Big inflation opportunity

[eurekafag]

I heard some guy has 25% of all bitcoins. What happens if he will trade it for dollars on the market? He has LOTS of coins so he may offer low price for them and everybody will buy it from him. Then it will cause inflation and lowering the exchange rate greatly for many months if not years. Will bitcoin cope with such a disease? We don't talk about motives of that dude. He may do it just for lulz or whatever. He might get all those bitcoins when the difficulty was low or he has a large cluster that generates blocks on a large scale. The same goes to all large generating clusters which may ruin the economics instantly.

Any thoughts on it?

[jgarzik]

I heard some guy has 25% of all bitcoins. What happens if he will trade it for dollars on the market? He has LOTS of coins so he may offer low price for them and everybody will buy it from him. Then it will cause inflation and lowering the exchange rate greatly for many months if not years. Will bitcoin cope with such a disease? We don't talk about motives of that dude. He may do it just for lulz or whatever. He might get all those bitcoins when the difficulty was low or he has a large cluster that generates blocks on a large scale. The same goes to all large generating clusters which may ruin the economics instantly.

Any thoughts on it?

Anyone with lots of coins may disrupt the bitcoin economy.

However, maintaining high level of bitcoin monetary value is an obvious incentive against dumping a huge number of coins on the market all at once.  Selling 1 million bitcoins at once will fetch much less money than selling 1 million bitcoins slowly, over time.

Bitcoin dumping is likely only to occur in (a) panic selling or (b) griefer scenarios.

[TTBit]

not worried. Even if he has 25% now, he won't have 25% in the future unless he's generating 25%.

[nelisky]

not worried. Even if he has 25% now, he won't have 25% in the future unless he's generating 25%.

Which it is rumored he is... that is, until someone gets GPU mining mainstream. I have volunteered  myself to do it, but I lack the hardware and don't want to put both work and money into this. There has been a couple of members of the forum that have agreed to send me coins for GPUs or the actual GPUs, but in the end, it never happens, so either some coder with time and hardware does it, or artfonz and a few others will hold most of the processing power for some time still.

[eurekafag]

He may start selling right now. Also, even if he sells slowly he'll lower the exchange rate as he wants and it'll be very hard to recover because nobody else has such money volume.

[TTBit]

If he owns 25% now, he's giving me more value for my coins right now. His hoarding is letting me buy things with less coins now.

Thank you, whoever you are. I invite everyone to go out and try and buy 1% of all the coins out there!

[Bimmerhead]

I say hopefully he does it, and the sooner the better.  That way we can all pick up lots of bitcoins very, very cheap.

With a maximum of only 21 million in circulation no one will ever be able to do a 'helicopter Ben'.  Either bitcoins are going to catch on and their value is going to skyrocket to the moon, or they will wither on the vine.  Somebody artificially holding, buying or selling bitcoins won't be able to manipulate their value in the long term.

Everyone holding bitcoins has an incentive to spread the word far and wide, or build websites that use bitcoins, or build opensource products like CMS store plugins or social media plugins that use bitcoins because the greater the use of bitcoins, the more your holdings of bitcoins increase in value.

[eurekafag]

If he'll sell it for bucks (for example, 100 coins per buck) then all your wealth will become nothing. No one will sell you goods for tens of coins but for hundreds or thousands of them because it will be easy to get them. Which you don't possess.

[dwdollar]

Maybe.  But keep this in mind...

We'll probably hear "so and so is about to dump X number of Bitcoins onto the market" over and over and over again.  It's a "short and distort" technique for market manipulation.  The opposite of this is a "pump and dump" which will also circulate, but probably not as often.

Since Bitcoin is a thinly traded commodity with no documentation of who owns what, it will be especially vulnerable to this sort of thing.

[TTBit]

If he'll sell it for bucks (for example, 100 coins per buck) then all your wealth will become nothing. No one will sell you goods for tens of coins but for hundreds or thousands of them because it will be easy to get them. Which you don't possess.

I don't understand. I bid 1 cent for 25% of all bitcoins and he sells them to me. Are we not in the same boat? Why would you now need 100,000 coins to buy a cheeseburger?

[FreeMoney]

If he'll sell it for bucks (for example, 100 coins per buck) then all your wealth will become nothing. No one will sell you goods for tens of coins but for hundreds or thousands of them because it will be easy to get them. Which you don't possess.

The cheaper he sells them the quicker he'll run out. What if he sells them for .000001USD/BTC! I'll just snap buy them all, resell some when it gets back near equilibrium.

But flooding would be pretty dumb of him, he'd sacrifice a lot of value. Did you see the MtGox "flash crash"? That guy could sold coins as low as ~.035 when waiting 15 minutes would have got him .06. It was just a gift.

The guy I'm thinking of only had about 10% of coins, who are you talking about?

[TTBit]

I bid $0.02 for 1,000,000 coins. PM me for details. I am serious.

[eurekafag]

He won't sell you all his coins but will sell with 10x lower rate than usual. No one then will sell their bitcoins because he will ALWAYS have the better (cheaper) rate. No one will have a chance to sell a bitcoin for MONTHS. People will start panic and sell at whatever rate and then quit bitcoin forever. That's what I'm talking about.

[S3052]

I think this is a serious risk, as the dollar value of all coins is still very low (250 M$). many folks who have saved something could easily buy 25% of the coins.

But then they are not stupid, they rather sell them slowly, or even smarter wait until the next rally started.

I might buy some more now...

[mpkomara]

I am .023 USD bid for 1,000,000 BTC.

[S3052]

and one more thing (which I said in our threads):

we need to very quickly bring the bitcoin economy to a much higher level (adding trade, games, services, spread it more to get more people to adopt it , etc.).

the longer we wait, the more risky it gets that some crazy dude will destroy it with just small funds (just think about if someone who fears that bitcoins become huge.. this individual / organization can just destroy the entire bitcoin value for 100 - 200 M$)

[TTBit]

I am .023 USD bid for 1,000,000 BTC.

.02300001 bid

[mpkomara]

.03 bid for 1,000,000

[FreeMoney]

and one more thing (which I said in our threads):

we need to very quickly bring the bitcoin economy to a much higher level (adding trade, games, services, spread it more to get more people to adopt it , etc.).

the longer we wait, the more risky it gets that some crazy dude will destroy it with just small funds (just think about if someone who fears that bitcoins become huge.. this individual / organization can just destroy the entire bitcoin value for 100 - 200 M$)

It would obviously suck, but it would just verify the disruptive potential and be great publicity for a new go at it, maybe under a different name, maybe implemented somewhat differently to make whatever attack was used harder to do.

[TTBit]

I think the real risk here is just the opposite:

Some organization or even some wealthy guy will just bid 50 cents for 2 million bitcoins, or $1.0 Million. This is a lot of money to be sure, but not so much if you consider the amount of USD in circulation right now.