Worries Grow That the Price of Bitcoin Is Being Propped Up • Hacker News Board

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#131

Post by conanbatt » Thu, Feb 01, 2018, 4:55 PM UTC

simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard.

I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose the money, but if you create the expectation that the sec will protect you as a consumer from the scams, then we will not be sophisticated to actually organically ignore scams.

What will happen next, FDIC and too big to fail institutions?

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#132

Post by roywiggins » Thu, Feb 01, 2018, 4:56 PM UTC

wastedhours wrote: post #102

If it becomes unprofitable to continue mining, and miners physically stop (selling gear etc...), will the change in Target just re-inflate the bubble again further down? Or have I misunderstood in difficulty/incentive structure? From here it looks like the flood of market actors with an unsustainable price have created a crash, the flakes will get out of the game (pushing the price south), and then it might begin to…

If nobody wants to buy Bitcoin, it doesn't really matter what the difficulty is to the price.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#133

Post by [deleted] » Thu, Feb 01, 2018, 4:56 PM UTC

wslh wrote: post #108

The regulators were extremely slow in this case. Bitfinex is/was a major exchange and not performing a proof-of-reserves is not a red flag but a motive for immediate action.

[deleted]

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#134

Post by notahacker » Thu, Feb 01, 2018, 4:57 PM UTC

paulgb wrote: post #57

notahacker wrote: post #45

Earlier quoted context omitted.

Easier to pump existing BTC holdings with $2bn of imaginary-dollar backed tokens than exchange $2bn in imaginary-dollar backed tokens directly for dollars and find a bank that'll let you cash them out... And if your plan is to ultimately do the latter, you're going to have to cash out slowly and indirectly anyway, in which case why not pump the price of other assets you stand to benefit from in the mean time.

Why pump assets if you can't cash them out?

(1) There's more demand for swapping BTC for cash or occasionally even goods/services than USDT period, and even more so when the price of BTC goes up. Offloading $2bn USDT is hard work because it's not a speculator-friendly asset

(2) They already had BTC and a belief in its future. Making it worth more, easier to exchange for cash and having more of it looks like a win all round if you don't mind committing fraud.

(3) Leverage, provided the BTC price holds up for long enough to cash out. Even if you're printing fake money, you can only print as much of it as people believe you actually have.

(4) BTC price rise income looks like it might be a legitimate income stream when auditors ask about it. Income from selling stuff that's supposed to be backed by a dollar for a dollar is obviously the proceeds of fraud.

(5) BTC holdings can likely continue to be bought and sold even if nobody wants USDT, bank accounts connected to Bitfinex and Tether end up frozen and a rapid change of address and identity is required

Money laundering is often very convoluted and usually costs money, but it's big business.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#135

Post by fwdpropaganda » Thu, Feb 01, 2018, 4:57 PM UTC

blibble wrote: post #121

duxup wrote: post #99

Earlier quoted context omitted.

The amazing transparency of the crypto tech has been overshadowed by a total lack of transparency in every other way.

it's almost as if fraud is mostly a societal problem rather than a technological problem...

And that's why anyone who has any experience in the stock market isn't suprised with what's happening: they've seen it before and they've been warning about this.

EDIT: As I was typing a response, your username seemed familiar. Turns out it's not the first time I see you on HN saying sensible stuff. https://news.ycombinator.com/item?id=16268736

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#136

Post by wastedhours » Thu, Feb 01, 2018, 4:58 PM UTC

roywiggins wrote: post #132

wastedhours wrote: post #102

If it becomes unprofitable to continue mining, and miners physically stop (selling gear etc...), will the change in Target just re-inflate the bubble again further down? Or have I misunderstood in difficulty/incentive structure? From here it looks like the flood of market actors with an unsustainable price have created a crash, the flakes will get out of the game (pushing the price south), and then it might begin to…

If nobody wants to buy Bitcoin, it doesn't really matter what the difficulty is to the price.

But don't the same market forces come back into play? Shortened transaction times, "brand name" for speculative buyers, more attractive price. It'll burn a lot of people, but another one born every minute...

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#137

Post by jnordwick » Thu, Feb 01, 2018, 4:58 PM UTC

roywiggins wrote: post #123

jnordwick wrote: post #103

Here a possible explanation on what Tether is doing and the economics behind why there is such an incentive behind pump and dump BTC. I think they are running a currency board pegging USDT to USD, and then using the BTC gained to push up BTC even further. Part of the idea of a currency is a stable value, that means supply and demand need to be matched. With a fixed quantity such as all the common cryptos, when demand…

> A currency peggged to an underlying doesnt mean you need to hold all the underlying. You just need to intervene in the market when your target price rises or falls to much Which works great until it doesn't, and then it gets costly: https://en.wikipedia.org/wiki/Black_Wednesday Tether claims to avoid the problem by literally holding a dollar in cash for every tether it has minted, so it can't be attacked- no matter…

Exactly. I was updating my comment as you posted this. The party stops when usdt needs to be defended. And they need to use either their usd reserves or any btc they have from selling usdt/btc to hold the peg.

Or they can defend it by selling bonds. We mat see bitfixes tying to write loans in cryptos. Or literally just steal from people. They have a lot of customer accounts they can raid "temporarily".

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#138

Post by cma » Thu, Feb 01, 2018, 4:59 PM UTC

rebuilder wrote: post #48

amluto wrote: post #29

Earlier quoted context omitted.

If Bitfinex or its sister company is engaging in outright fraud, I see no reason to believe its market data.

How would they fake the price while allowing trades and BTC withdrawals?

https://en.wikipedia.org/wiki/Mt._Gox

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#139

Post by segmondy » Thu, Feb 01, 2018, 4:59 PM UTC

throwaway30yo wrote: post #60

Could be the best buying opportunity of the year. As someone involved in bitcoin since 2012, these cycles are pretty standard. It went from $1000 to around $250 iirc at one point and recovered. No reason it cant go from $20000 to $5000 and recover. It may take many years, but its not as if all crypto will die overnight. I see crypto being big in the more distant future, 15-20 years away when many of the problems are…

You are just another of those speculators wishing for the price to go up, hence the reason for hiding behind your throwaway account.

Re: Worries Grow That the Price of Bitcoin Is Being Propped Up

#140

Post by kadenshep » Thu, Feb 01, 2018, 5:00 PM UTC

conanbatt wrote: post #131

simias wrote: post #84

The somewhat ironic part is that one of the core concepts of Bitcoin is that you can't counterfeit it. You can mathematically prove how many coins you own, if somebody sends you 3 BTC then once it's been validated on the blockchain you know that the money is now yours, they can't have lied, it can't bounce like a cheque Except this Bitfinex thing shows that while an amount of bitcoin can't be manipulated or counterfe…

The most interesting thought to me right now is how the situation will develop if or bitfinex/tether crashes the market hard. I am not a fan of the SEC getting involved. Taking crypto as an experiment, I think it is better for the market to take a hit and then find organic solutions. If the SEC gets involved and busts bitfinex/tether, the community loses the opportunity to become 'unbailable'. Yes , people will lose…

>and then find organic solutions.

I don't understand this perspective. You have a proven, verifiable, simple solution right in front of you. Then you ignore it with some skimpy platitude to dive right into economic mythology.

Regulation is the correct solution.