Quote from: Missy on June 26, 2011, 02:06:43 PM

Quote from: JoelKatz on June 26, 2011, 01:53:28 PM

This scenario is really unlikely. But it would be terrible for miners, great for early adopters, and awesome for BitCoin itself. Obviously, miners would be screwed because the difficulty would go through the roof. Early adopters would be thrilled because the value of a BitCoin would go up and they could consume a very high fraction of the market volume selling off their BitCoins without causing it to crash. Not only would they get absurdly rich, but they'd be *helping* BitCoins by doing it. It would be awesome for BitCoin itself because the value of coins would go up and the involvement of large companies would legitimize BitCoins further.

The only motive I could see for them doing this would be to try to kill BitCoins. But like the Goldfinger attack, this is an absurdly inefficient way to do that.

Without commenting on the likelihood or otherwise, I don't see how it would be good for anyone.

If a Big Player decided to undermine bitcoins then they could do so very easily. All they'd have to do is throw enough resources at it to capture the majority of the mining capability and they'd be able to sit on whatever they mine. This would be likely to temporarily push up the value of existing coins, thereby making it much more difficult for any new adopters to jump in. Then when the number of people using bitcoins contracts and the number of services accepting them in payment shrinks (both of which I think would be likely in this scenario) the value of each coin would decrease as the existing supply outpaced the demand.

And don't forget the 51% thing. That's potentially a very big issue. If someone could control the block chain, even partialy, then the intergity of the entire system would be compromised.

If such a player actually wanted to help bitcoins then the best thing they could do is not mine at all, but rather just start accepting them as payments.

How does the value going up make the entry barrier any higher? A number is just a number. Regardless of whether you can get 10 or 100 bitcoins for $100, 100 dollar worth of bitcoins is 100 dollar worth of bitcoins.