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Author Topic: I'm a Central Bank trying to keep Bitcoin from being adopted  (Read 13691 times)
Operatr
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April 08, 2013, 09:27:28 AM
 #121

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.


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April 08, 2013, 03:28:54 PM
 #122

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?

I'd say sure it's possible! However, getting a strong following like Bitcoin is another matter. And we mustn't let facts get in the way of a good story either.

The Satoshi fork seems to have unstoppable momentum... despite Litecoin, PPCoin, Novacoin and all the rest.

There's also the question of how Bitcoin could be controlled if it can't be printed at will. Well, printing is just one brute-force technique for controlling inflation. Fractional reserve and setting interest rates for banks is another technique. However, just because those particular techniques are not well suited for Bitcoin, me mustn't assume there is no available technique! Bitcoin's monetary velocity could, in theory, be controlled by miners (and operators of so-called "full nodes") by setting transaction fees. It's bloody simple once it clicks in your mind. E.g.:
  • Bitcoin's short-term price is getting too high and bubbly --> Miners start rejecting "low bids" --> Less trade can be done and network performance suffers and becomes more laggy --> THE EXCHANGE RATE GOES DOWN.
  • Bitcoin's short-term price is too low and it's falling or heading lower --> Miners accept more "low bids" --> More trade can be done, "micro-transaction" opportunities pop up, network performance gets faster --> THE EXCHANGE RATE GOES UP.

But of course nobody wants to engage in discussion on this topic.

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.

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?


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!

"A purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution" - Satoshi Nakamoto
http://haschinabannedbitcoin.com
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April 08, 2013, 11:56:14 PM
 #123

There's also the question of how Bitcoin could be controlled if it can't be printed at will. Well, printing is just one brute-force technique for controlling inflation. Fractional reserve and setting interest rates for banks is another technique. However, just because those particular techniques are not well suited for Bitcoin, me mustn't assume there is no available technique! Bitcoin's monetary velocity could, in theory, be controlled by miners (and operators of so-called "full nodes") by setting transaction fees. It's bloody simple once it clicks in your mind. E.g.:
  • Bitcoin's short-term price is getting too high and bubbly --> Miners start rejecting "low bids" --> Less trade can be done and network performance suffers and becomes more laggy --> THE EXCHANGE RATE GOES DOWN.
  • Bitcoin's short-term price is too low and it's falling or heading lower --> Miners accept more "low bids" --> More trade can be done, "micro-transaction" opportunities pop up, network performance gets faster --> THE EXCHANGE RATE GOES UP.
But of course nobody wants to engage in discussion on this topic.
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.

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.
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April 09, 2013, 01:47:46 AM
 #124

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.)

BTC:1Ca1YU6rCqCHniNj6BvypHbaHYp32t2ubp XRP: rpVbjBotUFCoi9xPu3BqYXZhTLpgZbQpoZ
LTC:LRNTGhyymtNQ7uWeMQXdoEfP5Mryx2c62i :FC: 6qzaJCrowtyepN5LgdpQaTy94JuxmKmdF7
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April 10, 2013, 12:01:25 AM
 #125

Bitcoin's "money supply" inflation is somewhere around 10%, and yes it's programmed to gradually slow down to zero. But there are also other types of inflation. There's 'price' or CPI inflation based on an arbitrary basket of goods that is supposed to be a snapshot of real-world prices. I would also keep in mind that Bitcoin does not exist in isolation of everything else. Anything that makes it more popular will draw in more users and cause price deflation, and the converse is also true: anything that reduces its popularity will cause price inflation. I was just describing a formal mechanism by miners could try to regulate its popularity by e.g.: deliberately putting the brakes on velocity in times like these when the exchange rate is sky-rocketing.

Instead it seems they've got it firmly maxed-out, "pedal to the metal" so to speak. Because Bitcoin is still immature, there's probably just too much block space and not enough transactions being done for miners to seriously consider doing what I described earlier. Or... maybe we should be directly questioning BTC Guild's motives? Who are they? Are they just in it for a quick buck? Are their participants able to vote for or somehow influence the fee settings? Maybe BTC Guild is adding hot air to the bubble and they're about to cause a panic by suddenly jolting the fees up to 0.1BTC?

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.
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April 10, 2013, 06:45:23 AM
 #126

They would just push the price up/thread


Originally posted at Reddit

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?

Admitted Practicing Lawyer::BTC/Crypto Specialist. B.Engineering/B.Laws

https://www.binance.com/?ref=10062065
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April 10, 2013, 08:38:43 PM
 #127

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.






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April 10, 2013, 11:58:09 PM
 #128

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.
"

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

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April 11, 2013, 01:49:19 PM
 #129

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, 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.

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May 25, 2013, 08:52:35 PM
 #130

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

If everyone is thinking outside the box, there is a new box.
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May 26, 2013, 05:37:07 PM
 #131

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.
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May 27, 2013, 03:31:34 PM
 #132


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


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

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May 27, 2013, 03:53:18 PM
 #133


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


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?

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