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If Bitcoin crashes when any single person sells a billion dollars of bitcoin at once, then what is the true valuation of their ownings after the 'this is too la
by floatingatoll 5y ago
If Bitcoin crashes when any single person sells a billion dollars of bitcoin at once, then what is the true valuation of their ownings after the 'this is too large to cash out' problems take their cut? What is the true value of anyone's holdings?
This is often not a problem for fiat currencies, they have an entire financial sector dedicated to buying and selling a billion dollars at a time. They are slightly demanding from a regulatory perspective, relative to Bitcoin, but they also do usually try not to crash the currency and they do sometimes get it done.
So I consider that ability to cash out a billion dollars at once a direct spot-check measure of Bitcoin's financial maturity. If this is actually possible to transact at all, then it proves something competitive and positive about Bitcoin, even if it's as much about currency exchange and financial instrumentation businesses as it is the blockchain. I think it is unavoidable that we'll evaluate this through a real-world event, what with one of those exchanges having IPO'd recently. I'd just like it to be an intentional test rather than a surprise, from someone who isn't trying to destroy the world, but does require detailed financial records and a written declaration of insolvency in order to forgive payment.
- porknubbins 5y agoI’m not quite clear what other fiat market you’re comparing BTC to but lets say there are at least some with extremely deep liquidity like USD/EUR where you can do 1B trades all day without crushing the order book. I’m not sure its a knock against BTC that it doesn’t behave the same. For example I think you definitely would need some finesse to sell 1B gold without major slippage, but this is just the nature of markets for anything. You can never just dump a significant percentage of anything, even USD without distorting price. On the other hand I have no doubt you could realize nearly all of 1B in BTC using proper trading strategies/algorithms over days or weeks, so I don’t see what would be learned from the test except “how deep is BTC liquidity currently” which is kind of what the market is trying to determine all the time anyway.
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- andirk 5y agoA large portion of USD's worth is from it being the primary currency in trading oil, the "Petrodollar". If countries switch to a different currency, that will hurt USD. Then again, Libya's president Gaddafi was working on gold-for-oil trade, and then he was overthrown and killed by US-backed rebels.