Australia Mulls For First Bitcoin Auction While Acknowledging It As A Legitimate Digital Currency

Bitcoins, worth around £8 million is going to be auctioned during the next month in Australia. The 24,518 bitcoins have been confiscated by the Australian police as proceeds of crime over the last year. Ernst & Young will organize the first ever bitcoin auction of its kind in Australia and the second one in the world.   

The confiscated crypto currencies will be sold mostly in blocks of 2,000. Such a block is now sold in the market for around £680,000. Australian authority has chosen June as the safer time to go for the sell. 24,500 bitcoins have been seized by police in Victoria during 2013 from an arrested person accused of dealing illegal drugs online, reports BBC citing Australian newspapers as the source.  

The US Marshals Service has organized several sales of bitcoins during last year after the arrest and conviction of Ross Ulbricht. He has been punished for masterminding the online illegal drug marketplace Silk Road. But the Australian collection is an extremely large holding of bitcoins, reports Financial Review quoting Adam Nikitins, transaction partner at Ernst & Young. He however expects for a hot contested as well as competitive auction since price volatility surrounding the decentralized digital currency is lower now.

Neither the auctioneer nor the Australian authority has forecast whether regular selling of the currency will take place for quite sometime or the whole collection gets dumped at a time. But the latter option is believed to flood the global bitcoin market. Every week, 4,000 new bitcoins are mined usually and such over supply may cause faster devaluation of the digital currency, according to an analysis furnished in Gizmodo UK.

Price of bitcoin has been witnessed to increase up to $530 on May 27, recording the highest one since August 2014. According to the bitcoin protocol, reduced number of new miners gets rewarded upon processing transactions in every four years.

The reward is expected to come down to half on July 14 and hence there is possibility for price up soaring. However, higher security risk is feared in case of significant reduction of rewards for miners. Considering the overall circumstance, Australian authority has chosen the safer time for dumping the bitcoin collection, analyzes Dr Garrick Hileman, economic historian at the Cambridge Centre for Alternative Finance.

However, Australia acknowledges bitcoin as a legitimate crypto currency through this auction. The move also bolsters US Marshal Service’s prior action for selling 175,000 bitcoins in 2014. Though approaching in own regulatory process, it is clear from the up coming auction that bitcoin is not illegal in Australia.