Cornerning the Bitcoin market

[Anders]

"In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly." -- http://en.wikipedia.org/wiki/Cornering_the_market

Someone with billions of dollars could perhaps corner the whole Bitcoin market. On the other hand, what would happen to the price of Bitcoin? First it would go up probably during the cornering operation. What would happen after that?

[giveBTCpls]

"In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly." -- http://en.wikipedia.org/wiki/Cornering_the_market

Someone with billions of dollars could perhaps corner the whole Bitcoin market. On the other hand, what would happen to the price of Bitcoin? First it would go up probably during the cornering operation. What would happen after that?

This is what i've been saying.

Check this out:
http://stopsyjonizmowi.files.wordpress.com/2012/03/bilderberg.jpg

Let us imagine these ally to buy as many ASIC machines as possible, and buy as many existing coins as possible. Only to sell them again at ridiculously low prices with the purpose of crashing the economy. This may be far fetched but not impossible technically speaking.

[Anders]

"In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly." -- http://en.wikipedia.org/wiki/Cornering_the_market

Someone with billions of dollars could perhaps corner the whole Bitcoin market. On the other hand, what would happen to the price of Bitcoin? First it would go up probably during the cornering operation. What would happen after that?

This is what i've been saying.

Check this out:
http://stopsyjonizmowi.files.wordpress.com/2012/03/bilderberg.jpg

Let us imagine these ally to buy as many ASIC machines as possible, and buy as many existing coins as possible. Only to sell them again at ridiculously low prices with the purpose of crashing the economy. This may be far fetched but not impossible technically speaking.

Impressive graph. I was thinking that they would keep the bitcoins. They could also dump them as you say, but then the bitcoins could start increasing in value again after a while.

My scenario is that someone buys a majority of all bitcoins and then holds on to them. Then if the Bitcoin market becomes enormous, they have a majority of all that wealth.

[giveBTCpls]

But since Bitcoin is not yet stablished that could kill any trust into it.
If they keep them, they can continue manipulating the market indefinitely just like they do now with FIAT.
Seems like a dead end to me.

[Swordsoffreedom]

Pretty sure it is a dead end since more users means more utility and acceptance
That doesn't mean they can't own a nice percentage of the coins though but it would be difficult to corner without killing the Golden Goose

[franky1]

this has been discussed over and over for the last few years, and the conclusion is that people dont have to worry, here is why

1. mining is not the most efficient way to crash the market. for this reasons.
even with billions of dollars to buy equipment, there are only 3600 coins mined a day which equates to maybe 1800 coins if you managed to gather 50% of the network. it would take a while to gather enough coins to crash the market

2. buying coins instead of mining can get the job done sooner, but by buying coins you are also going to cause a price rise by eating the sell orders, thus making a crash to a low number even harder by raising the price.

3. ok imagine you had 10k coins, you would crash the market by $200 (making it above $400 again but other people (majority of smart people) will not sell their coins at a loss, which will cause the price to rise again back to its natural level (above mining cost price). so you would need more, such as 50k to truly force the price down to double digits.. and guess what, it will just retrace back up again. all you would achieve is to make those who want to buy, get a great opportunity for once in a life time cheap coins.

so how do you crash the price and keep it down. the answer is to have over a million coins and to continually sell, as soon as the price rises, sell again. then when it rises, sell again. the end result would b once you run out of funds the price will retrace back up.

the market price is not just a mythical number plucked out of the air, without meaning or reason. there is actual data, logic, and psychology as to why bitcoin is above $600 right now. and that is the mining cost. it costs about $500(moving to $550) on average to mine a bitcoin if you bother to use mining calculators. and these miners (general public) wont sell at a loss. so they sell at $600 to cover costs and profit. then the people that bought the bitcoin from the miner wont want to sell at a loss either so they are reluctant to sell below $600 also. so you will always have a price retrace. as there would be a few people stupid enough to sell at a loss, but once sold all that is left is the smart people.. hence the price will retrace back up. the only time a dump stays low without having to force it to stay low, is if profiteering speculators raise the price too high first of all (china saga upto $1200 when mining costs were $400.. and then dump to $400 with bad news of china/mtgox)

summary.
crashing the market is not permanent, its just a quick dump before rising again. unless the price was pre pumped to be X times higher then mining costs, to then appear as a low when a dump brings it back down.

so dont worry about any $10 bitcoin. it wont happen

[giveBTCpls]

But beyond mining cost what dictates the price is simply the demand for it. If there isn't demand, the price would drop, ultimately is all supply and demand. Again, you are also ruling out bribing existing stakeholders thus being replaced with these new stakeholders with evil intentions. These are fat fetched scenareos but not by definition impossible.

[Anders]

I was thinking that one of the top traders would buy say 70% of the entire bitcoin supply. Starting at for example $1,000 and when the buying spree is over the value is $2,000 per bitcoin. And then after a couple of years the value of one bitcoin is $100,000 and that trader still has 70% of the market (by having bought some of the mined bitcoins during that period).

Of course, the value may also crash down to $10 per bitcoin, but anyway some of the big traders could corner the Bitcoin market like that perhaps.

[franky1]

But beyond mining cost what dictates the price is simply the demand for it. If there isn't demand, the price would drop, ultimately is all supply and demand. Again, you are also ruling out bribing existing stakeholders thus being replaced with these new stakeholders with evil intentions. These are fat fetched scenareos but not by definition impossible.

mining costs and those buying from miners have a valuation right now of $500-$550, beyond that... the price($550-$650) is the speculation part (S&D):
speculation is the profit and variance factor, which can move the price down or up due to demand or excess supply.

imagin it this way..
baked beans..
the whole sale price (cost of production is 10c) speculation is the retail price that is variable. so if there is a supply excess the retailer will do special offers, "buy one get one free" for instance. but the offer price will always be higher then wholesale.

so imagine the whole sale again is 10c a tin of baked beans. and retails normally at 50c, excess supply he offers 2 tins for 50c meaning 20c cost and still 30c profit, or he will just reduce the price from 50c to 40c, or if its near the 'sell by date' he will sell for 15c. in each scenario he wont sell at a loss. however in a time where there is huge demand he can raise his prices.. maybe up to a dollar.. either way the true value of baked beans is 10c and anything above that is speculation/profiteering.

now back to bitcoins
in december the mining costs were around $350-$400 but speculation (profiting, S&D) brought the price upto $1200 due to ALOT of speculation(china buying a crap tonne of coins and alot of positive news). then when bad news came about(gox/china government ban/FUD), speculation died and the price tumbled back to the true value of around the $400 mark.. check the charts and you wil see the mining costs track the average low's of each month.

the high prices are pure speculation. so again even if someone tries to dump below the mining costs (true value/low), then it will just by nature retrace back up to the low price, and then speculation will kick in to bring price back into profit. after all smart people wont sell at a loss and eventually the 'numpty' (dumb) people selling at a loss will run out as thy are a small minority.. meaning there wont be any sell orders at losses.

now to think about bribing stake holders.
lets say a government bribed stake holders by offering them $550 into the bank account, if they sold their bitcoin way below $550.. smart people would not sell at a loss so the government would have to offer $550+ just to persuade hoarders to sell their coins at any price less then profit.
so now imagine the price was $100.... those ex-hoarders will then use the multiple lumps of $550 they have in banks from government bribe, plus the dollars in the exchange from selling at a loss. to then buy like crazy, all the bitcoins that are priced below $550, simply because the end result is they would have more bitcoins. (end result price rises back to over $550).

so again any bribing or intentional price dump will retrace back up

[Eotnak]

Another well thought-out explanation from franky1.  These Bitcoin doomsday scenarios are what my fantasies are filled with, but when I have to come back to reality, I'm stuck buying at >$600

[Anders]

Maybe the Bitcoin market already is cornered! Does anyone really know who owns the bitcoins on the market today?

[franky1]

Maybe the Bitcoin market already is cornered! Does anyone really know who owns the bitcoins on the market today?

it doesnt matter..

you do realise that not every bitcoin is on the market right?.. there at 14million bitcoin in circulation but maybe only 10% of them are actually in exchanges.. people are hoarding because the spculative price is only 10%-20% above the price they mined/paid for the coin.

lets take bitstamp. if you look at the amount of coins that are on sell orders, thy range from the current lowest sll price all the way up to multiple thousands of dollars. so even if some rich dude wanted to buy all bitcoins on bitstamp he would only get a couple hundred thousand bitcoins (not the full 14million as they are privately hoarded off the exchange) and it would cost him multiple MILLIONS!! just for a small percentage of circulation.

then dumping the coins. as i described in last couple posts would only cause a temporary blip in the price before it retraces.. so its just a waste of money to even try..

but for anyone that sells at the many thousands of dollars that the intentional dummy is causing when he initially buys.. those funds will then simply buy alot more bitcoins when the dump occurs. meaning everyone gets richer, due to the dummy throwing away millions of his dollars on a 2 minute pump and dump. the only people that do not get richer are the losers that sell at a loss..

[Ron~Popeil]

But beyond mining cost what dictates the price is simply the demand for it. If there isn't demand, the price would drop, ultimately is all supply and demand. Again, you are also ruling out bribing existing stakeholders thus being replaced with these new stakeholders with evil intentions. These are fat fetched scenareos but not by definition impossible.

mining costs and those buying from miners have a valuation right now of $500-$550, beyond that... the price($550-$650) is the speculation part (S&D):
speculation is the profit and variance factor, which can move the price down or up due to demand or excess supply.

imagin it this way..
baked beans..
the whole sale price (cost of production is 10c) speculation is the retail price that is variable. so if there is a supply excess the retailer will do special offers, "buy one get one free" for instance. but the offer price will always be higher then wholesale.

so imagine the whole sale again is 10c a tin of baked beans. and retails normally at 50c, excess supply he offers 2 tins for 50c meaning 20c cost and still 30c profit, or he will just reduce the price from 50c to 40c, or if its near the 'sell by date' he will sell for 15c. in each scenario he wont sell at a loss. however in a time where there is huge demand he can raise his prices.. maybe up to a dollar.. either way the true value of baked beans is 10c and anything above that is speculation/profiteering.

now back to bitcoins
in december the mining costs were around $350-$400 but speculation (profiting, S&D) brought the price upto $1200 due to ALOT of speculation(china buying a crap tonne of coins and alot of positive news). then when bad news came about(gox/china government ban/FUD), speculation died and the price tumbled back to the true value of around the $400 mark.. check the charts and you wil see the mining costs track the average low's of each month.

the high prices are pure speculation. so again even if someone tries to dump below the mining costs (true value/low), then it will just by nature retrace back up to the low price, and then speculation will kick in to bring price back into profit. after all smart people wont sell at a loss and eventually the 'numpty' (dumb) people selling at a loss will run out as thy are a small minority.. meaning there wont be any sell orders at losses.

now to think about bribing stake holders.
lets say a government bribed stake holders by offering them $550 into the bank account, if they sold their bitcoin way below $550.. smart people would not sell at a loss so the government would have to offer $550+ just to persuade hoarders to sell their coins at any price less then profit.
so now imagine the price was $100.... those ex-hoarders will then use the multiple lumps of $550 they have in banks from government bribe, plus the dollars in the exchange from selling at a loss. to then buy like crazy, all the bitcoins that are priced below $550, simply because the end result is they would have more bitcoins. (end result price rises back to over $550).

so again any bribing or intentional price dump will retrace back up

Nice summation. The market is self regulating. If more people would simply deal in fact instead of over blown fear the price may be even more steady than it has recently become. 

[enhu]

very informative. I never knew these things when i started bitcoin. 

[allthingsluxury]

"In finance, to corner the market is to get sufficient control of a particular stock, commodity, or other asset to allow the price to be manipulated. Another definition: "To have the greatest market share in a particular industry without having a monopoly." -- http://en.wikipedia.org/wiki/Cornering_the_market

Someone with billions of dollars could perhaps corner the whole Bitcoin market. On the other hand, what would happen to the price of Bitcoin? First it would go up probably during the cornering operation. What would happen after that?

Really depends on their interests. Likely anyone who was to invest that much would not want to see the value crash. Unless of course it was done intentionally for just that purpose 

[Anders]

If Bitcoin would become larger than the U.S. dollar, then the Chinese government for example may corner the Bitcoin market when the price of one bitcoin is "low". Because later the price of one bitcoin would become astronomical (divide the total value of the U.S. dollar divided by total number of bitcoins in existence). And then China would basically own the whole world.

I think it's very unlikely that Bitcoin would become that huge. And other governments would not allow one single country to corner the Bitcoin market. It's just hypothetical thought experiment.

[rapport]

is there a transcript of this https://www.youtube.com/watch?v=bkf04kQw1YU    ?
Byrne mentions that he thinks bitcoin is now too big for Wall St to kill.