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Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

nytimes.com

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Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#321

Post by stcredzero »

ComradeTaco wrote: post #216
scj wrote: post #194

Earlier quoted context omitted.

I haven't used Bitcoin, and from what I've read I have two questions about it being a currency: If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts? What costs more, the transaction fees or the ice cream cone?

> If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts? It will not. >What costs more, the transaction fees or the ice cream cone? There have been times where the average transaction cost was about $20. It's hovering around $0.80 cents now, to the best of my knowledge. So it depends on the market. I belief that the current strategy is to convince others that b…

"It's really not a sincere attempt to create [X] as it is to masssively enrich early adopters by encouraging use by normal people."

So it's basically a trash startup.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#322

Post by mobilefriendly »

GalacticDomin8r wrote: post #308
tomkarlo wrote: post #275

Earlier quoted context omitted.

There's an infinite supply, but there's non-zero cost associated with accessing incremental units in that supply. (And some would say diamonds are an artificially constrained market anyway.) With crypto, there's arguably an unlimited supply at zero cost.

> With crypto, there's arguably an unlimited supply at zero cost. I like that one. Makes it seem like its a perpetual motion machine and we all know how that ends.

The mining cost is actually quite high for bitcoin, there's a friction involved that's being overcome.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#323

Post by nostrademons »

copenja wrote: post #285
achompas wrote: post #238

Earlier quoted context omitted.

> Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. Across so many people, and at BTC's market cap though? I think that's unprecedented. Penny stocks or pyramid schemes, sure, but they never affect this many people or hit 12-digit valuations. (By the way, fiat money doesn't count as an example becaus…

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion. But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that numbe…

24h trading volume for BTC/USD (excluding BTC/USDT and all non-USD fiat currencies) is over $500M [1], and has been at that rate or higher since last December. That's over $90B in real money that has exchanged hands for Bitcoin.

It's not quite the same as the Madoff Ponzi scheme, because in that, all the money went into Madoff's firm, and relatively little came out as redemptions. In a trading market, every dollar that comes in from a buyer goes out to a seller (minus exchange fees, which reportedly have netted Coinbase close to $1B this year, again supporting a >$100B trade volume). They can then be used to purchase more crypto later, and show up in the volume statistics again.

But this alone indicates that Bitcoin may be a bit more resilient than Madoff's ponzi scheme; when multiple people get rich off it, there's much less of a single point of failure for the scheme to collapse.

[1] https://coinmarketcap.com/currencies/bitcoin/#markets

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#324

Post by latchkey »

copenja wrote: post #285
achompas wrote: post #238

Earlier quoted context omitted.

> Making people believe that the money you've created with whatever hocus-pocus is real and that investment X will just spew money indefinitely is not at all a new thing. Across so many people, and at BTC's market cap though? I think that's unprecedented. Penny stocks or pyramid schemes, sure, but they never affect this many people or hit 12-digit valuations. (By the way, fiat money doesn't count as an example becaus…

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion. But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that numbe…

Thank you. More people need to realize that market cap is meaningless in the context of crypto. It is just a multiplier of two numbers which makes it sound like a big number and thus interesting (which it is not). You explained it perfectly.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#325

Post by mrep »

lallysingh wrote: post #14
ejstronge wrote: post #4

Could we change the title to that of the article, "Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say"? It currently implies that the New York Times did independent research ("NYT and UT Austin: Bitcoin Prices Manipulated by Tether and Bitfinex") which does not seem to be the case. I think this is a subtle point but, with the tension surrounding 'fake news', it's critical to distinguish reporting on…

Do people take the 'fake news' claims seriously? Even here in HN?

It does seem to be getting pretty paranoid here. Another ny times post got flagged this morning after receiving 25 points in an hour for god knows what reason (i thought it was an interesting read): https://news.ycombinator.com/item?id=17302371

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#326

Post by ridgeguy »

josu wrote: post #193
tomkarlo wrote: post #159

Earlier quoted context omitted.

Is the supply really "limited"? Sure, there's finite number of "coins" that can be generated. But unlike physical objects, there's not really any special property of that unit. Also, you can just generate a new currency of more units and similar utility (as has happened many times recently.) Objects in the real world have utility that's directly linked to their unit value. That's not necessarily true for Bitcoin... i…

I'd say that an analogy with diamonds works: There is an infinite supply of lab-made-diamonds, however they are not fungible with real diamonds. Them being substitute goods, lab-made-diamonds may have negatively impacted the price, but real diamonds are still considered scarce.

They pretty much are fungible with natural diamonds. High quality synthetics can't be told by eye from equivalent quality naturals.

If they're "Real" diamonds have always been considered scarce, but only because of marketing. De Beers, AlRosa, etc. have very large reserves of natural diamonds. Over time, they will become genuinely scarce, as the industry agrees that economically recoverable deposits of natural gems will decline after about 2020.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#327

Post by byset »

gtlondon wrote: post #279
the_mitsuhiko wrote: post #230

Earlier quoted context omitted.

There is also zero evidence that it’s not a scam.

This conversation is 6 months old though. Quite suspicious the New York Times have come to this incredible revelation now, yet didn’t mention it in Nov 2017 when it was actually a hot topic. I must admit I find most crypto journalism hard to agree with. Hopefully that will change.

Well, they're reporting on the recent release of a notable paper written by an academic who has a reputation for "uncovering fraud in financial markets," at least that's what the article says. Presumably that paper was released today or this week or something.

I'm not arguing that the paper is or isn't actually worthy of having this NYT article written about it, but what is your suspicion regarding the timing, exactly?

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#328

Post by deltateam »

Nursie wrote: post #123
deltateam wrote: post #54

Earlier quoted context omitted.

okay, then for your case only the ELSE IF is important.

For my case? Do you not mean "for the claims made by tether on their homepage to be true"?

no, not really

Tether can already exist and be in circulation and people can be willing to buy it at a higher price from existing holders. In this event, Bitfinex/Tether needs to be willing to create more Tether, diluting the current supply to offset the greater demand and keep the peg.

To me, it isn't important that "each Tether is backed by USD [in their bank account]", but they may accomplish it that way for consistency anyway. Each Tether is still backed by a notional value and was exchanged for such.

Their willingness to do this could help arbitrageurs try to front run and sell their own Tether when a premium exists.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#329

Post by chepaslaaa »

DennisP wrote: post #291
joe_the_user wrote: post #283

Earlier quoted context omitted.

Indeed, though states have boots and guns on the ground to a last resort backup the value of their currency (including protecting against competition). So I'd pick "Fed-coin" as the last one to go down.

I've been reading up lately on how fiat money systems work, and it doesn't seem to me that boots and guns really help. Certainly there have been countries with plenty of soldiers who failed to maintain the value of their currency. You have to pay taxes in the local currency, but if the currency crashes you just have to pay a higher nominal amount of taxes. You can outlaw competing currencies, but you can only do that…

The US' military might is the only reason why all oil is traded in USD and the main reason why the USD holds value.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#330

Post by headsoup »

nostrademons wrote: post #323
copenja wrote: post #285

Earlier quoted context omitted.

That's an interesting question. Bernie Madoff’s Ponzi scheme is estimated to have lost clients $65 billion. The Bitcoin market cap is nearly double at $107 billion. But Bernie Madoff's $65 billion is all real dollars paid into the scheme. Bitcoin market cap doesn't track the amount of the money that has been paid into the current Bitcoin market. It simply estimates the current market price, then multiplies that numbe…

24h trading volume for BTC/USD (excluding BTC/USDT and all non-USD fiat currencies) is over $500M [1], and has been at that rate or higher since last December. That's over $90B in real money that has exchanged hands for Bitcoin. It's not quite the same as the Madoff Ponzi scheme, because in that, all the money went into Madoff's firm, and relatively little came out as redemptions. In a trading market, every dollar th…

That would assume that it is 'different' money changing hands would it not?

I.e. that %500M and $90B is unique dollars being transacted and not just promises being passed back and forth.

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