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An anatomy of Bitcoin price manipulation

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381–390 of 454 posts

Re: An anatomy of Bitcoin price manipulation

#381
post #319

Earlier quoted context omitted.

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. Since we can assume that some people will die without making arrangements to pass on their keys, then isn't it guaranteed that a non-inflationary cryptocurrency like BTC would eventually consist solely of lost, unreachable coins?

No, but the reason would be simpler, the network dying because of low movement.

Re: An anatomy of Bitcoin price manipulation

#382

This is some interesting analysis, but all of the causal language is unsupported -- and I think mostly inverted from the reality. Here is an equally supported description: - Retail and futures traders create instability by placing leveraged trades and stop orders that amplify swings. - Market makers are aware of instability and design their bots to turn off so that they don't end up on the wrong side of a liquidity c…

Author here. I considered this, but rejected most of those hypotheses. > Retail and futures traders create instability by placing leveraged trades and stop orders that amplify swings. True > Market makers are aware of instability and design their bots to turn off so that they don't end up on the wrong side of a liquidity cascade. Algorithmic traders, yes. Market makers absolutely not. MMs want to be there as much as…

> Algorithmic traders, yes. Market makers absolutely not. MMs want to be there as much as possible in liquidation cascades, because bid/ask spreads are huge. MMs effectly print riskless money in these situations (which is why you see Alameda and DRW issue so much USDT in these events).

This is a deep misunderstanding of market structure. Market makers are algorithmic traders. In times of price stability they benefit from capturing the spread many times. But it is not risk free: they lose money when offering liquidity to "informed trades" (those followed by a price move) because they are holding the wrong position through the price move. For that reason, every market makers implements fail-safes that stop offering liquidity when they are not confident they will be able to clear their position at a break even price.

Re: An anatomy of Bitcoin price manipulation

#383
post #213

Earlier quoted context omitted.

Market makers can't just conjure up a counterparty. The spread widens because lack a liquidity increases directional risk. If it were truly riskless, others would jump in to close the spread.

This is exactly what market makers do. During violent moves prices vary wildly between exchanges and market makers become takers. They instantly buy and sell the same amounts on different exchanges without risk, then re-balance their accounts.

No. To buy and sell on your own schedule, you must take liquidity, paying the spread. This is not what market makers do, they sell liquidity. And it becomes less possible to find efficient clearing trades during rapid moves, because the spread widens exactly because market makers don't want others to arbitrage them.

Re: An anatomy of Bitcoin price manipulation

#384

Earlier quoted context omitted.

> What’s a share of SNAP entitle you to exactly? Ah right, you think someone will buy it for more. Ultimately you think someone will pay more for a future share of SNAP than of [OTHER THING] because you think SNAP's growth story is better, business model is promising, blah blah blah. We may be trading on the derivatives of the fundamentals, or even the hope of future fundamentals, but even that's turning back some as…

> why pay the huge transaction costs and help the current crypto-rich get richer, instead of making purpose-built chains for your future applications? the most convincing arguments i’ve heard for reusing an existing chain is 1) easier access to users, 2) easier to deploy and 3) if your application needs decentralization, a mature blockchain will be more secure (attacks like 51% attacks have higher cost) and reliable…

The regulatory arbitrage is a lie they tell themselves. Sure, drugs could be paid for by cryptos, but the ultimate utility of that money requires it to be transferred to fiat (aka, laundering). Unless all of your goods and services can be purchased using only crypto, the tax man and the gov't will always have this weak spot to target.

Re: An anatomy of Bitcoin price manipulation

#385

Earlier quoted context omitted.

Perhaps let's just talk running a poker table. It's a platform where people can play a zero sum game against each other. To me, that's what cryptocurrency is. People want to play these games. That, to me, is real value.

Nitpick: the House rake makes poker not zero sum amongst players.

True. I thought of it as apt because the exchanges/miners, etc. take a fee.

Re: An anatomy of Bitcoin price manipulation

#386
post #330

Earlier quoted context omitted.

Economic theory has run this world into the ground in just a single human lifetime. A system that maximizes consumption is insane.

I'm not seeing how a deflationary currency even addresses this argument.

I wasn't try to. I'm saying "modern economic theory" isn't really a position of strength to reason from. It's not like economists have done a good job at anything. Endless unsustainable growth, a disaster of a financial system, every natural incentive is completely upside down and inequality keeps rising.

Is a deflationary system better or a solution? I don't know.

Re: An anatomy of Bitcoin price manipulation

#387

Earlier quoted context omitted.

Right, because cash has never afforded anonymity... always good enough for the government agencies. This is an entirely boring and tired trope. How about the simple ability to transfer value across international borders, free of extraneous % fees imposed by unnecessary middlemen? That alone is enough of a use case to justify adoption. Banks have reaped rewards unearned for long enough. Those capable and responsible e…

Uhm... there is something called law in most of the world which kind of regulate how and why you can or cannot send money across international borders, I will never understand that "crypto let us do it better than banks". You can send 10BTC to me, you're from Azerbaijan and I'm from France, all cool and nice until I want to cash out on that 10BTC... do you think I can receive 380k EUR on my bank without some governme…

> If you are forbidden by law from sending money from A to B you cannot send it

the crypto-dream (which, i admit is a nice outcome) is that no entity _could_ make such a transaction forbidden under a new regime of crypto finance.

And it is true that today, some gov'ts can have an outsized effect over people that would not be under their juristiction - such as people in iran being sanctioned by the US.

Unfortunately, crypto is hardly being used this way, nor will it be in the near to medium term future.

Re: An anatomy of Bitcoin price manipulation

#388
post #113

Earlier quoted context omitted.

A counterpoint would be that what some call the intrinsic value is the expected future share price based on expected future revenues. There might or might not be future revenue for SNAP, but there is no revenue for a digital currency. But I do think digital currency has intrinsic value, in that for now, it affords you anonymity to commit crimes in a way that ordinary currency does not. I’m not happy about it, but thi…

> it affords you anonymity What? Bitcoin is radically transparent. The vast majority of crimes are committed with standard currencies like $USD. If 'crime' is the only value you see, you're extremely ignorant. What is the bull case for $USD? What properties does it have that make it superior to currencies like $BTC in your opinion?

Money has no properties or value. Both usd and bitcoin have an intrinsic value of zero. Unless you like staring at bills depicting national heroes, ofc.

The reason you want money is that you know people around you want it and you can use it to acquire goods.

Now, what makes USD a superior currency:

- you don't need internet to use it

- you don't need third party centralized unregulated services to use it (unless you want to run a full node)

- you can exchange it with ease, in multiple formats. Give your daughter 0.0000000000045 bitcoins for lunch.

- no fees for using it.

- practically scales to infinity vs few hundreds transactions per minute.

- doesn't require energy to run. The energy required by each transaction covers the needs (heating and transport included) of a family of 5 for days

- very stable, I know how much things will cost a minute, hour or days from now, so my daughter eats even if whales are short squeezing markets by lunch time.

- used mostly to buy services and goods vs never used to buy anything but other currencies.

- inflationary, creates pressure to spend and invest rather than hoarding. Deflative currencies don't make sense to spend. Why would I buy X today at n bitcoins, if the deflative nature of bitcoin will make it more scarce and will make X cheaper. Why spend bitcoin today, if in few months there will be new highs and I can buy even more and so on.

- de facto currency of international trade. Some countries like Russia try to do international trade in euro. What can have higher consensus?

- 250 years of history

- regulated through democratic means and under clear laws for the benefit of most; vs unregulated, mostly owned by few early anarco capitalists (i know people with thousands and thousands of bitcoin) and offshore scams. Basically very few people own most of bitcoins there are out there, very few people control most of the network.

I think the list can get infinitely longer but it gets boring.

Re: An anatomy of Bitcoin price manipulation

#389
post #386

Earlier quoted context omitted.

I'm not seeing how a deflationary currency even addresses this argument.

I wasn't try to. I'm saying "modern economic theory" isn't really a position of strength to reason from. It's not like economists have done a good job at anything. Endless unsustainable growth, a disaster of a financial system, every natural incentive is completely upside down and inequality keeps rising. Is a deflationary system better or a solution? I don't know.

To my knowledge, no large society in the past two centuries, regardless of economic systems, has been a particularly good steward of natural resources. You're going to have to do better than that.

Deflationary currencies have been an abject disaster in all fronts, and there is nothing particularly contentious about them from even the most contrarian of positions.

Re: An anatomy of Bitcoin price manipulation

#390

Earlier quoted context omitted.

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.

BTC didn’t drop in value did it? 1 BTC is worth 1 BTC. The fed manipulating the USD and affecting the trading pair of USD/BTC is probably what you’re referring to.

> 1 BTC is worth 1 BTC.

tautologically true, but irrelevant. That's like saying gold costs 1 ounce per ounce, and that price has never changed in the history of its existence.

Current economic pricing happens with USD for most activities, and thus you need to be pricing BTC under USD.

Until the day people would easily accept BTC directly (and hold it instead of converting it into USD), you cannot price BTC in BTC.

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