Topic: What if Govt buys all bitcoins? - page 2. (Read 1658 times)

They can buy from everyone, but I aint selling mine.

So if you want to have some bitcoin you need to go to me.

So as you can see everyone will think this, and no one will sell.

FED fucked up, again.

Have you seen Paul Graham's post hypothesizing bitcoin may have been developed by a government? https://news.ycombinator.com/item?id=5547423

Would you ever use your bitcoins for anything?  Would you ever spend them or "cash them out"?

If not, then what is the purpose of having them?

Personally, as far as regulations go, I'm far more concerned about the fact that the markets themselves are not regulated.

There is nothing that stops any of the markets (MtGox, CampBX, etc) from taking advantage of pending orders before they are filled.

If the current "Ask" price at MtGox is $153 and the current "Bid" price is $152.83

Lets say someone posts a market order to sell 1,000 bitcoins, and within the same second (or perhaps within a few seconds) someone else posts a market order to buy 850 bitcoins.

Before executing either of these exchanges, MtGox has an opportunity.  They can transfer 850 bitcoins from the person selling to the person buying, then transfer $129,905.50 from the person buying to the person selling and pocket the remaining $144.50.  Then they can execute the remaining 150 BTC sell against the current "Bid" on the order book.

Essentially they'll have stolen $144.50 from the person with the "Bid" on the order book, since their order won't be filled as it should have been, but nobody would ever know.

They could do this all day long in both directions stealing from both "bids" and "asks" on the order book without anyone ever realizing it.  The larger the spread between the current "ask" and the current "bid" the more they can steal from each trade.  Without any regulation and auditing, there is no way to know about or prevent this theft.

I would never let the government buy my bitcoins. So they could never get it.

You guys all bring up interesting points.  I would be more concerned if a government, any sovereign nation's government decided to make a coordinated effort in mining.  Then in the end, if they wanted to corner the BTC market, they could figure out the best way to do that to meet their agenda. 

We all live in interesting times everybody. 

Buy bitcoins, mine bitcoins, attack bitcoins... There is a simplier way to get rid of Bitcoin - delegalize it like viruses and trojans. And only after this proves to be unsuccessful, try to do anything else.

Yes ..this is the scenario I had in mind.

I would add that if their motive was not profit but instability, they would not wait for price to reach $260 nor would they need 30% of the available coins given only 200K are traded daily.

Lastly the BTC market is not huge in comparison to most financial markets if fact it  is rather small and as far as I am aware its not yet regulated. So the conclusion is its doable if they want to.

No.  At the moment Bitcoin markets are largely unregulated.  Like any unregulated market, manipulation is possible.  It is up to the individual to protect themselves from being a victim.  Don't buy bitcons that you feel are overpriced.  Don't sell bitcoins that you feel are undervalued.

Over time the market will grow and eventually it will become far more difficult to manipulate.  We are still in the infancy of bitcoin.  As such it is still a very high risk endeavor.  It could be $1,000,000 per bitcoin some day.  It also could be $0.00 per bitcoin someday.  Make your decisions with the knowledge that bitcoins could cease to exist at any moment, but also have a huge potential if they succeed.

I think a better financial attack with people who have huge financial resources would look something like this:

1) wait for bitcoins to hit a low ($30 for example)
2) start to enter the market in small chunks
3) accumulate a large significant holding of BTC let's say 30-50% of entire outstanding value (of course this could take a significant amount of time)
4) wait for prices to drift higher ($265 for example)
5) start selling like crazy in large chunks to move prices down
6) people start to panic as they see prices dropping rapidly and sell
7) now price is nearing a low ($30 again)
repeat

The only thing that prevents this from happening is 1. regulations 2. a huge huge size of the entire BTC market

They'd find it very difficult to mine more than 3,600 BTC per day on average.  And even then, they could only do that if they are engaging in a 51% attack (meaning they are actively and continuously providing more hashing power to the network than the entire honest network combined).  It'd be interesting to see how quickly the network would react to such an attack and how they'd deal with it (if at all).

1. Govt buys all bitcoins
2. You sell
3. Profit
4. Start new blockchain
5. Repeat

That's why they wouldn't do it.
Geez, ppl, think a bit before posting crap!

I always though it would be very easy for the governments to mine a crazy amount of bitcoins, given the access to super computers and such.
It wouldn't take them long, they have the money to waste and the technology.

This is a good point.  It's almost analogous to the 51% attack issue.  I guess the question is how hard is it to actually make such an attack by trying to financially overwhelm the system.  This is something that the BTC founders did not cover in their paper.

They certainly could but it is highly unlikely that they would. Bitcoins don't really threaten any real world economies, so the government would rather focus it's time and resources on more important issues.

The point is that it would not be difficult to destroy the credibility of BTC should it appear  that it was becoming a true threat to traditional currency.

Buy coins...then dump them on the market causing wild swings to undermine stability and credibility.

There will be some winners who will hold but many will panic sell just like April 14th. Then  Re-buy low and do it again.

Re the public wont allow it...well only if they know and there are many ways round that. eg using 3rd parties.

The question I am posing is what stops any large well funded entity from manipulating/ destroying the BTC market and credibility as the funds needed to manipulate are relatively small. 11M bitcoins but only 200k traded daily.

Is there any protection against this?  supply and demand do not work against big players in such a small market as that can be artificial

That isn't the way economics works.

As they but up more and more, the bitcoins become rarer and rarer.  As such the cost of each bitcoin becomes higher and higher.  Eventually, they'll be paying a billion dollars a bitcoin.  Meanwhile, as everyone sees the price shooting up, they all start buying bitcoins as well, making it more difficult for the government to buy them all since other people are also buying.  As the government starts printing massive amounts of dollars to purchase the bitcoins, the economy is hit with massive inflation (dollars are no longer worth as much as they were because there are so many more of them.  This makes the exchange rate between dollars and bitcoins grow even more, and drives more people to want to have bitcoins to avoid losing purchasing power to the massive inflation of the dollar.  The government destroys their own currency and drives their citizens to adopt bitcoins far faster than they otherwise would have.

^^ Precisely.

They need to buy all namecoins, litecoins, ppcoins, ixcoins, devcoins, freicoins, i0coins, terracoins, liquidcoins, whatevercoins too.

Well they can't buy everything unless everyone agrees to sell. The price would skyrocket before that happens and we'd all probably get rich in the process.

The results depends on whether they get found out though - if it's officially known that they're just "buying everything", then we'd all sell out, be happy, and start a new blockchain tomorrow morning.