2012-07-12 forbes.com - Kim Dotcom's Pretrial Legal Funds Would Be Safe With Bit

[World]

http://www.forbes.com/sites/jonmatonis/2012/07/12/kim-dotcoms-pretrial-legal-funds-would-be-safe-with-bitcoin/

However, there are two unique aspects of the bitcoin cryptocurrency for Kim Dotcom to consider — an online payment method for customers and a reliable storage facility for his company’s monetary assets.

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[proudhon]

This is all getting very interesting.

[ArticMine]

There is one small detail. The article mentions:

... The U.S. Department of Justice has already seized $67 million. ...

and the market cap of bitcoin is just under $70 million. For bitcoin to work in Kim Dotcom's case one needs a bitcoin market cap more in the range of say USD 70 billion and a corresponding price for 1 BTC of say USD 7200 at least.

[Spekulatius]

Still, bitcoin as an untraceble, uncloseable means of payment for his dodgy businesses is definately an option.

[Clipse]

There is one small detail. The article mentions:

... The U.S. Department of Justice has already seized $67 million. ...

and the market cap of bitcoin is just under $70 million. For bitcoin to work in Kim Dotcom's case one needs a bitcoin market cap more in the range of say USD 70 billion and a corresponding price for 1 BTC of say USD 7200 at least.

How do you come to these random figures?

A market cap of $67million can be converted unlimited times across this market cap if the BTC gets sold for USD and bought and sold and bought. As long buyers continue to buy he would be able to continue to convert to fiat which is obviously the goal for him after receiving BTC.

[FreeMoney]

There is one small detail. The article mentions:

... The U.S. Department of Justice has already seized $67 million. ...

and the market cap of bitcoin is just under $70 million. For bitcoin to work in Kim Dotcom's case one needs a bitcoin market cap more in the range of say USD 70 billion and a corresponding price for 1 BTC of say USD 7200 at least.

1000x is a ridiculously high requirement. I think 10x is plenty if the chance that you want to exchange rapidly to legacy money is low, which it would be for someone worried about having it all seized. 1x is actually pretty close to where it needs to be imo to start making the move considering the amount that you would expand it by yourself and the outside demand that would likely follow the example.

[justusranvier]

There is one small detail. The article mentions:

... The U.S. Department of Justice has already seized $67 million. ...

and the market cap of bitcoin is just under $70 million. For bitcoin to work in Kim Dotcom's case one needs a bitcoin market cap more in the range of say USD 70 billion and a corresponding price for 1 BTC of say USD 7200 at least.

How do you come to these random figures?

A market cap of $67million can be converted unlimited times across this market cap if the BTC gets sold for USD and bought and sold and bought. As long buyers continue to buy he would be able to continue to convert to fiat which is obviously the goal for him after receiving BTC.

Exactly.

MV=PQ

[FreeMoney]

There is one small detail. The article mentions:

... The U.S. Department of Justice has already seized $67 million. ...

and the market cap of bitcoin is just under $70 million. For bitcoin to work in Kim Dotcom's case one needs a bitcoin market cap more in the range of say USD 70 billion and a corresponding price for 1 BTC of say USD 7200 at least.

How do you come to these random figures?

A market cap of $67million can be converted unlimited times across this market cap if the BTC gets sold for USD and bought and sold and bought. As long buyers continue to buy he would be able to continue to convert to fiat which is obviously the goal for him after receiving BTC.

Exactly.

MV=PQ

Not really, it's totally different things. It could be that there is currently one untaken offer to buy 1BTC for $7.20 and no others whatsoever, or there could be an incredible depth above $7, both would show the same "market cap" but it would be very safe to hold coins in the latter situation.

[justusranvier]

Not really, it's totally different things. It could be that there is currently one untaken offer to buy 1BTC for $7.20 and no others whatsoever, or there could be an incredible depth above $7, both would show the same "market cap" but it would be very safe to hold coins in the latter situation.

You can't predict the effect this would have on the market based on current depth because their entry into the Bitcoin economy would change that depth. If a business the size of Megaupload started using Bitcoin a lot of people who don't have bitcoins now would need to buy them. A the same time Megaupload would need to sell bitcoins to pay its fiat expenses (either itself or through a service like Bit-Pay).

Depending on other factors this could either increase or decrease the exchange rate but that doesn't matter. More Bitcoin commerce is better regardless of what effect it has on the exchange rate.

[ArticMine]

All one needs to look at is what is happening in the bitcoin market right now with amounts that are way less than 1% of USD 67 million to see that the required liquidity is simply not there. A simple market buy for even 0.1% of USD 67 million will have a significant impact on the market right now. Furthermore the time is simply not there to wait for "the manipulator" to accommodate you with an ask or bid wall for example.

[benjamindees]

Guys, you're missing the point.  It doesn't take much to keep lawyers working, as long as there is the potential for pay-off eventually.  A few million dollars could take Megaupload all the way through trial.  I even imagine there are lawyers who would accept a significant portion of that in Bitcoins.  You have no idea what kind of insanely creative financing they are capable of.

[ArticMine]

Paying the lawyers in Bitcoins is exactly the whole point here and yes that is not the problem. But the lawyers themselves also have expenses and may need sell part of those funds quickly. Also consider a scenario where bail needs to be posted quickly for example. Liquidity can be a real issue here. Just give it some time and Bitcoin will be there but not right now.

[notme]

Paying the lawyers in Bitcoins is exactly the whole point here and yes that is not the problem. But the lawyers themselves also have expenses and may need sell part of those funds quickly. Also consider a scenario where bail needs to be posted quickly for example. Liquidity can be a real issue here. Just give it some time and Bitcoin will be there but not right now.

That's just it though.  If Megaupload accepts BTC and offers a better deal than paying via Paypal, the liquidity problem will solve itself.

[FreeMoney]

Not really, it's totally different things. It could be that there is currently one untaken offer to buy 1BTC for $7.20 and no others whatsoever, or there could be an incredible depth above $7, both would show the same "market cap" but it would be very safe to hold coins in the latter situation.

You can't predict the effect this would have on the market based on current depth because their entry into the Bitcoin economy would change that depth. If a business the size of Megaupload started using Bitcoin a lot of people who don't have bitcoins now would need to buy them. A the same time Megaupload would need to sell bitcoins to pay its fiat expenses (either itself or through a service like Bit-Pay).

Depending on other factors this could either increase or decrease the exchange rate but that doesn't matter. More Bitcoin commerce is better regardless of what effect it has on the exchange rate.

That's pretty much my point. You can't tell easily what size/type of business can 'fit' in bitcoin now and you can't tell the effect. Though I am quite confident that someone trying to jam 70 million dollars into bitcoin and/or opening up a huge market would have a positive influence of the price, I just have no idea by how much.

[TraderTimm]

The one thing to remember is - we only need one. Only one major business, supplier, whatever - and it will change the landscape forever. That trailblazer will be the foundation for others to copy their success, once they realize that they can shake free from the parasitic middle-men infesting financial transactions.

Even if this service doesn't happen due to Kim's legal battles, I'm certain we'll achieve that goal sooner rather than later.

It is going to be an interesting ride...

[kiba]

The one thing to remember is - we only need one. Only one major business, supplier, whatever - and it will change the landscape forever. That trailblazer will be the foundation for others to copy their success, once they realize that they can shake free from the parasitic middle-men infesting financial transactions.

Even if this service doesn't happen due to Kim's legal battles, I'm certain we'll achieve that goal sooner rather than later.

It is going to be an interesting ride...

I predict there won't be much business at first with the first big company to accept bitcoin, at least, not immediately. It would takes more than just one big company in my opinion. More like, multiple companies. Once that is achieved, we have social proof and then everyone will just copy the big companies(because big companies know how to make money right?)

I am still not sure if it will lead to increased adoption however. It would make it a lot easier for bitcoiners to stay within the bitcoin economy, though.

[justusranvier]

That's pretty much my point. You can't tell easily what size/type of business can 'fit' in bitcoin now and you can't tell the effect.

Any size revenue stream can "fit" into bitcoin, if you're using it as a payment system for real products and services.

It's different if you're talking about using it for speculation but I don't care about speculation anyway. In the long term a currency's value only comes from its use as a medium of exchange.

[ArticMine]

Paying the lawyers in Bitcoins is exactly the whole point here and yes that is not the problem. But the lawyers themselves also have expenses and may need sell part of those funds quickly. Also consider a scenario where bail needs to be posted quickly for example. Liquidity can be a real issue here. Just give it some time and Bitcoin will be there but not right now.

That's just it though.  If Megaupload accepts BTC and offers a better deal than paying via Paypal, the liquidity problem will solve itself.

Yes it will  but only as a result of a significant rise in the BTC price. In fact any significant increase in the use of Bitcoin as a payment method will result, by itself, in a substantial increase in the BTC price with no speculation involved. One needs to consider the size of the float in BTC needed between the customers of the business, the suppliers of the business and the business it self. We are not even considering that any of the players involved will keep some funds in BTC simply for convenience to avoid exchange fees and spreads.

[justusranvier]

Yes it will  but only as a result of a significant rise in the BTC price. In fact any significant increase in the use of Bitcoin as a payment method will result, by itself, in a substantial increase in the BTC price with no speculation involved. One needs to consider the size of the float in BTC needed between the customers of the business, the suppliers of the business and the business it self. We are not even considering that any of the players involved will keep some funds in BTC simply for convenience to avoid exchange fees and spreads.

You're ignoring the velocity component of MV=PQ.

Suppose Megaupload customers are using Bitinstant to buy bitcoins and Megaupload is using Bit-Pay to instantly convert them to USD. The payment could conceivably spend less than an hour as bitcoins before being recycled into other transactions. Depending on the specific values of V and Q involved a massive increase in bitcoin use as a payment system could initially reduce the exchange rate instead of increasing it.

[ArticMine]

Yes it will  but only as a result of a significant rise in the BTC price. In fact any significant increase in the use of Bitcoin as a payment method will result, by itself, in a substantial increase in the BTC price with no speculation involved. One needs to consider the size of the float in BTC needed between the customers of the business, the suppliers of the business and the business it self. We are not even considering that any of the players involved will keep some funds in BTC simply for convenience to avoid exchange fees and spreads.

You're ignoring the velocity component of MV=PQ.

Suppose Megaupload customers are using Bitinstant to buy bitcoins and Megaupload is using Bit-Pay to instantly convert them to USD. The payment could conceivably spend less than an hour as bitcoins before being recycled into other transactions. Depending on the specific values of V and Q involved a massive increase in bitcoin use as a payment system could initially reduce the exchange rate instead of increasing it.

No I am not ignoring M=PQ/V. It is just that I consider your value for V=8760 (24*365) completely unrealistic.