Using Benford’s Law to Detect Bitcoin Manipulation
statmodeling.stat.columbia.edu
Using Benford’s Law to Detect Bitcoin Manipulation
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Re: Using Benford’s Law to Detect Bitcoin Manipulation
#2Frankly, I can’t judge the merits of this article because I lack the knowledge required.
But I think at this point we know that all cryptocurrencies are ‘greater fool’ “investments”. [1]
They are in every way totally irrelevant and detrimental to society. Governments are unfortunately slow to crack down on the exchanges, although progress is being made.
And that effort is essential to battle the cancer that is the ransomware epidemic.
Anyone who follows the Lock Picking Lawyer on YouTube knows that with time, resources and dedication virtually all locks can be defeated and cryptocurrencies make ‘expensive’ attacks worthwhile on IT infrastructure.
Frankly it hurts to see how cryptocurrencies have been ‘legitimized’ by HN & ycombinator’s coinbase. Because so many people will be hurt.
[1]: https://twitter.com/smdiehl/status/1384055017003311106?lang=...
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#3Maybe he should try with prices in yen...
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#4Frankly, I can’t judge the merits of this article because I lack the knowledge required. But I think at this point we know that all cryptocurrencies are ‘greater fool’ “investments”. [1] They are in every way totally irrelevant and detrimental to society. Governments are unfortunately slow to crack down on the exchanges, although progress is being made. And that effort is essential to battle the cancer that is the ra…
> But I think at this point we know that all cryptocurrencies are ‘greater fool’ “investments”
It seems to me to be very apparent that we do not all know that. It is in fact a point of significant controversy.
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#5Frankly, I can’t judge the merits of this article because I lack the knowledge required. But I think at this point we know that all cryptocurrencies are ‘greater fool’ “investments”. [1] They are in every way totally irrelevant and detrimental to society. Governments are unfortunately slow to crack down on the exchanges, although progress is being made. And that effort is essential to battle the cancer that is the ra…
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Re: Using Benford’s Law to Detect Bitcoin Manipulation
#6Maybe he should try with prices in yen...
The currency against which BTC is exchanged the most is very likely the one that shows the best fit (most perfect market). Assuming that currency is the USD I expect any other currency would result is an even worst fit
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#7What is the statistical likelihood of this appearing by chance? Note that 2014 to today isn't actually that long of a timeframe, as prices in a time-series are highly linked to the previous data point.
Berkshire Hathaway has been trading for several decades; so that's 40 years of data; as compared to 7 years of data. yet the author, by using the same charts, seems to falsely imply that these are remotely comparable.
This article seems to have as much logic as the whole "Benford's law proves the elections were rigged!!!" claims by QAnon, who tried to apply Benford's Law on a county level, found that it generally fits a vast majority of the time, but cherry-picked the counties where it didn't fit (which generally tended to be smaller and hence less data points). Well, duh, it's statistics: outliers are to be expected.
Pretty poor take from an author at "statmodeling.stat.columbia.edu".
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#8Frankly, I can’t judge the merits of this article because I lack the knowledge required. But I think at this point we know that all cryptocurrencies are ‘greater fool’ “investments”. [1] They are in every way totally irrelevant and detrimental to society. Governments are unfortunately slow to crack down on the exchanges, although progress is being made. And that effort is essential to battle the cancer that is the ra…
Attacks on IT infrastructure have other motives besides ransom too.
For example. IP theft such as stealing the secret recepcie to the KFC herbs and spices, or stealing the soure code to a competitors product, or the user database. Moreover, attacks to ravage the target without the motive of ransom are common, see the Sony hack for example.
The only solution against attacks is better security.
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#9Sorry for the shameless plug. I made a video about Benford's law a while ago for anybody wondering how we get these values https://www.youtube.com/watch?v=9hY43XpVr1I&ab_channel=Treen...
Re: Using Benford’s Law to Detect Bitcoin Manipulation
#10I don't buy it. My intuition here is that Benford's law is a thing because for pretty much any statistical distribution, large numbers are less likely than small numbers, and small numbers are more likely to start with 1. But I'd only expect this effect to show up when aggregating across many different statistical distributions (e.g. looking at all stocks in the S&P 500 at once) rather than looking at individual distributions (i.e. I think maybe he just got lucky choosing Berkshire, and other S&P 500 stocks might not show Benfordness in their price even if they're not manipulated).
Plus, even if Bitcoin's price is mainly a product of manipulation -- speculators trying to make the price rise or fall relative to where it is right now -- there's no reason we can't think of that as also being a random process which produces some statistical distribution.
Benford's law works for detecting fraud because the process that humans use to choose random numbers -- just write down a bunch of random digits -- results in a statistical distribution that is unusual relative to what would be produced by a natural process. But it seems quite unlikely to me that Bitcoin price manipulation takes the form of a whale saying "OK, I just wrote down a bunch of random digits, this is our BTC price target for Wednesday".