Topic: What happens if someone buys all existing bitcoins and destroys them? - page 2. (Read 2788 times)

Seems like it'd be real good for anyone who had some seeing as though they would become a lot more rare/in demand/valuable.  We'll have to wait many more decades til everything's been released before such a buyout would ever be possible though. Won't be in my lifetime.

It makes zero sense to do this. Let's say someone could buy %99 of the coins. It would cost vast sums of money and the buyer would gain nothing. As he now holds a currency worth nothing. At that point bitcoin2 would be released and it would all start over.

Ahhh, thank you!
"Bitcoin, however, offers a simple and stylish solution: infinite divisibility."
My misconception was, that bitcoins are only divisible up to 8th decimal point. The fact that they are INFINITELY divisible removes the potential problem of extreme deflation.

What people who attack Bitcoin for these kind of problems fail to understand as well though is it's open source anyone can make digital currencies now, we already have competing currencies like Litecoin coming into the fray, like it or not digital currencies are probably going to be around for a long while especially if they can be tinkered with and released at will.

I didn't say a government ban would do X

I'm saying, coincide a drop in the price from 100 $ / BTC down to 1$ a BTC right when the government puts restrictions on exchanges and you don't think that confidence will be killed?

Coincide that with 51% attacks that have been carefully planned out for years?



The government knows about bitcoin. They have discussed how to squash it. They have discussed how to use it. They have some. To think that none of this has been mentioned, you're crazy. Or I need drugs.

A government ban on bitcoin would only drive the price of bitcoin UP.
I don't see large volatility as a threat to bitcoin itself. Not all people are stupid, so not all would give in to a purposefully caused panic. The only threat of a temporary price drop in bitcoin, would be, that then some entity whose goal is to destroy bitcoin, could buy up all the bitcoins cheaply, and then destroy them (by not using them again).

I'd imagine there are quite a few more government offices where they have talked behind closed doors about how they could fund their favored sides in Narco wars and insurrections with bitcoin. For all of the idealogical wrangling about what the Fed and bankers think, I bet the three letter agencies probably either love or want to love this shit.

Not to mention the legislators and officials who would like another way to "fundraise" under less scrutiny.

Just hypothetical. Do you not think behind closed doors in some government office they have sat down and discussed what it would take to get rid of bitcoin?

Take my scenario. You wouldn't have to know it's big brother doing it. It would just be anonymous. Right? With a devaluation large enough during a big swing up, you could cause serious damage to a whole list of players in the game. Toss on top of it potential 51% attacks.

Toss one more thing on top of it. Some three letter acronym of the government shutting down all US based exchanges and exchange accounts tied to US banks and declaring a war all at the same time. With the drop in price. With the 51% attacks. Isn't that more likely the fall of bitcoin? At least a huge set back. Something a government could easily pull off in a year or two and put Bitcoin back at square one.

Why would anyone trust something like that anymore? People will have lost money, businesses will have lost profits and trust.

It's just an imaginary situation. I really don't think Bitcoin can be destroyed. That doesn't mean that an opposing army won't try.

He's saying that the psychological and financial effect it would have on Bitcoin users would be very detrimental. Already, Bitcoin has a big problem with its volatility. Any sort of business deal that requires action more than a few hours into the future has to account for swings in the exchange rate.

If the perception became widespread that there were mysterious actors waiting in the wings, ready to devalue your savings by 50% when they crash the market, it would cause a lot of FUD for people holding bitcoins.

I've thought about similar scenarios before, like, "What would happen if China got pissed off at the United States and sold all their Treasury debt at once?"

So? $250M is nothing to Federal Reserve. And I don't think, if there would be only 1000 bitcoins left, that they would be worth millions. They would be worth zero.

wtfvanity, could you elaborate on how hoarding bitcoins, and then dumping them all at once on the market, would actually destroy bitcoin? It would make the bitcoin worth 100's times less overnight, yes. But after that, it would climb right back up, it wouldn't be "destroyed". Am I wrong?

I doubt anyone is moving exchanges over 2%...

wtfvanity has a more realistic account of what a malicious and well healed actor could do to Bitcoin.

They could send them to somewhere like http://blockchain.info/address/1BitcoinEaterAddressDontSendf59kuE

However, couldn't they do more damage by keeping them and not doing anything with them? Think about it, if they acquired 5 million bitcoins, half of what is in circulation today. And DIDN'T destroy them. But at any time they could dump them on the market. Think about that. Economy gets bigger, trading volumes in excess of 100,000 every single day not just on spikes. Value worth $100's of dollars each. Then they spend a bunch of them and immediately crash the market. That could destroy a lot of confidence into what BTC stands for. Instead of just destroying the coins and making others worth more isn't something like that more likely?

Acquire millions of them while raising the price. Then crush the system. That's a much better malicious strategy if someone really wants to squash things. Or say like a government. Acquire the tons of coins. Then buy out avalon and ramp them up. Accomplish a couple of 51% attacks during the dump and screw up exchanges and everything else. There's always a chance. The government can just print the money to accomplish something like that right? Chances are less greater of that happening than you finding the private key to the address above.

With today figures, you will need $250M to buy the last 0.000000001 btc standing. And you can add more zeroes if you ever are approaching that point.

Well then as the owner of some of the only bitcoins in existence, I'm super rich. Now please form a line to buy at $1000 / .

I only used "twice the ratio" as a theoretical example. In reality of course it would be more like 2%, but that's not the point.

example:
1. lets assume all 21 million bitcoins have been mined, and are circulating.
2. lets assume the Federal Reserve opens up exchangers/shops/services/etc and start accepting bitcoins, while making the price favorable for the buyer (remember, their goal would be to destroy bitcoin, not to get rich).
3. lets assume the Federal Reserve then hoards all the bitcoins they get, and never spends it again (equivalent of destroying them).
4. lets assume they get their hands on 15 million bitcoins, so there is only 6 million bitcoins lets in circulation. That would drive the price of bitcoins way up, and would make the people more willing to sell it to the Federal Reserve for personal profit.
5. lets assume they acquire 20,9 million bitcoins, so there is only 100000 of bitcoins in circulation, and that number would be constantly decreasing, because the Federal Reserve would buy bitcoins whenever they can, but would never sell any.
6. could the bitcoin exist if there would be only 100000 bitcoins in circulation? 10000 bitcoins? 1000 bitcoins?
*the money the Federal Reserve would have to spend to do this, is not the issue, because they can literally print the money.
**of course, you would never know, if the Federal Reserve stands behind any of these shops/exchangers/etc, and the only way to make sure you wouldn't sell your bitcoins to Federal Reserve, would be to not sell or spend them at all, which would essentially have the same effect as Federal Reserve itself hoarding it.

You could destroy them by sending them to a black hole address with an unknown private key. They'd stay destroyed for all practical purposes for at least a century or two.

Am I right in saying that the network updates itself if the coins disappear anyway? I'm not sure if you could destroy them.

Not really, they'd just destroy the ones they get.

The bigger problem is that market inertia is going to prevent much volume from going to this new exchange. Bitcoin to USD exchanges are a fairly saturated market (BTC to USD money changers are a different topic), and because it has been around so long without getting hacked or running away with all of the bitcoins Mt Gox is currently king of the market.

A new exchange that payed doubled the Gox price for bitcoins would almost immediately be flagged as a scam. Even if someone or some people big on the WOT start vouching and shilling for it, they are probably going to hear cries that they are scammers too.

A few people might take the jump though, and this exchange might build some trust after enough people sell on there then buy back on Mt Gox. The problem is that if some people started putting effort into this, it would start a feedback loop and the Gox price would start climbing fast. At some point though the new double price exchange is probably going to fold, because trying to destroy bitcoins at $200, $500, or $1000 won't be pocket change. Note this scenario only works if they get anyone to trust them with bitcoins in the first place.

There are a good number of people though who have at least some portion of their coins that they aren't cashing out of at any price.

This would be a hard thing to do. If some had that much money. I guess they could. But why would anyone do that. Bitcoins are like stock. If you have them. You have money. Plus miners hold on to them waiting for value to increase.