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

Post by divbyzer0 » Wed, Dec 06, 2017, 11:38 AM UTC

panarky wrote: post #176

rsynnott wrote: post #116

Earlier quoted context omitted.

Bear in mind that this is bitcoin. People continued pumping money into mtgox for _months_ after it was clear to anyone who’d been paying attention that it was dead. And currently bitcoin’s in an unusually large bubble, so there are lots of people buying into it who’ve never previously had experience of it. I see ads for, basically, “get rich quick with bitcoin” every day now. The people clicking those are not the wor…

> Bear in mind that this is bitcoin It's still a market, so market logic should apply. > get rich quick with bitcoin I see the same shit with real estate. > sufficient people buying tethers at face value It's a market. Smart money can sell tethers. When there's information that all market participants know, the market price should reflect that information.

Post by divbyzer0 » Wed, Dec 06, 2017, 11:46 AM UTC

gst wrote: post #188

querulous wrote: post #136

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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 bitco…

> 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. Afaik Bitstamp doesn't have any withdrawal limits for verified users.

Post by Laforet » Wed, Dec 06, 2017, 12:41 PM UTC

nerdponx wrote: post #354

Laforet wrote: post #321

Earlier quoted context omitted.

>If someone is able to buy Tether on credit, and the credit is actually backed by BTC then there could be a loop. Indeed, one of the BFX employees accidentally let it out that Tethers are not backed by USD but perceived value of cryptos held by the exchange. https://mobile.twitter.com/bitfinexed/status/935333097377329... Anybody claiming that a loop does not exist has to be in some kind of denial.

But is $845m enough to pump the entire crypto market by billions in market cap? Maybe there are secondary effects here, like increasing peoples confidence in crypto because of a false sense of liquidity, or something like that.

Post by dnautics » Wed, Dec 06, 2017, 4:38 PM UTC

antishatter wrote: post #199

dnautics wrote: post #157

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Isn't ltcm an example of markets keeping a dumb, dumb, dumb trading model ungrounded in reality from going out of whack?

It was an example of what happened when everyone believes the so called "smartest people in the room" without questioning. It also represents what happens when the market adjusts to what you're doing but you fail to adjust and also the nature of tail risk. Was their model dumb? Tough to say, they did win a nobel prize in economics for it. I think warren buffet has some quote about how they were "risking a million to…

Post by adameast9000 » Thu, Dec 14, 2017, 8:39 PM UTC

saalweachter wrote: post #258

adameast9000 wrote: post #182

Earlier quoted context omitted.

Unfortunately fractional reserve isn't safe for a currency that is this volatile. Depending on what the "fraction" is, some major withdrawal demand against one of these exchanges would topple it

So you are a Big Fish. You have a boatload of money in exchange X. You go to take it out and they don't immediately give it to you. They say, "Listen, we can't get to it, it's in our cold wallets, it will take a week." A week goes by, they say, "Listen, here's 10% of what you asked for, we'll get you the rest shortly.". This goes on, they periodically give you some of the money but there's a lot of evasion. What's th…