The Hottest Commodity: Virgin Bitcoin

[wattcrypto]

Has anyone ever heard of or come across virgin bitcoin before? This article is super fascinating especially when there are people willing to pay top dollar for 'clean' bitcoins in countries that fear a crackdown on compliance

https://cointelegraph.com/news/virgin-bitcoin-most-in-demand-crypto-that-is-regulated-differently

[gentlemand]

I'd never really considered that virgin BTC would be as tempting to dodgy people as it would be for those looking for legitimacy. It makes sense.

If people want to over pay then let them. Whatever they did pay is lost the moment they move it. I guess that virginness must be worth a lot to them. Coins can only be virgin once and the amount of new ones will continue to dwindle. This is a contracting area with shelf life of only a decade or two more before so few are mined it'll be impossible to do much.

[figmentofmyass]

If people want to over pay then let them. Whatever they did pay is lost the moment they move it.

the investors paying a premium for newly mined coins are obviously in it for the long haul---years, if not decades. they're hedging against pretty paranoid legal fears that would take years to come to fruition, like regulators freezing bitcoins because of taint regardless of whether and where they were provably, legitimately bought.

Coins can only be virgin once and the amount of new ones will continue to dwindle. This is a contracting area with shelf life of only a decade or two more before so few are mined it'll be impossible to do much.

there's only ever one early adoption phase. i guess some investors are happy to pay a premium (what is it anyway, 5-10%?) for a shot at huge exponential gains where the returns are unimpeachable. it seems overkill to me, but if their paranoia turns out correct it'll have been worth it for sure.

[gentlemand]

but if their paranoia turns out correct it'll have been worth it for sure.

If they're buying with the expectation of coins being tarnished with some dodginess at some point becoming unusable then they'll also find their clean coins are worthless as a market that consists only of squeaky cleanness will be so unwieldy it won't be able to function.

I don't have a huge issue with coins that come direct from theft or funding something nefarious being captured or whatever. If They choose to move it a few steps down the chain then this whole thing becomes untenable. You'd think the people paying those premiums would figure it out too but if they want to spunk some extra money then go for it.

[figmentofmyass]

but if their paranoia turns out correct it'll have been worth it for sure.

If they're buying with the expectation of coins being tarnished with some dodginess at some point becoming unusable then they'll also find their clean coins are worthless as a market that consists only of squeaky cleanness will be so unwieldy it won't be able to function.

I don't have a huge issue with coins that come direct from theft or funding something nefarious being captured or whatever. If They choose to move it a few steps down the chain then this whole thing becomes untenable. You'd think the people paying those premiums would figure it out too but if they want to spunk some extra money then go for it.

maybe it isn't so black and white. there are lots of possibilities for bitcoin between "completely fungible" and "completely infungible".

i think these investors are just hedging against the worst possible outcome for their own bitcoins. they don't want to be blindsided one day when they go to cash out millions of dollars, only to find out their OTC buy came from the world's largest darknet heroin smuggler.

i don't think they are making an assumption that every bitcoin in existence will be virtually unspendable. they're just buying an insurance policy against the unknown.

[Schirer]

Very interesting article, surprisingly.  using

But not sure of the relevance, in most cases the buyer will be able to send those cryptos to non regulated exchange or exchange them using other means.
This becomes more relevant if some one wants to hold them for a very long time. Than again , I dont understand why it is better than the same interested person going to regulated exchange, buying some btc and sending them to wallet...

[jdarren]

From the article it sounds like it has to do more with people in China most likely due to their unique regulations and government's involvement

[veleten]

From the article it sounds like it has to do more with people in China most likely due to their unique regulations and government's involvement

people who are investing into bitcoin and are very paranoid ( or smart , you never know ) are not only born and live in China 
protecting yourself from any potential problems in the future , when agencies like Chainalysis could tell exactly where did the coins come from and what did you eat for breakfast
if people want to overpay for the virgin coins , it is  up to them , I think it is not worth the extra price
but I'm not an investor and do not really care about the source of the coins

[DaveF]

I started a thread a few months back about the funding of loaded coins. Collectable and just for trading.
For some people it matters for some it does not.
https://bitcointalk.org/index.php?topic=5146208

The possibility for "tainted" coins was also discussed here:
https://bitcointalk.org/index.php?topic=5172361

With me again bringing up the issue of if you are not sure where they came from, a regulated exchange with KYC can be an issue if some BTC you are trading came from someplace that runs against their rules.

-Dave

[legendster]

Has anyone ever heard of or come across virgin bitcoin before? This article is super fascinating especially when there are people willing to pay top dollar for 'clean' bitcoins in countries that fear a crackdown on compliance

https://cointelegraph.com/news/virgin-bitcoin-most-in-demand-crypto-that-is-regulated-differently

The term is somewhat seeing a resurgence in use. I remember virgin btc being quite commonly referred to back in 2012 -13. Back then people were still mining with FPGA cards and BFL had just completed their crowdfunding.

I think it was one of their promo videos where I first heard this term. I wish I had the link so I could share it with you.


And yes, clean BTC is always best especially if you are an institutional investor or a corporation. That way it is less hassle when it comes to filing taxes and chain analysis is also redundant.

[akeegan]

I started a thread a few months back about the funding of loaded coins. Collectable and just for trading.
For some people it matters for some it does not.
https://bitcointalk.org/index.php?topic=5146208

The possibility for "tainted" coins was also discussed here:
https://bitcointalk.org/index.php?topic=5172361

With me again bringing up the issue of if you are not sure where they came from, a regulated exchange with KYC can be an issue if some BTC you are trading came from someplace that runs against their rules.

-Dave

Great valuable information, I appreciate it. I might be a bit of a noob but can anyone see the tx information on a btc? Or do you need special tracing technology like that from ciphertrace to be able to see where it's been?

[legendster]

I started a thread a few months back about the funding of loaded coins. Collectable and just for trading.
For some people it matters for some it does not.
https://bitcointalk.org/index.php?topic=5146208

The possibility for "tainted" coins was also discussed here:
https://bitcointalk.org/index.php?topic=5172361

With me again bringing up the issue of if you are not sure where they came from, a regulated exchange with KYC can be an issue if some BTC you are trading came from someplace that runs against their rules.

-Dave

Great valuable information, I appreciate it. I might be a bit of a noob but can anyone see the tx information on a btc? Or do you need special tracing technology like that from ciphertrace to be able to see where it's been?

Not quite sure what you mean by tx information. But yes, the txid or the tx hash will reveal where your btc is coming from all the way to where it originated from. And to do this you don't need any special tool. A simple block explorer can do it. There are hundreds online these days.

And when you say tracing I don't assume you mean geo-tracing because that's not a thing with cryptos.

[malevolent]

Very interesting article, surprisingly.  using

But not sure of the relevance, in most cases the buyer will be able to send those cryptos to non regulated exchange or exchange them using other means.
This becomes more relevant if some one wants to hold them for a very long time. Than again , I dont understand why it is better than the same interested person going to regulated exchange, buying some btc and sending them to wallet...

Neither do I, tbh, especially since the coins they're buying might as well have been mined by North Koreans evading sanctions. I don't see why hedge funds which are mentioned in the article would want to pay a premium as high as 10%. Starting/joining a PPS pool would make more sense from a financial standpoint. It could also be Cointelegraph not doing their research before publishing another article...

[squatter]

Neither do I, tbh, especially since the coins they're buying might as well have been mined by North Koreans evading sanctions. I don't see why hedge funds which are mentioned in the article would want to pay a premium as high as 10%. Starting/joining a PPS pool would make more sense from a financial standpoint. It could also be Cointelegraph not doing their research before publishing another article...

It's not Cointelegraph. I've heard about this phenomenon for at least a few years. There are/were services like Mint that would procure virgin bitcoins for a premium.

Investing in a mining operation is risky, and mining has a time cost vs. buying OTC. They could end up losing more than 10% taking that route.

Paying that premium seems crazy to people like us of course, but I get why some investors would do it: They can afford to, and the 10% premium is nothing to them vs. the potential headache if they end up with questionably sourced bitcoins from the OTC market.

[malevolent]

It's not Cointelegraph. I've heard about this phenomenon for at least a few years. There are/were services like Mint that would procure virgin bitcoins for a premium.

Investing in a mining operation is risky, and mining has a time cost vs. buying OTC. They could end up losing more than 10% taking that route.

Paying that premium seems crazy to people like us of course, but I get why some investors would do it: They can afford to, and the 10% premium is nothing to them vs. the potential headache if they end up with questionably sourced bitcoins from the OTC market.

No, I meant about hedge funds and the like being willing to pay such high premiums. The idea of virgin bitcoins themselves is older than that article, but 2-3% is the maximum reasonable fee, 10% or more is what I'd expect criminals being willing to pay.

Starting a PPS mining pool paying 105% isn't risky and people will quickly line up to sign up even if the variance would be high initially. Mining contracts could be used to jump-start the pool and lower the variance before enough people join.

[squatter]

No, I meant about hedge funds and the like being willing to pay such high premiums. The idea of virgin bitcoins themselves is older than that article, but 2-3% is the maximum reasonable fee, 10% or more is what I'd expect criminals being willing to pay.

Is there any historical data on this stuff? Probably not. I guess 10% didn't seem that unreasonable to me.

The CEO of Babel Finance -- who apparently brokers OTC deals and works with pools like F2Pool -- claims that buyers are paying "as much as a 20 percent markup."

Starting a PPS mining pool paying 105% isn't risky and people will quickly line up to sign up even if the variance would be high initially. Mining contracts could be used to jump-start the pool and lower the variance before enough people join.

It's risky if you're trying to quickly procure lots of bitcoins. In percentage terms, you may be right, but these buyers (like all OTC buyers) are trying to buy big lots all at once.

[DaveF]

Starting a PPS mining pool paying 105% isn't risky and people will quickly line up to sign up even if the variance would be high initially. Mining contracts could be used to jump-start the pool and lower the variance before enough people join.

In theory, if you have BTC that may be "tainted" and want "virgin" BTC all you really would have to do is use either https://www.nicehash.com/ or https://www.miningrigrentals.com/ or a similar service and rent hash and mine to a p2pool node.

Yeah, it has not found a block in ages but that is because of the lack of hash. If you went nuts and maxed out nicehash you could get ~325 PH/s between US & EU nodes.

Silly and probably pointless, but it could be done.

-Dave

[akeegan]

I am intrigued by the idea of virgin BTC however I don't think it makes sense to pay extra for non tainted money. I would hope there would be an alternative to helping 'clean' or identify the ledger as separate from the owner.

Blockchain forensic companies are likely to be the ones who are going to take precedence on this topic.

[BitMaximum]

No, I meant about hedge funds and the like being willing to pay such high premiums. The idea of virgin bitcoins themselves is older than that article, but 2-3% is the maximum reasonable fee, 10% or more is what I'd expect criminals being willing to pay.

Is there any historical data on this stuff? Probably not. I guess 10% didn't seem that unreasonable to me.

The CEO of Babel Finance -- who apparently brokers OTC deals and works with pools like F2Pool -- claims that buyers are paying "as much as a 20 percent markup."

Starting a PPS mining pool paying 105% isn't risky and people will quickly line up to sign up even if the variance would be high initially. Mining contracts could be used to jump-start the pool and lower the variance before enough people join.

It's risky if you're trying to quickly procure lots of bitcoins. In percentage terms, you may be right, but these buyers (like all OTC buyers) are trying to buy big lots all at once.

People are ready to pay for the absence of risk. Virgin Bitcoins do not have any history including a bad history. Financial Action Task Force against money laundering continue to tighten regulation of the cryptocurrency, obliging all cryptocurrency exchanges to comply with AML and CFT procedures .

[magneto]

I am intrigued by the idea of virgin BTC however I don't think it makes sense to pay extra for non tainted money. I would hope there would be an alternative to helping 'clean' or identify the ledger as separate from the owner.

Blockchain forensic companies are likely to be the ones who are going to take precedence on this topic.

Of course there would be a premium, at least on the black market.

Transactions on the blockchain is really an open book, anyone theoretically with the sufficient forensic analysis tool can track where money came from precisely (but since BTC is pseudoanonymous and there is such a large transaction volume, with the use of mixers, it is very difficult to actually carry out).

These newly minted coins have no such trouble. While the intent of those who would want to purchase these coins would undoubtly be questionable, it makes sense that it attracts premiums.