South Korea to Dispose of 216 Bitcoins in First Public Auction

South Korea to Dispose of 216 Bitcoins in First Public AuctionThe South Korean government will hold its first public auction of bitcoins that were seized from criminal proceeds, according to local publications. In doing so, the economic value of bitcoin will be recognized by the country for the first time. Also read: Why South Korean Bitcoin Adoption Could Outpace Most Other Countries This Year Korean Government’s

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South Korea to Dispose of 216 Bitcoins in First Public Auction

The South Korean government will hold its first public auction of bitcoins that were seized from criminal proceeds, according to local publications. In doing so, the economic value of bitcoin will be recognized by the country for the first time.

Also read: Why South Korean Bitcoin Adoption Could Outpace Most Other Countries This Year

Korean Government’s First Public Bitcoin Auction

South Korea to Dispose of 216 Bitcoins in First Public AuctionThe Korea Asset Management Corporation (KAMCO) has decided to auction off 216 bitcoins of criminal proceeds seized in April, according to local publications on Wednesday. KAMCO is a government-owned asset management company in South Korea. It manages state-owned properties, collects overdue taxes, as well as purchases and resolves non-performing loans of financial institutions.

Since seizing bitcoins, the organization has been contemplating what to do with the digital currency since there was no precedence. On Wednesday, MSN Korea quoted a KAMCO official saying (loosely translated):

It is the first time a virtual money auction will be held, but it seems to be similar to stocks that have changed prices.

South Korea to Dispose of 216 Bitcoins in First Public AuctionThe 216 bitcoins were confiscated in April by the Southern Gyeonggi Provincial Police Agency from an operator of an “obscene” website which had generated about 1.7 billion won from 1.2 million members. It was the first time a domestic investigative agency seized digital currency as a criminal profit.

Subsequently, the price of bitcoin has more than doubled since the seizure. Its value rose from 260 million won to 673 million won (approximately $596,500 USD) at press time on popular Korean bitcoin exchange Korbit.

Recognizing Economic Value of Bitcoin

According to South Korean Criminal Procedure Law, when a court confiscates an asset from an investigative agency, it becomes the property of the state, The Seoul Economic Daily explains. If forfeited, the asset will be valued and auctioned off to the treasury. An official of the prosecution conveyed (loosely translated):

Since the state has ownership rights to the asset, if it is forfeited, the state agency, such as the prosecution or the police, will be able to publicize the object for sale on the website of the Asset Management Corporation with ownership rights.

South Korea to Dispose of 216 Bitcoins in First Public AuctionThe commission on this bitcoin auction is estimated to be about 20 million won or 3% of the proceeds. It will be deducted from the balance and the remainder transferred to the treasury.

“Real estate and securities other than legal currency are regulated by the presidential decree so that they can be sold by the presidential decree,” KAMCO explained. “Virtual currencies are not included in the public auction exemption, so it is possible to dispose of it.”

The representative of the prosecution noted, “once the prosecution goes to a bitcoin auction, the social controversy over whether or not virtual currency should be recognized is actually over,” The Seoul Economic Daily reported. MSN Korea added (loosely translated):

As the public auction process proceeds, domestic investigators and public institutions will be the first to officially recognize the economic value of virtual money.

What do you think about the Korean government auctioning bitcoins and in doing so recognizing its economic value? Let us know in the comments section below.


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The Hidden Reason Behind Bitcoin’s Increasing Fees: Darknet Mixers

feeJust recently a darknet marketplace (DNM) vendor who details he’s been involved with the bitcoin industry for five years, says the rising fee market is caused by marketplace mixers that process multiple transactions at a time. The vendor details that DNM sales using these mixers are forcing him and many others to pay for 50 transactions

The post The Hidden Reason Behind Bitcoin’s Increasing Fees: Darknet Mixers appeared first on Bitcoin News.

fee

Just recently a darknet marketplace (DNM) vendor who details he’s been involved with the bitcoin industry for five years, says the rising fee market is caused by marketplace mixers that process multiple transactions at a time. The vendor details that DNM sales using these mixers are forcing him and many others to pay for 50 transactions at a time at ten times the cost, to cover their tracks.

Also read: Hedge Funds Are Quietly Investing in Bitcoin   

As Global Bitcoin Exchanges Suffer From Increased Use — Darknet Marketplaces Are Also Busier Than Ever

The Hidden Reason Behind Bitcoin's Increasing Fees: Darknet MixersAs much as people don’t like to talk about it, bitcoin has been used widely across DNMs across the deep web for years. Many people believe the lion’s share of bitcoin transactions come from DNM sales. Since the inception of the first DNM — the Silk Road — illicit narcotic sales have increased exponentially. Furthermore, two years after the sentencing of the Silk Road operator there are more online marketplaces located on the deep web than ever before. Over the past year, these markets have been extremely busy as bitcoin’s value has skyrocketed and many of the top underground market users have reported on experiencing big issues with withdrawals.

According to many forum posts, a lot of people have been having problems withdrawing from the leading DNM Alpha Bay. Additionally, there have been congestion issues over the past month on other popular markets such as Dream, Valhalla, and Hansa.

“Add me to the long list of people who can’t get their funds out of Alpha Bay,” explains a DNM consumer on Reddit. “I have been trying to withdraw a couple of hundred dollars worth of BTC for several weeks now. I go the transfer page, fill in all of the information, but after I submit the transaction, the page refreshes like the transaction has gone through, but when the page is done refreshing, it’s like I never submitted a transaction.”

Fee Pressure Stemming From Darknet Markets

According to one particular DNM vendor, he believes the super high fees lately are attributed to black market sales. Nobody seems to understand the rising fee market is coming from that “invisible” web.

Drugs, drugs, and more drugs — None of you are recognizing that most of the fee pressure comes from darknet markets; most especially from DNMs like Alpha Bay that has a built in mixer and causes 20-50 + transactions

The vendor who deals with cannabis sales details that in his opinion DNMs are “responsible for the lion’s share of bitcoin transactions daily.” According to him, there are hundreds of thousands of transactions coming from DNMs daily, rated around 550-600 satoshis. The obvious reason for this he explains is so “drug addicts can get their shit as fast as possible.” Many of the top DNMs found on the deep web have their own mixing services for customers who want to cover their tracks. The tumblers used on Alpha Bay and other DNMs continuously split transfers into multiple transactions at a time, which could quite possibly be adding more strain to the bitcoin network’s throughput.

Darknet Mixers May Be Putting Pressure on Bitcoin's Fee Market
An example of 16.1 BTC being mixed into multiple outputs.

The cannabis dealer states the bitcoin network fee estimation is “way off the radar” these days, mainly because DNMs are catering to addicts who want their products shipped as soon as possible.

DNM Sales Still Account for a Great Majority of Bitcoin Transfers

There is no doubt that DNMs are getting used far more than they were back in 2013, and back then the underground sales attributed to a vast majority of bitcoin transfers. The vendor’s theory may be more truthful than a lot of people would like to admit, as much of the focus these days has been on mainstream adoption. The likelihood of the fee market and network congestion rising due to more DNM usage is quite probable even though the discussion is not so favorable to everyone.

What do you think about DNM use boosting the fee market and adding to the network congestion? Let us know what you think in the comments below.


Images via Shutterstock, Pixabay, and Expressvpn. 


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