Miners' consensus - the distributed central bank in bitcoin economy

johnyj

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Beyond Imagination

Quote from: odolvlobo on February 14, 2014, 11:23:12 PM

Why miners? There are a lot of people with a lot of bitcoins who are not miners.

Good question!

Existing coin holders might miss the chance and sold too much coins at a relatively low price, thus they don't have enough coin to sell at higher price. But miners can sell coins at any price, since they have a continuous inflow of coin income

What you said is true, there might be large players with hundreds of thousands of coins, manipulating the price, but how effective a single player can do is a question

odolvlobo

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Why miners? There are a lot of people with a lot of bitcoins who are not miners.

johnyj

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Activity: 1988

Merit: 1012

Beyond Imagination

Central banks often intervene foreign currency market to protect the exchange rate of their own currency, the miners in bitcoin economy could also form such consensus. In order to reduce the volatility of bitcoin, they should sell the coins when price is rising too fast, and buy the coins back when price is falling too fast

But when? Historically, if price rise more than 5x in a short time frame, it should be the time to sell, and if price drop 50%, time to buy. In order to do so, they must have both bitcoin reserve and fiat money reserve. Fiat money is easy to get, but bitcoin is not so, so it should be miners doing such work

Currently I'm buying lots of coins using my fiat money reserve, don't know if any other miners are doing the same

Topic: Miners' consensus - the distributed central bank in bitcoin economy (Read 928 times)