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An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

bloomberg.com

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Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#131

Post by python-guy-vt »

empath75 wrote: post #129
python-guy-vt wrote: post #103

Earlier quoted context omitted.

> For example, 800M has been artificially pumped into the Bitcoin. This is impossible with Bitcoin. Bitcoins can only be created via mining, Bitcoin mining is a proof-of-work crypto currency. Crypto's typically use proof-of-work or proof-of-stake in order to have value. Tether, on the other hand, seems to have no proof-of-work or proof-of-stake at all and just claims to have a 1:1 ratio of their currency to dollars.…

> Bitcoins can only be created via mining Why do people think that it's impossible for exchanges to do fractional reserve with bitcoin?

Because you can't lend out a Bitcoin you don't have, unlike fiat currency.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#132

Post by alexpetralia »

busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

I'm not sure I follow.. There is no BTC-USD tether?

USDT is tethered to USD.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#133

Post by python-guy-vt »

aaavl2821 wrote: post #114
python-guy-vt wrote: post #103

Earlier quoted context omitted.

> For example, 800M has been artificially pumped into the Bitcoin. This is impossible with Bitcoin. Bitcoins can only be created via mining, Bitcoin mining is a proof-of-work crypto currency. Crypto's typically use proof-of-work or proof-of-stake in order to have value. Tether, on the other hand, seems to have no proof-of-work or proof-of-stake at all and just claims to have a 1:1 ratio of their currency to dollars.…

The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand

> fully determined by supply and demand

With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#134

Post by busterc »

alexpetralia wrote: post #132
busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

I'm not sure I follow.. There is no BTC-USD tether? USDT is tethered to USD.

For better context, here's the related article he was commenting on: https://news.ycombinator.com/item?id=15852750

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#135

Post by tarsinge »

python-guy-vt wrote: post #131
empath75 wrote: post #129

Earlier quoted context omitted.

> Bitcoins can only be created via mining Why do people think that it's impossible for exchanges to do fractional reserve with bitcoin?

Because you can't lend out a Bitcoin you don't have, unlike fiat currency.

Couldn't they do it partially by betting that not all their customers would withdraw their funds simultaneously? Lot of less technically inclined people seem to keep their coins on one exchange like Coinbase

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#136

Post by querulous »

panarky wrote: post #112

When something doesn't make sense, usually it's because information is missing. Every market participant knows that Tether doesn't prove their reserves, and yet the market exchange rate to USD stays in a tight band between 0.98 and 1.02 across multiple exchanges. If the market doesn't trust Tether, then it should trade at a deep discount to USD, not at parity. Similarly, the conventional wisdom says cryptocurrencies…

the market is extremely illiquid. even if you know it's a scam you have few options if you want to cash out.

you can trade bitcoin for cash balances at various exchanges but actually withdrawing those balances is subject to miniscule daily/monthly withdrawal limits and if there's a run on the market those exchanges will almost certainly collapse. there's no significant over the counter market. you can swap your bitcoin or tether for other crypto currencies but none of those have independent exchanges/markets. the best you can probably do with them is trade them back for bitcoin.

if you're a market participant who thinks things are a scam your best option is to withdraw what you can while you can and do everything you can to prop up the price until you are liquidated

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#137

Post by dkersten »

paulcole wrote: post #95
trqx wrote: post #86

Earlier quoted context omitted.

"do not link sites with autoplay videos" should be added to the guidelines imo. When I encounter interesting articles on such anti-user sites, I don't bother browsing the site, I use a script to extract the article and rehost it on a public pastebin. I'd rather avoid them at all, and that wouldn't even be necessary if everyone used atom/rss feeds. see example for this one: https://0x1a4.1337.cx/o_27/ You can blacklis…

Watch the ad. If you want to read the article it’s the cost of doing so. Otherwise don’t read it.

My complaint with this article isn't about watching the ad or not, its that it autoplays with sound. For example, I didn't see the warning and I played it in work. Luckily nobody heard it because I closed it quickly enough, but, still, auto play is not ok.

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#138

Post by querulous »

python-guy-vt wrote: post #133
aaavl2821 wrote: post #114

Earlier quoted context omitted.

The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand

> fully determined by supply and demand With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.

that's not how markets work. bitcoin has no intrinsic value, just a exchange rate with other things

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#139

Post by 659087 »

goialoq wrote: post #110

Why does HN have an active discussion of every rehashed ("hashed", hah!) crypto ponzi/pyramid/fraud scheme that flies, but not every new MLM? There were always be scammers peddling garbage backed by lies. It's getting boring.

Probably because people in the tech industry are far more likely to be involved with cryptocurrency than an MLM scheme?

Re: An $814M Mystery Near the Heart of the Biggest Bitcoin Exchange

#140

Post by tcoppi »

alexpetralia wrote: post #132
busterc wrote: post #117

I found this comment, by Richard Berger on SeekingAlpha, compelling: > STOP! and think about what this author has revealed. Even IF Tether is NOT running a fraud, the arbitrage positions that automatically exist between Bitcoin and any tether are real and do create incentive to create an arbitraged feedback loop whereby a pegged tether between Bitcoin - any_generic_tether - USD does exist and self feeds, driving up B…

I'm not sure I follow.. There is no BTC-USD tether? USDT is tethered to USD.

There doesn't need to be an official BTC-USD tether, BTCUSD on bitfinex is exactly that in practice and in fact.
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