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Author Topic: Now we have 750,000 less bitcoins in circulation ?  (Read 3210 times)
zeroday
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March 01, 2014, 02:26:22 AM
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If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

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March 01, 2014, 02:29:40 AM
 #2

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?


What, Another one of those bear traps? Tongue
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March 01, 2014, 02:31:53 AM
 #3

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.
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March 01, 2014, 02:32:51 AM
 #4

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

Max phantom coins 750k

But yes, its possible. However I doubt its anywhere near significant.
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March 01, 2014, 02:33:51 AM
 #5

First of all, Mt. Gox says it is missing 850k bitcoin (1.75 M is just CNN licentia poetica). Most importantly, according to Mt. Gox leaked strategy documents these coins were stolen, so there is no reason to believe they will be out of circulation - to the contrary.

Nevertheless, post like this appear regularly last couple days  Huh
zeroday
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March 01, 2014, 02:38:33 AM
 #6

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.

I mean that coins were stolen long time ago and were probably already cashed out.
The point is that Gox traded virtual non-existing coins and now bitcoin market is notably contracted. There is much less coins for sale than it was expected a few weeks ago.


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March 01, 2014, 02:42:11 AM
 #7

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.

I mean that coins were stolen long time ago and were probably already cashed out.
The point is that Gox traded virtual non-existing coins and now bitcoin market is notably contracted. There is much less coins for sale than it was expected a few weeks ago.



Well, buy the same reasoning, $$$ assigned to buy these coins are out of circulation now - or if you believe in fake bitcoins theory, perhaps they were fake, too?
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March 01, 2014, 02:42:59 AM
 #8

Whatever was on gox is no longer part of the market. It's irrelevant. The important part is what gox customers will do now. Are they out? Will they buy in again? What about non-gox bitcoiners? It could take a while before we see the full effects.

There is no bubble.
zeroday
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March 01, 2014, 02:45:52 AM
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People paid real money for fake bitcoins. I suppose gox still has loads of fiat on their bank accounts. Isn't it?


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March 01, 2014, 02:50:34 AM
 #10

And they will never get them out without a several years long and very expensive lawsuit. Only big holders will bother with that.

There is no bubble.
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March 01, 2014, 03:05:05 AM
 #11

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.

I mean that coins were stolen long time ago and were probably already cashed out.
The point is that Gox traded virtual non-existing coins and now bitcoin market is notably contracted. There is much less coins for sale than it was expected a few weeks ago.


I completely agree with you, zeroday.  I don't think many people have wrapped their minds around the implications if this theory turns out to be true.  

It's funny because if a new found stash of 750,000 BTC was likely to be hitting the market, we'd have people saying that bitcoin was going to crash back to double digits.  If the opposite is true, and you have a sudden demand spike for 750,000 BTC (or even a quarter of that), it could really move the market too--in the upwards direction.  

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March 01, 2014, 05:02:05 AM
 #12

A few things I've been pondering:

1) The entirety of the "coins" were not liquid. In fact, a small fraction were. Take a look at Gox's order book. 39k to $1 billion. Yes, that's not the full story, but to suggest that 750k coins were available on the market to begin with is absurd.
2) Presumably a majority of fiat on Gox was intended to be invested in BTC (as opposed to being withdrawn as fiat). That's a very considerable sum of fiat lost specifically by those with the ability to drive price performance.
3) While the markets can easily be moved by whales, the average investor is necessary to push up price past a certain point. What kind of fallout could we see from the Gox closure, in terms of "fresh fiat"? What time frames are we all talking about here?
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March 01, 2014, 05:36:39 AM
 #13

A few things I've been pondering:

1) The entirety of the "coins" were not liquid. In fact, a small fraction were. Take a look at Gox's order book. 39k to $1 billion. Yes, that's not the full story, but to suggest that 750k coins were available on the market to begin with is absurd.
2) Presumably a majority of fiat on Gox was intended to be invested in BTC (as opposed to being withdrawn as fiat). That's a very considerable sum of fiat lost specifically by those with the ability to drive price performance.
3) While the markets can easily be moved by whales, the average investor is necessary to push up price past a certain point. What kind of fallout could we see from the Gox closure, in terms of "fresh fiat"? What time frames are we all talking about here?

I questioned the 750,000 BTC figure too.  It seems an order of magnitude greater than I imagined.  For this to be true, I must assume that a great deal of investors were using MtGox as a wallet.  MtGox had 1 million customers, right?  Stick 750mBTC in each account and you get to 750,000 BTC, so it's not inconceivable.  Perhaps the value in GoxBTC dwarfed the value in fiat because of the "wallet effect."

I think the average bitcoin speculator invests a small percentage of their portfolio in bitcoin, say 2%.  So Joe Speculator has his entire stash of 3 BTC at Gox ($2,000) and $98,000 in other financial investments.  MtGox goes bankrupt.  Joe loses 2% of his net worth, but 100% of his bitcoins.  If Joe still values bitcoin in the same way, and if he acts logically, he would immediately rebalance his portfolio  by converting 2% of his other investments into bitcoin (this would produce new demand).  

But probably Joe is mad for a while, cursing bitcoin, but knowing deep down that bitcoin was not to blame.  Bitcoin start to rally again and he decides to give it another shot.  Bashful this time, he invests 1% of his portfolio and moves the coins to cold storage.  

In conclusion, if MtGox lost 750,000 BTC along time ago, I think the net effect (after anger fades to acceptance) will be an increase in demand and a decrease in the effective bitcoin supply.  

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March 01, 2014, 05:46:50 AM
 #14

If Gox tells us truth,

Stop! I think I have found the flaw in this argument.

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March 01, 2014, 06:13:56 AM
 #15

If Gox tells us truth,

Stop! I think I have found the flaw in this argument.

lol

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March 01, 2014, 06:26:42 AM
 #16

If Gox tells us truth, it means that there were up to 1.75M of phantom non existing bitcoins circulating in active trade during recent years.
Now they are vanished and we only have real existing bitcoins on exchanges (I hope).

Guess what would happen to the price soon?

I think they will not put bitcoins soon they will wait and slowly put these stolen Bitcoins to market.

I mean that coins were stolen long time ago and were probably already cashed out.
The point is that Gox traded virtual non-existing coins and now bitcoin market is notably contracted. There is much less coins for sale than it was expected a few weeks ago.


I completely agree with you, zeroday.  I don't think many people have wrapped their minds around the implications if this theory turns out to be true.  

It's funny because if a new found stash of 750,000 BTC was likely to be hitting the market, we'd have people saying that bitcoin was going to crash back to double digits.  If the opposite is true, and you have a sudden demand spike for 750,000 BTC (or even a quarter of that), it could really move the market too--in the upwards direction.  

Exacty, I have been trying to explain this yesterday, but a lot of people just don't understand.

There were a total of 12 million BTC + 750.000 (gox) BTC in existence, so a total of close to 13 million.


Now the fake 750.000 coins are gone, and we are back to 12 million coins in existance, the total supply just shrunk by 6%.

Also a very important factor to consider is that those 750.000 coins were higly LIQUID, because they were at an exchange, ready to be traded/sold, not in cold storage to be kept for a very long time.

The supply of liquid coins is most important for price discovery.

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March 01, 2014, 06:51:20 AM
 #17

A few things I've been pondering:

1) The entirety of the "coins" were not liquid. In fact, a small fraction were. Take a look at Gox's order book. 39k to $1 billion. Yes, that's not the full story, but to suggest that 750k coins were available on the market to begin with is absurd.
2) Presumably a majority of fiat on Gox was intended to be invested in BTC (as opposed to being withdrawn as fiat). That's a very considerable sum of fiat lost specifically by those with the ability to drive price performance.
3) While the markets can easily be moved by whales, the average investor is necessary to push up price past a certain point. What kind of fallout could we see from the Gox closure, in terms of "fresh fiat"? What time frames are we all talking about here?

I questioned the 750,000 BTC figure too.  It seems an order of magnitude greater than I imagined.  For this to be true, I must assume that a great deal of investors were using MtGox as a wallet.  MtGox had 1 million customers, right?  Stick 750mBTC in each account and you get to 750,000 BTC, so it's not inconceivable.


They had 1kk customers, but only 120.000 accounts were funded. Source: Every news coverage today (so might be bogus number)
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March 01, 2014, 06:59:43 AM
 #18

750k is not inconceivable. What is inconceivable is that a significant portion of those "coins" were highly liquid. I agree that if the numbers are that high, it is largely in part due to the use of Gox as a web wallet. The fact that Gox was an exchange is not evidence in and of itself that all coins held there were readily available on the market. Just take a look at the order books -- it puts things in perspective.
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March 01, 2014, 07:39:45 AM
 #19

750k is not inconceivable. What is inconceivable is that a significant portion of those "coins" were highly liquid. I agree that if the numbers are that high, it is largely in part due to the use of Gox as a web wallet. The fact that Gox was an exchange is not evidence in and of itself that all coins held there were readily available on the market. Just take a look at the order books -- it puts things in perspective.

If only a smaller fraction of these coins were liquid (say, 100k), then the remaining 650k were for holding, presumably using Gox as a wallet.  

Now these holders are no longer holding.  So I would imagine that some of them would purchase new coins to replace the ones they thought they had.  If we imagine that even 20% would be replaced with new purchases, then this represents an additional demand for 130k coins.  

Do you agree?

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March 01, 2014, 08:17:30 AM
 #20

750k is not inconceivable. What is inconceivable is that a significant portion of those "coins" were highly liquid. I agree that if the numbers are that high, it is largely in part due to the use of Gox as a web wallet. The fact that Gox was an exchange is not evidence in and of itself that all coins held there were readily available on the market. Just take a look at the order books -- it puts things in perspective.

If only a smaller fraction of these coins were liquid (say, 100k), then the remaining 650k were for holding, presumably using Gox as a wallet.  


I still can't imagine that 6% of all coins have been held at gox, at a time when everybody should have known for month what kind of company they are dealing with.
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