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Researchers find that one person likely drove Bitcoin from $150 to $1,000

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Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#181

Post by jandrese »

oculusthrift wrote: post #41
cardmagic wrote: post #25

Earlier quoted context omitted.

It’s similar to 1999 dotcom run up, there will be a crash to remove all the bad actors (like the former pets.com), but it won’t kill cryptocoins just like the dotcom crash didn’t kill ecommerce.

everyone keeps saying that to the point where i start questioning it. there’s no actual proof that this is anything like the dot com bubble.

You can tell when a bubble is about to burst because people will start talking about how it is different this time and it will never stop going up.

To be fair though, I thought more people would start cashing out before now. I suspect the vast majority of Bitcoins are held by a very small number of people and pretty much all activity in the market is happening on the far fringes right now.

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#182

Post by notahacker »

qubex wrote: post #180
notahacker wrote: post #110

Earlier quoted context omitted.

Sure, but assuming Tether are lying about their instrument being fully backed it doesn't meet any of the theoretical requirements either. Fractional reserve relies on banks being strongly incentivised not to issue too many bank notes because they earn profits only on repaid loans issued to creditworthy borrowers, not from the act of printing the bank note to sell for currency. Even in the absence of regulation, centr…

I’m a macroeconomist, a disbeliever in current cryptocurrencies (because they do not allow fractional reserve banking because they have finite supply) and I absolutely agree with you. I was being facetious further up, I thought that was clear (but apparently it wasn’t).

Fair enough. Difficult to tell sarcasm from true believing from shilling on crypto threads these days :-)

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#183

Post by stephen_g »

qubex wrote: post #85
dannyw wrote: post #82

Earlier quoted context omitted.

The USD backing Tethers could be used to buy Tethers! Instant capitalisation!

That’s comfortingly close to fractional reserve banking (which unfashionably I’m a big fan of).

It’s worth noting that ‘fractional reserve’ isn’t really how banks work anymore. That model implies that banks require reserves to lend money, but they actually don’t (except in the countries that have a reserve requirement, for compliance reasons). The central bank does need to ensure that enough reserves exist in the system to have enough liquidity for banks to transfer money between them, but the banks tend to hold as little as possible, as in most places they don’t get any return on them, so they lend them to other banks (banks cannot lend reserves to individuals) or exchange them for bonds. If they need more to fulfil transfer requirements, they can just borrow them from other banks or the ‘lender of last resort’ - the central bank itself.

The interesting implication of this is that the central bank doesn’t really have direct control of the size of the money supply (as is implied by the ‘money multiplier’ myth). That is determined endogenously by the amount of lending the banks do (plus other sector’s - Government spending and current account surplus/deficit - contributions).

This Bank of England (UK central bank) paper explains how the banks originate money - https://www.bankofengland.co.uk/-/media/boe/files/quarterly-...

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#184

Post by stephen_g »

Kelbit wrote: post #95
qubex wrote: post #85

Earlier quoted context omitted.

That’s comfortingly close to fractional reserve banking (which unfashionably I’m a big fan of).

Except in a real fractional reserve system, the central bank usually sets reserve and/or capital requirements.

Not to mention that in modern monetary systems, the central bank can always inject liquidity (new reserves) into the system if required (QE, etc.), and the Government also often insures people's bank deposits up to some limit. The Government can also choose to bail out the bank if required.

There is literally no comparison. If Tether runs out of US dollars, they have no options, and people holding Tether have no recourse...

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#185

Post by fjsolwmv »

nrb wrote: post #69
module0000 wrote: post #63

Earlier quoted context omitted.

>> I doubt any of this manipulation is even illegal? That was my first thought also... in stock/futures trading world, this is 100% normal business as usual. The idea of buying all the available XYZ to run up prices is a valid move for a hedge fund with sufficient capital to do so.

In the MtGox case, the exchange was (allegedly) fraudulently buying BTC with cash that didn't exist, which could theoretically continue for as long as they have enough cash on hand to satisfy withdrawal requests. IANAL but in the US that sounds like blatant wire fraud at the very least; I'm not sure about the relevant Japanese law.

Of course the cash existed. It was their depositors cash and cash from their depositors Bitcoin

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#186

Post by fjsolwmv »

qbrass wrote: post #167
oculusthrift wrote: post #86

Earlier quoted context omitted.

right but the dot com bubble included Google and Ebay and a lot of other legit companies. Maybe one can argue that bitcoin and Ethereum are the analogs but only time can tell

They can't be Google. Google survived the bubble by staying a small private company that bigger companies didn't see as worth acquiring. It saved them from dying with those companies when the bubble popped.

I don't remember Yahoo or AOL dying in the bubble. (They died later)

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#187

Post by fjsolwmv »

module0000 wrote: post #74
RickHull wrote: post #53

Earlier quoted context omitted.

Can you elaborate? Say Alice and Bob are market makers. They are colluding on some target price, say $10k. What's the spread, how does the trading proceed, and what is the effect on fairness and the public?

I'm not the OP to your question, but I observe what you are asking about each day. Here are the steps that can facilitate your example. If you are imagining stocks(instead of futures), replace the word "contract" with the word "share" in the example below. 1) The last trade price is $9950 2) Alice calls Bob, confirming she wants to close 500k long contracts by selling them to Bob 3) Bob bids up the price to $9999 4)…

How does Bob raise the price $49 without actual paying a lot of people and creating a real new price?

Or is that the entry price of the scam? And the profits come from everyone else willing to buy at 10k (instead of 9950) because they are placing market orders and don't know what the real price is? Seems like this "scam" is just taking money from people who have no idea what price they want, which gets us back to what investors think they are entitled to 8% /yr for purely passive investments backed by no loan contract.

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#188

Post by makomk »

gizmo686 wrote: post #171
AboutTheWhisles wrote: post #155

Earlier quoted context omitted.

The Bitcoin Unlimited team has tested 1 GB blocks and presented their research and findings at conferences already. That being said, the least sustainable solution is to keep blocks at 1 MB for btc. The core group have ousted and alienated everyone who made bitcoin work originally. The fees have priced out everyone who created the ecosystem originally. It is crystal clear to anyone even slightly paying attention that…

The Bitcoin Unlimited team tested on a tiny network ; ~6 miners with a highly simplified set of transactions that made some of the statistics collected so meaningless that they explicitly left them out of the talk. Under these conditions, they found that 1GB was the point where the network broke under its own weight [0]. If you were to run the full sized bitcoin network, you would likely see problems much sooner than…

Apparently we're already seeing block size increases give disproportionate advantage to large miners on Ethereum, which allows miner voting on block size similar to Bitcoin Unlimited's proposal and is processing the most transactions out of all the major coins, at much smaller transaction rates than that: https://www.reddit.com/r/ethereum/comments/7pfshh/why_is_8m_... (Ethereum probably isn't as highly optimized as Bitcoin though.)

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#189

Post by DenisM »

beefield wrote: post #177
DenisM wrote: post #128

Earlier quoted context omitted.

Tragedy of the commons? I want all of my money lent out, but I also want the bank to have a reserve in case I need it, which means none of your money lent out. The only way out of this is for customers to bargain collectively for the proper reserve ratio.

Nowadays the bank regulation is a bit more complicated than simple reserve requirements, and the capital held in "safe" assets (central bank deposits, government issued loans etc) is not there in the case if you need it (most of the time when you "need" your money, bank actually does not pay it out, but just changed whom it ows the money i.e. makes an account transfer), but it is there for the losses bank may make in…

Well put! Thank you.

I was sort of trying to get to a kind of the same point - tragedy of the point must yield regulation. Well, maybe it's not the same point. But I was trying!

Re: Researchers find that one person likely drove Bitcoin from $150 to $1,000

#190

Post by nrb »

fjsolwmv wrote: post #185
nrb wrote: post #69

Earlier quoted context omitted.

In the MtGox case, the exchange was (allegedly) fraudulently buying BTC with cash that didn't exist, which could theoretically continue for as long as they have enough cash on hand to satisfy withdrawal requests. IANAL but in the US that sounds like blatant wire fraud at the very least; I'm not sure about the relevant Japanese law.

Of course the cash existed. It was their depositors cash and cash from their depositors Bitcoin

Right, I'm saying the exchange isn't actually solvent. The "cash balance" on the fraudulent buyer account wasn't backed by any actual cash deposit or proceeds from BTC sale, it's just a column in a database table.

Theoretically, the exchange buys up a bunch of BTC with non-existent cash, raising the price tenfold, until their real cash deposits are too low to meet withdrawal requirements, then they do as the grandparent post says and disable withdrawals, deposits, or freeze the market until they can get it under control.

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