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BenjaminMemberApril 9, 2021 at 10:43
My main concern, and something I’d like to find Saifedean discussing somewhere is not the idea that the gov’t stops, bans, or even over-regulates it, but this: What if the government just buys all of it (or a large portion of it)? Current market cap of Bitcoin is ~$1 trillion. Obviously, they can’t just go buy all the Bitcoin without moving the market enormously, but I worry they can “print” enough USD to buy as much as they want, and then manipulate the market whichever way they want.
And while I agree that Bitcoin becoming a mainstream asset is what we want right now because it has done wonders for the price. But every time a member of the federal reserve system of banks makes a large purchase of Bitcoin, it worries me that eventually they will be the only hodlers, and all the sudden, the decentralized, outside-the-system nature of Bitcoin is ruined. When you have a bank charter, and are only required to hold 10% reserve (which was reduced to 0% reserve during the pandemic), why wouldn’t you just print infinite dollars to buy all the Bitcoin you think you’ll need.
Just musings I have.
I understand the analogy of alcohol during prohibition. The difference, which is part of the beauty of Bitcoin, is that you can’t go make Bitcoin in your backyard, like they could with illegal alcohol distilleries. And Bitcoin is open ledger, so ultimately, once the government has your address, they’ll know you own Bitcoin, and can enforce whatever draconian measure they’d like until you comply.
I guess it comes down to whether or not people will part with their Bitcoin for fiat currency in the long run.