do so. They should get it back (+ interest) in 4-5 years.

Even if later something goes wrong and BitStamp becomes insolvent, they won't lose the entire $5m, as they'd get paid proportionally along with other creditors from the remaining funds. So it's not as risky as it sounds.

Do you honestly need an explanation why stashing USD under your mattress is financially not a good idea?


I'm not pushing for anything. I see some pros and cons with both PoS and PoW, while you seem to stuck with logic "PoW sucks because of mining costs, therefore PoS must be perfect".

Lets take this scenario:

1) You have X PoW bitcoins, which is x% of total existing bitcoins. Since new coins are issued every day, if you want to maintain your x% you have to be active. You'd have to buy/mine/invest/scam/steal/gamble/create new BTC business/lend out etc.

2) You have X PoS bitcoins. To maintain your X% of total BTC, you have to do nothing, you just need to stake up all your coins in the wallet and don't use them.

Which system promotes activity and which one discourages it?

You don't have a clue how the Limited companies work, do you?

Withdrawing money/bitcoins to their personal accounts would be like robbing the bank and showing your face + your id document to the security camera.

The easiest way is not to close the biz, but to seek an emergency funding, preferably a loan from shareholders.

Doesn't matter. What's relevant is the amount lost and how are they going to repay that.

Both cold and hot wallets are customers' deposit, BitStamp just holds those on their behalf and cannot dispose such funds at free will.

It doesn't matter whether there's gazillion bitcoins safe in cold storage, these are all customers' deposits. If they've lost 19,000 BTC, they have to compensate for that. So the only question is whether they can afford it.

Don't think so. Even if they indeed lost 19000 BTC, the situation is manageable, if they have right people on-board.

But I don't think they have ~ $5m reserves to do that. Their latest financial statements (for 2013) showed P&L reserves of ~ $0.8m.

They'd likely need a loan for that, maybe from their shareholder Pantera Investments?

If they indeed lost ~ 19,000 BTC, they're seriously fucked. There's no way they have enough own reserves to cover it. And I doubt they have insurance covering such event.

It's a separate coin, definitely not Ether.

Someone wasn't aware of what's going on and send to the old address maybe?

Did you basically repeat what I said to use as an argument against what I said?

Yes.


It's relevant to the "USD has 1% interest on savings accounts" argument you used.

Again:

If we switch bitcoin to pure PoS, without changing issuance model, what would prevent the majority from hoarding? It's a simple question.

Sunshine, let's keep some manners here, OK?

1% interest is less than inflation, does it pay to hold?

Ever heard of negative interest rates? Why did they do that?

http://www.bloombergview.com/quicktake/negative-interest-rates

Are you now saying that deflation is good for economy?

Besides, USD is a legal tender, so people will be spending it even if they don't want to. You can't really compare it to un-established crypto-currency.

I agree it's too early to make a judgement based on comparing any 2 coins. But you don't need empirical data to discuss differences between PoS/PoW designs. You only need common sense for that.

NXT is probably not the best example in this case. Since it's non-inflationary, the only income you get is your share in tx fees (afaik), which atm are very insignificant. Therefore from the average holder's point of view - it's probably better to use it and keep it alive.

Now what would happen if we switch BTC to PoS (with the same issuance model)? You think it would increase activity? You have @micky123 above saying he would stop investing. I know I wouldn't be keen on buying a coffee with my PoS coins and wouldn't touch my stash to tip or donate.

If your coins generate you more coins - you don't want to spend them. Simple.

Right now you have bitcoin hoarders, who (despite all the logic) wouldn't use their coins at all. If they're further incentivised to hoard - why would they change their approach?

But that's one of the problems with PoS, it promotes hoarding and kills activity. Less activity leads to less adoption which leads to price decline.

Why non-innovative, ever-inflationary DOGE has similar market cap to innovative and non-inflationary NXT? Because people use DOGE, they tip, they gamble, they spend - that makes it alive.

ps I voted Yes, as I'd like the BTC devs to be more open-minded about implementing different protocol in the future, but I'm not convinced that PoS or PoW/PoS hybrid is the right solution.