Topic: I'm a Central Bank trying to keep Bitcoin from being adopted - page 3. (Read 13949 times)

'Gee, I sure love these corrections, they give me the chance to buy plenty more gold n silver at fire sale prices'

This was the sort of guff spouted by the likes of Mike Maloney, James Turk, and all the other precious metal retailers, when the metals had their pullbacks in 2011. Had anyone taken their advice, and kept on stacking up at any point since then, then they would be out of pocket in terms of net worth today.

Before I place my bets on any competitor, I will wait and see what cryptocoins Silk Road, or another dark net site just as significant as it, starts dealing in.

I like the way your brain works... but you forgot an easy one...

12) lobby governments to regulate the hell out of BTC and strip it of most of its potential usefulness.

You can't scare me away from Bitcoin. Well you can pull me away with something like it but just orders of magnitude better.

If you follow my golden rule the central bank even Bitcoin Nouveau riche can't win.
1) Only buy in to Bitcoin economy if you truly believe in the Idea and the economics it enables.
2) Only sell or triad out your Bitcoin's for something of greater value than you put in.

Demand and exchange rates have little to do with it in principal, they are only an accelerant.

Manipulating and crashing prises, just makes cheep coins available for the believers. 
Buying all the coins only makes an opening for a competitor.

Yes, I agree that cryptocurrencies can't easily be completely killed by inferior gov-backed knock-offs as competition.  But I think in the G-6/G-8 countries it can easily be made pretty useless for everyday transactions via the strategy I described.  Most residents in those countries will like the ease of use of the new USDCoins but not care (or be glad) that it is government-backed.  And they are also easily cowed by government bans on things that are not actually harmful (e.g. marijauna in the US 1930-1990).  If there were a $1000 fine for using bitcoin in the US then no businesses would accept it so it would lose the wide appeal and use it could have.  And the penalty would likely be much worse than $1000.

As for the rest of the world, cryptocurrencies could be much better than their national fiat currencies for many transactions and they will likely be used heavily there.  Though high volatility could make that more difficult. 

Thanks for starting this post and keeping it so active, OP!

The question is - Will the situation with other moneys around the world have improved by the time they try to ban bitcoin?

  Based on the way the last 5 years have gone, I don't think that's very likely to happen so by banning a currency that everyone will clearly works quite well and has a number of advantages over the old way of using money.  They'll be asking people to give up what they view as better money because you don't like that they're using that instead of your proprietary worse currency because that's the new rule they made.

I don't think you can successfully pull off that action without first intentionally creating marketplace chaos that scares out new users by causing them painful losses.  In most circumstances it winds up looking petty and late to the party, if they do it too early it lends legitimacy to the fledgling currency.

It's a very difficult situation to be in as the issuer of a worse-currency in a bitcoin world.

short-selling is implemented. there's an exchange that does it https://www.bitfinex.com/

"Expense to move and guard" is called your "cost of carry". It's true that Bitcoin's cost of carry is quite low, much lower than precious metals. I'd say that the main COC is keeping a copy of the blockchain synced - required if you're holding a lot of coin. 

Creating a derivative based on BTC is easy - the question is, are people DUMB ENOUGH TO BUY IT?  From the look of many posts on this forum, YES.

I still think the most likely scenario is a big money pump and dump. If somebody succeeds in implementing BTC short selling (last I checked it does not exist?), we'll see BTC/USD dropping in a big hurry.

I strongly disagree.  The most useful product on the market loses out all the time due to superior marketing, perceived security, etc.  I mean, either Windows, OSX, or Linux is a better OS but they have lived side by side for years.
The sheeple of the US would probably like those basic three conveniences (or two if anonymity is removed) well enough to go with the currency that their government hasn't banned and thus is widely accepted.  Bitcoin is far from being widespread enough at this point to squash it, I think it's still 2-3 years out from wide adoption on Main Street and by then the gov will make laws discouraging or banning it's use. 

Why on earth would it matter what a politician thinks you should do with your bitcoins?  Again, somebody has to buy them - Who would buy something that requires a law in order to get people to buy it? 

When banks say "do X or the economy will be in trouble", politicians reliably do X.

That works as long as you've got the most useful product on the market, but I don't think that would be the case.   The more of a head start Bitcoin and free market cryptocurrencies get, the harder it is to put that genie back in the bottle.

I'm a central bank powerful national government and feel threatened by alternative monies, e.g. bitcoin.  But cryptocurrencies gain a hold in the world before I squash them because of their incredible practicality:
1) Send to anyone instantaneously
2) Minimal fees
3) Anonymity

I know I can never kill them off completely so I will co-opt the idea with a government run (and backed!) cryptocurrency.  The USDCoin! (domain name apparently already taken.) I control the network, the software, etc, but the coin acts a lot like bitcoin so the average consumer likes it, especially because it's backed by the government and most people think that's a good thing.  I can keep the prices stable, too, and continue to inflate/manipulate the currency as I did with my old fiat dolla's.  I can also control the level of anonymity allowing it or keeping a close eye on users.  (Most people in the US might accept having to let the government track their account for the convenience of the coin, but it doesn't really matter, the gov doesn't have to restrict anonymity) 

Once I've invented USDCoin I mess with the competing cryptocurrencies in the manners described previously in this thread, namely make them highly unstable and also link them to terrorism as an excuse to make them illegal.  Then pass laws against them.  Those coins may continue to be used in the darknet, but that small economy doesn't bother me I've managed to retake the primary economic spaces (few companies will accept the other coins against my laws).

I have regained my power - and people love the convenience of the new USDCoin!

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The only way I think to avoid the above scenario from happening is to get bitcoins to be adopted by local businesses ASAP to create independent, closed-loop bitcoin economies that are resistant to claims of the lawlessness of bitcoin, etc, because these economies would provide unlimited stories of broad, legit use of the currencies.  But still, the gov could probably just argue USDCoin is as good as the coin that's also used for criminal transactions.

How can people spend bitcoins they don't have?  Who would be the counterparty?  Unlike dollars, there are not an unlimited amount of bitcoin and there is no central clearing house where all the bitcoin are stored, the ownership kept opaque to the public view.   Everything in bitcoin is in the open so the fact that someone owes a HUGE amount of bitcoin that they do not actually possess could even cause an increase in the price as people anticipate this person needing to buy up supply to fulfill their contract.

Derivatives REQUIRE darkness, banks make their money on the spread between what the blind seller on one side will take and what the blind buyer on the other side will pay, transparency breeds honesty - No derivatives.

If you are a bank, why not letting people spend bitcoins they dont have - we could end up having FRB = "Fractional Reserve Bitcoining". It is more convenient spending BitCoins on a credit card instead of having to worry about wallet.dat... Let the bank take care of the bitcoin wallet.. and its fine as long as the clients dont make a run on the bank for their bitcoins.

Or why not speculate with huge leverage on BTC/USD price with fiat you dont have - just like the good old time at Bitcoinica? But now you get ZhouTonged by FXCM, CMC Markets, IG Markets, et al. instead... Financial markets in a nut shell.

After all, the bank profits on us not because they are smarter than us but because we (people) are more greedy (speculative) or more lazy (credit cards) than them.

I thought that for quite a while, but then I realized there's not reason to financialize bitcoins because they're already the perfect financial instrument.  Gold and Silver are expensive to move expensive to guard expensive to ship so paper or digital assets make all the sense in the world.   But to bitcoin they actually encumber you, bitcoin is a currency built on ownership, not debt so to participate in derivatives is to introduce the risk that the counterparty will default, and with the state of regulation in Bitcoin good luck getting your money back - How's that recovery from the pirate default going?

So if there are no advantages, why would the be the preferable way to invest in bitcoin?   In order for it to become manipulative it would have to dwarf the real bitcoin market and I just don't see a scenario where that happens, and if it does the question must be asked "What are these people trying to do?"   

Does that change your opinion at all?


Also - If you've enjoyed this thread, you might enjoy my most recent article intended as something to share with friends and family who might be new to Bitcoin and interested in learning a little about it's positives and negatives - You can read that here http://www.mindtomatter.org/we-should-talk-about-bitcoin.html

Best post of whole thread and the most likely real life scenario.

Capture and manipulate market, raking in billions of profits whilst simultaneously keeping the upstart Bitcoin in its place.

I'm Wall Street and I want to screw bitcoin. This is my plan:

"The Fed hates BitCoin but realizes that it cannot be destroyed so Fed gave us (Wall Street) the mission to control BitCoin.

Our strategy is to first let average joe investors speculate in it by introducing Bitcoin ETF at the NY Stock Exchange so a bubble can grow.

Then we will create options and futures in bitcoin at www.cmegroup.com so people can speculate in derivatives so the bubble becomes even bigger. We take the other side of the trades and make huge profits when the bubble bursts. And we of course buy major holdings in bitcoin after the 90% crash which will be triggered by attacks from us against the bitcoin network and later on price manipulation with algorithmic trading creating flash crashes. We now own most of the bitcoins created and issue derivatives that people speculate in that we easily manipulate. They believe that they are trading bitcoin, but in reality they are betting against the house.

Bitcoin is now enslaved in the financial system just like Gold and Silver, their prices do not reflect their true value since we have manipulated them for many many years... We will set the BTC/USD price that we wish.

Mission accomplished - The tail wags the dog."

Depends what you mean by "Kill", if you mean dramatically reduce the price and send it underground than yes - If you mean make people stop wanting and trying to use cryptocurrencies, than no.

Liquidity is money, no money no liquidity

Laws can kill liquidity kill therefore money.

This guy gets it.  What bitcoin needs is long periods of relative stability so that an economy can actually start to build.  Look at the recent bitcoinstarter.com launch, I'll be surprised if they don't have trouble funding right now.   It doesn't take a genius to see it's silly spending money today when it looks like it'll buy you more for the same amount tomorrow.

I'm dealing with that myself in starting a journalistic bitcoin podcast, we're going to have to set sponsorship prices in USD to be collected in BTC because you can't have the price of the ads constantly moving around, it's crazysauce trying to do business in this environment.