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Crypto Wash Trading

arxiv.org

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Re: Crypto Wash Trading

#241

Post by NineStarPoint »

ryanlol wrote: post #23
biddit wrote: post #17

So this implies that the crypto markets are actually far less liquid than the trade volume implies. Suddenly those massive 10% +/- fluctuations in a day make a lot more sense.

Yeah, but everyone already knew that unregulated exchanges are faking their volumes. This isn’t news to anyone who has the slightest clue about cryptocurrency markets. This is one of the few things about cryptocurrency markets that isn’t being disputed by anyone.

It’s something of a sign of how dramatically it would be possible for the price to crater. With less liquidity in the market a smaller amount of people trying to legitimately sell off their BitCoin could result in a massive downward spike in price. Which generally causes more people to sell, which further exacerbates how badly the lack of real buyers will lower the price. In a general sense, faking volume makes it impossible to tell what the real level of demand for something is.

Has everyone internalized that faking volume means Bitcoin’s real value to people is hard to pin down? Maybe, but it’s useful to try and pinpoint exactly how much trading is fake regardless. (30% real trading would still indicate a non-trivial portion of people who actually will buy at current price, much better than if it was 99% fake trading or something).

Re: Crypto Wash Trading

#242

Post by cblconfederate »

xboxnolifes wrote: post #238
cblconfederate wrote: post #174

Earlier quoted context omitted.

you can store your private keys printed inside a deposit box if you don't trust computers (which you shouldn't). Nobody guarantees bitcoin, but insurance companies will always exist.

Ultimately you need to trust the blockchain, which runs on computers. Which is the commenter's point.

Even with cash, you trust that the banks won't blacklist your serial numbers. With gold you trust that the world will not invent a new gold making method that will make it worthless (as happened with aluminum). A basic level of faith is required by any system, so that point is not valid.

Re: Crypto Wash Trading

#243

Post by wbc »

csee wrote: post #99
gota wrote: post #49

Earlier quoted context omitted.

Can you explain in more detail, please? Sorry if it should be obvious. I'm used to being 100% stupid at least 10% of the time

Sure. Suppose there's 8 on the best bid and then you send a limit buy order of 1 quantity to the same price, making it 9 in total after your order arrives. Then after that, suppose a trade is shown with volume 9 at that price level. What this event implies is that someone sold into the best bid and took it out completely. If this trade volume is fake in any way, then your order won't get filled. But in reality, that…

There's some misunderstanding here. The paper is asserting that the volume is fraudulent, due to wash trading, not that the trades are fake.

In your toy scenario, I put 8 on the best bid, you put in 1 more, then I go on another account and hit the bid for 9 volume. 1 of that is legitimate volume, and 8 is fraudulent because I'm trading with myself (aka wash trading). Sure you get your fill, but the paper asserts that the stated volume is too high (in this case by 8).

Re: Crypto Wash Trading

#244

Post by lottin »

joshfraser wrote: post #78
nefitty wrote: post #66

Earlier quoted context omitted.

The market is interdependent. Wash trading on one platform benefits all other platforms. When you ask someone the price of BTC they don't say $x on Coinbase, $y on Kraken, etc. Literally all of crypto is a scam. After 10 years there is not one feasible use case that isn't done better through another tool. I don't consider "making black markets and extortion easier" a feasible use case.

Oh yeah? Ever tried to send funds to a family member on the other side of the world over a weekend?

The reason financial transactions take time is not that there's something wrong with the technology, but that we, as society, have chosen to establish capital controls. Choosing to evade such controls, without really understanding why we put them there in the first place, basically makes you an anti-social brat.

Re: Crypto Wash Trading

#245

Post by austinheap »

capableweb wrote: post #19

I recently had to go through extensive KYC/AML email conversations and phone calls with bunch of exchanges like Coinbase and others. Got me interested how wash trading could happen, when they were so strict with me, and which exchanges were investigated. These seems to be the exchanges they investigated. Would be interesting to see a breakdown of percentage per exchange, as I still don't understand how wash trading c…

Great data! I am no longer confused as to why the Binance Bridge between ETH and BSC is getting shut down…in six days.

Re: Crypto Wash Trading

#246

Post by meowkit »

xboxnolifes wrote: post #238
cblconfederate wrote: post #174

Earlier quoted context omitted.

you can store your private keys printed inside a deposit box if you don't trust computers (which you shouldn't). Nobody guarantees bitcoin, but insurance companies will always exist.

Ultimately you need to trust the blockchain, which runs on computers. Which is the commenter's point.

The blockchain is a virtualized state - yes it executes on computers but the whole point is distributed consensus - you don't have to trust the computers, you trust the open source code being executed by the network.

Re: Crypto Wash Trading

#247

Post by knodi123 »

thebean11 wrote: post #112
knodi123 wrote: post #98

Earlier quoted context omitted.

With cash, if you put a fortune in your shoebox it is "IN" your shoebox. The whole point of bitcoin is the distributed nature. Your wallet can be copied without altering any actual holdings or values, whereas a shoebox cannot. A bitcoin wallet is more like a safety deposit box key, than an actual box itself.

That's not the comparison I made. I'm talking about a bank account not holding physical bills.

Okay, then that vacuous point is correct as well. A bank account is just a 9-ish digit number. So in that regard it's similar to a bitcoin wallet. What the person who started this convo was saying is that his friend thought the bitcoin wallet contained the bitcoins, in the exact same way that a regular wallet contains regular paper currency. That the bitcoin wallet would grow in file size based on the amount of bitcoin inside it. All pedantic misinterpretations aside, I'm pretty confident that's what he was trying to convey.

Re: Crypto Wash Trading

#248

Post by betwixthewires »

nefitty wrote: post #66
cdiddy2 wrote: post #28

Earlier quoted context omitted.

Ya I seriously doubt there is much wash trading at the Tier A exchanges you listed above.

The market is interdependent. Wash trading on one platform benefits all other platforms. When you ask someone the price of BTC they don't say $x on Coinbase, $y on Kraken, etc. Literally all of crypto is a scam. After 10 years there is not one feasible use case that isn't done better through another tool. I don't consider "making black markets and extortion easier" a feasible use case.

If you don't consider black markets a feasible use case you're cherrypicking.

Re: Crypto Wash Trading

#249

Post by lottin »

legutierr wrote: post #219
throwawaygh wrote: post #101

Earlier quoted context omitted.

> Miner extractable value (MEV) is a measure of the profit a miner can make through their ability to arbitrarily include, exclude, or re-order transactions within the blocks they produce. Um. Wow. So... how much of crypto is just "things that are illegal to do with anything that's not crypto"?

There is a meaningful difference between this kind of miner intervention and the kind of intervention that might be problematic in a centralized context. Provided there is sufficient decentralization within a blockchain network (i.e. enough independent miners participating) no individual miner will be able to pursue a MEV strategy beyond a single block. The next block will be created by a different miner. In addition…

> Depending on the level of centralization, it is also the case that a particular miner will get to mine a new block infrequently at best.

How do all these "mining" companies survive, if they only mine a block infrequently?

Re: Crypto Wash Trading

#250

Post by nefitty »

betwixthewires wrote: post #248
nefitty wrote: post #66

Earlier quoted context omitted.

The market is interdependent. Wash trading on one platform benefits all other platforms. When you ask someone the price of BTC they don't say $x on Coinbase, $y on Kraken, etc. Literally all of crypto is a scam. After 10 years there is not one feasible use case that isn't done better through another tool. I don't consider "making black markets and extortion easier" a feasible use case.

If you don't consider black markets a feasible use case you're cherrypicking.

https://goo.gl/search/Define+feasibility&hl=en feasibility (noun): state or degree of being easily or conveniently done

The originator, Ross Ulbricht, is in prison for life. Anything that involves any remote possibility of that is not "feasible" to me, specifically in terms of the strength of my own self-preservation instincts.

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