What if 700K+ coins have just been destroyed? BTC price to the moon?

[btc4ever]

So let's suppose the theory that MtGox has lost access to its cold wallet reserves is the correct one.

Read all about it here:
http://letstalkbitcoin.com/somethings-not-right-at-gox/

Now let's further suppose that they are never able to regain access to that storage, and publically announce as much, as well as the public watch addresses, so we can verify those funds never get spent.

I'm not sure exactly how many BTC are in existence now, but let's say it is 12 million.   700k is nearly 6% of all coins ever mined then.

Poof!

That seems pretty bullish for the price of bitcoin to me, once we get past the initial shock stage.


comments?

[F-bernanke]

Ofcourse, that shrinks the total available coins by 6% (or more, who knows how many coins are lost or will never be for sale), thats a huge cut to the supply side, and if the demand stays the same, the price will soar.


But as far as I understand, these coins were stolen a long time ago, but we were under assumption that there were an additional 700K coins over at mt. gox, so the effect could be almost the same as if they were lost.

[seleme]

Of course it would be. 6% of all currently available coins and 3.5% of all that would ever be mined.

[theonewhowaskazu]

What if when a bitcoin is stolen from Gox, and then down the road is returned to Gox in order to be sold again, that bitcoin is counted as two towards the 700k+ that were lost?

Irrelevant. It has same effect on economy as if $1 deposit into bank, $1 lend out, $1 comes back in, and then $1 lend out again and Bank defaults. End effect is 2 people are losing $1 == more deflation.

What if those 700k lost is a figure derived from their internal ledger, and not an actual block chain number.

Again, irrelevant for same reason.

[TERA]

Why would the price change at all from where it's been trading at recently? The coins have been lost over years and the scarcity is already in place and taking effect on the market.

Also, if you think that btc's market cap should be X, so removing Y% of the supply should adjust the price to Z,  then the price difference should be no different than  7% - the amount of coins that were lost. Not to the moon.

[theonewhowaskazu]

Why would the price change at all from where it's been trading at recently? The coins have been lost over years and the scarcity is already in place and taking effect on the market.

So, say you deposit 5 BTC into Gox, and keep it there for 2 years. After the first year, Gox destroys the private key and doesn't tell anyone, the coins are STILL in your account, can STILL be traded, are STILL in the gox orderbook. Now, use your brain for this one, how in hell will the market know to put 'scarcity in place' until you actually TRY TO WITHDRAW the coins, or until gox actually tells you that those coins in your account are 'fake', or removes them from the orderbook? The answer is, the market WON'T. Since the market assumed that those coins were the same as every other coin, until Gox coins started trading at a discount to others, then for all practical intents and purposes those coins weren't destroyed at all, until the market started believing that they might be.

[theonewhowaskazu]

What if when a bitcoin is stolen from Gox, and then down the road is returned to Gox in order to be sold again, that bitcoin is counted as two towards the 700k+ that were lost?

Irrelevant. It has same effect on economy as if $1 deposit into bank, $1 lend out, $1 comes back in, and then $1 lend out again and Bank defaults. End effect is 2 people are losing $1 == more deflation.

What if those 700k lost is a figure derived from their internal ledger, and not an actual block chain number.

Again, irrelevant for same reason.

It's not irrelevant to the scope of this thread. The thread is talking about 700k coins being lost (forever inaccessible). If the 700k figure was derived by internal accounting and if internal accounting counted the same coin twice, the actual amount lost (forever inaccessible) could be much smaller.

The only part your ignoring here is that you're mixing and matching scenarios here.

The coins were either STOLEN; or they were DESTROYED.

If they were destroyed, then the "double-counting" problem could never occur because they couldn't ever be deposited into gox a second time because they were, well, destroyed.

If they were stolen, then the double-counting problem could occur, but would be irrelevant, because in either situation (whether whether a single coin was deposited and stolen 750k times or where 750 different coins were deposited and stolen) the amount Gox is owing is the same amount, 750k coins, and a grand total of 0 coins were actually destroyed. As such the effect on the markets in each case would be equivalent.

[F-bernanke]

Also, if you think that btc's market cap should be X, so removing Y% of the supply should adjust the price to Z,  then the price difference should be no different than  7% - the amount of coins that were lost. Not to the moon.

I think this is alot more complex, alot of coins are in cold storage for the long term.

In my eyes there's 3 kinds of pools deviding all 12 million coins.

1. Lost
2. Locked in cold storage for the long term
3. Liquid (for sale/trading on an exchange)

#3 is the smallest pool, (EDIT: ofcourse Lost is the smallest pool, my mistake, the point is that #2 is the biggest)

Those 700k coins were coins at gox which were quite liquid (#3), anybody who wants bitcoins cant buy from that 700k pool anymore now, so this person has to go to bitstamp for example, bidding on a much smaller pool of coins.

[seleme]

Why would the price change at all from where it's been trading at recently? The coins have been lost over years and the scarcity is already in place and taking effect on the market.

Also, if you think that btc's market cap should be X, so removing Y% of the supply should adjust the price to Z,  then the price difference should be no different than  7% - the amount of coins that were lost. Not to the moon.

It is relevant for future prices just as it was for prices so far. More price goes up more are people tempted to sell. If those 700k coins are lost forever nobody will be tempted to sell them at any price.

[Ibian]

I think the "lost coins" were "lost" during the recent goxing and that they were "lost" by being stolen by Karp & co. and sold on other exchanges which is what drove the price down. Dumb money and panic selling etc, but I just don't see that accounting for the full price drop.

[Sawadekub]

Also, if you think that btc's market cap should be X, so removing Y% of the supply should adjust the price to Z,  then the price difference should be no different than  7% - the amount of coins that were lost. Not to the moon.

I think this is alot more complex, alot of coins are in cold storage for the long term.

In my eyes there's 3 kinds of pools deviding all 12 million coins.

1. Lost
2. Locked in cold storage for the long term
3. Liquid (for sale/trading on an exchange)

Obviously #3 is the smallest pool,

Those 700k coins were coins at gox which were quite liquid (#3), anybody who wants bitcoins cant buy from that 700k pool anymore now, so this person has to go to bitstamp for example, bidding on a much smaller pool of coins.

stupid.. of course lost is the smallest pool do u have brains? imo LOL!

[F-bernanke]

stupid.. of course lost is the smallest pool do u have brains? imo LOL!

Oops, of course, my mistake. I edited it now.

[Wilhelm]

Maybe a lot of the coins of big whales on MtGox we're created through transaction malleability by sending multiple times to Gox and Gox kept upping their accounts.
This would mean that a lot of the 700KBTC could have been fake.... In theory this would mean they were never lost

Maybe the new investor is having a look at whom has faked coins.....

Anything is possible....

I don't have gox coins. I consider myself very lucky...