What if Govt buys all bitcoins?

[qwerty555]

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

[ahmed_bodi]

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?

[qwerty555]

yes . If they wanted to

http://www.usfederalbailout.com/

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

[oatmo]

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

[ahmed_bodi]

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.

[bitchess]

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?

[bitleif]

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.

[Come-from-Beyond]

What if Govt buys all bitcoins?

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

[ahmed_bodi]

^^ Precisely.

[DannyHamilton]

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

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.

[qwerty555]

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

[Cobalt_rx]

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.

[bitchess]

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

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.

[zim79]

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.

[Bastet]

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!

[DannyHamilton]

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.

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).

[bitchess]

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!

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)
repeat

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

[DannyHamilton]

- snip -
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

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.

[qwerty555]

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.

[Come-from-Beyond]

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.