An anatomy of Bitcoin price manipulation • Hacker News Board

Re: An anatomy of Bitcoin price manipulation

#281

Post by solveit » Mon, Jan 17, 2022, 8:29 PM UTC

kaashif wrote: post #152

benreesman wrote: post #94

Eh 20-ish years ago the shit happening on Island and Archipelago would blow most people’s minds. Undocumented, conditional, non-displayed order types. Routine wash trading. Shear-but-don’t skin multi-venue arbitrage. The ECNs were the Wild West. Smoke-filled dark pools. Island and Arca are NASDAQ and NYSE now. But Ben, US equities have intrinsic value unlike this BTC garbage! Well unless they pay no dividend, have du…

> Well unless they pay no dividend, have dual-class share structure, and IPO without a profitable quarter. What’s a share of SNAP entitle you to exactly? Ah right, you think someone will buy it for more. I think the idea would be like what happened to Apple: they eventually grew so much, became so successful, accumulated huge piles of cash bigger than they could possibly spend, that they had to start paying a dividen…

> they eventually grew so much, became so successful, accumulated huge piles of cash bigger than they could possibly spend, that they had to start paying a dividend.

What mechanism forces this?

Re: An anatomy of Bitcoin price manipulation

#282

Post by arcticbull » Mon, Jan 17, 2022, 8:30 PM UTC

TrackerFF wrote: post #237

shawabawa3 wrote: post #225

Earlier quoted context omitted.

I personally don't value nfts highly but I'm in a circle with lots of rich crypto early adopters - they absolutely would pay $100k for a bored ape and would consider it a bargain. It's a real status symbol, just in a niche you don't understand. I feel the same way about $100k Patel Phillipe watches but I don't hear everyone talking about how those are only wash trades The platforms where these nfts are sold usually c…

The main difference here is that those paying for a pointer to the bored ape, are paying just that. Nothing more. Anyone can copy that bored ape image, and use it as they want. If you pay $100k for a Patek, that's your watch. It's a physical item - the only way someone's going to steal it, is by physically stealing it from you. Of course, one can argue up and down whether or why a Patek is worth $100k. But IMO it's e…

> The main difference here is that those paying for a pointer to the bored ape, are paying just that. Nothing more. Anyone can copy that bored ape image, and use it as they want.

I hate NFTs, but this is actually not true in the case of BAYC and a small handful of others. They assign full rights to the token holder.

Re: An anatomy of Bitcoin price manipulation

#283

Post by doopy1 » Mon, Jan 17, 2022, 8:38 PM UTC

joosters wrote: post #64

doopy1 wrote: post #59

Earlier quoted context omitted.

I see this concept of NFT was trading posited all over the place, but it should be easy to prove, yet no one has been able to produce tangible evidence, besides the occasional single flashloan based sale... which eats a tone in gas. Sure there are probably some wash trades here and there, but why is it so hard for most folks to believe that this is in fact a huge market driven by speculation?

Only the really obvious wash trades get spotted - e.g. https://www.bloomberg.com/news/articles/2021-10-29/here-s-a-... , because half-decent manipulators will have the sense to trade between different wallet addresses and obfuscate their money sources.

Yes you are citing the flashloan wash trade that I mentioned, but the rest I don't really buy at all. You can't just materialize a wallet out of nowhere and use it in a wash trade. Wallets need at least some ETH in order to transact, because you have to pay gas to transact on ethereum. This means that even the best pseudonymous wash traders should be discoverable with chain analysis, or lead to dead ends like tornado.cash. The reality is that you can't find any good examples of this, and that means it's all hypothetical conjecture. It should be quite easy to prove otherwise.

Re: An anatomy of Bitcoin price manipulation

#284

Post by aqme28 » Mon, Jan 17, 2022, 8:38 PM UTC

TrackerFF wrote: post #90

skilled wrote: post #31

Interesting tidbit: "An aside on NFTs Because they’re “unique” objects, NFTs are a perfect vehicle for wash trading. You can easily ensure you only wash trade to yourself. The common scheme is to wash trade with yourself until some credible dunce buys the NFT from you at your manufactured “fair” value, leaving you to walk away with real money." It's such a stupidly simple idea it's actually brilliant.

Yes, it's been painfully obvious from the start. It was the first thing I noticed, once looking into NFTs. I'd be surprised, AMAZED actually, if some of the big NFT collections aren't entrenched in wash trading, to pump up trade volume and price. In fact, I think that in order to successfully launch a NFT collection today, you need to have either: A) Substantial social capital. B) Capital to do the wash trading, or i…

For A), some of the wash trading has been done with flash loans. There are some well-documented cases. You don't need much capital at all for that.

Re: An anatomy of Bitcoin price manipulation

#285

Post by acdha » Mon, Jan 17, 2022, 8:39 PM UTC

joering2 wrote: post #254

largbae wrote: post #221

Earlier quoted context omitted.

One thing fiat currencies have that is underrated: a legal system to handle special cases. Recently, an apparently Bitcoin-rich man named Mircea Propescu died without sharing his private key(s). Now that fortune is gone with no recourse for next of kin. Maybe this is OK and everyone is happy to lose the safety net. But what about fraud? Do you want to have to take up arms to get your money back from someone who stole…

For a starters, its not Bitcoin fault that someone did not have last will, or did not include the keys or their crypto in the last will. Second, when some large heist in the past happened on the chain, the largest exchanges announced they won't exchange proceeds from these addresses. It may still not be impossible to withdraw into fiat, but certainly it was harder. Eventually, there will be more regulation from US an…

> For a starters, its not Bitcoin fault that someone did not have last will, or did not include the keys or their crypto in the last will.

It’s not Ford’s fault that someone didn’t drive safely, and yet they’re required to build cars with safety features. Bitcoin’s design ensures that these mistakes happen regularly, and most users end up paying a “I can’t believe it’s not a bank” exchange to hold their Bitcoin for them due to the many irrecoverable risks if you do it yourself.

Re: An anatomy of Bitcoin price manipulation

#286

Post by errantmind » Mon, Jan 17, 2022, 8:40 PM UTC

somewhereoutth wrote: post #276

Bitcoin (and friends) is essentially a pyramid (edit: ponzai) scheme, where late entrants pay the 'returns' on early entrants - but with a technology layer that precisely and and publicly records each payin/payout. In a way it is beautiful - the fraud is so transparent, and so technologically guaranteed to be transparent, that it becomes legitimised. Almost as if robbing a bank would be ok if you made an appointment…

By that logic, any marketplace is a pyramid scheme because later entrants always pay earlier entrants. A pyramid scheme has a very particular definition, please look it up.

Re: An anatomy of Bitcoin price manipulation

#287

Post by lcvw » Mon, Jan 17, 2022, 8:45 PM UTC

gfd wrote: post #149

Dumb question, but is price manipulation wrong when it's for something that doesn't have a "true" price? Like I get why it should be illegal for stocks. If you pump it and the price reverts back to some true price (calculated from expected future earnings or whatever), then people who bought it expecting it to be at an efficient price will lose money. In the case of crypto where everything is driven by supply and dem…

Stocks also don’t have a “true” value. Their price is driven entirely by supply and demand, which in turn is weakly anchored by investors doing fundamental valuations on the stock (there is more demand for an underpriced stock). The issue is that market manipulation is outright theft, usually from retail investors.

Think of it like playing blackjack. When I hit, I make a bet and I know roughly what the odds are that the bet will pay out. If the house was to manipulate the cards in the deck so that the odds are different, I would lose much more often then I should, and it would be theft. Similarly, if someone uses artificial demand to drive up the price of btc above the natural demand and I overpay, then they are selling to me at an unfair price. Eventually the price with fall to the natural price and I will lose money. Btc is weird because people keep buying more, but the principle is still the same. If the price is going to go from 40k and 50k over the next few months, and the price is artificially raised to 45k (which is when I buy in this example) then even if I get out at 50k I’ve lost 5k of profits I would get if the market was fair.

So the short answer is that in any case of any market manipulation, it is theft from other investors. Usually (but not always) small retail investors.

Now the argument some crypto folks make is that market manipulation is part of this market, so take that how you will.

Re: An anatomy of Bitcoin price manipulation

#288

Post by felipeko » Mon, Jan 17, 2022, 8:57 PM UTC

squeaky-clean wrote: post #257

eric_cc wrote: post #247

Earlier quoted context omitted.

This is a short term advantage that is quickly evaporating. There are crypto credit cards now that allow you to achieve the same effect. Assuming this advantage disappears, are there any other bull cases for $USD?

I don't want a currency with a bull case. That means it discourages spending it in favor of holding it. I want a currency with an extremely slow bear case. Also my value of USD hasn't dropped 30% in the last month.

It is a good thing to be encouraged to saving instead of spending.

No one needs incentive to spend. You will spend if you have plenty to spend. Having a currency which gains in value will take you there.

Re: An anatomy of Bitcoin price manipulation

#289

Post by landemva » Mon, Jan 17, 2022, 9:02 PM UTC

colinmhayes wrote: post #245

landemva wrote: post #189

Earlier quoted context omitted.

How do you get lots of actual dirty cash into a dirty wallet?

Take payments in crypto instead of cash.

That is crypto-to-crypto.

Your earlier comment said there are dirty wallets. How does someone get dirty cash in to that dirty wallet? For example, which bank allows deposit of dirty cash so the bank account holder can then wire the funds to an exchange?

Re: An anatomy of Bitcoin price manipulation

#290

Post by Ekaros » Mon, Jan 17, 2022, 9:04 PM UTC

mtremsal wrote: post #251

freedomben wrote: post #216

Earlier quoted context omitted.

It seems pretty hard to me to look at charts of inflation, income inequality, and quantitative easing and compare them to stock market values and not see how the system is allowing the rich and powerful to use inflation to suck money away from everyone not heavily in the market (especially the poor as inflation is a highly regressive tax) and into their own pockets through increases in valuation. And then look at the…

> inflation is a highly regressive tax Is it? I think a takeaway from Piketty's book was that inflation was one of the rare factors that slowed down or reversed wealth inequality. Intuitively it would make sense that people drowning in debt benefit from (moderate) inflation, especially if low wages get bumped in the process.

And if you think really. The poor who live from hand-to-mouth, do they really care about inflation as long as wages keep going up with it. It is not like they even aim to save anything. So prices going up if also their wages do have really net zero effect for them.