Over the last couple of days, the UK government has been doing something it never has before: selling bitcoin.
It’s not doing it to bring about greater BTC adoption of course. Nor is this an attempt to suppress its price. The Feds just want the money.
The bitcoin in question is the hoard of a 19-year-old hacker from Norwich who was sentenced for cybercrimes last month. Elliott Gunton, under the handle “Planet”, had amassed half a million pounds’ worth of crypto for his dastardly online deeds. “Having lots of money is cool… but having lots of money without people knowing is cooler” he bragged online.
Turns out, he wasn’t all that good at the “having money without people knowing” part, but the police agree that “having lots of money is cool”. Having seized his hoard of digital blood diamonds, but not savvy enough to spend them, they got an auction house to flog them off in 15 lots.
I was curious to see what an auction lot for BTC looked like. Turns out, what the auction lot had an image for was 1 troy ounce of copper, 99.9% pure, minted by a now defunct private mint called MJB Monetary Metals:
Click to enlarge, and read the lower half. As an aside, I was curious that this copper coin was 1 troy ounce, as troy oz are usually used for the measurement of precious metals. Base metals like copper are normally measured in AVP, or “avoirdupois” ounces, which are roughly 10% lighter.
Interestingly, the same auction house auctioned off seized BTC for the Belgian government back in 2015, and used the same copper coin in the image – guess nobody pointed this out then either.
Representing such an intangible asset as BTC is a challenge that’s yet to be overcome. It will arrive, in time, but only once we actually understand what bitcoin actually is, and what it truly represents. Bitcoin as it stands now is perceived the same way as electricity was in its early days: strange, dangerous, and with such limitations as to have few applications. It’ll take time for that to change just as it did for electricity, but change I believe it will.
Hopefully nobody gets conned into bidding for bitcoin, only to receive a copper coin in the mail until then.
We wrote about Ross Ulbricht, creator of the Silk Road, earlier in the week (Life in the shadow of the Silk Road – 25 September) whose hoard was auctioned off in a similar fashion in the US.
The evening after I wrote that piece a couple days back, Ulbricht’s mum published a blog post he’d written by hand behind bars on the nature of bitcoin. It’s titled simply “Bitcoin equals freedom”, and is a great insight into the asset by one of its earliest, and arguably its most controversial adopter. From his note:
Every other money that predates Bitcoin — in the long history of human civilization — was valued for reasons other than its use as money. Cattle in Africa, postage stamps in prison, sea shells and precious metals all have been used as money and fit this pattern. The only exception is fiat money — something declared to be money by an authority — but even national fiat currencies were once backed by something with prior value, like gold.
Bitcoin changed all that. Bitcoin had no prior value, and no one was forced to use it, yet somehow it came to be a medium of exchange. People who don’t understand and care little for Bitcoin can nevertheless accept it as payment because they know it can be used to pay for something else or be exchanged into conventional money.
People often mention the pizzas that were bought for ten thousand bitcoins and, in hindsight, poke fun at the guy who ate what would become a multi-million dollar lunch. I’m more interested in the person who gave up two perfectly good pizzas for mere bitcoins. What did he see in those bits and bytes, that digital signature on something people were calling a blockchain? Whatever motivated the pizza seller may have also called to the early miners who could not liquidate but happily hoarded. It may have inspired the ones who simply gave bitcoins away by the thousands. Whatever it was, it was something new.
Something new.
The Silk Road was something new: an online market for anything and everything except that which had the explicit purpose to harm or defraud. An unregulated distribution system, magnified by the power of the internet.
Something new. And something that’s so intimidating, so disruptive to existing methods of law enforcement… that they utterly ruined him at the trial.
The case itself was full of corruption: federal agents at the core of the investigation, had been enriching themselves off the success of the Silk Road. Though they’d been involved in producing much of the evidence used to prosecute him, any note of their crimes was prevented from being seen by the jury, alongside many other things. Hell, Ulbricht wasn’t even allowed to “communicate” (smile) in the direction of his family while the jury was present.
Ulbricht was made an example of. For setting up a market for illicit goods, he received two life sentences plus 40 years with no parole, all for non-violent charges. That’s more than El Chapo got, who ran one of the largest and most violent drug cartels in history. Convicted murderers and rapists will see freedom before he does. If he does.
Ulbricht should have waited until someone else had tried his idea first. Those caught running Silk Road 2 and subsequent dark net markets have received mere fractions of his jail time. Some haven’t faced any jail time at all.
And that’s because they didn’t create something new. “First-mover advantage” in this scenario, contained plenty of disadvantages for Ulbricht. Innovation can come with a hell of a price tag.
1 October will mark his seventh year behind bars. He’s got a long way to go.
I know where my sympathies lie: with the man in the box.
Wishing you a great weekend,
Boaz Shoshan
Editor, Capital & Conflict
Category: Market updates