Would this be illegal?

[ermsam]

Let's person A has a lot of money, so he buys 1 million or so bitcoins. After he buys those he goes out and buys a load of iPods, for which he flips at 0.5 bitcoins. So by doing this he drives up the price of bitcoins to $100+ and then proceeds to dump the amassed bitcoins at a large profit. Legal and would this work?

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[qbg]

Let's person A has a lot of money, so he buys 1 million or so bitcoins. After he buys those he goes out and buys a load of iPods, for which he flips at 0.5 bitcoins. So by doing this he drives up the price of bitcoins to $100+ and then proceeds to dump the amassed bitcoins at a large profit. Legal and would this work?

You would run into massive problems at every stage of that plan. First buying that many Bitcoins would take a very long time and/or drive up the price very high. Second, if an iPod isn't already worth 0.5 Bitcoins, you would be taking a massive loss in trying to boost the price of Bitcoins. Finally, assuming you do get the price you want, cashing out is going to be an issue. You would have to do it slowly or else you would crash the market, and at the same time continue to offer the deal or else the price would fall (if that is the only thing supporting it).

Its practically a given that you would lose a ton of money, so it doesn't matter if it is legal or not.

[Elder]

It's legal, but you would lose a lot of money and the first step alone would be closer to achieving what you wanted with the hypothetical.

[silverchair]

Yup, there's no law yet for bitcoin. 

[Revalin]

If he tries to sell off fast, the market will crash.  If he sells off slowly, the high price he created will slowly drop back down before he can unload what he has.

The technique is called cornering a market.  Usually it results in huge losses for whoever tries to do it.  The exception is after you buy up the commodity (in this case, BTC) to drive up the price, you're in a position to take advantage of the high price without actually selling the commodity.  Generally this only happens if you can do it to such a degree that you can have a monopoly on a resource like precious metals.  Even then it's very hard to accomplish regardless of law; and once you have a monopoly antitrust law prevents you from doing most of the things you'd want to do.  In the case of BTC it's basically impossible anyway since it has no intrinsic value that you can hold hostage.

More info here:  http://en.wikipedia.org/wiki/Cornering_the_market

[Kansattica]

You'd be a real jerk to do it and everyone would hate you. But if you do sell iPods for five dollars each, I'll buy one.

[echris1]

Pretty sure anything is legal as far as bitcoin goes, since I don't think we have any bitpolice =)

[mute20]

You would have to be at least a multi-millionaire to make a huge dent in the market. This scheme is also very long term. This is also not a realistic idea you would probably be better served just putting the money in  a bank or buying gold.

[maaku]

Sure it's legal, but it wouldn't work. Why do you expect selling iPods at less than market value will drive up the price of BTC?

[DiaperedDynamo]

It wouldn't work, the market would correct itself after the buy order and you'd be selling four dollar iPods. markets are self-correcting, that's what makes them strong.

[brad]

It'll take a ton of money. Originally when BTC was at about $1 someone bought $50k worth and thtat's when it started jumping up. Now that the price is higher, I'm guessing it would take as much as 10 times as much to do it again.

[Benminnn]

Generally, if you have to ask, it might not be illegal now, but probably will be in the future.

[Kansattica]

This sort of thing is illegal in stock and commodities markets, and it has a habit of backfiring really quickly if someone catches on beforehand. Say I see you buying a million or so bitcoins and know what you're doing. Everyone else sees the price rise and starts buying as well. I can then put in a 'short' order (or a loan for) for 100,000 BTC, basically an agreement to buy bitcoins later at a later price while having them now. Then, when you drive the price up, I sell the coins I bought through the short while the price peaks. I make a profit on this, then the price drops and you're left with a million near-worthless bitcoins and I gladly pay the lower, crashed price (or easily repay the loan).

[higbvuyb]

Yup, there's no law yet for bitcoin. 

I suspect that in many jurisdictions fraud laws apply to nontrivial stores of value even if said stores are not defined in relevant laws explicitly.

[Vladimir]

ermsam, you will be broke but free. No worries.