Bitcoin Forum

Originally posted at Reddit (http://www.reddit.com/r/Bitcoin/comments/1b7own/if_i_were_a_central_bank_heres_what_id_do_to/)

Playing Devil's Advocate here....

Let's play a game:  I'll be the Central Bank with say, 10 billion USD to devote to the "problem" of bitcoin.  You try to think of why my plan won't succeed.    

• I win when I can cause situations that scare users away from using Bitcoins.  
• I lose when non-technical users successfully and satisfactorily use any currency that's not controlled by a central bank.

So I'm assuming everyone understands why central banks will never like Bitcoin.

It's a construct completely outside their control, and since they get their power from issuing and being the central clearing house for paper currencies the mere existence of an alternative that doesn't have those problems is very dangerous, because it's obviously a better deal for its users in the medium-long term.

You can't manipulate a currency unless you have a lot of it at your disposal. With dollars, that's easy - Just create some new currency.
But with Bitcoin, you can't do that - So what do you do as a central bank with the ability to create as much paper money as you want.....
You buy a bunch of bitcoins, and the price doesn't matter. Actually, it's BETTER for you if your buying causes the price to go up, the more the better.

The total market cap for Bitcoin just hit 1 billion, so if the Fed wanted to buy 10% at current market rates best case scenario it would be 100 million, which is pocket change for the entities we're talking about. The demand spike creates a price spike which pulls media attention which brings new buyers which feeds higher prices which feeds more media attention, the cycle becomes self perpetuating after a while. That's where we are now.

Because Bitcoin's fundamentals (stable supply, distributed decision making, borderless operation) don't really leave room to argue they're worse than Dollars, the only argument that can reasonably made against them is that they're unstable and therefore unsafe for the average person to use.

So the way you do that is help the price go way up by buying in quantity over a reasonable period of time without regard to the price, then once you've cornered a reasonable proportion of the market (say 5-10%) you dump them all at once, smash the price, and incur massive losses for the new users who bought in during the climb through higher prices.
Then (after the market exhausts itself at the bottom) you DO NOT buy any of your coins back, since the dollar amount is trivial it's better to leave the impression that demand in the market has completely left town.

This also means you can use the same trick of accumulating -> causes bubble -> encourages newbies to get in -> sell large stake -> pop bubble -> cause newbie panic -> advise currency is unsafe -> wait for fundamentals to become important again -> repeat

What do you think, why wouldn't this be easy for any major central bank to do?

You're assuming there is no significant amount of diehard hoarders, and more importantly, that there is no real economy here that needs these coins for trade.

Both are false, although I wouldn't expect the fed to know this.

You are also assuming there is ONE central bank, when there are many, and many countries in the world full of bitcoin holders.

Bernanke can try all of this himself, for instance, but without the coordination of the EU, IMF, China's central bank, and others, he isn't fighting the full bitcoin market; just the US market.

Too many assumptions, and too many strong bitcoin advocates. I think it would fail.

However, now that we've passed a Billion $ market cap I fully expect some bad press to be manufactured and thrown our way. Things like terrorists attacks funded fully in bitcoin and the like... If they pump out enough of that bullsh!t then the sheeple of the world will form a strong resistance and we'll be far more segregated as a race.

They are experts at propaganda. Just look at any presidential election. Once we've taken a big enough bite out of their economy, this is the big gun that they will use on us.

We had a bubble already.  Tell me, how is that working out?  (look at nr of transactions, nr of wallets being used etc.)

1. Build an ASIC mining farm with at least 2x current hash power.  Make it quite obvious that one entity controls at least 2/3 the hashing power
2. Mine like a motherf&*$er (throw in the occasional double-spend, just for kicks)
3. Watch difficulty go through the roof
4. Dump your mined btc, causing minor price crash
5. Stop hashing, added difficulty will cause blocks to go through every, say, half hour, instead of 10 minutes, choking the network with uncleared transactions
6. When difficulty readjusts low, goto 1:


A few iterations of this are likely to kill bitcoin, I think.

Make sure you keep your plan a secret because there is more than one central bank, and they probably have more money than you to spend. Do you think they will waste their money helping you to destroy Bitcoin, or do you think they will buy your cheap bitcoins and put you out of business?

Central banks have always worked together against the slave class.  Watch the Forex markets if you don't believe so.

It would be naive to think they won't try to kill Bitcoin.

So far though 3 good opportunities to cause a crash have resulted in a rapid rebound.  Demonstrating some pretty good resiliency.

The momentum is only increasing.   The cost of doing something like this is going up exponentially.   

I suspect there are enough in the community to see it for what it is and buy, buy, buy.

It's the new naive user that will be hurt.

Bankers only care about making money for themselves. In fact, it looks like the BRIC nations may move in where the EURO is failing.

1) Buy off / co-opt development team and major miners.  (check)

2) Establish network control via frequent, forced client upgrades and network splits.  (check)

3) Use shills to co-opt and distort Bitcoin political message away from freedom and opposition to bail-outs and towards democracy and paying taxes to support cronyist banks.  (check)

4) Support large-scale criminal enterprises to secure a supply of Bitcoins to short (ponzi schemes, thefts, fraud, etc).  (check)

5) Setup Bitcoin services designed to eliminate anonymity.  (check)

6) Identify major holders.  (check?)

7) Control ASIC manufacturers.  (in progress)

8 ) Targeted shut-downs, bank account raids, random door-kickings of major participants that fail to go along. (coming soon)

9) THE PUMP -- pump up the price by preventing selling, artificially limiting supply, and by buying en masse.

10) THE DUMP -- crash the price by coordinated technical attacks, sabotage, targeting merchants, loosening of restrictions on selling, and by dumping BTC.

11) GOTO 8

1. Bitcoin is open source. Satoshi will return anonymosly. Check
2. Anonymous dev team will use darknet communications to coordinate counter attack because they are smarter than bankers. Check
3. FUD is ignored by anyone with a brain. Check.
4. A good thing. Monetizing Bitcoin makes my stash more valuable. Check.
5. Set up anonymity services on darknet. Check.
6. Change your name. Check
7. Compete with ASIC manufacturers by building bigger fabs. Check.
8. Use TOR. Check
9. Sell to pumpers. Check.
10. Buy from dumpers. Profit.
11. GOTO 8
Better sell all your Bitcoins.

Oh, I forgot:

3b) Promote Bitcoin as a 'payment service' or an 'investment' instead of a currency in order to justify regulation and create volatility. (check)

I don't think they'll bother trying to take down bitcoin as another would just take its place.

They'll probably just buy up a good portion of btc with their unlimited US dollars and manipulate the market.

The central banksters along with the CIA will be among the biggest users for the purpose of money laundering.

No. Why?

3b. Vote criminal politicians out that craft unjust laws. Check.

Next time read the next sentence - The short version is "Because central banks don't have to obey the rules of the market, but if the world adopts bitcoin then they DO have to play by the same rules as everyone else.   That might not seem like a big deal to you, but the ability to break or change the rules at will is the only emergency control mechanism they've got.  If Cyprus and the EU had bitcoin as their primary currency, would the EU have been able to freeze all bank accounts and take money out of all accounts? 

No.  They'd have to play by the rules, which means they can't save the failed bank, which means they don't have control.

Actually the division you're seeing is because the BRIC nations recognize they're getting the shitty end of the stick.   Look at gold manipulation, that lasted for decades before some central banks turned buyers (knowing what's coming).   It's still happening now, but the cartel is breaking up since CBs actually want gold if we go through a destablizing event in the major reserve currency.   

I'm not assuming any such thing  - I'm assuming that if a central bank had 10 billion USD to play with in hopes of disrupting Bitcoin, you would first have to wildly inflate the price while buying your initial bitcoins to work with.  Because you have more money than the whole market by an order of magnitude, the price people sell at is *irrelevent* and you actually WANT the price to be as high as possible.   To your point, this would be very few sellers to the much larger demand.  Sure, many sellers wouldn't go for it at a 50% premium but we're now up over 1000% gain since january.  How many people do you think would still refuse to sell a single coin at 10,000USD each?    

Again, the higher the price goes, the better for the purposes of manipulation so slim supply is DESIRABLE for the manipulator.  The higher you go, the further you fall (as they say.

As far as "fighting the US market" i don't think you understand how bitcoin functions as a stateless entity.   As VALUE goes into bitcoin, whether from Dollars or gold or euros or whatever, there is more money chasing the same (at a steadily increasing rate) number of bitcoins.  

If someone uses dollars to buy 10% of the available bitcoins, it doesn't matter how you price it - bitcoins are now rarer to other market participants, cash is now more plentiful to other market participants, so bitcoins will cost more regardless of the currency you buy them with.

As far as Central Banks working at cross purposes.... Why?   They're all in the same paper boat, Bitcoin makes their product look terrible - A twinkie to a flourless chocolate cake, both are confections but one's garbage and the other gourmet.   How do you sell the twinkie if the flourless cake costs less and is better for you?  You make the flourless cake look dangerous.

Central banks are all selling their own variant of twinkies, so they all benefit from getting rid of that stupid cake - So long as the only options available to people is twinkies, they know they look just as good as their competition.

Does that not make sense?

The whole theory here is that the Central Bank would buy bitcoins over a somewhat long period of time because the ascent needs to look natural - They want the price to go up, but not too fast.  Then once you're done accumulating and helping the price get nice and high you dump everything, don't rebuy them, and let the air out of prices until the market clears the enormous amount of coins with a willing seller but no buyers.   

So I don't really think your volume comments have an impact, right?

Why would they benefit from the "money laundering" features of bitcoin when they already fund their operations without any oversight using money they don't have to buy?  Seems like that's a system they've had working well for the last 30 years at least, I'm not sure how this helps them and we know the government doesn't like to cut jobs.

And what do you mean by "take down bitcoin"  - I didn't say they would destroy it, just that they'll manipulate it to create instability so they can say it's unsafe for normal people to use.   

Because THAT is how bitcoin wins - when normal people step away from paper currencies and use Bitcoin as their de-facto money.  That's what Central Banks can't allow because then they have no control.

It took 6 months+ to recover, scared a lot of players out of the market who have still not returned, and let everybody talk about how "unstable" bitcoin is because it's just a speculative bubble.   

The fact we're now in an even bigger bubble is cause for concern in the short term because as normal people buy into the currency, not wanting to miss out on the next big thing, a crash in price back to even 500%+ what it was in January will mean HUGE losses for anyone buying in at prices over 60/ea.   

Those investors won't hang around once the price is at 30 hoping for a rebound, they'll take the loss and be out of bitcoin thankful they didn't lose more and swearing to not be stupid enough to try a "new currency" again

Which again, is my goal (as the central bank) so I won that round, and it looks like I'll win this round too.  Crash the price, Gut the newbies, destroy the legitimacy of the investment for at least a few months.

I actually think this wouldn't work :) Once it's obvious an entity controls most of the market and is inducing these fluctuations, non-compromised mining interest groups would increase their own operations to counterbalance.      This is possible because while there is no end to the money that can be thrown by a central bank, there are real technical limitations when it comes to the production and sale of ASICs, all the manufacturers are incredibly back-ordered. 

 That chokepoint means any agency trying to manipulate would have to
a) wait a long time to build enough ASIC power relative to the rest of the market.
b) build their own ASICs (the government is not known for efficiency)
c) Buy an ASIC manufacturer and use all production internally without telling anyone.

I think this is a fringe risk for the foreseeable future, especially as ASIC manufacturers start shipping units and the power becomes more distributed.

I don't think they can kill bitcoin, just slow its adoption and create a group of people who will never touch a cryptocurrency again because it cost them so much.

The cost of doing something like this going up is a GOOD THING for the manipulator, it means there is further to fall and since they have access to (for the purposes of such a small market) unlimited funds, they don't care about incurring losses - only the losses they cause others to incur.

The community is not small, but if the largest buyer suddenly turned seller and dumped 10% of the bitcoins in circulation on the market, I think you'll agree that would cause a major panic and take quite some time for the market to effectively clear. During that time, what happens to the people who bought in at 100/ea?  1500/ea?  10,000/ea?   How much of their investment will they be able to recoup as they struggle to save what they can?

Any central bank (ECB, FED, BoE) and gov (USA, EU) can kill bitcoin and similar currencies in two days or less.
They have too many options. For example, close exchangers, forbid the protocol,..., too many.
First at all, bitcoin is not a real currency, very little people works for BTC, very little people sell products and services in BTC. BTC has not stable value, ...,not possible for real life.
Only exchange, only mining, ..., for $, €,....

In the other hand,..., software developers/foundation are the new "board of governors", or central bank of the currency. A change in client/server of bitcoin network, it is really, a change in bitcoin.

You gave two examples; Close exchanges and forbid the protocol

Close exchanges: this would cause a major disruption, a price crash... BUT in the long term it's actually good for Bitcoin.   Look at Napster vs. p2p music sharing now, every time a service was smashed it was replaced (not by the same people) with something even more distributed, even harder to stop, and even harder to generate profit from so the people doing it care less about money and more about the cause.

If I were a central bank that is NOT what I would ever want to do, you want to make sure that bitcoin stays as concentrated in as few a places as possible because you can turn that into a chokepoint - Apply pressure to Gox and you can affect 92% of the volume being traded, which means you control the market.   If you close all the taxpaying, law abiding exchanges down you'll just cause the creation of shadow markets that make it very difficult to track the users since they don't keep customer records centrally.

Forbid the Protocol:
Same thing, price crash, but instead you wind up with crypto forks of the protocol that focus heavily on anonymous use and maximally decentralized control.

The developer foundation is NOT a central bank board, because a central bank board acts with unilateral authority and makes changes, in secret, to accomplish whatever purposes they want.

The developers on the other hand have to come up with a plan and then TELL EVERYBODY ABOUT IT, and not just tell them about it but convince them that the idea is correct, will work, and won't cause a problem that's potentially worse than what they're fixing. 

AND even if they manage to convince everybody to do the wrong thing a few times, people will eventually just stop listening to them since it'll be obvious they're either stupid or NOT working towards the best interests of most people using bitcoin.

Got anything else?

Central bank can buy and destroy 10.000.000 BTC or 21.000.000 BTC with fake €, $.
I remember that in USA gold was stolen from people,..., without any problem.
Use of bitcoin can be prosecuted,..., too many.

This, it is not a real political system. Democracy, oligarchy, what kind of political system is?
Any bitcoin user can say what to do with bitcoin?. Developers can cause forks in blockchain and destroy bitcoin. Users that do not accept new bitcoin rules could lost money in blockchain fork.
 
Client/server developers/foundations can cause forks, really they are the new central bank.

Gold, silver, and pockets ..., has no central bank.

Except the price of gold and silver have been successfully suppressed during the last five years of crisis.  And for basically the same reasons.  They can't stop people from recognizing the value, but they can play tricks with supply and demand (because you can create paper promises for real gold or silver, which removes the advantage of no entity being able to create something of value out of nothing)

So they control the market as best they can, and when it looks like things are going to run away from them (to a higher price) they HELP IT GET THERE by buying into the market at the higher prices, and then selling (at a loss) to cause a panic out of the bubble.  This is the technique, has been for years.

Bitcoin does not have the ability to do that because there are no paper bitcoins (you know what I mean, you can't just create a promise for bitcoins you don't own that will be accepted for the same price as a bitcoin).  BUT it has the advantage of being unregulated and very small, not easier or harder to manipulate - but very different.

If what you say happened to Bitcoin and an entity bought everything just to destroy it, the people who sold their bitcoins to the buying entity for dollars still would have all the concerns about dollars that made bitcoin attractive in the first place, so a fork would be developed that would have a greater emphasis on being able to tell when a coin was in a "destroyed" state, and a mechanism to recycle those into the system.

And pockets absolutely have a central bank if theres paper money in them.  Just because you have a dollar in your pocket doesn't mean it'll buy a dollars worth of value tomorrow.

So you win a battle, but you are losing the war...   
I still think the bubbles are normal price discovery though.

Why can't I just keep doing this forever, preventing most of the people in the WORLD from viewing bitcoin as anything other than a highly technical instrument of speculation that is unsafe for the average person?

This is a fascinating discussion. Big thanks to everyone contributing. I do wonder, however, if someone involved with central banking might not find it a nice play book. At least we're also discussing potential solutions.

As an American, I think government restrictions will be the hardest thing to get around. You can mention Tor and darknet and such things, but the average person doesn't have a clue about them, and probably never will. If Bitcoin is pushed to the dark, it won't ever be adopted widely enough to be a real solution. That, of course, assumes those who operate "in the dark" are a small minority. If they end up becoming the majority, we might have another revolution. That, I think, is unlikely (at this point).

I think that the OP is spot on with a lot of these assumptions. Bitcoin, even in the current scheme of things, is a HUGE threat to the status quo for reasons painfully clear. In the 'civilized' world, banksters run EVERYTHING. Granted, I can only attest to the situation in the US, but ffs, you have to be pretty naive to think otherwise. Don't agree? Quantitative Easing. I can barely pay my bills these days cause one USD doesn't go very far these days...

Now, with that being said, if Slave St really wanted to go after BTC, my money would be on a 51% attack. MUCH easier to prep for and the desolation to the BTC economy would be as simple as flipping a switch. Same could be said in regards to the NSA... with their available computer power and toys they have lying around, they could probably do it right now if so inclined or motivated... but thats a whole other argument.

I'm bright, but nobody ever called me a genius - You've got to imagine if I can think this through on a whim it's not that difficult for people whose business is based on staying in control.

You've correctly identified the ONLY point where the US government, or any government really, has control of Bitcoin transactions - When people exchange their bitcoins for dollars.   Because it isn't tied to the USD, they can make the case that it's speculative profit and thus requires capital gains to be paid on it.  There are actually several ways they could go about this, but that's the most straightforward in my opinion.  As the central bank I'd want regulations to be onerous, but not so difficult to navigate that it's easier to just break the law and avoid them.  Ultimately you want as much going through the legal system as possible, because you can tax that which adds to the cost of using it for the average law abiding citizen and makes dollars look better.

Except that governments aren't known for being technically brilliant.  In fact, they're highly inefficient.     If what you're saying was true, why hasn't a government company taken the lead in microchip technology yet?   

Ultimately, they  use what's on the market

No, the only reason I'd think this is a serious possibility is if an ASIC firm goes private and instead of selling into the market engages in massive "proprietary use"

Technically you're right - The money has to go somewhere, but you're wrong in saying it's "Free money to everybody".

The new dollars will only go to experienced traders who know the game and follow the markets like a hawk, fingers hovering on the sell button at the right time. 

The people I care about (the newbies just getting into bitcoin because it seems like such an opportunity) will be the ones who panic and sell when the market is 50% below what they paid, and it looks like it's going all the way back down. 

So while Bitcoin as a market keeps getting bigger, all the value is being collected at the early adopter/day trader user level.  People who want to use it as a currency?  No thanks, too volitile!   People who want to invest in it because it seems like a good opportunity?  Well, it was an opportunity until I lost 50% of my investment!

We all agree you can't "Kill" bitcoin, but doing this I think you could keep it VERY niche and preserve the US dollar as the world reserve currency at least a few more years.

Seems like people are out of ways to stop me the central bank) from preventing bitcoin reaching mass adoption through induced, planned serial bubbles and crashes.

I win.  Muahaha

you didn't win. What you're proposing is unfeasible, it won't happen.

What part isn't feasible, that a central bank whose job it is to make sure they remain in control of the currency used by its subjects wouldn't manipulate a market?   That 10 billion dollars is too much to throw at a problem like Bitcoin?

Try using actual reasoning instead of just declaring your will as fact.

I am.

I'm doing it right now.

If I were a central bank, I'd be buying into the market, keeping the price going up by providing a solid level of demand irregardless of the price and accumulating the ammunition to cause a crash to accomplish my ultimate goal:   Forcing a newbie rush-to-the-exits and creating another swath of people who were interested enough to jump through the hoops and buy bitcoins with fiat currency, and who after suffering enormous losses during the crash will never think of bitcoin as anything but a scam that cost them money.

Every part is unfeasible.  First of all Central bank from where? Second, not all the bitcoins are for sale and if they buy a huge amount of bitcoin the price will skyrocket exponentially, and I'm talking near the hundreds of thousand per btc. simple offer and demand.
I can assure you that by the time they buy say 1,000,000 BTC the price would be so high that everyone here would be a millionaire with 8 digits!
your assumption is ok, I'm a bank and I have 10 billion to spare to crash this system... but you don't realize that:

A) The other btc holders also know how to play this game
B) Not all bitcoins are for sale.

And sure, invest 10 billion in BTC and after you invested 1 billion the price of BTC skyrocketed to $1000, and then invest 2b and it'll go to 10,000 and so on... by the time they invest all the money, others already profited from the spikes...
Who will win?
All of US..
who'll be scared? a few noobs...

without the bank example... just look at current prices... up 800%-900% since a year ago... let's pretend this mysterious central bank has been driving the price up...
I already made a shit ton of money... I can easily afford to sell at 80, 70, 60, 50, 40, 30, 20, even 10 before I start losing money!
Anyways, you need to read more about economics. Your idea is unfeasible like I stated before.
I hope that helps as an explanation.

Also, lot's of people here will be buying like nuts when the price will crash under, let's say 10 USD. I know I would

Every part is unfeasible.  First of all Central bank from where?
For simplicity, lets assume it's the Fed, which issues the world reserve currency.

Second, not all the bitcoins are for sale and if they bit a huge amount of bitcoin the price will skyrocket exponentially, and I'm talking near the hundreds of thousand per btc. offer and demand.
But the entirety of the bitcoin market is 1 BILLION USD  - Every month I print and  purchase 65 BILLION USD worth of Mortgage Backed Securities at face value - These are financial instruments that cannot be sold on the open market because they're really worth a fraction of the value the FED pays for them at, so clearly the amount isn't the issue.

Let's assume you're right - In order to buy 10% of the bitcoins on the market the price goes up to $100,000 or even $100,000,000 per coin -  That actually accomplishes my purpose BETTER because it means newbies will feel like they MUST buy into bitcoin because it's clearly going up in value and will never come down.  "I wish I had bought it at $1000 per coin, so I better buy when it's $10,000 per coin so I don't miss out when it becomes $100,000 per coin.      

The higher the price goes, the more attractive it is to those not holding any and the more likely they'll buy at the inflated price.   Then when I'm done accumulating, all the suckers are in the market, and I want to make sure they're never in it again I sell all at once and DO NOT rebuy.  With the largest buyer turning into the largest seller, demand collapses and as the price plummets all the newbies decide to take the loss rather than risk losing EVERYTHING, so they all turn into sellers to.

I can assure you that by the time they buy say 1,000,000 BTC the price would se so high that everyone here would be a millionaire with 8 digits!
your assumption is ok, I'm a bank and I have 10 billion to spare to crash this system... but you don't realize that:

See, as the central bank I don't care about you or the other people who have been invested in bitcoin all along and understand it's value proposition - I actually don't mind if you get rich off this because it exacerbates the wealth disparity in the currency, which makes people not like early adopters.    The only thing I really care about is making sure I HURT newbie bitcoin users so badly that they never even want to hear the word Bitcoin again, and every time someone says it they cringe, responding "it's a scam - Don't lose money like I did"


A) The other btc holders also know how to play this game
B) Not all bitcoins are for sale.
A) I don't care about you or other bitcoin holders, just like I don't care about people in the gold market who understand and profit from the predictable manipulation.
B) Enough are for sale so long as I don't care about the price because it's all small potatoes compared to the value backing my operation (multiple trillions)

And sure, invest 10 billion in BTC and after you invested 1 billion the price of BTC skyrocketed to $1000, and then invest 2b and it'll go to 10,000 and so on... by the time they invest all the money, others already profited from the spikes...
Who will win?
All of US..
who'll be scared? a few noobs...
If I can prevent the currency from being adopted by the average person, than I win.  My goal isn't to prevent you from getting rich, it's to make sure Bitcoins don't replace Dollars as the currency everyone expects to do business in.   This is a success because Bitcoin is substantially better at being money than really anything else out there, so If I can prevent Bitcoin from becoming the world reserve currency, it means I get to keep running the world money supply.

without the bank example... just look at current prices... up 800%-900% since a year ago... let's pretend this mysterious central bank has been driving the price up...
I already made a shit ton of money... I can easily afford to sell at 80, 70, 60, 50, 40, 30, 20, even 10 before I start losing money!
Anyways, you need to read more about economics. Your idea is unfeasible like I stated before.
I hope that helps as an explanation.
Again, I don't care about you - You'd act in your best interest no matter what I do, I care about your mom and how upset she'll be after buying into bitcoins as an investment when they're worth $1000 each, who sells when they crash to $40 each.  

She'll never go near bitcoin again, I win.

And I guess he couldn't come up with anything else so he stopped responding at this point

For a tomatter with a mind he never learned about red/green text. Bad tomatter!

Actually, there may be a very easy way for a central bank to destroy Bitcoin. Just back their money 100% with precious metals.

I just got tired or reading  your nonsense... that's all.. your argument is weak, it lacks substance, it won't happen. You print money as you stated (you the FED) and your money loses value. Go tell chinese people to sell all their US Debt and the US will go bankrupt, will they do it? of course not! they will not benefit from that either.
Again, you don't have a valid point, I'm sorry that you don't understand it. You might want to go study economics a little? I'm not being a troll, but seriously what you're proposing is unlikely if not impossible and you didn't provide a single decent explanation that has some sense.
Just ask the community here to see what they think...

Color blindness is not a laughing matter.

Not being colorblind and not knowing anyone who has advertise their colorblindness to me, I do not think of it when post. 

Guilty as charged.


Who do you think the largest purchaser of US debt is?    That'd be the Fed. 

The chinese didn't stop buying, but we're spending more than they're willing to lend us.

What you're saying would be true if we weren't running a 1 trillion+ yearly deficit, but we are and it looks like that won't change in the foreseeable future.  If you don't think the Fed is printing money and devaluing the currency already, you need to take a look around. 

Outside of attacking me personally and saying it could never happen, you really haven't said much here at all.

Indeed if all the worlds central banks actually started to do their jobs; keeping prices rock steady with no inflation or deflation and made transactions free and private and stopped seizing bank funds - the appeal of Bitcoin would lessen.

Add some exchange crack downs, attack-mining and repeated hacking attacks against all Bitcoin users and they might do very well.

As for manipulation I would buy 100 billion $ of BTC and then just sell slowly "forever" in such a way that anyone who held Bitcoins would always loose money over time for years and years. I would make a few millionaires sure but from then on drive most away.


However their system is fundamentally broken, they rely on printing money to line their pockets and keep their friends happy. It's a card house of excess and decadence waiting to fall.

It's a system of plunder with corporations paying politicians for parts of the pie. Well such a pie quickly shrinks and Bitcoin is the spark.

The goal isn't to destroy bitcoin - If you do that, another fork will pop up that fixes whatever caused/allowed Bitcoin to be forced out of existence.   

The goal is to discredit bitcoin, to prove it's unsafe and therefore should be left to people who are not you, the average user of  money.   

Can't start a new bitcoin fork that fixes most of the world hating cryptocurrency

Agreed. Bitcoin is the only way to reform the system without loud noises and weeping mothers.

Manipulate the market is difficult, the best a central bank can do is simply deploy $100 million worth of ASIC mining farm, which is more than 10 times network total hashing power, and hide them. They will select a time when BTC is suffering from an internal problem and start all those hashing power in one night and make a 90% attack, make millions of transactions invalid and cause huge loss for merchants

But what is the purpose? If bitcoin is so great then why not join the game? It is just another star performence asset in their portfolio. Their debt based money issuering have huge sustainability problem and bitcoin is their only hope to bring the sustainablility back. Unlike housing, the demand for bitcoin can be endless, and supply is always limited, its price will never stop rising, means economy finally have a growth area which can last forever

Imagine in not so far future, almost 20% of people are working with bitcoin related business, this dramatically reduced the jobless rate, and those who still work get higher and higher salary due to labor shortage, then FED have to tighten to prevent price inflation, and that action have almost no effect for bitcoin, by that time, bitcoin value could still be driven up by physical goods/services

If it were an actual strategy, it is already a losing strategy.  Bitcoin is gaining a lot of adoption.  Granted, it is still very small, but it used to be a lot smaller...

PS: Apologies if I repeated someones argument, this thread was tl;dr for me.

The game is (was) to figure out a reason why an entity like a central bank would not be able to basically control the market and intentionally cause bubbles and panics, assuming they wanted to throw something like 10 billion at the problem.

It is of course a losing strategy, because Bitcoin can't be shut down or effectively regulated without causing a fork that's even more difficult to deal with.  Really all governments have to do is stop printing money and start acting responsibly, then Bitcoin is a huge boon to them as well because of the easy commerce it enables.

But unfortunately it doesn't look like they plan to stop any time soon, so it's in their best interest to make Bitcoin look as risky as possible.   They can't just come out and say "don't buy that, buy dollars instead" because addressing the problem gives it legitimacy so better to keep the market unregulated, buy into it with the intention of being disruptive and scaring out less sophisticated users.

The end game is the fall of the dollar, but if we have serial bitcoin bubbles that always end very badly for lots of newbies, that will really hurt adoption in the medium-short term.

Have read the whole thread.

This dude above has the best strategy, because the ASICs are factorially more powerful, and moreover, prisoners work for .50 cents an hour or less in Marxist countries, so an utterly phenomenal amount of hashing power will be fielded in the next 24 months.  It takes maybe 60 days to ramp up a chip factory if you throw X billions of dollars at the problem (an assumption on my part) and can get silicon, and college kids, etc.  So this is a battlefield shaping up.

OP, I agree with you in this respect:  Bitcoin is a threat to those who run the traditional money making machines: Coin mints and paper printers.  The money issuing class, cannot allow bitcoin to survive for let's say 100 years, but they have that long, to effect your plan.  Yes, I agree with your strategy, the guy arguing with you above, doesn't think long term and doesn't understand warfare.  You do.

Indeed, this is a generational war, as Rothchild himself started as a coin collector and became the richest man on Earth.  It took generational breeding his kids into royal familes, selling out to Satan on every level, but he succeeded.  This is the essence of the power which will oppose bitcoin, which effectively will end debt-as-money.

To illustrate the point simply, I can hold an FDR dime from 1963, when JFK was killed, and it's worth about 2.00 US.  But the face value is ten cents, and at the store, the FDR 1963 dime can only get me ten cents worth of product.  No cashier can give me 2.00 worth of product for it, or they will be fired.  Even if the owner allows his cashiers to accept FDR 1963 dime as 2.00 worth of goods, the Treasury lawyers can shut him down and jail him for doing so.  But, the 1965 FDR dime, is worth less than ten cents, and so the face value is what matters.  The coin itself is worth about 3 cents in moly weight melt value.

OP makes a good point in that he describes full on warfare, where money is no object, and winning is the objective.  OP describes simply, that to destroy to idea of bitcoin, at any cost, at any length of time, is a win.

when debt=money, there is no limit to the amount of money you can "make" because humans will always dig deeper into debt.  In fact if you look closely enough, a "Constitution" is a debt document, and WARFARE is what creates the debt, that causes nations to need "Constitutors" who then form a "Constitution"  ...Notice that the IMF could not en-debt Egypt until some men would stand up to pay the debt.  That is the legal definition of a Constitutor, "One who agrees to pay the debt of another, and this is always the primary obligation" - Bouvier's Law Dictionary.

So OP is thinking tactically correct.  However, OP, I would say that plain old guns and poison and particularly public shame (associating bitcoin with pictures of naked kids or meth/heroin) via the HDTV network of mind control, will accomplish the pariah-effect that you seek and will cause people to hate bitcoin much quicker.  The TV lemmings have a great power in mobs, and in the end, you could just hire 1,000,000 soldiers for a cheaper cost, to police your anti-bitcoin laws.  I am thinking of something like the SS and what Himmler/Goering accomplished.  Sure it was a loss for them as two men, but Bretton Woods was a very big win for the money powers, so you could ditch your whole army at the end.  Bankers fund warfare, of course.

Assuming Leo Strauss and Edward Bernays are correct in understanding herd mentality and core-hypocrisy of the human being (not saying I agree with them, but so far they are right), I expect a mass media blitz of negative bitcoin-hating propaganda, over say two years, would accomplish your goals.  It would be combined with shame and legislation of painful prison sentences for bitcoin users/miners (bribes to politicians are fairly cheap), while secretly the prison powers like Wackenhut (who changes their name every year it seems) and Bechtel and so forth, will simply use prisoners and mega-tech, to mine coins and this will give them bitcoins and will increase difficulty for other non-cartel miners who are jailed or hunted, and also by running their own secret bitcoin farms in prisons, they work 24/7 on a path toward the 51% moment where they poison the chain, long enough to shake the system, and scare people or just fork it toward destruction.

So yes, from the perspective of generational warfare, public shame of bitcoin users/miners, combined with jailing them or straight up assassinations and pogroms, combined with secretly putting mega-billions into secret bitcoin mining operations with prisoners (like the ones who now build Patriot missile parts for Ratheon for example) would produce good results that you seek.

The people, as such, overestimate their ability to fight long term wars.  Typically the people, will not want to keep fighting.  They will sue for peace and accept war debt, just to have fifty years of "peace".  But OP speaks for powers that are not human.  Central bankers like Rothschild and the shecklemonger class of people, live only for money.  Mammon itself, demands they sell their own children into the fight.  And bitcoin is a threat unlike any they have ever seen.  If OP's words are grasped, then perhaps bitcoin can be a weapon wielded by the people, to their advantage, but the key is that you can only "make profit" when you SELL.  And how shall the people, NOT SELL THEIR BITCOINS at 1,000,000 USD per coin?

That's the key, if it takes 100 years, and starvation, and nuclear meltdowns, that all will be done, anything it takes to get the regular plebes, to part with their coins.  If the people can never sell their bitcoins, then all that will happen is that they will keep the banker class at bay, but this battle can never be won.  Even Jesus threw over the moneychangers, but guess what?  He died, and they won.

Agree with your banker buddies to clone bitcoin, but with a fresh blockchain.  Slightly change the mining algorithm so bitcoin mining setups don't work.  Integrate the new coin with your online banking software and offer it as an option when nonchargebackability is desired (such as for international settlements or when a merchant requires it (scammer prone industries)).  Create financial products based on the new coin that can be traded by anyone with a brokerage account.

Same as the Microsoft strategy for open source: embrace and extend.  Sure it only works if you own the market, but there is no industry more locked down than the finance industry. Even putting themselves into bankruptcy wasn't enough for banks to lose their place at the table.  The strategy isn't working for Microsoft anymore, but that's because the market they own (desktops) is being replaced by mobile devices where other OSes took root first.

But you have to get everyone to use it for that to work :)   The manipulation won't work if it's recognized and becomes a known factor, people will just work it into their assumptions.  Microsoft took people from a somewhat open platform to a closed platform with better usability, I don't think that same transition can happen here.

Great post :)  I understand the appeal of "overwhelming hardware addition" but I don't see what the end-game there is.   If it's obvious there is a manipulating entity, the value will just shift to a fork that doesn't have that vulnerability.

Honestly if one wanted to be thinking a few moves ahead, you could make the case for creating these currency forks IN ADVANCE and just sitting on the new protocol in the event something like this happened.  You could have one that is built to ignore hashing power beyond a certain maximum level based on geographical distribution, lots of options to keep power distributed.   Another scenario where this would be useful is the "All bitcoin coins are purchased by malicious entity, and destroyed", this would require a fork that has the ability to detect and recycle "lost" coins.     

But you get it :)

My problem with your argument is that once Money stops being important to you because you have so much, Power is all that remains. 

The power of a central bank is to control the issuance and the interest rates of that money, so anything that threatens that control cannot be allowed.  In this scenario, bitcoin is cutting in on a zero sum game - People conducting transactions or keeping their savings in Bitcoin of course do NOT keep that same value in another currency. In our current monetary reality, virtually every transaction in one way or another is enabled by the US dollar.  Most currencies around the world use the US dollar, and US treasury debt as the backing of their own currency.

Also lets keep in mind those "old ideas" were abandoned to remove the controls they put on the Central Bank.  It used to be they weren't allowed (but did it anyhow) to create more money than they could back with gold and silver.  That was inconvenient because what if they really wanted to print more money but didn't have more gold? It needed to be removed so the "proper" actions could be taken.

Bitcoin is like that, except when they want to "do it anyhow", they have to actually tell people their plan, explain the reasoning, and then hope enough participants will think it's a good idea and adopt it as their own.  Compare that to the system now where 12 unelected bankers sit around a table making arbitrary decisions that further their personal goals?  It wasn't until very recently that normal citizens even got to know what was said at these meetings, and now it's with a FOUR YEAR LAG.

If I were a central banker, I would be terrified of two things: Sunlight and Bitcoin

So I'm assuming you don't pay much attention to world events? 

Exactly what do you think is happening with the Euro right now?

 Hint: It's not trying to stay a joint currency because it's in the best interest of its people over the long term.

You may view this as academic, but it is not.

 Don't prescribe malice where incompetency could be substituted, but similarly don't assume benevolence when the actions taken don't appear to be in  your best interest.  They're usually not.

Sorry for arriving late to this thread... but I think your plan is silly.

Why not simply allocate some small percentage of fiat and use it to buy and hold bitcoin... throw enough money at it, drastically deflate it...

Say central banks now own 90% of btc.

How much of what's left is horded? How much is actively being traded?

By forcing a massive bubble over a long enough period of time you might actually slow down the growth of the bitcoin economy. Since the supply is fixed - eventually it gets to a breaking point - where you have to start selling some of your holdings (for insane profits I might add) or stagnate the economy.

So if we give the bankers a choice between making an insane profit over a period of 30 years or consuming their investment to kill competition... which are they more likely to choose?



~



Also, this isn't about "real market value" in the same way a commodity is. . . bitcoin isn't a basket of goods. Even bubbles that exist for long enough will persist after you 'pop the bubble'. It's all about how people perceive the value - so there's no inherent value to a bitcoin.

The problem with the strategy suggested by the OP is that the initial buying of Bitcoin will increase the price which will increase the awareness for Bitcoin.

That is what they *do not* want to happen. They want people to think Fiat currency is the only kind of money possible.

It does not matter if Bitcoin itself is successful or not, once enough people understand the concept of a decentralized cryptocurrency and its advantages, then all is lost for the central bankers. Alternatives cryptocurrencies can appear and take the place of Bitcoin if necessary.

So what the actually are hoping for is that awareness and understanding of Bitcoin stays as low as possible. They are two ways to acheive this, no information or misinformation on Bitcoin.
Both have been attempted, obviously the "no information"-tactic is working less and less.

Hey,
I understand it's a long thread but I've gone over this at least 4 times in previous answers:

it is BETTER if the price increases because it will PULL IN MORE NEW USERS who don't want to miss out on the speculative gains to be made.  Then when I dump all my accumulated bitcoins, the biggest buyer goes to the largest supplier, and walks away from the table with all the money people buy back bitcoins with.

This would cause MAJOR depression in bitcoin because
a) all the liquidity provided initially would be completely removed - People just assume it all stays in the same pool, but if I were a CB I would want to make things as painful as possible and that's the way to do it.  Create false demand that  people get used to, then dump it all to create a HUGE oversupply, which makes all the coins plummet in value as people struggle to sell before it goes to zero.

There will be winners in this scenario, people who buy when the price is low and they will get wealthy  - But I don't care about that.  I care about the majority of average, every day people being TERRIFIED of bitcoin and any other cryptocurrency because the last time they invested and thought it was going up forever they lost a large amount of their investment.    People don't forget losing money, especially when they don't understand why the market moves like it does.  Those people who get burned bad enough will stay away, which is why I win.

As to people finding out about Bitcoin, the fed has zero control over that.  Can't spend money and stop people from figuring out Bitcoin is worthwhile, and since it's fundamentals make it look so good in this time when other money is so bad, how do you stop the awareness?  That's why the only way to do it is seemingly ignore the issue, then when things inevitably go haywire you caution people against investing in unsafe and volitile assets, why not just put your money in the good ol' dollar? is the inferrence.

Your argument would make more sense if bitcoin wasn't infinitely devisable, if 90% of the bitcoins were owned by one shadowy entity unbeknownst to the rest of the market then the remaining whatever% in circulation would be exceptionally valuable, and the amounts being traded for commerce would be .000000xwhatever bitcoin.   There are already plans to move the decimal point once the value gets high enough to justify it.  21 million coins becomes 210 million or 2,100 million or whatever and the 0.1 becomes 1.0 becomes 10.0.

I think by forcing a massive bubble over a long enough period of time would encourage EVERYONE to get into bitcoin,  you need volatility to scare people out otherwise it's stupid to keep your money in anything BUT this perpetually rising currency, that works against my purposes.

And your assumption that bankers care about profit should be dispelled by the last 5 years of world events - Bankers want to stay at the top, the gatekeepers of finance, able to make and break companies like pieces in a game of chess.   Making profits is secondary to that.

I still have yet to see why my arguement is "silly" perhaps you can explain instead of just insulting?

WH WH WHAT WHAT WHAT!?

How dare you suggest that Bitcoins are being manipulated. They are not being manipulated! The recent market action is all down to the people beginning to realise that they need to flee to a safe haven away from the dollar. You obviously don't understand anything about Bitcoins. To suggest that central bankers care about Bitcoin is a form of insanity! If anything, they will actually be glad that there is something that can help them fix the world and make lots of money at the same time. I am going to tell my granny to put all her life savings into Bitcoins. I feel it is my moral duty to do so!

Undermine my paradigm would you? Well, I will tell you, my paradigms are my castles, and I don't take kindly to those who attack my castles!

You are mad!

You are an idiot!

Everything you say is total rubbish!


etc etc etc.

Ahem, sorry bout that, but I do have an overwhelming instinct to adjust my posturing in accordance with whatever tune the mob happen to be playing. The fact that the mob and their group-think are nearly always wrong on most matters doesn't put me off one little bit.

In seriousness, although you may or may not be entirely accurate in terms of details, going by the way you have ruffled so many members of the Bitcoin communities feathers, and having them reveal their seriously faulty ideas about how the world works by waving them in your face, I suspect that your guesstimations will at least in spirit, be highy accurate.

The only counter to your arguments that I have find to contain any substance, is the idea that a much cheaper and more certain method of taking down Bitcoin, would be too simply invest in a megafarm, build up a huge hoard of Bitcoins, then dump on the market on a down day one day. With the real underlying economic activity representing a mere fraction of the total Bitcoin trade volume, the ensuing rush to sell in order to minimise losses and/or maximise profits would take this eagle down.

That was my way of saying that I have enjoyed your posts and pretty much agree in spirit with what you have said.

Since I couldnt post on the main forum until just now, I have spurted out all I have to say on the matter in the n00b forum. So other than repeating myself all over again, I thought I would just type something mental.

I enjoyed it quite a bit, almost as good as a tip ;)
13yRVRmVwiShRHBfmEFEd5zv9zhKGFUXRg

Would that deal with mtgox and coinbase make bitcoin susceptible to HFT manipulation?

http://www.financialsense.com/contributors/cris-sheridan/silver-manipulation-caught-in-the-act-hft-nasdaq-slv

Silver and Gold markets are easy to manipulate because paper promises outweigh the actual stuff by about 100x.   People only use paper gold and silver because there are real expenses associated with the trading and transport of the real physical object. 

This is not the case with bitcoin, there is no advantage at all to using an instrument to represent a bitcoin because a bitcoin is already just about as easy to transact as whatever you'd be replacing it with.  Using derivatives to buy bitcoin makes no sense at all

I'm just thinking out loud here. I wonder what percentage of the worlds wealth do the central banks currently own?

If you can own a bigger percentage of the total number of bitcoins (through infinite buying now, and massive investment in mining so you control the vast majority of hashing power... you collect the majority of mining rewards and ultimately end up being the cheif beneficiary of anyone using the system through transaction fees)

I doubt the fed is stupid, so they know the dollar has a limited shelf life, taking all their soon to be worthless dollars and switching them for bitcoin now isn't such a daft idea...

In the BTC deflationary endgame. The more you own, the more you benefit from deflation? The more hashing power you own, the more of the transaction fees are headed your way.

Effectively you'd be getting richer faster than everyone else... just like the good old dollar days :)

What if Satashi Nakamoto is the US govt?  :o

Sorry to say it, but I am with OP here. Points:

* central banks DON'T CARE ABOUT LOSING MONEY. 

All central banks do is PRINT MONEY, and right now this is done electronically.
It costs them almost nothing to create more money, and they can do it almost instantly.
The US Fed has intentionally bought TRILLIONS of "bad debt" from financial corporations
to offload losses.  Throwing 1 billion into BTC would be a drop in the bucket.

* Central banks DO worry about any competitor to their fiat system, no matter how small.

The IMF constantly worries about bartering and the black market. The global financial
system works by keeping labor going to pay interest on infinite debt. Anyone exiting
their debt-based financial system is a threat to their dominance.

* Right now, the top level international financial networks are STRIKINGLY SIMILAR TO BITCOIN

All transactions are done electronically, and happen very quickly. Also, the parties often don't pay taxes because
funds are laundered offshore. I doubt that hedge funds and HFT traders are happy that Linux dorks now
have a rival system, that is even decentralized!

* Buying up bitcoins and running the price up over $100 can be harmful to the burgeoning economy.

"Everyone has a price" - those who won't sell at $100, will start thinking hard at $1000, etc.
Central banks don't even need to sell the BTC after blowing the bubble. Taking 40% of bitcoins out of
circulation would do damage to the bitcoin economy. They could also just create a "liquidity trap"
which results from deflation (put simply: everyone is hoarding coins so the economy stagnates).

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.

Liquidity is money, no money no liquidity

Laws can kill liquidity kill therefore money.

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.

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."

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 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 (http://www.mindtomatter.org/we-should-talk-about-bitcoin.html)

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.

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.

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!

********************************************************************
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.

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.

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

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? 

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. 

"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.

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

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.

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!

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.

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.

'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.

Thanks - I had a feeling I wasn't up to date on shorting.
That said, I don't think this exchange is shorting much volume.

BTC trading is getting interesting today. Waiting to see if these "rescue buyers" are ready to sop up more coin at 120...
LTC's break to 5 USD is amazing as well...

Both the win and loss aren't well defined outcomes. More importantly, I think they are misdirection.

see https://bitcointalk.org/index.php?topic=154907.msg1734674#msg1734674 (https://bitcointalk.org/index.php?topic=154907.msg1734674#msg1734674) for explanation of what I think the real failing of this plan is

From the other thread

 The  scenario described seems quite realistic,  the same  risk was described in a zerohedge headline today.
 With bitcoins huge coverage lately  I'm surprised it has not been more demonized in the MSM,  I would have thought that would be the first defensive reaction of those who would like to see bitcoin fail.
The possible defenses that I can think of are
a)  back bitcoin with reserves ( of gold probably), like a central bank, just enough to put some sort of floor on how far the price   could  fall in the case of a crash.  I can't see this happening,  who would pay for it?
b)  more exchanges,  somehow supporting more graceful price drops when demand is low.
c)  access to more btc  denominated  assets,  allowing current btc holders to cash out without going through exchanges.

The key is to  get money flowing within the bitcoin economy, and providing a wide range of exits to try and avoid panic selling when the price does fall.

I think they can, as seems to be their specialty, kick the can further down the road. It seems to me though that they cannot stop the tide.

I think their best bet would be to try and capture as much of the bitcoinmarket as possible. Buying up coins now is the short term method. The real key though, I think, is to invest in hashing power (whilst their dollars are still worth something).

In the medium term you then capture most of the mined transactions. In the long term you start to ream in the transaction fees.

In this endgame, nobody has enough BTC to buy up hashing power to compete. Transacation fees become the new 'tax'. Welcome to the future! It's the same as before :D

Buying up or mining a significant amount the coins would not necessarily cripple the Bitcoin economy.

People would simply use what is left in circulation.

We sort of already have that situation now with lots of the coins from the original miners being forgotten or lost.

I doubt the central banks *want* a crippled economy, what they want is not to lose their position as your lord and master!

From what I can tell there area lot of people looking to get into Bitcoin or even start accepting it who are waiting for more realistic prices. A drop in price could take Bitcoin mainstream.

Wait until it comes out at the shareholders meeting that you spent all their money on your operation.  You will be lucky to get a job as shift manager at McDonald's.

It's not about "getting" bitcoin, it's about the price increases having both a push and pull effect on new buyers.  Using mBTC will be fine, but not when people are expecting to use BTC.  It's about expectation management, specifically with new users who as you say "really don't get bitcoin"

What do you think the point of this game is?  It isn't to make everybody love bitcoin ;)

You seem to be prescribing motives to players that don't really match their actions - Do you not think the Gold and Silver markets are manipulated to keep the price from running away and causing a panic into the "safe haven"?

At the end of the day there is only two possible ways.
Either the banking cartel controls bitcoins or it does not. If they don't control it they will destroy it its as simple as that.
To get rid of this great concept u only need to use human natures GREED for money and power and it will destroy itself. Up until the beginning of the year bitcoins acceptant s and price where moving in the right direction. Now acceptance is decreasing and price is sky-rocketing because everybody just hoards the coins because on day x there worth a million each. Which is still low as there only ever will be 20 million of them (1 million be lost over time). All the cartel needs to do is throw some blood into the water to intensify the feeding frenzy and then at the height of it raid gox (or any small exchange will do, which ever has got the most favourably jurisdiction) for money laundering or ter******* charges and it will wreck havoc since confidence will be gone. All the people who took out loans, prawned the family jewellery and mortgaged the house to buy bitcoins will try to cash in asap. Then when everyone still trying to figure out what happened the cartel will say thanks for the crypto idea and since it is such a great and wonderful tool we will implemented and from now on u can pay our taxes with it and use it in all major retailers and ….. well, make it part of you.
Now the second scenario.
I know most believe (made belief) Satoshi is this lone hacker writing this marvellous code and hold only a handful of bitcoins himself, really just coded out of kindness. Well few may believe the entity satoshi really holds power (more than 50% of coins). Who the satoshi group is and how many coins they really are in control of we will never find out, so much is certain. Only someone very naïve believes they are smart enough to write this extremely technical code and at the same time are dumb enough to relinquish power being fully aware of the monstrous power of it. No one can argue that on day one they had not control of more than 50% so why give it up? Before early adaptors jumped on board they already had several millions of bidcoins mined, so having this great hashing power they mined a fair few since 2010 as well, and of course adding with smart buying and selling since they are in control of it since day one. (you will never be able to prove otherwise). There is no logical reason for satoshi not identify himself. Bitcoin will exist without him just as well from now on. There is nothing illegal releasing a open source code nor is his use otherwise every user is guilty too.
As a banking cartel if you would try to introduce a “one world currency” the traditional way people would revolt and fight to the end, yed if u come in at an arse about way from behind the people trip over each other to get in on the action, once it is widely accepted its game over.
The fast majority (billions) will never posses a full coin at most a fraction of it and only few (thousands) will hold the fast majority of wealth. No different to the current fiat system.
The power of belief, yes just look at religion to what extremes some go because the "believe". As an atheist only facts can convince me, so u will have a hart time argue.
Which of the two ways it is, time will tell. so far the money involved is only small change for the powers to be, 1000 merchants accepting it worldwide no reason to act upon at this time and no reason to hurry after all, all transaction are forever available!

I think if the banksters or any government agency were behind bitcoin there would have been endless positive stories in the mainstream media over the last 2 years.

If the rulers are behind bitcoin, this might be a beta version before they create a crypto currency that is better suited for their purposes. We might be guinea pigs...

The "bankers" have to control Bitcoin from the shadows - if it's understood that the currency is controlled what's to stop people  from starting a new fork that's the "bankers don't control this version of bitcoin" and then all the people who don't like the idea of bankers controlling Bitcoin would be able to switch.   If bankers controlled bitcoin, it would be because they bought a large portion of the market, which would cause the price to increase quite a bit - so selling out at that point on bitcoin and switching to something new is very plausible.

The options are very limited actually - Nobody is locked in, so bitcoin needs to continue providing advantges in order for it to continue being used.

I do very much get Bitcoin, and love it. It doesn't matter what price it's at if I'm going to spend it today, but if I don't have confidence that it can retain it's value, I'm not going to let it sit around. Let's not get into whether the current price represents a bubble; it looks like one, and to outsiders that's all it is!

everyone knows its open source so not sure what u on about there.
New crypo currencies are created regularly and the creators have no trouble identifying themselves. so the onus is with the satoshi guys to reveal themselves and move bitcoin forward to its rightful place.
i'm happy to add to my bitcoins stack if i know
a: how many persons are behind "satoshi"
b: what was there stack of bitcoins before they went public with it
c: what is there combined mining power

without this basics we are simply sheep on a truck "thinking" to go to greener meadows but really we are taken to the slaughterhouse.
 

Hey guys, what about this: banks will start using BTC.

If you can't beat them join them.

I think the gold/silver markets are likely manipulated, for no less a nefarious reason than the money being made on derivatives based on the market far outweighs the cost of moving the price.

However, this does not necessarily lead to that, bitcoin is not metal. It is not subject to the same laws that govern its control. I am not aware of any actions that have been taken by the central banks with regard to bitcoin. The only motives  I assign to the bank is the betterment of its own position in the game.

As for the point of the game - I think we have different games in mind. I have the broader goal of how the central banks might serve their own best interests through the mechanism of bitcoin, whereas you seem to be specifically focused on how best to discredit bitcoin, based on the assumption that this *is* the optimum strategy.

I don't agree with the premise that discrediting BTC is the best action for the banks to take. I think we even agreed that you can't *kill* it you can only mess with it. If it can't be killed, then maybe it can be controlled.

The more I think on the more the 'own the network' plan seems to make sense for the banks. I'd be glad to hear counter arguments to that, as it has me a little worried. I'm really hoping they are stubborn/stupid enough not to.

Central banks can't serve their purpose through Bitcoin because Bitcoin cannot be created at will to accomplish policy goals.  If CBs were going to support Bitcoin, they'd already be supporting gold as it provides many of the same balances.   The problem with gold is it's opaque - you have to store it, and it's very valuable so you don't want to let everybody see it.   This provides a way to, even on a gold standard, produce currency in excess to what your "backing" would allow, because nobody checks how much you actually have and lacking that information it's pretty much impossible to determine how much currency should be out there.

Bitcoin doesn't allow that - If a currency were to be backed by it, the reserve address would probably be printed on the money so that anyone who wanted to check what their dollar was backed by could just look up the bitcoin address and see how many BTC there are relative to the amount of the paper currency in circulation. 

So again, please re-examine what purpose central banks actually serve - If you think it's to "keep inflation low" I suggest you re-examine your analysis.

It is to finance government.   The way you finance government when you don't want to tax as much as you want to spend is by devaluing the currency.  Bitcoin would make that impossible, and in being such good money demonstrate to the world what bad money all alternatives are.

Wow, neither have I said that I think think that, nor do I think it.

I made it quite clear that my view on central banks, and to be clear I mean the IMF, ECB, Federal Reserve etc is to retain and/or increase the power they have over their subjects using money as the proxy.

It's all about power. What you are explaining to me is economic theory. A theory that it suits the central banks for you to believe. They want you to believe the choice is "Buy and Spend vs Austerity" because it suits them for you to believe that. It is a form of divide and conquer.

You need to stop thinking that the way things are is the only way things can be. If you keep arguing based on those assumptions then your whole argument collapses the moment your assumption is proven invalid.

When you say "Central Banks can't serve their purpose because..." and then define their purpose as that which they would have you believe it is, then of course you will only draw the conclusions that can inevitably come from a basic flawed assumption.

When you say "If CB's were going to support bitcoin they would be supporting gold..." you have i) misunderstood what I have been saying. They dont want to 'support' bitcoin, they want to control it.

The key difference is that you saying support bitcoin implies some benefit to you (and the other serfs) just as supporting gold implies some benefit to you (and other serfs).

Think carefully about the implications of them 'owning' the network - in particular the endgame scenario, once the block reward dries up. They ream the transaction fees, they have better control over the transactions (remember miners choose what goes in what block - hello censorship).

Right now, who is to say they arent the ones pushing the price up, buying all the loose coin. This not only gets the necessary mindshare by making it appealing, but it also lets them offload all those soon to be worthless dollars.

But what about all the millionaires they are creating?? I refer you to the 'worthless dollars' clause...

So think bigger dont think about bitcoin in the context of everything that went before, think about how it is different and how those differences can be (ab)used to the ends of those nefarious enough to want to controll all of the money in the world.

In some ways its easier. There is a fixed amount, so they always know exactly how much they have, they have a significant control over the block chain (who is to say they couldn't effect a meta-minimum fee, or your transaction nver gets included in 'their' blocks, voila taxation!)

You are underestimating the ways in which the ideas of good man can be twisted by those with evil motives.

 

Do you guys think it will be possible for central banks to generate new cryptocurrencys in the future?

What are the implycations if it's possible?

Yes of course they will. And when you go shopping or pay taxes u will convert your bitcoins ether directly or indirectly to the gov.  approved money.

Yes, like the tulip mania......despite roses, orchids, lilys and the rest.
Bitcoin has the major "satoshi entity" flaw other crypto currencies dont have. Also EVERY transaction EVER sent is 100% traceable FOREVER.
Cash in your pocket is 100% anonym forever.

Most people have not idea of the power bitcoin possesses.

Quick point - the official stated policy of the Fed is to "meet inflation rate targets".  In plain English this means "continually devalue US dollars". Any "hedge", like precious metals (and perhaps bitcoin, it would seem) works against their stated policy because these things can hold their value against the dollar. Therefore the Fed is thought to work hard at keeping precious metal prices DOWN. JP Morgan has been "naked shorting" silver for years without being prosecuted - periodically there is a bit of bluster about this, but nobody has gone to jail for this highly illegal practice.  FDR confiscated privately held gold in the 1930s in order to make the Fed system work. There are plenty more examples around of the Fed manipulating PM markets, though I am not an expert on this subject.

Logically, the Fed SHOULD be working to undermine Bitcoin, because it represents (at the very least) a hedge against USD inflation. Worse still (from their perspective), it is an entire alternate GLOBAL currency that they don't control!  US dollar hegemony is VERY important to controlling the global financial system - how else can the US keep the deck stacked in their favor?

Finally, I agree that the Fed probably does have goals other than their stated ones - keeping labor active, wages low, and unemployment high, for example...

YES. You totally nailed it. Central Banks don't need to discredit or destroy bitcoin, they just needs to control it, and right now they have infinite money to make that happen.

> Teach about Bitcoins via schools, media, social media, etc. (Will likely take years or decades)
> Wiser public will not invest in banks, people will withdraw money, etc.
> Banks go broke.
> Hold onto Bitcoins until this point in time. (Difficulty would likely in a new realm and prize would likely be very low)

GG

Again, this is only a problem if people don't figure out what's happening.  If they do, then miners looking for money making opportunities will buy new machines so that when the "conspiracy" network turns off, they turn on - When the conspiracy network is accepting all transactions, they turn off because it's not profitable.   Seems a simple matter to see when normally accepted transactions start being rejected, or normally sub-acceptance transactions are accepted - Wouldn't be hard to automate the balancing process based on that information.

That's why I keep coming back to discredit - You can't force people to quit something better once they understand why it's better and what it does for them, Bitcoin is like Napster, squishing it just makes a bunch of small ones that eventually grow larger than the original you wanted to get rid of.  But if you scare them early into thinking it's not safe and they'll get hurt, then they have to weigh that "fact" against the potential gains, and many risk-averse individuals will simply walk away to play it safe.

There's a book called the Starfish and the Spider, very worth your time if you're confused on these issues of decentralized vs. centralized organizations, they're very hard to control and even harder to stop.

Do you believe that once the manipulation is realized (slowdowns that drop the price, acceptance that brings it up) it would not be countered by other miners not in on the game?  Or are you just saying "MINERS" as one giant group implying they're all operating under the same motivational/organizational structures?

Bankers and Bernake fans think Bitcoin is some novelty or a ponzi scam, they have no idea what Bitcoin is about to do to them. I'm really hoping Bitcoin creates a literal firesale across the financial landscape.

Clearly it doesn't suit your agenda, as a writer, to consider anyone else's point of view other than your own. You are convinced that BTC will save you. You refuse to consider it could enslave you.

Look at blahblahblah's post above this, thats another great point of view, again it exposes the concept that the BTC network can in fact be controlled (though this example is not so nefarious as mine!), this is a fundamental property of the world.

Starfish and the spider works when no one person is a power hungry psychopath. Show me a world where we don't have any of those, and I will submit to your thesis that decentralised power cannot be controlled.

You are campaigning against human nature!

Wait a minute - bitcoin CANNOT BE INFLATED - that's the whole point of the (eventually) static monetary base and the steady release of coin via difficulty adjustments. If anything miners might need to adjust fees DOWNWARD to INCREASE monetary velocity.  Conventional Keynesian economists spread exactly this FUD:  deflation creates a downward economic spiral called a "liquidity trap". Of course, anyone espousing this viewpoint regarding bitcoin is immediately blown out of the water:  bitcoin can merely revalue versus fiat, and prices can be held constant by always making them relative to fiat, hence making it an inflation hedge and store of value... This could be what has the central banks' undies in a wad...

Nonetheless I agree that miners could have a significant impact on bitcoin monetary velocity - it's something I'd like to discuss further.

OK, I'll have a crack at this one (in fun, mind you, I'm not really expecting this to happen:)

1) Wait patiently while the present distributed network is gradually replaced by one or a few central server farms as most people decide that running the full client and keeping a separate block-chain copy is no longer worth the bother--thin clients work just as well.

2) Quietly purchase a controlling interest in all the server operations so that in effect you come to own them;

3) Announce a hard fork, replacing the original Bitcoin protocol with New Bitcoin, altered to give you complete control over the system's monetary policy; explain that all users must migrate from Bitcoin to New Bitcoin by x date or face being cut off from the network. The few independent node operators remaining will have insufficient influence to mount any effective protest, and the rest of the users will not really care for the most part.

4) Rinse and repeat for any significant alt-chains (LTC, DVC, BQC, etc.)

Price inflation/deflation isn't really a concern because BTC prices are simply adjusted relative to fiat. Hardly any seller will quote a static price in BTC anymore,
because they'll end up losing. Of course this situation can reverse, but then the buyer will refuse to pay a static BTC price because of potential downside losses.
This relative pricing is an unintended consequence of the fiat/BTC price volatility, but I think it's actually solving valuation problems for goods and services quite nicely.

I doubt that miners can really slow BTC velocity much, as there will always be incentive to lower fees to capture more transactions.

If and when the BTC crash comes, the velocity will pick up quite a bit as people try to get tangible goods for their diminishing coins.
This could be great for the BTC economy.

They would just push the price up/thread

I would say that mintomatter's theory is by now looking the most likely of all the guesstimations that I have read both in this thread, and across the forum as a whole.

The behaviour of Bitcoin today, suggests to me beyond all reasonable doubt that the recent mania in Bitcoin has not come about as a result of:

Cyprus.
Capital fleeing USD for safe haven.
Iran doing oil deals in Bitcoins.
Impending Euro crash.
Masses waking up to Bitcoin.
Bitcoin being the currency of freedom.
The fact that you can now buy download capacity on some websites using Bitcoin.
Bitcoin supplanting Western Union for transfer of currency funds.

and the countless various other grounds that the hoardes of delusional idiots on this forum like to cite as thier rational for the exponential price increases, and how it will never go back down etc etc.

No, because of Bitcoin's potential threat to the status quo of international finance, it is being taken out at a young age. A bit like the infanticide of a one day potential hier to the throne.

If Bitcoin actually recovers to beyond the heights that it hit anytime soon, then that will be 99.5% confirmation that the market is being controlled by one pair of overwhelmingly strong hands. As if this were an 'honest' speculative bubble. Most fresh capital would at this stage be very hesitant to enter the market, and existing capital will be anxious to maximise gains, break even, or minimise losses. This means that supply of Bitcoins on the exchanges would far outstrip demand and that we could therefore expect a near collapse of the Bitcoin price, right down to near the price levels that the real Bitcoin economic transactions would support, insofar as the real economy hasn't already been cannibalised by the recent speculative mania.

They were faster than I thoughth... IG Markets is starting with Bitcoin binary options.

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Hey just wanted to mention that I'm not avoiding the topic, I really love having these ideological conversations because ultimately it's not about "winning" with the person you're arguing with, more about presenting both sides of the argument and letting the eventual reader decide for themselves.

Since I took on The Daily Bitcoin show (https://bitcointalk.org/index.php?topic=171353.0), I have had no time to continue this or the other long form discussions I've initiated.  Thanks to everyone who sparred with me, I had a great time and I hope you did too.

Working on Starting a Bitcoin town here:
https://bitcointalk.org/index.php?topic=216139.0

Any central bank would/will use its utmost power to prevent any medium of exchange of which they dont issue and is outside of their control. I think you win, Mr. Central Bank as long as you exist.

I never think that central banks will dislike Bitcoin, one day they will like it so much. Their current system is unsustainable and is about to crash, bitcoin is the only hope that they could keep their game rolling without a total collapse of the system

Today's banking system works like a bloodsucker, and it has successfully sucked interest from many people's future income for the next decade, and they need to suck more and more blood to keep the system running. On the other hand, the efficiency increase and automation/AI development have dramatically reduced the labour force requirement, so the banks just could not find any more people to suck blood from

But bitcoin is a monster, it has endless blood that can satisfy banks' needs, and the more they suck it, the stronger it becomes

Mortgage backed securites will lose its value when more and more house were built and people lose their job, but bitcoin backed securites will never lose its value due to limited supply of bitcoin and forever increasing demand of bitcoin as a medium of saving

You're acting like the goal of a central bank is different from the goals of its member banks, but the aggregate members of the latter control the actions and motivations of the former.  The money system as controlled by central banks is to the detriment of most and to the benefit of those member institutions.

You've identified the end point correctly, but you've made an odd assumption that the entity with power does not want that power and would gladly give it up if only the problem would be fixed.  I think the last five years should stand as testiment to the fact that outcome does not matter nearly so much as preservation of the existing power structures.  If that was not the case, why do we continue treating the problem with the same solution that cannot work?