A real threat is not from bankers, but exchanges

Exchanges are like banks, they have large amount of fiat money and bitcoin reserve. So they could create money and bitcoin out of thin air by using fractional reserve practice

For example, an exchange holding 100K coins could in practice manipulate 1 million coins by borrowing those coins again and again many times without being discovered (maximum 10% withdraw request from customers). And all those coins can be dumped to the market to crash the price to double digits, because no one would anticipate that amount of sell pressure from a single exchange (almost 1/10 of all coins). And after that many people will be selling their coins due to lost confidence in bitcoin (If they withdraw, then the exchange will have huge problem to deal with, but who would withdraw bitcoin in a crashing market?)

Actually I don't really know how stock exchanges are regulated. For example, could a stock exchange create fictive stocks and short them to crash the market? I think they can not, there might be some kind of third party auditor holding all their stocks so that they could not create stocks out of thin air by using FRB, they can only request deposit or withdraw of equities from that auditor upon customer request

In bitcoin's case, the exchange are holding both fiat money and bitcoin, no one knows how much fiat/coins they indeed have, unless there is a panic withdraw, which is very seldom

Same as you claim banks are criminal enterprise, it does not stop them from using FRB and creating financial crisis

Of course not, but the question is what you can do to prevent them from creating too much volatility in market?

If one of the large Chinese exchanges are taking a market share of 15%, they can essentially sell millions of bitcoins on the whole market and push the price into single digits and crash people's confidence in bitcoin, and people can not do anything about it: The only thing you can do is to withdraw coins from the platform thus they will have a bitcoin bank run, but as most of the people on Chinese exchanges are speculators, I doubt they even want their bitcoin back if the price dropped to that low   Besides, many people still don't want to withdraw bitcoin since it is too easy for them to lose it without proper IT knowledge, they regard the exchanges like a stock exchange, they trade there but never touch a bitcoin/stock

The main problem is that currently there is no regulation for bitcoin exchanges anywhere, and maybe there will never be


On further thoughts, another exchange might use the same trick to create fictional fiat money to buy lots of coins on their platform, and let the arbitrager to drain the bitcoins from the other exchange to make a bitcoin bank run for them... We need more exchanges

This topic just get hot recently

After several Chinese exchanges opened the option to do leveraged trading, many doubted that they can essentially create many bitcoins out of thin air based on fractional reserve principal, then they could use those coins to short the market and squeeze out many traders to get real coins in their hand

Of course, they can also create fictional fiat money to push up the price by many folds using the same practice, most possibly MTGOX has already done that and that is the main reason the exchange rate fluctuated so dramatically before

So what is your opinion about this? Even if you auditing an exchange and make sure their cold storage contains 50K coins, it does not stop them from creating 500K coins sell pressure using a fractional reserve ratio of 10%

Auktion the coins and get a high bid 

I remember someone had hundreds of wallets and he don't need a back up. If one of those wallets are compromised he will start to move the others, but to manage so many wallets, you must be a IT professional with good scripting skill

The price is only a consensus and a balance point between buyers and sellers opinion, one piece of news will change the price dramatically before any money enter/leave the exchange, since many people will change their bid/ask prices based on their opinion

Save for retirement, and purchase software/games subscription online in another country

Actually the virtual economy is the place it should be used, since it is on the internet without border

I heard that Jeff is going to launch some bitcoin satellites so that even all the ISP is blocking bitcoin you still have full nodes in outerspace.

Finland is already deploying radio based bitcoin nodes

 

You are the main reason I love this community 

Reserved for the icecream 

OP are too pessimistic, on the positive side, the first country who support it (maybe England is on the way) will be greatly benefited (new economy, new jobs, new foreign money inflow) and others will follow

300 years ago, when John Law banned private person from holding gold at France, all the gold flow to Holland and nearby countries, and you can guess who is most benefited

The biggest money launderer are banks, but this topic does not belong here

Bitcoin transaction does not fit into today's monetary system at all, regulate-from-bank-account method will not work. Currently the best authorities can do is to regulate the exchanges, once wealth entered bitcoin network, they can be totally free from regulation

You don't use localbitcoins? coinbase? Most of the time I trade on localbitcoins, only occasionally on Bitstamp

Just like other industry, when they are not profitable anymore, the operation will be disclosed to public. When they can still make good return, all is secret

While private miners could pay for those electricity bill and hold the coins, the rent and electricity cost for mining farms must be covered by selling some of the coins, these farms will all add to the sell pressure on the market

Those who are holding the coins will not get affected, they hold it at least for years, only those short term speculators cares

I'm not sure where is the bottom but I have buying order every $30 apart, all the way down to zero, just some fiat earned by trading bitcoins, so even it drops to zero I still lose nothing

Never can. You always need to exchange your fiat money into some kind of digital token, the most simple way is directly buy bitcoin at exchanges. I don't understand why do you need to first exchange your dollar to XRP (involve a bank transfer anyway) and then use XRP to buy bitcoin 

I saw a poll recently showing that about 80% of people are holding their coins, so the basic behavior has not changed much. But you can see from the chart, if everyone is investing for one year and then start to spend, the daily coin supply will actually rise year after year until the next reward halving

The natural appreciation tendency is caused by reward halving every 4 years, that will give a 19% appreciation each year when money inflow does not grow

However, even we had a huge boost in user adoption, that won't make a 10 fold increase in money inflow in one year. Money inflow can be several times higher than last year, resulting an exchange rate of several hundred dollars

Usually the technology shift causes lots of miners to lose the ability to mine and forced them to buy on exchanges, thus creating a rally. Now technology shift is over and daily coin supply will still be about 5000 coins. Since many new established large mining farms in china only sell the mined coins, the coin supply can be bigger than the time when ASIC first arrived. It is a test for how much money inflow the market really has

Anyway, a 19% increase in price during a time frame of one year is almost guaranteed, anything beyond that can be regarded as a bonus due to expoential increase in adoption and money inflow

To keep exchange rate at $500, for 5000 coins you need $2.5 million net inflow every day, that is about one apartment in big capital cities

Pictures of your castle?