With the recent court order of the forfeiture to the government of Silk Road Bitcoins (still pending an appeal if I understand correctly) a public auction of such a large amount of Bitcoin would have all the smells and sounds of an Initial Public Offering of a stock but with one major exception … there is no Bitcoin stock, and there never will be.
So as the government gets set up to auction off the Bitcoin they will likely hire brokers to handle the sale for them just like a company hires someone to orchestrate their IPO. Of course one of the main considerations when choosing said broker(s) is how much marketing such a broker could deliver. That alone is great news for Bitcoin. Add to that the fact that the government, the US government no less, itself will be the owner of record which, in effect, places a huge stamp of legitimacy on Bitcoin and we get a potential for a huge uptick from it’s current price going up to the auction and beyond.
To make certain the point about legitimacy is clear, let’s suppose the government had confiscated Bitcoin but instead had gotten that dollar amount worth of contraband (heroin, crack, guns, porn etc). Would the government be auctioning it off? Of course not. And just by taking the matter to court to confiscate it they already have greatly added to its legitimacy. Thank you!
Why Such A Pseudo IPO Event for Bitcoin Is So Important
What a lot of news writers reporting about Bitcoin lack is an understanding that Bitcoin is Open Source software. And even worst, they don’t have a clue of how the Open Source Software industry works. A major problem that open source always suffers from is a lack of a marketing department. Take the Open Source server and operating system Linux for example. The chances are extremely high (80-95%) that the web pages you look at every day are from a Linux server. Linux servers are the backbone of the Internet but if you did a poll on the street to compare the numbers of those who have heard of it compared to Windows and/or Apple it will certainly be last. The reason for that is because Microsoft and Apple spend billions marketing their product and Linux spends nothing, because … it is Open Source.
The concept of Open Source is a licensing function that essentially prevents any one from ever copyrighting it (the source code) and claiming ownership of it. The developer of the software (the original owner) doesn’t transfer ownership of it but only the license to use it and usually to distribute it as well. Users cannot change the license. While the Open Source process has produced some incredibly valuable software the owners and developers of it are left with only a tiny remnant of that created value. It is typically understood that the owner’s remant value will be derived from the fact that they probably know more about it than anyone else does and, so, will be highly sought for their technical expertise.
The fact is that there is so little ownership value left after the release of it as Open Source it prevents the possibility of having an IPO. Granted there are some publicly traded companies built around using Open Source software but the software itself has no value in their holdings. The company’s value is based on their employees and skills, income, services etc..
So by seizing those Bitcoin and now holding a public auction the government will be, in effect, conducting the first of its kind IPO on an Open Source Software. It will be providing the Bitcoin community a hugely valuable service! It is going to be incredible!
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