The US Marshals Service announced it will be holding an auction to sell 660 bitcoin seized during various criminal investigations, according to an announcement made by the agency on October 18.
The auction will take place on November 5 from 8 a.m. to 2 p.m. EST. To participate in the auction, interested parties must register with the US Marshals Service by October 31 and deposit $200,000.
The bitcoin will be auctioned in bundles. There are six bundles with 100 bitcoin in each, and one bundle of 60 bitcoin. Bidders will not be able to see bets made by other bidders or be able to change their bid once it has been cast.
But why would someone wish to participate in such an auction?
Cryptocurrency, specifically bitcoin, is intended to be currency that allows the user to circumvent government and banking intermediaries: The Satoshi white paper described peer-to-peer electronic cash, not government-auctioned electronic assets that require a $200,000 deposit to have the opportunity to bid on. Worse still, bidders must pay an additional deposit of the same amount for every bid submitted.
It seems counterintuitive that the currency is now being used by the government to fill its coffers.
The registration fees will be refunded, but it is still an amount that is unattainable for most people. Besides, a person can already buy bitcoin at auction on an exchange – without any deposit at all.
The main reason why people would choose to participate in such an auction is the same reason why people take part in most auctions: the chance to buy something at far below standard price. In this case, the barriers to entry are so high that the winning bid may well be far below the going market rate.
One way the US Marshals Service is enticing people to participate in the auction is by allowing bidders to form groups of syndicate buyers so that one person or entity need not bid on an entire bundle of 60 or 100 bitcoin to benefit from the potentially cheaper price.
A potential issue with this method, though, is trust. The US Marshals Service website states that it will only "transfer the bitcoins in a single [bundle] to a single bitcoin address." The person or entity in possession of that address then must be trusted to distribute the bitcoin appropriately after the auction. However, to be fair, it would be a pretty bold move to steal bitcoin just purchased from the government – a government that possesses a record of your participation and winning of said crypto-assets.
Police auctions give people the chance to buy houses, vehicles, jewelry, and other goods for a fraction of what they would using conventional methods, and this US Marshals Service cryptocurrency auction is no different. It's a chance for participants to basically buy cash for below its actually worth – and that, my friends, is what the American dream is all about.