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Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

nytimes.com

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Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#191

Post by DINKDINK »

fitchjo wrote: post #66
paulpauper wrote: post #51

Earlier quoted context omitted.

the second choice would be true if tether were fake. the evidence suggests it's backed by real money maybe there is a third option: 3. it was just a bubble pumped by people looking to get rich quick and who are now holding the bag.

What evidence have you seen that tether is backed by real money? I haven't seen "definitive" proof/evidence either way, but it would seem there are certainly strong suspicions that tether is not backed by real money (e.g., never having completed an audit and being fired by their auditing firm).

Research rather than speculation: https://blog.bitmex.com/tether/

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#192

Post by partiallypro »

existencebox wrote: post #185
partiallypro wrote: post #183

Earlier quoted context omitted.

Washtrades and Bitfinex's tether were no doubt a huge factor. Someone wrote a great article about it back in November-December, but I can't for the life of me remember where/who.

Probably "bitfinexed". I think I know the article you're talking about, but could only find another quickly peeking through my history, but perhaps it'll serve as a breadcrumb for you. https://medium.com/@bitfinexed/meet-picasso-the-painter-on-g...

That appears to be correct author, all of the pieces are very insightful.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#193

Post by josu »

tomkarlo wrote: post #159
john_moscow wrote: post #122

Earlier quoted context omitted.

I'd say there's a simpler explanation. Bitcoin has a limited predictable supply, so its price is mostly a function of the demand. And demand correlates with expectations, that typically follow the hype cycle [0]. I'm not sure how much someone managed to single-handedly manipulate the price, but the plain old human psychology, FOMO and the positive feedback loop for media writing about bitcoin demand definitely played…

Is the supply really "limited"? Sure, there's finite number of "coins" that can be generated. But unlike physical objects, there's not really any special property of that unit. Also, you can just generate a new currency of more units and similar utility (as has happened many times recently.) Objects in the real world have utility that's directly linked to their unit value. That's not necessarily true for Bitcoin... i…

I'd say that an analogy with diamonds works: There is an infinite supply of lab-made-diamonds, however they are not fungible with real diamonds. Them being substitute goods, lab-made-diamonds may have negatively impacted the price, but real diamonds are still considered scarce.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#194

Post by scj »

ComradeTaco wrote: post #124
captainbland wrote: post #110

Earlier quoted context omitted.

In either of these situations it seems like hodling until victory pays off. The real loser is, well, the planet as the network continues to consume more and more power.

Bitcoin could go the way of any number of other cyptos; back to zero. In any case, nobody uses Bitcoin as a currency because it's logistically harder for 99.9% of people, and nobody uses it as a store of value because its insanely volitale. Bitcoin is really just a speculative asset.

I haven't used Bitcoin, and from what I've read I have two questions about it being a currency:

If I attempted to buy an ice cream cone with Bitcoin, will the money be transferred before the ice cream melts?

What costs more, the transaction fees or the ice cream cone?

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#195

Post by sgspace »

paulpauper wrote: post #58
josu wrote: post #37

I don't know, I followed all the ride very closely, and I don't think that manipulation played that big of a role. Bitcoin was clearly undervalued at the beginning of the year, when its price was around $1,000. Bitcoin needed a protocol update, however, the community couldn't agree on how to proceed, and there was the threat of a contentious fork, where bitcoin would split in 2. In the end, the protocol update was ca…

Bitcoin was clearly undervalued at the beginning of the year, when its price was around $1,000. how could such a determination be possible?

Maybe not "clearly undervalued" but at the beginning of 2017 the price surpassed the $1150 high from 2013 giving you a clue the sky is the limit.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#196

Post by Spooky23 »

GuB-42 wrote: post #92
ceejayoz wrote: post #33

Earlier quoted context omitted.

> Creating billions of dollars’ worth of value with a ridiculous perpetual-motion fake-dollar-printing machine is a real innovation. That's silly. Ponzi-style schemes have been around since at least the late 1800s.

If anything, Bitcoin is closer to the even older Tulip-mania than to a Ponzi scheme. A Ponzi scheme is a specific kind of fraud based on the promise of an unreasonably high return on investment which is actually payed by late adopters. Bitcoin doesn't make promises and it doesn't have a cover story to hide the source of the money. It may be a bubble, but it is not a Ponzi scheme.

Bitcoin doesn't make promises? It is supposedly rendering money obsolete!

The primary market force was pretty obvious -- fraud like cryptolocker and money laundering. Shockingly, fraudulent exchanges and practices were/are pervasive.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#197

Post by JackCh »

DINKDINK wrote: post #174
kgwgk wrote: post #28

Today Matt Levine talks about this paper in his daily column: https://www.bloomberg.com/view/articles/2018-06-13/judge-rul... "of these two explanations— 1) Bitcoin’s rapid and sustained rise is due to the fact that it satisfies a real economic need in an elegant way, and people have responded to that; or 2) Bitcoin’s rapid and sustained rise is due to a magical fountain of fake dollars that everyone just decided to…

>magical fountain of fake dollars The problem though is that if ether really were a "magical fountain of fake dollars" that would be reflected somewhere in the market price of tethers. Look at the price charts for tether->USD it's pretty nominally 1:1 https://cryptowat.ch/markets/kraken/usdt/usd The most contrarian one could argue is that people who sold bitcoin for fraudulent tethers haven't tried to withdrawal them…

> "The most contrarian one could argue is that people who sold bitcoin for fraudulent tethers haven't tried to withdrawal them /at all/"

Or they're just matched by the number of people with 'legitimate' tether who haven't withdrawn?

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#199

Post by Spooky23 »

trendia wrote: post #188
skybrian wrote: post #113

Earlier quoted context omitted.

What's the difference between a fake promise and a real promise? The government guarantees that dollars are acceptable for paying taxes. For a promise, that's about as real as you're going to get.

This may be true, but the government also has the power to control inflation, which limits the purchasing power of those dollars. See: Venezuela, Zimbabwe, Germany ~1920

Debt instruments are based on faith and credit.

Those events are indicative of scenarios where the market lost confidence in the faith and credit of those nations. When you can't sell bonds anymore, you implicitly borrow by devaluing the money.

That's where the derogatory treatment of "fiat" money by goldbugs and cryptocurrency advocates falls down. A government can declare that something is worth a dollar, but the market determines what a dollar is worth.

Re: Bitcoin’s Price Was Artificially Inflated Last Year, Researchers Say

#200

Post by JackCh »

jrkatz wrote: post #182
ericb wrote: post #168

Earlier quoted context omitted.

No no, if you can acquire a $6,000 bitcoin for $0 and sell it, your scam has a 100% margin. It is still profitable whenever you can run the scam, at whatever price above $0.

Right, but if they acquire $6000 for 20000 tether (that they paid $0 for), and promise that tether is full redeemable for $20000, they are $14000 short when the tether holder comes knocking.

What if tether is the tether holder and they simply decide to never call in that debt against themselves? That would mean they lost their own money, but they still may have made enough money over the course of the entire scheme to pay off their "legitimate" customers and thus avoid getting publicly called out.
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