Considering that anyone trying to sell that much bitcoin at once would pretty much crash the currency, how much is it really worth?
Perhaps some kind of revolutionary mathematical fact could be worth even more? This is a very interesting question.
EDIT: A lot of people responding to me seem to be trying to contradict my argument by pointing out that if it was true, it would be true for almost everything. I don't get how that works, because it is true of everything! Flooding the market will always reduce the value of what you are selling.
I'd find it really odd if the ounces they reference aren't troy ounces, which is the true de facto for precious metal weight quotes.
To the true matter though is that valuing things by their liquid value is problematic especially when their liquidity isn't ever really going to be utilized.
That argument proves too much [1]. The same can be said for almost all stock, e.g. Bill Gates could sell of his shares of Microsoft and crash the stock price.
No he couldn't. Microsoft shares have intrinsic earnings, and while the stock price might go down, I wouldn't expect them to go down far enough to generate predictable excess returns. Lots of people want predictable excess returns and they have enough money to buy all of Gates's shares and then some.
Unless you think bitcoin is going to disappear in the next 6-12 months, it's worth a lot.
You could easily liquidate out of that entire position over the next six months without crashing the bitcoin market. In fact, the added liquidity might help lessen the volatility.
Bruce Schneier once equated the security of a 256 bit private key by comparing the energy needed to brute force all possible combinations of 256 bits to the amount of energy harnessed for one year by a Dyson Sphere built around the sun.
So maybe there's a correlation, in the sense of knowing the GPS coordinates of Fort Knox, and targeting it with an ICBM?
Oh, I dunno, maybe by promising to vaporize it with multiple thermonuclear warheads? I mean, I did contrast the idea with an a attack involving a hypothetical Dyson sphere...
earth, brother squire, and if that's not enough for you, take as
many more, for you may have it all your own way and stretch yourself to
your heart's content. Oh that I could see burnt and turned to ashes the
first man that meddled with knight-errantry or at any rate the first who
chose to be squire to such fools as all the knights-errant of past times
must have been! Of those of the present day I say nothing, because, as
your worship is one of them, I respect them, and because I know your
worship k
As an alternative to this, what about ICBM/Nuclear Launch codes - they have the potential to destroy a lot of value (both natural, material and psychological)?
Or even a terrorist's planning information prior to an event?
Well, incidentally Minuteman launch codes were set to 00000000 for about 20 years [1]. Can you argue that zero entropy effectively reduces the number of information bits to 0 and thus drives up the value per bit to infinity?
Possessing the launch codes is one thing. Positioning oneself such that it is possible to extract value is something else entirely.
The difference is the private key gives the beholder power over the wallet at any time from anywhere in the world. No additional information is required.
I'm sure a root private key from Verisign or something could give that a good run for its money on a byte-for-byte basis, though it's harder to directly valuate.
Technically, I don't know, as I don't personally understand the code behind the mining and what the difficulty would be like to mine the very last bitcoin.
But from a social aspect, cracking that key would be like hitting one of the multi-state lotteries. And people continue to play them all the time, despite the astronomical odds against their winning.
>Thus, each individual bit protects USD $631,212... USD $631,212 per bit
That seems a rather flawed way of viewing the density, since that key represents 2^256 possible combinations. So if you take a way a bit, the density by that measure goes up 0.3%. Practically speaking, it should double.
Why don't we instead calculate the density as the expected value of guessing one combination. In other words, let's say I have stolen an ATM card and can wipe a bank account containing $100,000 by guessing the 4 digit pin:
I agree that that makes a lot more sense in a way, but there is another interpretation.
Suppose you are omniscient but that you have a terminal illness, and have 256 time units left in your life to give value to your heirs. Due to your illness, you can only communicate by blinking. If you can give one bit of information per time unit by blinking, what is the information you can give your heirs that will maximize their inheritance?
That's a good point. You'd have to restrict to information available to someone at the current time, and not based on future randomness (like winning lottery numbers). Otherwise, you could make (effectively) unbounded money by just specifying the stock symbol of a company that gains the most in value in the next year.
Well, yes. I see your original point... it makes sense if you look at it from a perspective of communicating the information rather than a security perspective, which is what I was focusing on. Of course, that all assumes that the receiver knows a priori they are receiving a key and what the key corresponds to. And assuming you wanted to set something like that up, there are a lot more dense ways to go about it. It reminds me of this: http://killscreendaily.com/articles/articles/we-went-looking...
In other words, bury massive inheritance in the desert. Issue a list of 1,000,000 GPS coordinates. Then you only need 10 bits.
How about peptides? The targeting end of the anti-obesity drug described in [1] can be expressed as 7 characters (KGGRAKD) in a 20 character alphabet. Another agreement [2] values candidate peptides at $32.8M each, even without a specific therapeutic application. The same value could be applied to certain short linear motifs, which could be composed of as few as 3 amino acids. These strings don't suffer from the same liquidity problems that limit the real value of bitcoin addresses either (i.e. the value is really in the data).
There are financial holdings worth 100+ times that bitcoin wallet. Likely protected by a lot less than 100 times the security of a 256 bit key.
Apple's hedge fund, Braeburn Capital, likely qualifies. It's arguably the largest hedge fund in the world. Gain access to their network and you could wreak serious financial havoc.
It is probably the case that there are multiple cryptographically-secured security layers standing between an anonymous internet user and the innermost layer of such a system.
I'm assuming you wouldn't try to go after their network from an anonymous Internet user.
Rather, stuxnet comes to mind. We're talking about $150 billion after all.
Of course the other issue is, I'm betting they're holding a lot of short term government securities. It simply isn't plausible to steal $70 billion worth of short term US paper and do anything with it.
I'd argue no. It's definitely some kind of valuable and/or dense, but it's not that simple.
The value is purely held up by what value people ascribe to this information. This can change rapidly (and it does), so the precise measure of value isn't really known until you actually convert it.
If you actually try to convert in a short amount of time, it'll rapidly destroy its own value, because the market doesn't have the kind of depth to absorb a hundreds of millions of USD conversion, so the only way to satisfy that bitcoin volume would be a rapid drop in price, which would lower the amount of USD in order to satisfy it, or conversely, increase the purchase power of everybody on the market.
The true value of this stash is thus, in fact, some fraction of the current valuation of bitcoin. The larger the stash, the smaller the fraction becomes, because the larger the stash, the less able will you be to realize the value.
This is the reason the winkelvii are creating an ETF. They're sitting on 1% of the coins in existence. An attempt to realize profits would take an extremely long time without moving the market quite adversely. So they need to create a vehicle that allows them to massively increase the market depth.
The value is not wholly contained in the bits of the private key, it's also dependent on other state (namely, the state of the wallet). Consider the value of those bits once the money has moved.
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[ 2.8 ms ] story [ 114 ms ] threadPerhaps some kind of revolutionary mathematical fact could be worth even more? This is a very interesting question.
EDIT: A lot of people responding to me seem to be trying to contradict my argument by pointing out that if it was true, it would be true for almost everything. I don't get how that works, because it is true of everything! Flooding the market will always reduce the value of what you are selling.
How much is the gold in Fort Knox really worth?
Amount of present gold holdings: 147.3 million ounces. The gold is held as an asset of the United States at book value of $42.22 per ounce.
http://www.bloomberg.com/markets/commodities/futures/metals/
COMEX Gold Value: 1,250.40/per troy ounce
1 ounce = 0.911458333 troy ounces
$167,875,968,689 USD
You are correct. Selling that much gold at once would decimate the gold market.
To the true matter though is that valuing things by their liquid value is problematic especially when their liquidity isn't ever really going to be utilized.
[1] http://rationalwiki.org/wiki/Proving_too_much
You could easily liquidate out of that entire position over the next six months without crashing the bitcoin market. In fact, the added liquidity might help lessen the volatility.
Then these 32-bits provide the whereabouts of about $238 Billion dollars[1].
For this information to have a higher value-density, it must grant you a 0.01% chance of controlling all of the gold in Fort Knox.
Good luck getting in, getting out, and surviving the manhunt.
[1] Wikipedia
So maybe there's a correlation, in the sense of knowing the GPS coordinates of Fort Knox, and targeting it with an ICBM?
http://us.imdb.com/title/tt0058150/
C:\TAD\Text\QUIX.TXT
earth, brother squire, and if that's not enough for you, take as many more, for you may have it all your own way and stretch yourself to your heart's content. Oh that I could see burnt and turned to ashes the first man that meddled with knight-errantry or at any rate the first who chose to be squire to such fools as all the knights-errant of past times must have been! Of those of the present day I say nothing, because, as your worship is one of them, I respect them, and because I know your worship k
Or even a terrorist's planning information prior to an event?
Or even genetic code?
[1] http://www.damninteresting.com/ive-got-the-same-combination-...
The difference is the private key gives the beholder power over the wallet at any time from anywhere in the world. No additional information is required.
But from a social aspect, cracking that key would be like hitting one of the multi-state lotteries. And people continue to play them all the time, despite the astronomical odds against their winning.
1. If the owner of the wallet still has access to it, they can easily transfer the amount to smaller wallets, and reduce their risk.
2. If the owner has lost access, it is good for the community to recover the lost coins.
There was a period in history where this claim was certainly true. Now, not so much.
Information of this nature loses value when revealed.
That private key holds value until it becomes public. Then, the wallet is plundered and its value falls to nought.
That seems a rather flawed way of viewing the density, since that key represents 2^256 possible combinations. So if you take a way a bit, the density by that measure goes up 0.3%. Practically speaking, it should double.
Why don't we instead calculate the density as the expected value of guessing one combination. In other words, let's say I have stolen an ATM card and can wipe a bank account containing $100,000 by guessing the 4 digit pin:
$100,000/(10^4) = $10/guess
Or in our case:
$161,590,330/(2^256) = $1.39e-69/guess
Not so impressive now.
Suppose you are omniscient but that you have a terminal illness, and have 256 time units left in your life to give value to your heirs. Due to your illness, you can only communicate by blinking. If you can give one bit of information per time unit by blinking, what is the information you can give your heirs that will maximize their inheritance?
Omniscient? Well, I'm not very creative, but you should be able to get off at least half a dozen lottery picks in that.
In other words, bury massive inheritance in the desert. Issue a list of 1,000,000 GPS coordinates. Then you only need 10 bits.
[1] http://www.ncbi.nlm.nih.gov/pmc/articles/PMC3666164/
[2] http://www.arrowheadresearch.com/press-releases/arrowhead-an...
Apple's hedge fund, Braeburn Capital, likely qualifies. It's arguably the largest hedge fund in the world. Gain access to their network and you could wreak serious financial havoc.
Rather, stuxnet comes to mind. We're talking about $150 billion after all.
Of course the other issue is, I'm betting they're holding a lot of short term government securities. It simply isn't plausible to steal $70 billion worth of short term US paper and do anything with it.
The value is purely held up by what value people ascribe to this information. This can change rapidly (and it does), so the precise measure of value isn't really known until you actually convert it.
If you actually try to convert in a short amount of time, it'll rapidly destroy its own value, because the market doesn't have the kind of depth to absorb a hundreds of millions of USD conversion, so the only way to satisfy that bitcoin volume would be a rapid drop in price, which would lower the amount of USD in order to satisfy it, or conversely, increase the purchase power of everybody on the market.
The true value of this stash is thus, in fact, some fraction of the current valuation of bitcoin. The larger the stash, the smaller the fraction becomes, because the larger the stash, the less able will you be to realize the value.
This is the reason the winkelvii are creating an ETF. They're sitting on 1% of the coins in existence. An attempt to realize profits would take an extremely long time without moving the market quite adversely. So they need to create a vehicle that allows them to massively increase the market depth.