Quote from: pitham1 on October 07, 2017, 10:01:41 AM

Quote from: BobK71 on October 06, 2017, 09:35:06 PM

So, if Bitcoin really takes off, we think we have an honest, state-free money. No central bank, or anyone, can create bitcoins past the 21 million limit.

Correct? In practice, no.

What Western central banks are doing now is getting us used to the idea of multiple cryptocurrencies being viable. When they use their printed money to buy some new cryptos, their values go up.

One simple example of how they can continue to expand their money supply is to have a basket of cryptos against which they 'manage' exchange rates with dollars, euro, etc. Say, at first this basket contains 1 BTC, 10 ETH, and 100 LTC, and the Fed and US government have an official or unofficial policy of keeping this basket at the price of $100K, with a combination of keeping money printing and public debt under control, and selling the BTC/ETH/LTC in its vaults to scare savers away from moving their dollars into coins.

As time goes on, the Fed will want to create more dollars. (As it always has.) Then they will buy up lots of new cryptocurrency XYZ (cheap) with their dollars, and raise the price of XYZ. After XYZ has 'proven itself in the market with its technical superiority,' the Fed will add it to the basket, and the new basket will be priced at $120K. Since the 'base money' has expanded by 20%, the number of dollars can also be expanded by 20%.

This is only one of many variations. The Fed doesn't even have to declare a basket (as mentioned above.) Whatever it buys will rise in value, and will become part of the 'basket'. Whatever it abandons will die out. It will have all the power.

The system will be no different from the early days of gold and silver standards, but with a new twist: there are an unlimited number of new gold and silver mines, and only central banks know where they are!

So, I'm still thinking that gold and silver, whose scarcity is secured by physics, rather than computer code, are the superior forms of money for improving our freedom from governments and bankers.

Their pump and dump might with small altcoins, but will it work with Bitcoin? There are quite a few backers of Bitcoin who will remain with it, even during a Central Bank dump. In your metals analogy, there are a lot of metals which central banks could buy, but that won't impact the price of gold.

It would be easy to pump and dump and manipulate altcoins price since it has very small marketcap.But same is not the case with bitcoin as it has very big marketcap.Also,it has user base globally and not in the control of a single country like china as earlier.If the central banks try to dump bitcoins,then they would be the ultimate losers as their dumped bitcoins would be immediately bought due to huge buy wall.

But since altcoin markets do not have a significant impact on the economy or banking sectors,they would not try to manipulate it.