Could the market cap be intentionally raised by a single party?

notme

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Quote from: Luno on February 10, 2013, 09:53:49 AM

It is, you know!

The market has been nursed since 4.50-5 to get confidence back. If nobody had taken over the market, we would have been messing around $7-15 still.

While the concept might seem scary, all markets have this kind of giant operators behind them with vision and cash to catch the tumbling baby and we are greatfull that they are there and willing to take on such an enormous risk. Everybody here has earned some ~~money~~paper profits because of them.

FTFY

Luno

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It is, you know!

The market has been nursed since 4.50-5 to get confidence back. If nobody had taken over the market, we would have been messing around $7-15 still.

While the concept might seem scary, all markets have this kind of giant operators behind them with vision and cash to catch the tumbling baby and we are greatfull that they are there and willing to take on such an enormous risk. Everybody here has earned some money because of them.

Anon136

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it would work perfectly well so long as you were willing to spend years in order to effectively liquidate your position.

Grinder

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Quote from: Piper67 on February 07, 2013, 02:57:41 PM

Or so it would be, if the system was static and we didn't know about the velocity of money concept.

Fantastic! Then here's how to get infinite wealth. 1. Buy tons of bitcoins, pushing the price and thus the value of the coins up. 2. Trade them for something you can sell for fiat. 3. Sell the goods for fiat. 4. Go to 1.

Piper67

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Quote from: Grinder on February 07, 2013, 02:46:08 PM

Quote from: Piper67 on February 07, 2013, 07:40:30 AM

BTC doesn't lose it's value if you spend it for something, even if at some later point in the chain it converts back to fiat, because if there's something out there that you can spend BTC on, that BCT will be re-purchased to be used for that purpose. It's a funny little concept called money.

Actually, this is all a "funny little concept" called trading. It's irrelevant whether you spend the bitcoins on fiat currency or goods. You will be flooding the market with BTC, and that will push the value down. It won't be easier to find someone who will trade for the full value in goods than in fiat, so instead of getting less fiat you will get less goods. It would have exactly the same effect as printing fiat and spending them on goods.

Or so it would be, if the system was static and we didn't know about the velocity of money concept.

Grinder

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Quote from: Piper67 on February 07, 2013, 07:40:30 AM

BTC doesn't lose it's value if you spend it for something, even if at some later point in the chain it converts back to fiat, because if there's something out there that you can spend BTC on, that BCT will be re-purchased to be used for that purpose. It's a funny little concept called money.

Actually, this is all a "funny little concept" called trading. It's irrelevant whether you spend the bitcoins on fiat currency or goods. You will be flooding the market with BTC, and that will push the value down. It won't be easier to find someone who will trade for the full value in goods than in fiat, so instead of getting less fiat you will get less goods. It would have exactly the same effect as printing fiat and spending them on goods.

Piper67

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Quote from: Grinder on February 07, 2013, 07:25:08 AM

Quote from: Piper67 on February 05, 2013, 08:04:41 AM

Hmmm... the coins ARE money Grin

Just don't sell them, like you don't sell gold.

What's the point of having money which lose their value if you try to spend them?

You didn`t say spend in the previous comment I`m referring to. You said get out. If everyone holding USD decided to "get out" of USD at the same time, it would also lose its value.

BTC doesn't lose it's value if you spend it for something, even if at some later point in the chain it converts back to fiat, because if there's something out there that you can spend BTC on, that BCT will be re-purchased to be used for that purpose. It's a funny little concept called money. Which is what Bitcoin is... which is the point of my reply to your comment.

Grinder

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Quote from: Piper67 on February 05, 2013, 08:04:41 AM

Hmmm... the coins ARE money Grin

Just don't sell them, like you don't sell gold.

What's the point of having money which lose their value if you try to spend them?

sunnankar

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Quote from: johnyj on February 05, 2013, 09:51:06 AM

Even a small country's stock market could be controlled by a group of investment banks, BTC surely can be manipulated by them, and they have been doing this for many years in every possible market - future, commodity, mbs... But currently BTC is still too risky for them, I'm sure when BTC becomes mature enough, wallstreet boys will come one by one

There is a major flaw with this argument. Bitcoin is not as 'elastic' as other currencies.

They are limited in amount, instantly verifiable both in quantity and quality (gold's problem), not subject to counter-party risk (equity based and no need for a lender of last resort), function as a settlement currency (MPEx options and futures) and are, most importantly, censorship resistant (another of gold's problem).

All of these reasons make the traditional methods of market manipulation much less, if not completely, potent. Coupled with gold, because every currency needs a mirror, Bitcoin becomes a Kryptonite dagger aimed at the heart of the State (fiat money central bank monopolies).

phelix

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This should be quite simple and profitable if you have enough reputation.

1.) Slowly but steadily buy tons of coins for say a billion dollars. This drives the price to 100-1000 usd/btc
2.) Announce you will use bitcoins. Price rises by a factor of 10.
3.) Sell/transfer some of your coins.
4.) Keep the rest as profit. A couple billion of dollars.

Grin

johnyj

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Beyond Imagination

Even a small country's stock market could be controlled by a group of investment banks, BTC surely can be manipulated by them, and they have been doing this for many years in every possible market - future, commodity, mbs... But currently BTC is still too risky for them, I'm sure when BTC becomes mature enough, wallstreet boys will come one by one

Piper67

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Quote from: Grinder on February 05, 2013, 05:10:21 AM

Quote from: Topazan on February 04, 2013, 02:04:19 PM

Say you were a government or major corporation that wanted to carry out a multi-billion dollar transaction in bitcoin. Would it be possible to raise the market cap up to where it needs to be for you to do it?

Sure, but it would be stupid if you intend to get out afterwards. People are not going to buy the coins back at the same price as they sold them, so you would lose money.

Hmmm... the coins ARE money Grin

Just don't sell them, like you don't sell gold.

Grinder

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Quote from: Topazan on February 04, 2013, 02:04:19 PM

Say you were a government or major corporation that wanted to carry out a multi-billion dollar transaction in bitcoin. Would it be possible to raise the market cap up to where it needs to be for you to do it?

Sure, but it would be stupid if you intend to get out afterwards. People are not going to buy the coins back at the same price as they sold them, so you would lose money.

Topazan

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That's the question, though. If they wanted to transfer an amount of money greater than the market cap, would they be able to?

crazy_rabbit

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RUM AND CARROTS: A PIRATE LIFE FOR ME

Depends on which country needs to funnel funds into a sealed autocratic nation with the intention of destabilizing the regime and funding revolutionaries.

Just saying.

Topazan

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I said why. Twice.

If, as I suspect, the market cap can't necessarily grow as quickly as needed, that's a huge barrier to adoption by large institutions.

twolifeinexile

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Of course they can if they have a big pocket, but the questions is why??If they speculate, then it has to be substantiated and recognized by general market participant to make the market value stay that level

Topazan

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You know, I didn't think about it that way, but you might be right. It could take less money, not more as I thought.

The question is whether or not it would be sustainable long enough for the other party to cash out. In order for that to happen, the market has to follow the lead of the major purchaser and start buying at that volume and price. I don't think that could be counted on to happen.

Piper67

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Quote from: Topazan on February 04, 2013, 02:45:03 PM

I'm just speaking in hypothetical here, so I can't tell you how much. As I said, the scenario is if a major corporation or government wanted to conduct a multi-billion dollar transaction in bitcoin.

Remember back in September when someone claimed they would release Romney's tax records unless they were paid 1 million dollars in BTC. Someone calculated that it would actually cost quite a bit less than 1 million USD to get the right amount of BTC. All they had to do was to solidify a position with the initial 100 thousand or so, then go on an all out spree for the rest and they'd reach the magic number fairly quickly.

It would be a bit harder today, as a 20k purchase or dump doesn't seem to have the same effect. But the principle is the same.

The difference is if it was a government... say, for example, Iceland or Greece, they'd have the resources to keep the market depth at such a level that they could raise the cap and maintain it (pretty crucially) long enough to effectively turn it into the new market cap.

Topazan

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I'm just speaking in hypothetical here, so I can't tell you how much. As I said, the scenario is if a major corporation or government wanted to conduct a multi-billion dollar transaction in bitcoin.

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