Bitcoin Forum

If large Govts bought all available bitcoins in an effort to wreck BTC it would be a drop in the bucket for them. ( and the Fed would only need to print the $ to do it) They would also be in a position to manipulate the market.

Furthermore if they embarked on mining using their massive resources it would probably push ALL small miners out of business.

Therefore BTC can not be regarded as a serious threat to their currency monopoly, merely an interesting diversion for the powers that rule the markets

cmon, be serious here. All the goverments today cant even afford to run their own countries effectively. Do you honestly think theyre gunna waste millions on bitcoins?

yes . If they wanted to

http://www.usfederalbailout.com/

trillions of $'s...what is 1.5 Billion in comparison?

Governments can only buy the bitcoins that people sell. My guess is that most people would probably be willing to sell around 10x the current price, but there are a lot of people who would hold on during the rise and not sell. This isn't like a company acquisition, where if you get 50% to agree, then the transaction is approved and the rest of the shareholders are cashed out. They would have to throw 10x-100x the price of the current market cap in order to get people to sell.

That seems like a waste of money, and the public probably wouldn't have it. The FED could do a lot of it, but everyone is just going to want bitcoin if the price shoots through the roof.

Oatmo

And what will happen when they do? Say i buy all the bitcoins today, Currently People are still mining. Also what point would it have. Dont forget theres also the several ALT coins. Its close to impossible, another coin can easily be made. The goverments aren't really going to buy out every crypto currency because they end up the losers.

I think the simple answer is, will everybody sell them?  There are some crazies out there that don't trust the government even if they offered 1 million for each BTC.

On the other side, if the gov't make a ridiculous attempt to do this, would it get passed?

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

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

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

^^ Precisely.

That isn't the way economics works.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

We all live in interesting times everybody. 

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

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

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

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

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

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

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

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

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

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

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

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

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

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

FED fucked up, again.

How will u know that a person u sell bitcoins to is not a FED agent?

Since this is the government you're talking about, Bitcoin is a real game changer because it has to be one of the few (only?) assets that even governments cannot simply confiscate (assuming you have taken adequate security precautions...  and if they are trying to take *all* bitcoins then a reasonable minority will have taken those precautions). They would have to buy it from you, at whatever price you dictate.

You can read on Wikipedia about all the other times people tried to corner a market, and how successful they were: https://en.wikipedia.org/wiki/Corner_the_market.

Well luckily over half the coins are already mined and difficulty keeps the supply controlled regardless of how much hashing power is thrown at it.

Then whatever government does it, is a total sucker.

Bitcoins empty? Damn, some people got rich. Lets mine Litecoin, namecoin, novacoin, feathercoin, yourmommacoin.

If all specs are provided, you could probably inplement a new coin in one day. Then they have to buy again.
And again, and again....

Until people are laughing their asses of, because Cryptocurrencies then become something awesome: A get rich quick scheme that is BACKED BY THE GOVERNMENT because they will not bail but buyout.

What could be cooler than that?

Imagine the headlines, Govt uses all your tax money to extinguish an online currency, people would go nuts ... I hope.

There is some conspiracy theories saying that the banks will destroy Bitcoin once it get popular enough to threaten them. Can`t say I disagree that they want to stop it. Especially the companies that takes fees while the customer is just using a simple service of theirs

The hashing algorithms for Bitcoin are based on the USA's National Institute of Standards and Technology (http://csrc.nist.gov/publications/PubsTC.html#Cryptography) (NIST) published PKE algorithms.  These standards are proposed by technologists from applicable fields then reimplemented/refined over time based on peer-revue and ultimately public contests involving substantial prizes to the person/group that discovers a flaw and/or develops the fastest key-cracking methodology.  The Bitcoin algorithms use a sub-set of the published hashing standards for purposes they were intentionally designed for with the exception of using "little-endian" bit-order processing (a vestige of compiler/assembler addressing optimizations which can save space and increase throughput by reducing the size of block-aligned address indexes) as opposed to "big-endian" processing which is implicit in the published standards.

So it's safe to say that a government did develop Bitcoin technology.  Whether or not one also created the real-world application seems immaterial since the entire block-chain is easily obtained.  Anything from a person to a government can use the 'information' accumulated in the chain for any purpose that suits their needs.

It's surprising that Graham didn't suggest the possibility of Bitcoin being "digital currency 0.1 (alpha)" which could be observed with no responsibility by anyone to actually back or regulate.  Even in this case the prime-mover in fabricating the technological application is still irrelevant since anyone can make experimental observations on the currency and its exchange.

I'm not certain why the OP (or anyone) would presume governments would be the most likely suspects for control of the Bitcoin exchange rate when so many other suspects actually stand to gain from such market manipulation.

Just my 0.00000002 BTC.  The thread looked interesting and I can't seem to post/reply in any group but this one...

If the government tried to buy up Bitcoins, then common economic logic dictates that would make the price of Bitcoin go up dramatically because of Bitcoins hard limit, I'd say that kind of move would be what finally kills them off because they'd have to print in order to make up the difference and speed up their hyper-inflation. I'm looking forward to seeing what happens when the politicians and bankers try to actually do something :p that said though I wouldn't be surprised if they were behind the constant DDoSing of the exchanges.

Oh, that and the people who stubbornly hold on to their Bitcoins no matter what or just trade only in Bitcoins would end up ridiculously fucking rich.

Then a new digital currency would come out lol

Reply re:  Mt Gox executing orders "off the books" and pocketing the profits...

Why would you consider that an issue?  That's exactly what a market maker does for securities.  They stay in business by pocketing the difference in the bid/ask spread.

The whole thing about a government buying all the bitcoins is that point blank is it wouldnt happen. If they somehow found a way to make bitcoins useless... then the entire bitcoin network would just move to a different type like litecoin. The process would basically continue and keep continueing for quite a while.

And, I know I shouldn't say that:

There wouldn't be anything more awesome than that. The huge buy orders coming in everywhere would raise prices. Someone buying all bitcoin will be in a total pain. It would be the ultimate pump and dump EVER.

Some people are gonna get really, really rich, when the government does something like that.

Granted, that last 10-20% to the selling party might loose a fortune, but everyone else will be licking their fingers, waiting for the gov to pull it off with the next currency.

And then, then you guys know, how being a big bank boss must feel being bailed out.

In the end, if government wants to get rid of bitcoin, they have the resouces to do it through mining hardware. They could easily create 70-80% of the hashing capacity, although it would take a while. When all the ASICs come on line, I don't believe that the government would have enough computational capacity to screw up the market, but they could easily get a defense contractor to deliver them billions of dollars in hashing equipment and effectively hash out the market and make it not work the way it was designed.

If that's going to happen, it's likely going to be a long term expensive effort on their part, but they have more resources than the small mining community is going to be able to muster. I think that would only happen if bitcoin became more popular than dollars, and tax revenues fell 20% because of bitcoin, then they might go after it.

Oatmo

Why not? If the price is right :)

The discussion is interesting and deserves promoting to another subforum..

To me the question is eventually boils down to..

Does the corrupted govt system has the best people,
the most genius, the most visionary, the most advanced?

And the answer to me is not. They don't.
They has never had and won't ever have such people.
Because the best people can't stand and live in lie.
The best minds of this planet hate lie and hypocrisy.
On the contrary, based on my personal and hard earned experience,
i can say that ignorance is the very basis of any govt structure whatsoever.
The only concern of those with power is staying in power as long as possible.
That's their ultimate business in the universe, they strength and their flaw.

Luckily, the govt is the ultimate anti progressive force in the universe.
They resist any change or any new information with brute force and ban.
Being such they do not have either vision or best people or courage to do that.

If anyone owned more than 10% of money supply, the currency wouldn't function as currency.  If the gov't bought all bitcoin, someone would just start an alt chain in it's place.

Large Govt, even largish corporations could squish bitcoin like an gnat. It's not a threat to anyone at the moment.

Or the gov could cause "accidents" to happen to the big farmers. ie drone attack asicminers farm

If gov buys all coins, prices will explode to ∞ which is great.

I will sell them coins at the right price.

So i hope the gov buys all the coins... :-*