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They have every motivation to do so.

Extreme volatility is bad for confidence and can hurt the chance of Bitcoin becoming a respected currency.

Say for the sake of argument that Satoshi owns 500,000 BTC. This is a conservative estimate.

Someone holding that much BTC could easily dampen the wild price swings we are seeing at the moment by selling large quantities when the price spikes and buying them back when it crashes.

By doing this they risk losing a fraction of their bitcoins. However, this would also increase the probability of bitcoin’s success and them becoming multimillionaires.

Which would you choose?

  1. 50% chance that you own 500,000 BTC worth $500 Million USD in 2017. 50% chance that bitcoin fails to take off and they are worth $5 Million USD.
  2. 80% chance that you own 300,000 BTC worth $300 Million USD in 2017. 20% chance that bitcoin fails to take off and they are worth $3 Million USD. Plus $16 Million USD profit right now.

Note: The above numbers are not meant to be scientific. They are just simplifications meant to illustrate the gist of my argument.

I don’t see how any rational person would choose option (1), unless they have some really crazy lopsided utility function for money.

So why isn’t it happening? Why are most coins mined in 2009 practically untouched?

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  • How did you arrive at $16M profit right now? How do you know it wouldn't be $16M loss? Without profits right now with a 2017 FV of at least $11.9M, option (2) is better.
    – Bernd Jendrissek
    Commented Jun 3, 2013 at 2:18

5 Answers 5

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I think the idea is to have a system that is not subject to manipulation. Highs and lows may be what I consider growing pains but will eventually diminish provided there is confidence that the system is a true free market system. This means free of manipulation. Let the free market reign and value will be real. Manipulate it and we basically have another ponzie scheme like we have now with the US dollar.

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  • I don't see how this kind of intervention (manipulation) would make it an unfree market. Nobody is being forced to buy or sell anything. Nodody is being defrauded.
    – TimoY
    Commented Mar 27, 2013 at 16:52
  • @TimoY the fraud is that it creates the corporate-fascism takeover of society. Bitcoin's design is a trojan horse against mankind. It is amazing how blind you fanboys can be.
    – Shelby Moore III
    Commented Mar 27, 2013 at 18:14
  • Yeah but Bitcoin is designed to be manipulated. Thus I have downvoted you. See the link in prior comment for proof.
    – Shelby Moore III
    Commented Mar 27, 2013 at 18:17
  • @ShelbyMooreIII fun, you sound exactly like a fanboy!
    – o0'.
    Commented Jun 5, 2013 at 11:43
  • In an ideal free market, if I recall my college Economy classes correctly, no buyer or seller has the capability of modifying the market. Should one seller/buyer have enough strength to "dampen" the bitcoin's value oscillations, it follows they could as well intentionally create them or keep them going - not a good thing unless it were a super-trustful party.
    – Joe Pineda
    Commented Jan 6, 2014 at 2:48
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There once was a guy named pirateat40 who had been trusted with a lot of Bitcoin. On August 17, 2012, he decided that he didn't like how quickly Bitcoin was gaining value and decided to sell a chunk of his holdings at a low price in order to bring down the value. He may have recovered his losses, if he did at all, by rebuying low and up the rise in price.

MtGox chart Aug 15-21

He claims to have done this several more times, but to a lesser degree.

Here is IRC transcript. I was in the room -- I think #bitcoin or #bitcoin-otc on Freenode -- at the time he announced his intentions. I found this forum thread linking to it.

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  • 2
    He's also a known scammer en.bitcoin.it/wiki/Pirateat40
    – o0'.
    Commented Jun 5, 2013 at 11:45
  • 1
    As soon as other people figured out what he was doing, they developed a counter-strategy and he began losing money massively. The counter-strategy is simple -- let him spend all the money to push the market down, and then force him to compete with you to buy at the low price. You have the same buying opportunity he does, but don't have to sell below the natural price (like he does) to get it.
    – David Schwartz
    Commented Jan 6, 2014 at 4:23
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Implicit in "stabilizing" the price is the assumption that you know what the price "should be". Maybe the people who own the lion's share of bitcoins don't believe that they know what the price "should be". If they believe that they don't know, then it stands to reason that they would not attempt to "stabilize" the currency, since doing so while being wrong about what the price "should be" will lead to a loss. Why not rather just do nothing if making either a profit or loss would be, a priori, equally likely?

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That is because no early adopter believes in the statement: "Extreme volatility is bad for confidence and can hurt the chance of Bitcoin becoming a respected currency."

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  • I just find it hard to believe that none of them feel that way, after experiencing the 2011 bubble.
    – TimoY
    Commented Mar 27, 2013 at 15:42
  • ... and the 2013 bubble!
    – TimoY
    Commented Apr 15, 2013 at 17:20
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A) the original OG BTC guys don't believe in market intervention

B) they knew these initial spikes would put them on the map as fiat currencies degrade

C) the Satoshi unit of .00000001 allows for price levels to accommodate price swings by a factor of 10 mil

D) menu costs will become neglidgeable if not 0 in an increasingly digital world

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