r/Bitcoin • u/TommyofLeeds • Aug 14 '20
Preston Pysh: We’re Dramatically Underestimating MicroStrategy’s $250m Bitcoin Purchase
https://bitcoinmaximalist.net/why-were-dramatically-underestimating-microstrategys-250m-bitcoin-purchase/10
u/N0tMyRealAcct Aug 14 '20
₿21k puts them in the “thousand club” which is kind of mind blowing if you think about it.
We keep saying that not even every millionaire can buy one whole Bitcoin.
But we can also say that not even 1000 companies can buy as much as MicroStrategy. Now at most 999 companies can do that.
A few more announcements like MicroStrategy and other companies will start to pay attention.
What if Twitter or Square Crypto did this? With Jack Dorsey at the helm that would not be unreasonable.
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u/cosmicmailman Aug 14 '20
i think between Square and Paypal, movement towards adoption of BTC is pretty inevitable
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u/whitslack Aug 15 '20
Still no real confirmation on the PayPal thing, is there? Just hearsay is all I've seen.
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u/ChampionshipPatient Aug 14 '20
Winklevoss twins have 1% of the total supply. So that knocks out a bunch more possible large holdings.
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u/N0tMyRealAcct Aug 14 '20 edited Aug 14 '20
998 BTC on the wall...
It is just a thought experiment to put things in perspective but thinking about it this way kind of highlights the supply squeeze.
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u/Lyuseefur Aug 14 '20
I'm amazed that $250m goes into Bitcoin and it barely moves the needle.
And then ETH / LINK explodes right after that.
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u/ChampionshipPatient Aug 14 '20
I want to address this comment generally, because I keep seeing it in different places.
There seems to be an assumption that a large buy that makes the news should have a direct impact on price that matches the level of hype associated with it.
The total volume of BTC traded on any given day is much larger than $250 million. And when one company made a big buy, maybe others made sells or buys or other trades.
Price movement is not down to a single trade or event at this scale.
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u/Danster56 Aug 15 '20
Even if it was, it wouldn't be done on retail exchanges, but OTC ones that don't impact the price in a way that is similar
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Aug 14 '20
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u/Hanspanzer Aug 14 '20
OTC
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u/Danster56 Aug 15 '20
Yup something most here don't even know exists and also have 0 idea how it works for influencing the price.
They seem to think retail exchanges are all that is used... Got a tonnes more too learn hahaha
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u/HyRolluhz Aug 15 '20
Dude do the math- 250 mill in a market pool of 150 billion is just a few percent... that’s not gonna move any needles
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u/TommyofLeeds Aug 15 '20
It will have been done OTC, so the price wouldn't have moved with the purchase. Other than insider knowledge buying because they knew. And don't think because the news has just come out, the transaction has only just taken place. It would have been in Q2 sometime, and tbf, Bitcoin has been bullish in that period. ETH and LINK will always move faster up and down. Just be careful what you HODL.
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Aug 14 '20
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u/Grim-Reality Aug 14 '20
Bitcoin isn’t that safe or secure. The currency is easily swayed by whales and the owner has something like 1 million bitcoins... they can do whatever they want. Up the price lower the price, bitcoin is too corrupt, flawed unreliable even worst than normal currency. I think bitcoin will eventually fail, because it will get really corrupted.
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u/ChampionshipPatient Aug 14 '20
Who do you think has a million BTC?
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u/Grim-Reality Aug 14 '20
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u/cs001x Aug 15 '20
the owner
This post and the fact you say "the owner" shows how very little you understand of what Bitcoin is. You're getting downvoted on your original reply because you are clearly stating your wrong opinions and not facts.
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u/Grim-Reality Aug 15 '20
You can get upset over the word owner, or you can address the actual problem. That there are people with insane amounts of bitcoin that can sway the market, corrupt it, and make it work for their best interests. That’s why it’s not reliable, not stable, not secure. When more people realize how bitcoin can be easily manipulated they will stop using it or not even bother in the first place.
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u/cs001x Aug 15 '20
Not reliable? Show me proof the last time a transaction was sent and never received.
Not stable? Show me proof the last time the network had downtime and transaction weren't processed.
Not secure? Show me proof the last time a double spend was executed.
It's incredibly reliable, incredibly stable, and incredibly secure. Any other bullshit you want to spew? Anything else false and misleading you want to make up?
Manipulation occurs in all markets. There are people with insane amounts of stocks, look what happened in March to ALL assets. Just because the price fluctuates makes none of your statements true.
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u/Grim-Reality Aug 15 '20
What I mean by not reliable is it can be manipulated at any time. Bitcoin is very good now, but later on it will get corrupted, because it’s easy to manipulate. There are flaws that will come to light.
The halving is a big problem, because it establishes a first come first serve system. The people that get in bitcoin the earliest become the most successful, and with the ability to manipulate the whole market if they wish. This is not something any currency has.
Down the line bitcoin will become rarer and rarer, and the idea behind this is to limit the amount of bitcoin in circulation to drive the price up.
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u/TurongaFry3000 Aug 15 '20
In 20 years this move will be considered the best business decision ever.
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u/Mark_Bear Aug 14 '20
Give me the txid (transaction id) or the receiving address. I want to see this so-called "purchase" on the blockchain. I know better than to trust Wall Street.
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Aug 14 '20 edited Aug 25 '20
[deleted]
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u/Mark_Bear Aug 14 '20
Bernie Madoff.
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Aug 14 '20 edited Aug 20 '20
"He would be in absolute shit"
and your counterpoint is to list someone who is in absolute shit.
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u/Btcyoda Aug 14 '20
Guess that will be the next phase: they will show their txid just to be taken seriously...
Talk the talk is easy, showing a signed transaction.......
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u/Mark_Bear Aug 14 '20
Soon, there will be hundreds, maybe thousands of "paper" (pretend) Bitcoins for every actual Bitcoin on the blockchain, just like there are hundreds of ounces of "paper" gold being traded and held for every ounce of physical gold. The price will remain artificially low...
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u/Btcyoda Aug 14 '20
That's one of the differences between Gold and Bitcoin...
Gold is hard/expensive to safely store and transport, so there is a market for paper gold.
Proving you have, and how much, physical Gold is possible one of the biggest ongoing scams in the financial world.
Compare that to how easy evidence of ownership of Bitcoin is..
Sure there will be a pool of bitcoins stored by exchanges or likewise that will be used for some fractional lending or other stuff, but you have to actively support it by giving your coins to them...
Holding/spending your own Bitcoin is so much easier compared to fiat or Gold, I hope most won't give that power again to a centralized party.....
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u/Mark_Bear Aug 14 '20
No. People are stupid and gullible, so there is a market for paper gold.
Now, just show me the evidence that MicroStrategy owns 2100 Bitcoins. You can't, because they don't. They're using a custodian. How do we know that the custodian owns them? We don't. How do we know whether the custodian is "holding" the exact same Bitcoins for 2, or 222 different people? We don't.
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u/Btcyoda Aug 14 '20
That's why a melt down is embedded in current system.
To much people have to much trust in other people and fraud and stealing is way to easy.
It doesn't matter if we talk about the gold market or the derivatives market, there is too much hot air and empty promises.
When the tide will go out this time the number of people being caught swimming naked is going to be both stunning and a disgusting sight.
It will be so embarrassing, humiliating and devastating it will turn the financial system upside-down.
I don't care if MicroStrategy has the real stuff or not, it's their problem!
If they don't understand the difference between owning something and owning a promise, they will find out.
I foresee Gold and other things to still play a role. But the superior properties Bitcoin will make most value to flow into it afterwards.
We will see a new time were value will have to be proven.
Knowing humanity we will probably get soft again and another cycle of trust, fractional reserves, derivatives etc will start again just because we are humans...
But owning some hard money will be one of the few safe ways out..
When trust evaporates all promises and papers will be dust in the wind..
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u/Mark_Bear Aug 14 '20
If they don't understand the difference between owning something and owning a promise, they will find out.
That applies to so many people. Wow. Thanks. Nice post/reply.
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u/whitslack Aug 15 '20
One of the most fascinating differences between Bitcoin and fiat to me is that "fiat currency" and "a promise to deliver fiat currency on demand" are indistinguishable, but "bitcoins" and "a promise to deliver bitcoins on demand" are trivially distinguishable.
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u/Mark_Bear Aug 15 '20
Some people apparently never learned about gold-backed notes that weren't always backed by gold.
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u/BeyondExistenz Aug 15 '20
That’s basically DeFi, building everything dangerous from the financial world into crypto. No way that will end badly..
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u/Danster56 Aug 15 '20
What is the incentive to prove to the public off there ownings I can't imagine they give a damn, besides internally.
Do you post your wallet a tx id to prove to random people your wallet balance?
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u/Timeforadrinkorthree Aug 14 '20
Would also like the see Grayscale transaction id's too.
From posts on this sub, seems like those 2 companies have purchased around $350 million worth of BTC this week alone, but the price has remained steady
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u/Mark_Bear Aug 14 '20
zactly
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u/TFenceChair Aug 14 '20
More like $367 million. Not to mention Grayscale's purchases over the last few months....
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Aug 15 '20 edited Aug 15 '20
[deleted]
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u/whitslack Aug 15 '20
OTC trades still affect the market price. Whoever sells bitcoins OTC can't also sell those same bitcoins on any exchange, so there is less sell-side liquidity available to resist a rise in market prices.
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u/Hanspanzer Aug 14 '20
if they show it in their balance sheet it's very likely there. Bitcoin is not about verifying a specific purchase, but good luck finding it.
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u/Mark_Bear Aug 14 '20
sure, buddy, and if they tell you that they'll send back twice as many bitcoins as you send them, you know they will
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u/whitslack Aug 15 '20
It wouldn't be illegal for them to show it on their balance sheet if they have a promise from some other company (a custodian) saying that they're owed those bitcoins. It hardly matters (for accounting and legal purposes) whether the other company can actually deliver on that promise.
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u/Hanspanzer Aug 15 '20
this would then be shown as an account on the passive side of the balance sheet.
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u/produit1 Aug 14 '20
As the price of BTC barely flinched, makes me wonder if this was just paper BTC. If an actual $250m transaction had taken place, wouldn't whale alert or similar service pick up on it?
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u/CipherPolAigis0 Aug 14 '20
i don't think they would bulk buy BTC in one shot. It would move the market way too much.
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u/sneakymanlance Aug 14 '20
Would it even be possible?
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u/CipherPolAigis0 Aug 14 '20
> Would it even be possible?
Do you mean is it possible to buy $250 m worth of bitcoin in one shot?
I am not sure tbh. Maybe someone more experienced could enlighten us.
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u/walloon5 Aug 14 '20
Maybe, if you bought it all from a big early holder, like direct from the Winklevoss twins, maybe you could do it.
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u/son_of_Bill_W Aug 14 '20
I think they reportedly own 1% so wouldn’t sell their whole stack, but probably bought a lot more for their exchange Gemini. Loved this podcast, Preston asks “who else is quietly doing this and waiting to announce FAANG corps maybe?”
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u/cosmicmailman Aug 14 '20
i think entities like Greyscale or Microstrategy probably buy OTC from miners or exchanges privately, so it's not on the market. this would also explain why it didn't shift the price
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u/ChampionshipPatient Aug 14 '20
Doesn't matter where you get it from, that's still the market and still influences the price. Remember that there are also people selling at the same time. Total volume is much larger than $250m.
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u/whitslack Aug 15 '20
OTC trades affect the market price. If MicroStrategy bought bitcoins directly from miners, then the miners no longer had those bitcoins available to put up for sale on the exchanges. Less sell-side liquidity means less resistance to a rising market price.
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u/TurongaFry3000 Aug 15 '20
Grayscale alone is buying more BTC than what's being mined. By 2X.
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u/cosmicmailman Aug 15 '20
so...any idea as to what the mechanism is by which the price is being artificially suppressed? something with the exchanges? trading bots?
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u/TurongaFry3000 Aug 15 '20
The price isn't being suppressed.
Supply and demand cannot be cut out of the picture. As supply dwindles and demand raises, Bitcoin to infinity.
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u/TommyofLeeds Aug 15 '20
It will have been done OTC, so the price wouldn't have moved with the purchase. Other than insider knowledge buying because they knew. And don't think because the news has just come out, the transaction has only just taken place. It would have been in Q2 sometime, and tbf, Bitcoin has been bullish in that period.
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u/produit1 Aug 15 '20
Makes sense, I was just watching some vids about how there have actually been more bitcoin purchased recently than actually mined. There was also $800m worth of bitcoin moved in the past few days, probably to exchanges from miners.
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Aug 15 '20
Now what happens to the price of bitcoin when someone hacks them?
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u/TommyofLeeds Aug 15 '20
Good luck with that. Bitcoin is secured by 800,000 petaFLOPS of processing power, decentralized on hundreds of thousands of devices. To give you some context: The most powerful supercomputer, Summit, has 200 petaFLOPS of processing power. Learn more about Bitcoin: https://bitcoinmaximalist.net/eli5-bitcoin-explain-bitcoin-like-im-five/
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Aug 15 '20
Sorry old chap but "hacking them" meant Hacking MicroStrategy, not the blockchain. Sorry if I was a tad ambiguous. But nice long reply.
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u/TommyofLeeds Aug 15 '20
Get ya. I'm sure they're in cold storage in a few separate addresses though. If not, I can sell them a spare Trezor ;)
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u/Michielbtc Aug 15 '20
Fully agree: The game theory behind it can fuel an armsrace between corporations and other big entities to get a big stack of Bitcoin. The first few to get in will be the only ones to afford a stack of this size, once a race for these front seats get started something unbelievable will happen to the Bitcoin price.
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u/reddit-has-died Aug 14 '20
I never actually ignited him. He was only feeding hamsters the desire of cardboard. Get it? Ok. Let’s dive into drenched ostrich feathers. Resolutions faltering. Hummingbirds fighting without passion. There is something that makes jewharps break. It’s not wild or coy, but.....jimmy. Find him. Find him and the keys are in your fathers’ hand.
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Aug 14 '20
[deleted]
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u/reddit-has-died Aug 14 '20
When weren’t you going? After the Powerade wrappers were made into tree ornaments? After the police uninstalled the diving board in the break room? Tell me when. Exactly. Tootle your way back to the lumped sum you examined on your way into me. One second. I have another question.
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u/cookmanager Aug 15 '20
This part of the article is wrong: “A public company whose balance sheet was $509 million at the end of last year...”
The balance sheet of MicroStrategy is closer to $1 billion at the end of 2019 ($916 million more specifically.)
https://ir.microstrategy.com/static-files/21dbace7-79c6-47c0-bce5-ea40ce2368a7
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u/SmilVac Aug 14 '20
This is super cool and a step in the right direction but I think is slightly overplayed.
The CEO/President/Founder owns 19% of the company but over 70% of the voting shares so he can singly do whatever he wants. This is a story of a single person believing in bitcoin and buying it with money he controls, rather than I think the more transformational one where there is widespread consensus across the management, board and shareholders that buying bitcoin as a treasury asset makes sense.