Why aren't the worlds richest people buying up all the coins?

[justusranvier]

Bitcoin companies aren't run in a way which would give them much control over the community yet. In the future that could change if the community depends too much on Bitcoins and does not diversify into altcoins.

Any excuse, not matter how flimsy, to pump scamcoin will do, right?

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[RodeoX]

The rich are welcome to buy as much as they want. But they will have no edge over you. That is a beautiful thing about bitcoin, it's egalitarian free market nature.

[frobley]

They are highly discouraged from investing in anything that could compete with the $

[Ipsum]

I think the rich guy would prefer to invest in a company that produce ASIC instead of buying Bitcoin, they would earn even more using this strategy.

Buying Bitcoin is the safest investment in a lot of ways but no, a rich person wouldn't touch Bitcoin yet. The ultra rich want to buy control and power over others.

Bitcoin companies aren't run in a way which would give them much control over the community yet. In the future that could change if the community depends too much on Bitcoins and does not diversify into altcoins.

You don't really understand the concept of risk if you're labeling bitcoin the safest investment in -any- way. It's extremely risky as an asset class.

[rpietila]

What's stopping them? Basic economic logic.

Say you have 10 BTC and they offer to buy for $200 per bitcoin, so you sell 2 at that price. Well they are rich and want ALL your coins, so offer $300 and you sell 1 more. You don't want to sell too many with the price rising that fast, of course, so you always keep a chunk in reserve for the big payoff. Fine, they say, wanna play it that way? "$20,000 per coin!" You have 7 left, maybe you sell 4 of them, but not all of them because who knows where this is going? They eventually go ballistic and offer you $10 million for your last few coins. You sell just one, thinking $3 mil oughtta hold down the fort pretty well, and since they keep upping the ante why not wait until they offer a billion? Of course long before this they would run out of money. And well before that you'd start wondering if all that fiat money was even worth anything anymore, so you'd be even more incentivised to hold on to a few coins.

This property defines whether something is Money or not. It is impossible to buy up all bitcoins, or all gold, or all silver in existence, using fiat currency as payment. Long before you can corner all the supply, the exchange rate has shot to the stratosphere and the purchasing medium ceases to be a valid medium of payment i.e. is destroyed.

Of course you can try to corner e.g. all Picassos, and you may end up paying very high price for the last ones, but dollar is not destroyed in the process because it is still needed to function as money.

The reason why an attempt to corner gold, silver or bitcoins will destroy the dollar, is that both the object of the corner and the medium of payment are possible to work as media of exchange. The corner sends the value of the monetary stock of the gold/silver/bitcoins so high that automatic economic adjustment mechanisms debit this from the dollar, the value of which is thus lowered. (The aggregate total purchasing power of all money in existence cannot grow unbounded.)

[theonewhowaskazu]

Well,

The winklevoss did it, so I wouldn't be surprised if at least one other does.

The thing is, once you're that rich, it doesn't seem like it'd do much harm to anybody to plop down a couple million on what might be called "risky investments" like Bitcoin, but I guess so many similar things (in terms of huge potential hype) go by each year that it must seem like just another flash in the pan for rich folk and they never bother to investigate any given phenomenon anymore. If they did, I'm almost sure more would invest in Bitcoin.

[lucasjkr]

Hey guys,

Serious question here. Bitcoin has more awareness now than ever, but why aren't people like bill gates and warren buffet just buying all of the coins?

Do you ever wonder that? Like you would think they would be buying up all the coins, and the market cap would be tens of billions right now. Maybe they are going to war against Bitcoin?

A 51% attack controlled by opposition of Bitcoin would be fairly easy with the amount of resources these guys have.

Whats your opinion?

To give an analogous example; Warren Buffet famously shunned gold investment in early 2000 and plowed money into his enterprises that went on to underperformed gold over the proceeding decade. He would have been better off putting the cash into gold and not expending effort on his enterprises.

I think Bitcoin does not fit most people's mental models of how finances work. But then that comes down to a discussion of how allied with 'reality' people's mental models are.

Sure, Buffett "lost out" by not buying gold. Hindsight is always 20/20 though. He did buy a ton of businesses and shares of other companies that grew their earnings at rates generally faster than the economy did, though. Which, after doing his homework, was a prediction that he felt comfortable in making. Had he just piled into gold, there would have been zero earnings and zero earnings growth. His investment returns would have been based purely on hoping that someone else would offer more for it that he paid. Knowing what we know now, yes, he could have done better going that route. But there were zero guarantees of that happening; gold had been a horrible investment for the previous 15 or so years.

Just like Bitcoin; herd mentalities rule. I was getting a lot of inquiries from friends about "what is this bitcoin thing and how do i get into it?" when bitcoin was over $200. When it slipped down the the double digits, none of them expressed any interest whatsoever. Even someone i was dealing with on localbitcoins.com had gone and frantically sold all of his in the mid $90's; I kept inquiring, and he didn't buy back in until well after the trough... not at $60 or $70, but at $110 to $120. In essense, the age old mistake of buy high sell low.

That's disjointed. What i'm trying to say is that you can look at a "hot" commodity in hindsight and say "yeah, obviously everyone should have bought that" but in the real world, most people don't act that way. They see the price of something collapse (because everyone else is selling) and jump ship. And they get excited and buy in only after it's gone up quite a ways. The consensus of the world in 2000 was that gold was still a "go nowhere" investment. And unlike buinesses that grow and create more earnings, the only way for gold (and bitcoin, for that matter) to go up is by other people offering more and more for it. Where as an investment in a company, maybe the shares will be spurned for some time, but if it's operating well, it could generate positive returns for its owners in the form of dividends until that time that the rest of the market catches on.

And here's a point. The wealthy aren't going to buy bitcoin. They'll buy businesses operating in Bitcoin, quite possibly. But they're not going to make purchases of BTC itself on the hope that someone else will buy them from them for more later on. People here can do that, sure, because their purchases don't distort the market. And it takes relatively few bitcoins to make meaningful returns for most people here. If Buffett bought 10% the bitcoins in existence and they doubled in price, AND he was able to sell them all without pushing the price far down, the results would barely move the needle of his overall portfolio. Same goes for Gates and his Foundation, and for many other wealthy investors as well.

[vqp]

If their value will increase like everyone thinks, why wouldn't they? To get more wealthy

Bitcoin trading volume has reduced! Your assumption is wrong, that everyone thinks this and that. For "reach" (large volume) people is liquidity very important! If they cant sell anytime, they will not buy to much!
http://i.imm.io/1ihk5.png

But why Bitcoin volume has reduced???
Well, for one you are looking at MtGox volume in USD.  MtGox lost market share and USD lost market share in the last few months.

[rpietila]

Rich people may have some flaw in their thought models, let's call it "linear thinking". Their current modus operandi rewards them every day with position of power and luxury of life. It is impossible extremely hard to think that something created outside their sphere of influence, with a market cap of just 1 million or 1 billion, would be so crucial to them.

I know a guy who was not rich to begin with, upper middle class maximum, but he already thought so linearly so as to dismiss bitcoin when it was small. "I don't make investments to such small things." When price had gone up 10 times, he finally bought, and invested a conservative 1% of his net worth. This gave him about 1/10000 of all bitcoins, which is clearly a large interest, since it cannot be diluted.

Bitcoin price rose 1000% before the guy in the example understood that it does not matter, how much you pay for your bitcoins, what matters is how many you have. If a person is 100 times richer, and has similar thinking, and buys 100 times higher, he will have the same number of coins at the same relative investment (1% of his worth), and same relative position in bitcoin economy (1/10000 of all coins).

Most of the powercenters in bitcoin economy will be un-establishment. This is not because bitcoin is contraband, but because the mind models of the established people (with few exceptions) prevent them from purchasing bitcoin early on. In my estimation there is only about 10 people who have BTC100,000. The club is still open, but not too many admissions are available.

[tvbcof]

...
I know a guy who was not rich to begin with, upper middle class maximum, but he already thought so linearly so as to dismiss bitcoin when it was small. "I don't make investments to such small things." When price had gone up 10 times, he finally bought, and invested a conservative 1% of his net worth. This gave him about 1/10000 of all bitcoins, which is clearly a large interest, since it cannot be diluted.
...

A vast majority of my friends fall into this category (though their reasons don't necessarily follow your outline.)  Most never got into Bitcoin, and the few who did lost at least a 10x potential by the time they made the jump.

This was a pool of people many of whom were extraordinarily intelligent, had plenty of disposable income, and who I'd spent at least some time explaining the very principle that you've elaborated on.

If somehow a herd of mouth-breathers start moving toward Bitcoin the results won't be an explosion; it'll be a detonation.

[Alty]

Maybe because they are in direct contact with various string pullers that assure them that Bitcoin or any other digital currency will never be allowed to break into the mainstream.

Unless there is legal clarification that states that Cryptocurrency is going to be tolerated in the long term why should they risk offending people they rely EVER SO heavily upon.

Banks / governments / the 1% they've all got one thing in common, CONTROL, why hand that over by endorsing something that removes it completely? Would you?

BTW. I really hope I'm wrong!

[mgio]

The reasons are very simple:

1) Bitcoins are an INCREDIBLY risky investment. They are extremely volatile. Just a few weeks ago when Silk Road was shut down they were down to $60. Now they are about $200. They are far too risky for traditional investors. They are completely unregulated and may even become illegal at some point.

2) The bitcoin market is way too small and way too illiquid. Their market cap is the same as a medium sized company. Large investors can't buy or sell too many bitcoins without moving the market too much. A couple thousand in profits here and there are meaningless to them. They need to be able to invest hundreds of thousands at least into bitcoin and that isn't possible right now. Neither the market, nor the exchanges can handle it.

Those two reasons alone keep the worlds richest people out of bitcoins. And it keeps most institutional investors out of bitcoins too.

[rpietila]

It seems that bitcoin's exchange rate grows roughly in proportion to the number of holders. Therefore it makes sense to buy as soon as possible.

The correct way is to determine what number of bitcoins you want and then buy it and not sell. (Think in BTC)

The wrong way is to wait until you can invest a certain amount of dollars, and then sell after a quick double. (Think in USD)

Now, the dollar richest naturally think in USD, and apply the wrong way. This keeps the majority of bitcoins always in the hands of the smart people who think in BTC.

[tvbcof]

The reasons are very simple:

1) Bitcoins are an INCREDIBLY risky investment. They are extremely volatile. Just a few weeks ago when Silk Road was shut down they were down to $60. Now they are about $200. They are far too risky for traditional investors. They are completely unregulated and may even become illegal at some point.

2) The bitcoin market is way too small and way too illiquid. Their market cap is the same as a medium sized company. Large investors can't buy or sell too many bitcoins without moving the market too much. A couple thousand in profits here and there are meaningless to them. They need to be able to invest hundreds of thousands at least into bitcoin and that isn't possible right now. Neither the market, nor the exchanges can handle it.

Those two reasons alone keep the worlds richest people out of bitcoins. And it keeps most institutional investors out of bitcoins too.

Just the opposite to my way of thinking.  A rich person could risk 0.01% of their wealth and have a noticeable chance of making some pretty good money.  I've never thought of my Bitcoin speculation as very likely to pay-out, but I've always put the odds at much much much higher than winning the lottery (which I've never had any inclination to try BTW.)

It is true that a better way to become unbelievably wealthy is to get a job as the CEO of a financial corporation, but that is a long-shot even to those who are well positioned.  And it takes a lot of effort.  Buying some Bitcoin takes about 5 minutes and requires no on-going effort, particularly if the initial investment is considered a sunk cost and most likely to come to naught.  Voice of experience.

In the end, I never understood why more rich people did not 'jump eeeen it' earlier on.  I would have expected more of them to have more orthogonal minds than seemed to be the case else they would not have gotten where they are.  Perhaps a lot of them did and it's just not all that apparent (though in the late 2011 crash time-frame it would have been pretty obvious in monitoring the exchanges.)

[Hippie Tech]

The richest people are not buying BTC because they are not done scaring the 'poor' into buying it first.

The more I see, the more I have to think that cryptos are a false flag/hope operation that will con us into going cashless.

[tvbcof]

The richest people are not buying BTC because they are not done scaring the 'poor' into buying it first.

The more I see, the more I have to think that cryptos are a false flag/hope operation that will con us into going cashless.

This I doubt (but do not rule out.)  Bitcoin itself has some flaws which would make it amenable to centralization and control, but doing so would spook the userbase and popularize one of the numerous possible alternative designs which would be less susceptible.

Most likely Bitcoin was a natural follow-on to earlier efforts such as hash-cash and was released with the level of polish that the resources allowed (minimal.)  The designer(s) was/were probably independent entities who had some combination of political motivations and personal enrichment goals.  And both were probably fulfilled.

[Hippie Tech]

The richest people are not buying BTC because they are not done scaring the 'poor' into buying it first.

The more I see, the more I have to think that cryptos are a false flag/hope operation that will con us into going cashless.

This I doubt (but do not rule out.)  Bitcoin itself has some flaws which would make it amenable to centralization and control, but doing so would spook the userbase and popularize one of the numerous possible alternative designs which would be less susceptible.

Most likely Bitcoin was a natural follow-on to earlier efforts such as hash-cash and was released with the level of polish that the resources allowed (minimal.)  The designer(s) was/were probably independent entities who had some combination of political motivations and personal enrichment goals.  And both were probably fulfilled.

----> Gavin will visit the (fascist scum) CIA ----> https://bitcointalk.org/index.php?topic=6652.0

[tvbcof]

The richest people are not buying BTC because they are not done scaring the 'poor' into buying it first.

The more I see, the more I have to think that cryptos are a false flag/hope operation that will con us into going cashless.

This I doubt (but do not rule out.)  Bitcoin itself has some flaws which would make it amenable to centralization and control, but doing so would spook the userbase and popularize one of the numerous possible alternative designs which would be less susceptible.

Most likely Bitcoin was a natural follow-on to earlier efforts such as hash-cash and was released with the level of polish that the resources allowed (minimal.)  The designer(s) was/were probably independent entities who had some combination of political motivations and personal enrichment goals.  And both were probably fulfilled.

----> Gavin will visit the (fascist scum) CIA ----> https://bitcointalk.org/index.php?topic=6652.0

What does that have to do with anything?  For one, it's no big deal in and of itself, and for two, Bitcoin was fairly old by the time he did his presentation.  This in fact argues against your thesis.  I mean, if some entity had devised Bitcoin as a nefarious plot of one-world control, the CIA probably would not have had Gavin to come and give a presentation about it as a means of trying to learn something.

[frankenmint]

because they are stupid...no its because they are risk averse.  why should you speculate on greed if you've already got a healthy portion of wealth. 

[Hippie Tech]

The richest people are not buying BTC because they are not done scaring the 'poor' into buying it first.

The more I see, the more I have to think that cryptos are a false flag/hope operation that will con us into going cashless.

This I doubt (but do not rule out.)  Bitcoin itself has some flaws which would make it amenable to centralization and control, but doing so would spook the userbase and popularize one of the numerous possible alternative designs which would be less susceptible.

Most likely Bitcoin was a natural follow-on to earlier efforts such as hash-cash and was released with the level of polish that the resources allowed (minimal.)  The designer(s) was/were probably independent entities who had some combination of political motivations and personal enrichment goals.  And both were probably fulfilled.

----> Gavin will visit the (fascist scum) CIA ----> https://bitcointalk.org/index.php?topic=6652.0

What does that have to do with anything?  For one, it's no big deal in and of itself, and for two, Bitcoin was fairly old by the time he did his presentation.  This in fact argues against your thesis.  I mean, if some entity had devised Bitcoin as a nefarious plot of one-world control, the CIA probably would not have had Gavin to come and give a presentation about it as a means of trying to learn something.

Do you really believe such powerful technology (eg. asics) would have been developed otherwise ?

If BTC wasn't on their radar before gpus were integrated, it sure as hell was after. alCIAda couldn't figure it out for themselves, so they had to step in before cryptos became too big to control.

Given thier history of fabricating wars and the human suffering these maggots have imposed on our existance, its mind boggling to see how so many of you are willing to pass this off as a tea and crumpet social.