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vinney...axkl

How could exert undue influence? You're just talking about free market activities like buying and selling, right?

And why does it sound like you got an AI to write this response?

ภ๏รtг๏ภคยt 10mo ago

Because it was.

I only have an 8th grade education and have issues clearly getting my point across to those much smarter than myself.

How they could exit undue influence;

1. Price Manipulation

* Pump and Dump: Imagine a group of whales (large Bitcoin holders) suddenly buying up a lot of Bitcoin. This could create a frenzy of buying, driving the price up artificially (the "pump"). Once the price is high enough, they sell off their holdings, causing the price to crash (the "dump"), leaving many smaller investors with losses.

* Spoofing: Whales could place large buy orders to create the illusion of high demand, encouraging others to buy in. Then, they cancel those orders, causing the price to drop.

* Wash Trading: Whales could trade Bitcoin among themselves to create the illusion of high trading volume, making the market seem more active and liquid than it actually is. This can attract unsuspecting investors who believe there's a lot of interest in Bitcoin.

2. Limiting Access

* Hoarding: If a small group holds a large portion of the Bitcoin supply, they could effectively control the market. They could refuse to sell their Bitcoin, creating artificial scarcity and driving the price up even further. This would make it difficult for ordinary people to acquire Bitcoin.

* Restricting Transactions: In the future, if Bitcoin becomes more widely used, these large holders could potentially collude to limit the number of transactions or set high fees, making it difficult for others to use Bitcoin for everyday purchases.

3. Regulatory Influence

* Lobbying: Large Bitcoin holders could lobby governments to create regulations that favor them, such as tax breaks or favorable treatment for Bitcoin businesses they own. This could give them an unfair advantage over smaller players in the market.

It's important to remember that these are just potential scenarios. The Bitcoin market is still relatively young and volatile, and it's difficult to predict exactly how it will evolve. However, the concentration of Bitcoin ownership is a real concern, and it's something that the community needs to be aware of.

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vinney...axkl 10mo ago

All that does is move the price some amount, and that's only if other people are still willing to trade sats for fiat.

When the fiat illusion dies, all a "Bitcoin hoarder" will be able to do is buy things from fellow bitcoiners.

ภ๏รtг๏ภคยt 10mo ago

However, even in a Bitcoin-centric economy, large holders could still exert influence, although the how changes:

* Control of Essential Goods/Services: If a large holder controls a significant portion of the supply chain for essential goods (food, energy, etc.), they could effectively dictate the terms of trade. They might demand a higher "price" in Bitcoin for their goods, not in fiat terms, but in relative terms. They could effectively create a tiered system where those with less Bitcoin have limited access to essential resources.

* Influence over Development: Even without fiat, large holders could still influence the development of the Bitcoin network. They might fund development teams that implement features favorable to them, or they might try to block proposals that threaten their holdings. This could impact transaction fees, privacy features, or even the fundamental rules of the protocol.

* Early Adoption Advantage: Those who hoarded Bitcoin early on would still have a significant advantage. They could use their larger holdings to acquire valuable assets in the Bitcoin economy, giving them a head start in building businesses or acquiring resources. This could lead to a concentration of wealth and power, even within a purely Bitcoin-based system.

* Collusion and Cartels: Large holders could collude to manipulate the market for specific goods or services. They might agree to only accept a certain amount of Bitcoin for their products, artificially inflating the "price" of those products in Bitcoin terms.

* Reputation and Trust: In a decentralized system, reputation and trust are crucial. Large holders might use their influence to build a reputation that allows them to command higher prices or better terms in Bitcoin transactions.

So, while the mechanisms of manipulation change in a purely Bitcoin economy, the potential for manipulation still exists. Large holders could still exert influence, not by manipulating fiat prices, but by controlling essential resources, influencing development, or leveraging their early adoption advantage. The challenge remains the same: how to create a system that is truly decentralized and resistant to the concentration of power, even in a world without fiat currencies.

vinney...axkl 10mo ago

Your LLM friend does not realize that monopolies cannot exist on a truly free market - and as long as Bitcoin stays secure and decentralized, that's what it is.

Please, try this prompt and see if you get interesting results: "assume Bitcoin is perfectly decentralized and secure and instantiates a free market free from government-enabled monopolies. What strategies, if any, would allow cartels to persist in an environment where competition is always a threat?"

vinney...axkl 10mo ago

Here's an example response I got from that prompt. You'll notice that the "bad things" the AI is describing is **lower prices for consumers**. Call hyper-efficiency a "cartel" if you want, but what I see there is the market providing the best, cheapest goods and services to consumers. And IF a cheaper, more efficienct strategy is found through successful entrepreneurship, THAT competitor will become the new "cartel" and prices will go down further. This **is good** for consumers.

---

Let me analyze this interesting economic question systematically:

1. Natural network effects and economies of scale

- Even in a perfectly decentralized system, some businesses naturally benefit from having more users (e.g., payment networks, communications platforms)

- Large operations can often achieve lower per-unit costs through economies of scale in infrastructure, R&D, etc.

- These effects create natural barriers to entry that could help cartels maintain market power

2. Information asymmetries and reputation

- Established cartel members could maintain information advantages about market conditions

- Strong brand reputation and trust relationships with customers/suppliers could resist competitive pressure

- New entrants face uncertainty and higher costs in building equivalent market knowledge and relationships

3. Strategic deterrence through excess capacity

- Cartels could maintain surplus production capacity

- This creates a credible threat to flood the market and drive prices down if new competitors enter

- The high fixed costs of entry combined with this threat could deter competition

4. Coordination through smart contracts

- The Bitcoin network could enable sophisticated automated enforcement of cartel agreements

- Smart contracts could automatically detect and punish defection from cartel pricing

- This reduces the internal instability that traditionally weakens cartels

Would you like me to elaborate on any of these mechanisms? I'm particularly interested in exploring how smart contracts might change traditional cartel dynamics.

ภ๏รtг๏ภคยt 10mo ago

"Assume"

No thanks.

Essentially this is telling the LLM what to think.

Of course it's going to say your right on any that you use.

vinney...axkl 10mo ago

You do realize that is exactly what you're doing, too, right?

The point is to use the LLM tools to generate the best arguments on both sides of the opposite assumptions. And then interrogate the assumptions themselves to see which is more plausible (or wait and see which ends up being the way the world works)

ภ๏รtг๏ภคยt 10mo ago

The last one I just simply copied your reply and asked "what would you say to this?"

Turns out I kinda agree with the LLM used....

We can't tell the future, only assume, so we have to wait and see regardless.

vinney...axkl 10mo ago

See you then!