Bitcoin Forum

Other => Beginners & Help => Topic started by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 02:23:26 PM



Title: What happens if someone buys all existing bitcoins and destroys them?
Post by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 02:23:26 PM
The total value of all bitcoins currently is several hundred million USD. That is pocket change for some bank or government who would wish to destroy bitcoin. What would stop them, to open an exchange of bitcoins into USD, with twice the ratio as all other exchangers, and then never spend (or destroy) all acquired bitcoins, until there are none, or a really small amount left in circulation? I realize this would drive the price of the remaining bitcoins way up, but wouldn't it destroy the bitcoin system, if only say 0,1% of 21 million possible bitcoins actually existed (and that number would be constantly decreasing)?


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: bwstacker on February 14, 2013, 02:34:37 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Atruk on February 14, 2013, 02:39:36 PM
The total value of all bitcoins currently is several hundred million USD. That is pocket change for some bank or government who would wish to destroy bitcoin. What would stop them, to open an exchange of bitcoins into USD, with twice the ratio as all other exchangers, and then never spend (or destroy) all acquired bitcoins, until there are none, or a really small amount left in circulation? I realize this would drive the price of the remaining bitcoins way up, but wouldn't it destroy the bitcoin system, if only say 0,1% of 21 million possible bitcoins actually existed (and that number would be constantly decreasing)?

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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Lethn on February 14, 2013, 02:44:28 PM
Am I right in saying that the network updates itself if the coins disappear anyway? I'm not sure if you could destroy them.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Atruk on February 14, 2013, 03:35:51 PM
Am I right in saying that the network updates itself if the coins disappear anyway? I'm not sure if you could destroy them.

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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 03:42:21 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: RodeoX on February 14, 2013, 03:43:38 PM
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 / .


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: gusti on February 14, 2013, 03:44:15 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: wtfvanity on February 14, 2013, 03:45:22 PM
Am I right in saying that the network updates itself if the coins disappear anyway? I'm not sure if you could destroy them.

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.

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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Atruk on February 14, 2013, 03:53:57 PM
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.


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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 04:02:57 PM
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.
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?


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: IveBeenBit on February 14, 2013, 04:14:44 PM
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.
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?

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?"


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: wtfvanity on February 14, 2013, 04:30:46 PM
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.
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?

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?"

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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Atruk on February 14, 2013, 04:39:15 PM
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?

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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 04:43:48 PM
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).


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: wtfvanity on February 14, 2013, 05:00:20 PM
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 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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Portnoy on February 14, 2013, 05:14:43 PM
Someone want to buy all existing bitcoins?

Nice! I am selling some of mine at 20 billions $ each  ;)



Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Lethn on February 14, 2013, 06:19:05 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: 1PFYcabWEwZFm2Ez5LGTx3ftz on February 14, 2013, 06:20:42 PM
First of all you can't buy all the bitcoins cheaply, that isn't how markets work.

Also: https://en.bitcoin.it/wiki/FAQ#Won.27t_loss_of_wallets_and_the_finite_amount_of_Bitcoins_create_excessive_deflation.2C_destroying_Bitcoin.3F

Edit: I would quite enjoy someone attempting this "attack".
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: RodeoX on February 14, 2013, 06:56:06 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: btcgdi on February 14, 2013, 10:30:30 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Driice on February 14, 2013, 11:09:34 PM
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.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: lassdas on February 15, 2013, 04:30:05 AM
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.
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.

That's ridiculous, there's no fuckin' way you can buy anything close to all bitcoins with that amount of money.
Take a look at the order-books to get an idea of what you'd have to pay.

For example, if you would buy all available coins on MtGox right now, you'd have to pay
16 224 128 220 282 USD and you would only get 64372 bitcoins, and
12 478 225 504 440 EUR would buy you another 64753 bitcoins.

That's a hell of a lot of money, even for the FED.
They might get a tiny fraction for $250M, but there's no way they could ever buy them all (or close to),
most bitcoins are not even for sale.
   


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: baggyp on February 15, 2013, 07:11:46 AM
It would be a pretty clever way for the Fed to get some cash circulating... *tin foil hat*


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: mjc on February 15, 2013, 07:23:08 AM
I hope they do.  Because after they my BTC from my hand's they'll be worth so much it will not matter.  we'll just start over.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Gabi on February 15, 2013, 11:04:19 AM
The total value of all bitcoins currently is several hundred million USD. That is pocket change for some bank or government who would wish to destroy bitcoin. What would stop them, to open an exchange of bitcoins into USD, with twice the ratio as all other exchangers, and then never spend (or destroy) all acquired bitcoins, until there are none, or a really small amount left in circulation? I realize this would drive the price of the remaining bitcoins way up, but wouldn't it destroy the bitcoin system, if only say 0,1% of 21 million possible bitcoins actually existed (and that number would be constantly decreasing)?
Call me when someone want to buy all bitcoins, i'll sell mine for some billions of $  ;) or a bit more!



Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: usagi on February 15, 2013, 11:37:40 AM
The total value of all bitcoins currently is several hundred million USD. That is pocket change for some bank or government who would wish to destroy bitcoin. What would stop them, to open an exchange of bitcoins into USD, with twice the ratio as all other exchangers, and then never spend (or destroy) all acquired bitcoins, until there are none, or a really small amount left in circulation? I realize this would drive the price of the remaining bitcoins way up, but wouldn't it destroy the bitcoin system, if only say 0,1% of 21 million possible bitcoins actually existed (and that number would be constantly decreasing)?

What happens if someone puts all the money into a giant hole, pours gasoline on it, and sets it on fire?

https://www.youtube.com/watch?v=JnX-D4kkPOQ


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Endgame on February 15, 2013, 12:37:41 PM
Somebody already tried damaging bitcoin by destroying a bunch of coins. I remember reading a thread about it a while back. They didn't manage to destroy bitcoin, but they did provide some good lulz.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Warry on February 15, 2013, 12:55:38 PM
Bitcoin dies, someone rises and makes a new currency and everyone switches to that..


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: muyuu on February 15, 2013, 01:05:20 PM
Not selling all my coins at any price. Might sell a few at 10000 each :P


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: hundenapf on February 15, 2013, 02:25:56 PM
Question is rather what happens when the Internet is banned  ;)


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: vyvy on February 16, 2013, 10:28:33 AM
There's nothing to stop them from doing that but why would they want to?  They'll basically be giving away money to the common man (something banks aren't willing to do today in the form of loans).  After acquire most of it, the remaining coins would be mostly worthless, as others will just move on to another crypto currency and there would be little demand for Bitcoins.

Realistically, it'll be much easier and cheaper to destroy Bitcoins via other means than buying it all up.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: xxjs on February 17, 2013, 05:42:45 PM
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.
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?

$250M is just the value based on small trades today. It would not be possible to buy a substantial amount of bitcoins for the current price.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: notig on February 17, 2013, 08:42:34 PM
It would not be a good idea. If someone did that...... if you started buying up the coins the price would go up. It would be expensive and bit coin users would get rich. In the end even if you got them all and destroyed them all you would manage to do is prove that people can get rich by using these alternative currencies. Another would rise in it's place as fast as lightning.

That's why I think ultimately banks should embrace bitcoin. If they do that then at least they can control it somewhat more than if they try to kill it. If they try to kill bitcoin through any means then another system will simply pop up in it's place. But if they all the sudden integrated banks with new bitcoin exchanges they could take control from mtgox and make money.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: antimattercrusader on February 17, 2013, 09:21:09 PM
I don't know if it's been brought up yet - but what about "lost" coins?

I don't think you could truly buy every single coin, and a buying frenzy of that nature would push the price up. Someone would have to want to buy it out pretty bad and have a large commitment of funds, possibly alot more than the current value of BTC.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: Monster Tent on February 18, 2013, 12:12:22 AM
The long term lending section does more damage to bitcoin than any government could.

More likely they will setup hundreds of exit and entry nodes such as buying mt gox and other large exchanges then tracking the money flow.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: mandyb on February 18, 2013, 12:23:36 AM
Not very likely!  Some other form will pop up to take it's place.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: serp on February 18, 2013, 12:34:56 AM
As has been mentioned, buying all the coins would be impossible since not every coin is up for sale somewhere.  You could buy up all the coins currently listed with an ask price at mtgox but obviously you aren't going very many at all for what most refer to as the current price (last or avg). 

Right now there are about 10,793,875 total bitcoins in existance.  Of those there are about ~84,000 currently for sale on mtgox.  To buy up those 84,000 it would currently cost $16,224,019,674,361.37 USD.  That's over 16 trillion dollars to buy 0.7% of the current available bitcoins.  Not to mention the number of bitcoins yet to be created.

Really, all any attempt to buy up that many coins would just end up making us all rich as the price would sky rocket.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: DiHydro on February 18, 2013, 05:58:29 AM
First of all you can't buy all the bitcoins cheaply, that isn't how markets work.

Also: https://en.bitcoin.it/wiki/FAQ#Won.27t_loss_of_wallets_and_the_finite_amount_of_Bitcoins_create_excessive_deflation.2C_destroying_Bitcoin.3F

Edit: I would quite enjoy someone attempting this "attack".

I never realized that Bitcoins were infinitely divisible, that does seem to make them resilient to any but the most determined attackers.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: SRoulette on February 18, 2013, 07:02:54 AM
I become insanely rich and retire.


Title: Re: What happens if someone buys all existing bitcoins and destroys them?
Post by: DannyHamilton on February 18, 2013, 10:59:57 AM
I never realized that Bitcoins were infinitely divisible . . .
At the moment with the current protocol, they aren't.  They are currently only divisible to 8 decimal places, with 0.00000001 BTC being the smallest possible nit that can be transferred between bitcoin addresses. In the future, if it became necessary, a protocol change could occur.  Depending on  how it is implemented, doing so might require a fork in the blockchain, but if it was necessary there would likely be enough support and acceptance to accomplish it.