What if Govt buys all bitcoins?

[rockrhino27]

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. 

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[vivabitcoin]

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

[DannyHamilton]

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.

[DannyHamilton]

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

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?

[InspiredEye]

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

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

[kingofmoon]

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.

[Come-from-Beyond]

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

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

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

[nbartlett]

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.

[DeathAndTaxes]

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. 

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.

[Schrankwand]

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

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?

[a2706r]

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

[HjerterEss]

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

[3gghead]

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

The hashing algorithms for Bitcoin are based on the USA's National Institute of Standards and Technology (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...

[bitleif]

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

[Lethn]

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.

[Kennji]

Then a new digital currency would come out lol

[rsbriggs]

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.

[white854]

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.

[Schrankwand]

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.

[oatmo]

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