Is ETH a better alternative?
An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
191–200 of 359 posts
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#192Earlier quoted context omitted.
The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand
> fully determined by supply and demand With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.
You're fundamentally missing the main idea here. If you don't understand the fake Tether situation then in this case consider:
Someone makes 1M of counterfeit US Dollars using their own printing machine and puts it in a suitcase, and they exchange that suitcase with you, and in return you give them 1M of bitcoin in their digital wallets.
Now do you understand the thread?
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#193Earlier quoted context omitted.
The exchange doesn't sell/buy. It just connects the buyers/sellers. There are brokers that do that but you can't call them an exchange. I also think regulation prevent exchanges from trading on their own exchange to avoid front-running and since they have lots of information about the users/deposits/etc...
From coinbase TOS: You acknowledge that the quoted Buy Price Conversion Rate may not be the same as the Sell Price Conversion Rate at any given time, and that Coinbase may add a margin or “spread” to the quoted Conversion Rate.
Coinbase is not an exchange, it is a direct seller. Gdax is the exchange.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#194Can anyone with a more studied background in economics help hypothesize the after-effects on Bitcoin and other altcoins if this 814M 'digital counterfeiting' for lack of a better term, is true? For example, 800M has been artificially pumped into the Bitcoin and general crypto ecosystem, like air in a bicycle tire. And this is a game theory sort of question, too: If this is true: now, what?
Look to history: https://99bitcoins.com/price-chart-history/
Speculation: When Mt Gox froze withdrawals and closed it either triggered or participated in a massive correction. If Tether allegations are true, I would speculate increased volatility in a bearish direction. It should start with rising volume on USD exchanges and shrinking volume on USDT exchanges as traders withdraw BTC, USD/USDT volatility on Kraken, BTC/USD and BTC/USDT price diverging across exchanges. Chicago futures if they open will set the reference price. If BTC anchor price is volatile alts will probably get hurt. KRW fiat rates will probably be affected. If it dips in the long run it could be a good buying opportunity.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#195> Neither Tether nor Bitfinex disclose on their websites or in any public documents where they’re located or who’s in charge, but information is available elsewhere. > Jan Ludovicus van der Velde is CEO of both Bitfinex and Tether, Torossian said by email on Dec. 3. A LinkedIn page for someone named J. L. van der Velde, who identifies himself as Bitfinex’s CEO, says he speaks Dutch, English, German, Italian and Chine…
No, they are starting to piss themselves realizing that their swindle went out of control. They also remember what happened to CEOs of other funky enterprises that attempted to screw what US thinks are its interests:
* Think of other bitcoin exchanges
* Think of betting companies
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#196When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…
Tether is how you short bitcoin -- it's hard to move USD out of exchanges, people are worried about a bitcoin (or "all cryptocurrencies") drop, so they move into tether hoping to buy back in after bitcoin goes down without having to do the expensive/difficult bitcoin-usd move. This assumes that the price of bitcoin will go down but the rest of the system (exchanges, tether, mining, etc.) will stay intact. As long as…
Futures are opening for trading in the next two weeks on regulated US exchanges with daily / weekly USD cash settlement and central clearing. For every long futures position, someone else is short. I think that's a lot safer way to short bitcoin than holding tether.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#197Earlier quoted context omitted.
Naive question: when an exchange sells, I assume they can decline to buy if they don't have a buyer or too much inventory? For example, if suddenly everyone wants to sell BTC, the price would drop, at which point the exchange could buy the BTC at a much lower price, or not buy at all? (unless they commit fraud, massively purchase BTC without having the actual money to back it, then not be able to wire money out of ou…
The exchange doesn't sell/buy. It just connects the buyers/sellers. There are brokers that do that but you can't call them an exchange. I also think regulation prevent exchanges from trading on their own exchange to avoid front-running and since they have lots of information about the users/deposits/etc...
Thanks. Makes sense. I guess the "instant buy" on some exchanges gave me the impression that they kept coins in stock. (edit: I just saw the other comments regarding Coinbase, which answer that issue)
However I'm a bit confused by:
> An unsustainable price of bitcoin will lead to the collapse of other exchanges since people cashing out on these exchanges requires enormous amount of real money.
To cash out, other people need to buy, typically with fiat currency, so it's unlikely that their bank accounts would empty overnight? (assuming no fraud, bugs, not running the exchange at a loss, etc)
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#198Earlier quoted context omitted.
People who want a liquid USD tethered asset on many exchanges and aren't needlessly paranoid over absurd conspiracy theories that have yet to present a single ounce of real evidence.
Bitfinex is also lacking in evidence when it comes to showing that Tethers are backed by USD.
This is what regulation is for. No regulation? Then people are stealing. History suggests it's that simple.
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#199Earlier quoted context omitted.
> how "markets" will prevent the peg from going out of whack. One only needs to read about Long-Term Capital Management to see how flawed this is.
Isn't ltcm an example of markets keeping a dumb, dumb, dumb trading model ungrounded in reality from going out of whack?
It was an example of what happened when everyone believes the so called "smartest people in the room" without questioning. It also represents what happens when the market adjusts to what you're doing but you fail to adjust and also the nature of tail risk. Was their model dumb? Tough to say, they did win a nobel prize in economics for it. I think warren buffet has some quote about how they were "risking a million to make a nickel".
Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange
#200Earlier quoted context omitted.
> how "markets" will prevent the peg from going out of whack. One only needs to read about Long-Term Capital Management to see how flawed this is.
If anyone is looking for books to read during holiday down time, they could do worse than 'Liar's Poker' [0], followed by 'When Genius Failed' [1], following the career of John Meriwether and the rise and fall of LTCM. [0] 'Liar's Poker', Michael Lewis [1] 'When Genius Failed', Roger Lowenstein For a 'light reading intro to finance' trilogy, add 'A Demon of Our Own Design: Markets, Hedge Funds, and the Perils of Fina…
JWMP is the successor to LTCM, built using the same models with less leverage. They also blew up in 2007-2009.
It's cool, I just submitted a paper on LTCM yesterday. AMA?