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Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

davidgerard.co.uk

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Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#151

Post by [deleted] »

runeks wrote: post #138
sytelus wrote: post #122

Earlier quoted context omitted.

Article author actually makes a great point and it stands regardless of your ability to cash out within 1%. Big investors on current markets can whip out huge profits for themselves by using techniques such as front running, wash trades, willybot, spoofing etc. Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players. If you are…

> Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players. Are we sure about this? The two largest USD-exchanges are Coinbase/GDAX and Bitstamp, which operate out of California and London, respectively. If someone were to reveal that these exchanges were trading against their customers, are we sure that the authorities would be…

[deleted]

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#152

Post by omarforgotpwd »

sah2ed wrote: post #144
omarforgotpwd wrote: post #139

Earlier quoted context omitted.

Sure, definitely. There are many possible scenarios, like a major exchange like Coinbase, Bitfinex, or some chinese exchange going down / getting hacked. Wouldn’t even have to be all the worlds central banks: could just be one new regulation or rule in China.

MtGox was a major exchange and it went down but it didn't deter people from investing in bitcoins, they merely moved their business to other exchanges. Your original comment talked about a scenario where people decide against bitcoin and such a scenario can only play out if there is too much uncertainty to make them a viable investment. Because bitcoin is decentralized, the only way major governments can try to influ…

"They merely moved their business to other exchanges"

The price crashed from like $1200 to $200 and it took years for it to recover. All those Moms and Dads and Grandmas who bought $10,000 of Bitcoin after Thanksgiving dinner hoping it would turn into $100,000 within a month will certainly get hit if the price falls to $1600 and doesn't recover for 3 years. All it takes is a change in the media narrative that scares away a sizable chunk of the market (say, institutional investors or mom and pops, or Chinese people)

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#153

Post by Iv »

Ok, I'll put my theory here.

We have seen weird spikes in the past that looked like a speculation bubble and it has taken us a few days or weeks to understand their cause. They usually crash a bit but stay at relatively high levels compared to where they started.

One was caused by Russians discovering they could evade sanctions that way. Another one was caused by people hiding money in Cyprus discovering that it could be seized by the government.

For the current rise, my money is on the anti-corruption operation happening in Saudi Arabia. Whatever you think about the crown prince's true goals, the move is not just theater. Hundreds of billions of dollars are changing hands.

I suspect that what we see is half of the royal family's wealth being shuffled around in a hope to escape being seized.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#154

Post by aedron »

davidgerard wrote: post #15

(author here) I originally submitted this with just the second part of the title, 'cos Part 1 doesn't deliver on "why you can't cash out". I expect two or three more parts, that answer the question: KYC/AML, oddly-convenient ineptitude, and hoo boy Tethers.

The article does read mostly like sour grapes. "T-T... They're never gonna get that money anyway!"

Some examples are plain false (calling "thin" volume when several exchanges see a billion dollars a day).

If the point was that banks will not let you transfer out of the exchange, the exchange will hose you, or your tethers will prove worthless, then the article should have just made that point. BTW the first two are false, obviously no experience actually dealing with big money crypto. WRT to tethers they look like a fraud but only represent one inferior exchange.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#155

Post by omarforgotpwd »

sah2ed wrote: post #144
omarforgotpwd wrote: post #139

Earlier quoted context omitted.

Sure, definitely. There are many possible scenarios, like a major exchange like Coinbase, Bitfinex, or some chinese exchange going down / getting hacked. Wouldn’t even have to be all the worlds central banks: could just be one new regulation or rule in China.

MtGox was a major exchange and it went down but it didn't deter people from investing in bitcoins, they merely moved their business to other exchanges. Your original comment talked about a scenario where people decide against bitcoin and such a scenario can only play out if there is too much uncertainty to make them a viable investment. Because bitcoin is decentralized, the only way major governments can try to influ…

A scenario where the government makes crypto currencies completely impossible is unlikely, as that would mean that you essentially controlled all communication. There are many ways they can make it difficult, cumbersome and risky however, even on an individual basis. That could lead to a short term dampening effect on the global price until people figure out effective ways to get around the regulation in question.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#156

Post by sytelus »

paps wrote: post #148
sytelus wrote: post #122

Earlier quoted context omitted.

Article author actually makes a great point and it stands regardless of your ability to cash out within 1%. Big investors on current markets can whip out huge profits for themselves by using techniques such as front running, wash trades, willybot, spoofing etc. Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players. If you are…

> I think its also worth pointing out that less than 1000 entities owns 40% of the bitcoins. This is FUD. 1000 wallets own 40% of BTC. See here https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

Not sure what your link proves. In reality, no one knows if this statement to be true because addresses and wallets can be shared. There was a Bloomberg article with lots of interviews on this topic with people in crypto business and no one seem to deny this: https://news.ycombinator.com/item?id=15877838

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#157

Post by davidgerard »

coldtea wrote: post #147
DennisP wrote: post #11

Earlier quoted context omitted.

Well he does argue that the infrastructure isn't as advanced and regulation isn't as mature. But you could say the same about equities in emerging markets.

Yes, only several times worse. A random guy that self-taught himself PHP, for example, is not usually found (or even allowed) to build one of the biggest exchanges for developing markets. For Bitcoin though, they do.

in fact, "I know PHP! How hard could running an exchange be?" is literally the process by which Mt. Gox and Bitcoinica - whose stolen code was pressed into service as the first version of Bitfinex - came into being.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#158

Post by madaxe_again »

josephagoss wrote: post #102

You can cash out Bitcoin and the price is actually very accurate. The money I see in my bank account is real I can assure you of that. Also I know friends that cash out six figures at a time and the price they get is within less than 1% difference to the last sell price. The number is accurate enough for most orders under $10,000,000. Has this person actually traded Bitcoin? You might not be able to sell a large orde…

If cashing out is easy and reliable, why can’t I withdraw from Coinbase, six months after verifying my bank account?

I’ll tell you: they don’t have the capital to pay anyone, so nobody can withdraw. It’s Mt Gox all over again.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#159

Post by g09980 »

paps wrote: post #148
sytelus wrote: post #122

Earlier quoted context omitted.

Article author actually makes a great point and it stands regardless of your ability to cash out within 1%. Big investors on current markets can whip out huge profits for themselves by using techniques such as front running, wash trades, willybot, spoofing etc. Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players. If you are…

> I think its also worth pointing out that less than 1000 entities owns 40% of the bitcoins. This is FUD. 1000 wallets own 40% of BTC. See here https://bitinfocharts.com/top-100-richest-bitcoin-addresses....

Many of these wallets are actually exchange cold storage wallets, so they hold the BTC but not per se "own" it

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#160

Post by davidgerard »

rlpb wrote: post #23

> The delays — ten minutes to over an hour — and fees add enough friction to generate the spread between exchanges, even if you assume everyone’s using trading bots as quickly as possible. Can an arbitrager not simply hold both BTC and cash on multiple exchanges at once? When a price difference swings one way, sell on one exchange and buy on the other, without worrying about transferring anything between exchanges. W…

There's also more complicated tricks, like arbitraging via an altcoin. I'll mention that later, didn't want to get too detailed right at that point.

Basically, though, it's reasonable to assume that arbitrage is happening as absolutely efficiently as it possibly can, and we still see huge spreads, because the Bitcoin market is structured for inefficiency and volatility.

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