Bitcoin pegging itself to the USD?

[elewton]

When Max Keiser suggested it, it sounded ridiculous.

But maybe he wasn't talking to me.  Maybe he was talking to the whales or even the great manipulator(s).

EDIT:
Corrected link.  Had typed https, and it would appear Mr Keiser's site doesn't support SSL.  Thanks, Komodorpudel.

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[Komodorpudel]

When Max Keiser suggested it, it sounded ridiculous.

But maybe he wasn't talking to me.  Maybe he was talking to the whales or even the great manipulator(s).

Chrome sais that this link is fake.

[Miz4r]

When Max Keiser suggested it, it sounded ridiculous.

But maybe he wasn't talking to me.  Maybe he was talking to the whales or even the great manipulator(s).

It's Max Kaiser himself. He is a pretty big whale himself with over 50k coins.

[phoenix1]

Well that's about the dumbest idea I've ever heard

[glendall]

Sure hope that BTC isn't pegged to the USD's fantasy-based enrich-the-billionaires inflationary dollar policy.  It'd be a really strong negative for BTC's future worth.

[elewton]

Well that's about the dumbest idea I've ever heard

Fair enough.  Throwing out dumb shit and hoping it starts an interesting conversation is kind-of my thing.

The big whale dumps really lowered the price and confirmed that a few entities have a fair reserve of USD.  Some of them may still have a ton of XBT.  Collusion between a small number of early adopters isn't obviously impossible.  It could well be in their interests to act as a Bitcoin central bank for a couple of weeks or months, letting infrastructure develop, bleeding off a percentage of each of their hordes to increase the probability of ultimate success and greater riches.

Perhaps its obvious to someone in the pits that such entities would be fleeced by a large number of smaller traders or that said traders would lose interest, is necessarily this the case?  They only need to make market moving purchases when it drifts ~10% from $100 and not absorb any absurd asks.

Again, just curious as to whether this is possible or rational.

[aigeezer]

Sure hope that BTC isn't pegged to the USD's fantasy-based enrich-the-billionaires inflationary dollar policy.  It'd be a really strong negative for BTC's future worth.

No - it's more clever and subtle than that. Just a coattail thing until BTC builds market share, then remove the peg. Sort of like how the cuckoo lays its eggs.

"For those who scream… But Max, this defeats the idea of non-fiat currency! Consider this an interim solution to what is a very nettlesome problem: bitcoin’s vulnerability on the exchanges – that are being shut down right now. An ‘invisible’ dollar peg would allow the entire exchange business to go dark behind cryptology – allowing for the capitalization of Bitcoin to rise to the critical $50 – $100 bn. level unmolested by governments."

The piece was apparently from this past April. I'm surprised we haven't heard about it until now. It's worth thinking about.

[Qoheleth]

Edit: I wrote my post before reading the actual proposal. Here's a complete rewrite.

The problem with the idea is that supporting a peg, given the current exchange volume, would take monumental amounts of both BTC and USD. Even the largest known holder of BTC on the entire network - Shamir User A, who many claim is a ghost of faulty mathematics and not a real person - has only 2.8 million BTC, which is barely enough to service three months of Mt. Gox volume. Similarly, they'd have to be multimillionaires in fiat terms to support that sort of volume in the case that people are selling rather than buying.

We had price stability for months, during the doldrums of Summer 2012. It was interesting when it was happening, but in the long term it affected the price little. I daresay a peg at $100/BTC would have the same effect, and be devastatingly expensive when it finally ended.

[elewton]

Thanks for the responses.  I don't mean for that any individuals or group would act as a full redeemer.

Simply that they would burn anyone who buys above $105 or sells bellow $95 and after a period of stability during which Bitcoin dispensers become more widespread and merchant adoption increases, slowly bring this upward and let Bitcoin spread its wings while they sit on the bulk of their stashes.  Obviously, one wouldn't bother if the swings got too large or other large players entered the market, but for a pod of whales it seems possible.

[Malawi]

Edit: I wrote my post before reading the actual proposal. Here's a complete rewrite.

The problem with the idea is that supporting a peg, given the current exchange volume, would take monumental amounts of both BTC and USD. Even the largest known holder of BTC on the entire network - Shamir User A, who many claim is a ghost of faulty mathematics and not a real person - has only 2.8 million BTC, which is barely enough to service three months of Mt. Gox volume. Similarly, they'd have to be multimillionaires in fiat terms to support that sort of volume in the case that people are selling rather than buying.

We had price stability for months, during the doldrums of Summer 2012. It was interesting when it was happening, but in the long term it affected the price little. I daresay a peg at $100/BTC would have the same effect, and be devastatingly expensive when it finally ended.

Hmm, it might be a burn, but with that kind of founds, it might be profitable. He could offer a huge amount of BTC at one price, and offer to buy a huge amount at 2% below. If the buying and selling were not too much off, the .2% trading fee would mean that it would give a profit, and if one side became to weak, he could do some supporting buys in the middle and still make a profit. Say buying at $100 and selling at $102, (1.6% profit) and sometimes sell/buy at $101 (0.6% profit)

0.6% - 1.6% profit maybe many  times every day quickly adds up.

[Qoheleth]

Hmm, it might be a burn, but with that kind of founds, it might be profitable. He could offer a huge amount of BTC at one price, and offer to buy a huge amount at 2% below. If the buying and selling were not too much off, the .2% trading fee would mean that it would give a profit, and if one side became to weak, he could do some supporting buys in the middle and still make a profit. Say buying at $100 and selling at $102, (1.6% profit) and sometimes sell/buy at $101 (0.6% profit)

0.6% - 1.6% profit maybe many  times every day quickly adds up.

If, and only if, the buys and sells balance enough that her stash of BTC doesn't run dry.

[JordanL]

Sure hope that BTC isn't pegged to the USD's fantasy-based enrich-the-billionaires inflationary dollar policy.  It'd be a really strong negative for BTC's future worth.

Agreed, not to mention it would eliminate one of the key reasons Bitcoin was invented in the first place.

[Malawi]

Hmm, it might be a burn, but with that kind of founds, it might be profitable. He could offer a huge amount of BTC at one price, and offer to buy a huge amount at 2% below. If the buying and selling were not too much off, the .2% trading fee would mean that it would give a profit, and if one side became to weak, he could do some supporting buys in the middle and still make a profit. Say buying at $100 and selling at $102, (1.6% profit) and sometimes sell/buy at $101 (0.6% profit)

0.6% - 1.6% profit maybe many  times every day quickly adds up.

If, and only if, the buys and sells balance enough that her stash of BTC doesn't run dry.

Absolutely, but the person doing this would then have a large lump of USD, and would presumably still have a reserve in case it went to the moon.

[phoenix1]

Artificial and untenable pegs are a speculators wet dream ... how much is 'the pegger' prepared to spend ?
Clue ... BOE tried this with Soros and failed LARGE

And as has been said, it's the antithesis of Bitcoin ...

[ninjarobot]

Pegging Bitcoin to the US Dollar is like pegging a Ballerina to a ball and chain.

[herzmeister]

There might be something to it, the current price and Max Keiser.

He pushed Bitcoin immensely in the last months, he'd lose his face if Bitcoin really crashed to 30.

That's maybe why he's trying to peg it.