[HN Gopher] An anatomy of Bitcoin price manipulation
___________________________________________________________________
An anatomy of Bitcoin price manipulation
Author : VHRanger
Score : 514 points
Date : 2022-01-17 13:53 UTC (9 hours ago)
(HTM) web link (www.singlelunch.com)
(TXT) w3m dump (www.singlelunch.com)
| kkjjkgjjgg wrote:
| Am I reading right that among all the words, there are just three
| examples of "manipulation"?
|
| - fake news stories about Amazon accepting Bitcoin, and something
| Tether
|
| - "momentum ignition", trying to start a trend by placing a big
| trade offer and withdrawing it when takers arrive
|
| Are those really a big deal?
|
| I guess technically every trade in crypto or stock markets is
| also a "market manipulation", as it has the potential to move the
| price.
| skilled wrote:
| Interesting tidbit:
|
| _" An aside on NFTs Because they're "unique" objects, NFTs are a
| perfect vehicle for wash trading. You can easily ensure you only
| wash trade to yourself. The common scheme is to wash trade with
| yourself until some credible dunce buys the NFT from you at your
| manufactured "fair" value, leaving you to walk away with real
| money."_
|
| It's such a stupidly simple idea it's actually brilliant.
| paulpauper wrote:
| not really if the fees are high and tons of ppl are doing this
| with few sales. the nft market is so unbelievably saturated.
| doopy1 wrote:
| I see this concept of NFT was trading posited all over the
| place, but it should be easy to prove, yet no one has been able
| to produce tangible evidence, besides the occasional single
| flashloan based sale... which eats a tone in gas. Sure there
| are probably some wash trades here and there, but why is it so
| hard for most folks to believe that this is in fact a huge
| market driven by speculation?
| joosters wrote:
| Only the really obvious wash trades get spotted - e.g.
| https://www.bloomberg.com/news/articles/2021-10-29/here-
| s-a-... , because half-decent manipulators will have the
| sense to trade between different wallet addresses and
| obfuscate their money sources.
| doopy1 wrote:
| Yes you are citing the flashloan wash trade that I
| mentioned, but the rest I don't really buy at all. You
| can't just materialize a wallet out of nowhere and use it
| in a wash trade. Wallets need at least some ETH in order to
| transact, because you have to pay gas to transact on
| ethereum. This means that even the best pseudonymous wash
| traders should be discoverable with chain analysis, or lead
| to dead ends like tornado.cash. The reality is that you
| can't find any good examples of this, and that means it's
| all hypothetical conjecture. It should be quite easy to
| prove otherwise.
| MikeDelta wrote:
| Reminds me of this sketch from Enfield and Whitehouse
|
| https://youtu.be/ZiJa9diJOMk
| crtasm wrote:
| From loadsamoney to lots of money!
|
| https://genius.com/Harry-enfield-loadsamoney-doin-up-the-
| hou...
| fleddr wrote:
| It's brilliant but not simple at all. You can't just mint an
| NFT, wash trade it up to a large number and then expect
| somebody to buy it. This plan would almost always fail.
|
| Because it would pop out of nowhere and nobody has ever heard
| of you. So just like in the traditional art world, you need to
| be visible and networked.
|
| It's very educational to simply browse the big marketplaces.
| You'll notice that the typical NFT gets zero offers. Almost all
| trading happens within a tiny scope of hot projects.
| spoiler wrote:
| > Because it would pop out of nowhere and nobody has ever
| heard of you.
|
| Isn't that everything in the crypto space right now?
|
| > So just like in the traditional art world, you need to be
| visible and networked.
|
| People who spend hundreds, if not thousands, on procgen
| chimpanzee/monkey avatar NFTs would beg to differ.
| fleddr wrote:
| I mean known in the crypto community. Surely a random
| person in the street has never heard of most crypto
| celebrities, but that wasn't my point.
|
| The monkey NFTs that you mention are a perfect example,
| because they are the best known project after cryptopunks.
| Massive media reach, real world celebrities and almost all
| crypto influencers are in.
|
| That's what I mean when I say they didn't come out of
| nowhere. These high value NFT projects come from massive
| marketing machines to create the hype. You as rando can't
| just draw something and sell your NFT for a million, it
| doesn't work that way.
| spoiler wrote:
| > I mean known in the crypto community. Surely a random
| person in the street has never heard of most crypto
| celebrities, but that wasn't my point.
|
| It might be due to my misconceptions about the crypto
| space then, but I always assumed people just kinda "pop
| up" relatively often (even if we just constrain this to
| within the crypto community). The whole crypto space
| seems to be very very "fast moving" to me, if that makes
| sense?
|
| Back to the monkey avatar NFTs: I was under the
| impression those also just popped up. There's obviously a
| "ramp" towards reaching popularity in any community, but
| that ramp seems to be short (within the crypto
| community). Also, people will invest in any crypto-
| game/nft for promise of future profits, regardless
| whether they believe in the product/nft; they're going
| for coverage. This is fine for people with cash to burn,
| but there's more victims than heroes in the get-rich-fast
| crypto rush. Or is this perception wrong (it might very
| well be)?
| fleddr wrote:
| I had a deeper look into it, and it looks like you're
| right, the apes actually are an example of overnight
| success: https://www.rollingstone.com/culture/culture-
| news/bayc-bored...
|
| So it's a bad example from my side to explain what would
| be a more planned launch, which may include a setup with
| marketplaces to get it on the homepage, and the paying of
| crypto influencers to shill the project.
|
| Your perception on crypto gaming is correct. It's a hot
| market right now where many believe we're at the very
| beginning. Everybody wants to be early so they buy any
| game-related shitcoin.
| TrackerFF wrote:
| Yes, it's been painfully obvious from the start. It was the
| first thing I noticed, once looking into NFTs.
|
| I'd be surprised, AMAZED actually, if some of the big NFT
| collections aren't entrenched in wash trading, to pump up trade
| volume and price.
|
| In fact, I think that in order to successfully launch a NFT
| collection today, you need to have either:
|
| A) Substantial social capital.
|
| B) Capital to do the wash trading, or investors to back you.
|
| C) Probably both above.
| prox wrote:
| So basically if you are rich you become richer. Same old same
| old.
| shawabawa3 wrote:
| I personally don't value nfts highly but I'm in a circle with
| lots of rich crypto early adopters - they absolutely would
| pay $100k for a bored ape and would consider it a bargain.
| It's a real status symbol, just in a niche you don't
| understand.
|
| I feel the same way about $100k Patel Phillipe watches but I
| don't hear everyone talking about how those are only wash
| trades
|
| The platforms where these nfts are sold usually charge 1-2%
| commission which is expensive for a wash trade
| TrackerFF wrote:
| The main difference here is that those paying for a pointer
| to the bored ape, are paying just that. Nothing more.
| Anyone can copy that bored ape image, and use it as they
| want.
|
| If you pay $100k for a Patek, that's your watch. It's a
| physical item - the only way someone's going to steal it,
| is by physically stealing it from you.
|
| Of course, one can argue up and down whether or why a Patek
| is worth $100k. But IMO it's easier for the layman to argue
| its worth - it's an item which probably took 12 months to
| make, using the best materials, world-class craftmanship.
| The bored ape was generated in microseconds.
|
| If I had $100k to spend on whatever, I wouldn't spend it on
| either of those. But if I was to guess what item will hold
| its value 5,10,15 years down the line...I'd go for the
| Patek, 100% of the time. The bored apes are digital beanie
| babies for rich people.
| [deleted]
| joering2 wrote:
| > If I had $100k
|
| Precisely. For a starters you already told us you don't
| have type of "first comers crypto gains" like OP wrote
| about. I know a person that has over 10,000 bitcoins from
| early days, and he treat those as "fuck off coins". At
| this level you don't look at it as "gee, whos gonna pay
| $100k for some easy to copy pixels!", you look at it like
| "oh shit Eminem just dropped $400k on some pixels, let me
| use some of my fuck off coins to get on board - who knows
| this thing can quadruple in 10 years. Or go to zero. In
| both scenarios, whatever". Hardly people at this level
| care about whether they lose money or not. The point is
| to be a part of the "movement", to be part of the deal
| that's going. Its adrenaline rush.
|
| The point is, if it goes down to 0 they couldn't care
| less. Its a fuck off coins to start with.
| arcticbull wrote:
| > The main difference here is that those paying for a
| pointer to the bored ape, are paying just that. Nothing
| more. Anyone can copy that bored ape image, and use it as
| they want.
|
| I hate NFTs, but this is actually not true in the case of
| BAYC and a small handful of others. They assign full
| rights to the token holder.
| snowwrestler wrote:
| You can buy social capital by wash trading the price of the
| NFTs up to where they are interesting, then giving some to
| folks with social capital.
|
| Only you don't give them an actual NFT, you give them a
| sponsor fee that they use to buy one of your NFTs (thereby
| further validating the interesting price).
| aqme28 wrote:
| For A), some of the wash trading has been done with flash
| loans. There are some well-documented cases. You don't need
| much capital at all for that.
| colinmhayes wrote:
| This is also what makes NFTs great for money laundering. You
| can use the money from the dirty wallet to make the wash sales,
| increasing the value of your NFT while cleaning the money at
| the same time.
| landemva wrote:
| How do you get lots of actual dirty cash into a dirty wallet?
| colinmhayes wrote:
| Take payments in crypto instead of cash.
| landemva wrote:
| That is crypto-to-crypto.
|
| Your earlier comment said there are dirty wallets. How
| does someone get dirty cash in to that dirty wallet? For
| example, which bank allows deposit of dirty cash so the
| bank account holder can then wire the funds to an
| exchange?
| belter wrote:
| In a complex system, whose algorithmic essence is price
| forgery, value randomness and pump and dump as a
| strategy...Would argue that achieving maximum manipulation is
| simply the algorithm optimizing for its "best".
| latchkey wrote:
| Any market with insufficient liquidity and an easy way to
| trade, is ripe for this. I'm sure you could look at the price
| history of all sorts of stuff on Ebay and Amazon and see many
| many cases of this.
|
| Imagine a seller buying their own products cheaply and giving
| reviews. Then come back and raise the prices when the product
| gets listed higher up in the search results.
|
| I recently bought some KF94 masks on Amazon cause they were
| crazy cheap. Came back a few days later and the price went from
| $8->$25. A few days after that, the entire listing was gone.
| joering2 wrote:
| But shilling bid is illegal regardless of how you bid. While
| crypto can be made harder to trace than fiat, the fact of the
| matter is, someone have commited crime.
|
| With millions of dollars flying on all sorts of NFT
| exchanges/auctions [1], sooner or later some government will
| crack a case and make it very public in a form of a warning to
| others.
|
| [1] https://nouns.wtf/
| m3kw9 wrote:
| This is the real world equivalent to high balling. It's just
| that you have to assume every price is washed. This is the
| actual offer price, not a real price. If you put in a lowball
| offer I bet they'd eventually sell it to you. Exceptions are
| famous sets like BAYC
| masona wrote:
| The fine art market has been doing this for decades by using
| auction records to set prices.
| spoiler wrote:
| You can't buy and sell the same item to yourself at an
| auction multiple times... Or am I missing the point you're
| trying to make?
|
| Also, the value is in the art, not the receipt. With NFT,
| that's not the case... Unless it's an exchangeable NFT, like
| one you can exchange for a service (e.g. as a tick) or some
| goods, but that's not really how NFTs are being used.
| Cthulhu_ wrote:
| > You can't buy and sell the same item to yourself at an
| auction multiple times
|
| You don't have to; you get someone else to buy it, hold
| onto it for a few years, then sell it again on a different
| auction. It doesn't have to be short-term.
|
| > Also, the value is in the art, not the receipt.
|
| I would argue the value is not in the art in real life
| either, that is, it's not the artwork itself, but the
| 'object', its history, what people have paid for it in the
| past and how it increased in value over time. The main
| thing is that it has to be rare or one of a kind.
|
| I mean more understandable is expensive, collectable
| whiskeys. They make a limited batch, say 100 bottles, sell
| it for $100 each. Ten years later, 90% of those bottles
| have been opened and drank, another 10% of the remainder
| was lost or broken, leaving you with nine bottles of a
| once-and-never-again rare batch. Collectors will pay more
| for it.
|
| Anyway, NFT's, like cryptocurrencies, are investment
| products whose value is determined entirely by whatever a
| buyer pays for it.
| gandalfian wrote:
| Though whiskey doesn't age in the bottle making it a
| weird investment in itself. The ten year old bottle I
| bought twenty years ago now costs much more to buy it
| again, is rarer but the whiskey is not better, it forever
| stays at ten years old once out of the barrel.
| DennisP wrote:
| It's not completely nonsensical. The new whisky even from
| the same distillery won't taste quite the same, due to
| variations in climate and so on. The old and increasingly
| rare one isn't trivially replaceable, so if has a
| reputation of being especially good it can gain value.
| Even more so when the original distillery isn't in
| business anymore.
|
| On top of that, the popularity of good whisky has
| increased a lot over the past few decades, and the higher
| age statements haven't been able to keep up.
| yunohn wrote:
| > It doesn't have to be short-term.
|
| This is actually a really important nuance. NFTs/crypto
| have a really short turnaround time - which means they
| can run the scam much quicker and at massive scale.
| DennisP wrote:
| Plenty of high-end art investors never move the art from
| the specialized vault where it was already stored. The only
| change is a new entry in the public art registry. Seems
| like the receipt is carrying a lot of the value in that
| case.
| spoiler wrote:
| I wasn't aware of this. I guess that's a special way way
| of appreciating art (assuming the art isn't somehow
| volatile in "normal" conditions), if it's done out of
| legitimate interests (i.e. not money laundering)
| [deleted]
| iechoz6H wrote:
| I guess the main difference between the two markets is that
| with fine art the object is genuinely rare/unique.
| noneeeed wrote:
| While that's true, in many ways huge chunks of the fine art
| market exist purely as objects in warehouses, normally in
| freeports such as those in Switzerland, that are simply
| traded back and forth, often never seeing the light of day.
|
| The art market is really weird in many ways. Both the
| Freakonomics podcast and Malcome Gladwell's Revisionist
| Histories have done episodes in the last year or so on the
| market.
| ASalazarMX wrote:
| Banksy agrees and winks.
| agilob wrote:
| And if you don't have money you can borrow
| https://mobile.twitter.com/Foone/status/1457749433844568066
| fleddr wrote:
| It's a good and fair article. Even without media manipulation,
| there's a huge amount of futures trading on high leverage which
| tends to pile up. Then, all that is needed is a fuse and
| something spectacular will happen, either up or down.
|
| The author could have picked from a series of other dates, where
| seemingly relevant/important news to Bitcoin is revealed, and
| somehow...price action does nothing on those dates.
|
| Why not? Not enough leverage built up. So it's the nature of the
| trading making price so volatile. A small event can trigger a
| cascade of liquidations.
|
| To a skeptic, this would be a reason to reject the asset. To a
| long term holder, it doesn't matter as they don't trade. To short
| term traders, it's the way to make a lot of money quickly, or to
| blow up your account and lose it all.
| JohnJamesRambo wrote:
| They do it down too. It's not a secret or illegal. Here's a post
| mortem from the guy that did it.
|
| https://twitter.com/AlamedaTrabucco/status/14672197118301511...
|
| Ready for a move up again soon.
| noja wrote:
| > It's not [...] illegal
|
| Errr - what?
|
| I think you'll find that market manipulation is prohibited in
| the US under Section 9(a)(2) of the Securities Exchange Act of
| 1934, and in the EU under article 12 of the Market Abuse
| Regulation (etc.)
|
| The US Securities Exchange Act defines market manipulation as
| "transactions which create an artificial price or maintain an
| artificial price for a tradable security".
|
| See https://en.wikipedia.org/wiki/Market_manipulation
| kyruzic wrote:
| You realize the world isn't beholden to stupid American laws
| right?
| TheDesolate0 wrote:
| adrianN wrote:
| Is Bitcoin already classified as a tradable security or is it
| still Monopoly money?
| teekert wrote:
| People assign value to monopoly money now?
|
| Edit: I get that many people here are ant-cryptocurrencies,
| but I think it is rather childish to call it monopoly
| money.
| adrianN wrote:
| Yeah, a replacement set costs about three Euros on
| Amazon.
| vmception wrote:
| False dilemma
|
| Products are regulated by the FTC
|
| Commodities and currency _derivatives_ that are traded are
| regulated by the CFTC
|
| Securities issuance _and_ securities trading are regulated
| by the SEC
|
| so have fun with the federal trade commission rawr big
| teeth over there /s
| cma wrote:
| It's not classified as a security.
| noitsnot wrote:
| This guy apparently runs a company that has millions and
| takes advantage of inefficiencies. He's not creating the fake
| articles but he's using what it creates to his advantage.
| From what I understand, he will run the price down if there
| is low liquidity and trigger your stop losses and somehow
| make money doing it.
| giansegato wrote:
| they're based in Hong Kong so i'm not sure why US / EU
| regulation should apply
| VHRanger wrote:
| Actually, Alameda is based in the Cayman Islands as a legal
| entity
| giansegato wrote:
| so it's a branch, uh. i'll never wrap my head around the
| complex corp structure of these crypto juggernauts
| JohnJamesRambo wrote:
| It's not a security, my friend. Crypto is the land of no
| rules and caveat emptor.
| SilasX wrote:
| But Bitcoin options on e.g. LedgerX.com _are_ securities
| (edit: regulated ones, that is), and anything that affects
| Bitcoin's price is going to affect those derivatives'
| prices.
| ianai wrote:
| Seems trading firms largely facilitate trading it btc and
| other cryptos. If they're not legally regulated as
| securities then it may be time for that regulation. Or
| simply being disallowed for such trading firms.
| SilasX wrote:
| LedgerX (now FTX US derivatives) is regulated.
|
| (Sorry, forgot to mention it in the first comment -- that
| was the whole point of bringing it up in this context.)
| vmception wrote:
| They're regulated by the CFTC which also does not use the
| Securities Act
|
| The CFTC literally just got a fraud statute in 2010
|
| They mostly follow their earlier mandate and the new
| mandate doesn't alter it too much
|
| Trying to apply it to spot assets just because a
| derivative market is affected requires a huge stretch and
| risk of getting the agency embarrassed and curb stomped
| in the courts
| vageli wrote:
| > But Bitcoin options on e.g. LedgerX.com are securities
| (edit: regulated ones, that is), and anything that
| affects Bitcoin's price is going to affect those
| derivatives' prices.
|
| But the SEC doesn't regulate mortgages even though there
| are derivative securities that are regulated. SEC
| regulates the asset backed securities but not the assets
| underlying those securities.
| SilasX wrote:
| The question was whether the SEC would have jurisdiction.
| The manipulation affects securities that the SEC would
| have jurisdiction over, so it would follow that they do.
|
| If not, it would be a pretty gaping hole in their
| mandate: "It's fine to manipulate X and profit from that,
| but not to profit from the regulated derivatives that
| closely track X."
| ajross wrote:
| That thread is just describing a long squeeze, which is an
| mechanism, not manipulation. The allegations in the linked
| article (against the same guy!) are quite a bit more detailed.
| And they absolutely are illegal in real money trading on
| licensed exchanges; whether they constitute crimes in the
| crypto world is sort of an open question.
| paulpauper wrote:
| "Ready for a move up again soon."
|
| does not look like it
| mbesto wrote:
| Curious - does anyone _not_ think Bitcoin or any other cypto coin
| is being manipulated?
| SuoDuanDao wrote:
| I don't think it's being manipulated in only one direction,
| does that count?
| Cthulhu_ wrote:
| It does, I think, and you make a good point; there's big
| players who bet on it going down, there's big players that
| bet on it going up. In a perfect world, their intents would
| cancel each other out.
| mbesto wrote:
| PS - I'm an investor in a fund that trades on it both going
| up and down (i.e. volatility).
| DJBunnies wrote:
| Does it matter either way?
| recursive wrote:
| Me. I don't have an opinion.
| likecarter wrote:
| Great analysis.
| 2OEH8eoCRo0 wrote:
| Is it illegal to manipulate crypto? If so, then how many people
| have been prosecuted for manipulating crypto?
|
| I think all of it is manipulated at a scale never before seen.
| sosuke wrote:
| I think that every and all markets are manipulated by groups
| with money and power. Everyone wants to game the system to act
| in their favor right? What would I want with more money? To
| earn more money of course.
| eric_cc wrote:
| Fixed for you:
|
| Curious - does anyone not think _all stocks, currencies, and
| cryptos_ are being manipulated?
| temp8964 wrote:
| What coin is not being manipulated? Even USD is being
| manipulated by the fed. All the countries manipulate their
| coins.
|
| So the real question is whether a coin is being manipulated,
| but what kind of manipulation you can accept.
| mbesto wrote:
| First, let's start by using a valid comparable. Fiat currency
| has the feature of "medium of exchange", at present BTC does
| not (technically it does but its adoption for exchange is
| abysmal).
|
| > So the real question is whether a coin is being
| manipulated, but what kind of manipulation you can accept.
|
| The NYSE is a better comparable. In the US we have the SEC
| which does regulate against market manipulation:
| https://en.wikipedia.org/wiki/Market_manipulation I do
| believe there is some level of market manipulation not
| captured by the SEC, however there is at least _some_
| baseline level of control against it.
| SilasX wrote:
| >First, let's start by using a valid comparable. Fiat
| currency has the feature of "medium of exchange", at
| present BTC does not (technically it does but its adoption
| for exchange is abysmal).
|
| You're changing the topic. You asked whether BTC was being
| manipulated, and were asked to compare to the US dollar.
| Whether the dollar is as "medium of exchange" has no
| bearing on that, you're just unhelpfully switching to an
| unrelated issue that will make the dollar look better in
| orthogonal ways.
| mbesto wrote:
| > and were asked to compare to the US dollar.
|
| The original blog article was about the BTC/USD market
| being manipulated; hence the title "Bitcoin price", in
| which "price" assumes you are converting one currency to
| another (in this case USD/BTC).
|
| The person that replied to me asked "so what, every coin
| is being manipulated". If anything the replier was
| changing the topic. The assertion that the coin itself is
| being manipulated is irrelevant and a red herring. In the
| context of the US stock exchange the SEC defines
| manipulation as "transactions which create an artificial
| price or maintain an artificial price for a tradable
| security". This concept isn't even a concept when it
| comes to the value of the medium of exchange for a
| currency, hence why I posited "why is this even
| relevant"?
| SilasX wrote:
| You're claiming the dollar can't be manipulated and/or no
| one is allowed to care about it, because one agency
| doesn't have jurisdiction over said manipulation?
| mbesto wrote:
| No, I'm not claiming anything about a currency being
| manipulated. I'm saying the idea that a currency in and
| of itself is being manipulated is completely irrelevant
| to this discussion. Currency manipulation, in the context
| of the OP's discussion, implies one currencies relation
| to another one, in this case USD and BTC.
|
| Federal interest rates affecting the value of your dollar
| making purchases for goods and services is completely
| irrelevant.
| notch656a wrote:
| I knew when I bought crypto it was being manipulated. I
| don't give a fuck, I use it as a medium of exchange
| usually dumping it within a few minutes of buying it in
| order to buy some goods online to avoid credit card fees
| (precious metals).
|
| It's true dollar is manipulated. It is true crypto is
| manipulated. It is true many people such as myself purely
| is it as a medium of exchange. Just like with dollars, I
| dump it as quickly as possible to buy physical assets or
| other investments, lest the government inflate my fiat or
| manipulators manipulate my crypto.
|
| In short, currencies are usually bad choice for store of
| value. Fed intentionally destroys USD by target of 2% a
| year to intentionally sabotage store of value.
|
| Back to the point. Pretty much all coins are manipulated.
| Even commodity money. Best to avoid regulation so
| government's hand is out of the pot. Also I recommend
| people not use crypto as investment, that is probably not
| smart idea to consider long chain of cryptographic
| signatures and hashes as a large portion of investment on
| your future. Or piece of paper with a president and a
| number on it on it either.
| mbesto wrote:
| > In short, currencies are usually bad choice for store
| of value.
|
| > Also I recommend people not use crypto as investment,
| that is probably not smart idea to consider long chain of
| cryptographic signatures and hashes as a large portion of
| investment on your future.
|
| Re-read what you wrote there again for me. How do you pay
| for any goods or services if you:
|
| > dump it as quickly as possible to buy physical assets
|
| So, like cars that depreciate in value the second you buy
| them? (note - I recognize the last 2 years this has not
| been the case...but thats a historic anomaly) What other
| physical assets are you aware of that consistently
| outpace inflation? Housing? What else?
|
| > or other investments
|
| Like ones denominated in....US currency?
| notch656a wrote:
| I pay for goods and services with USD. I get USD either
| by liquidating non-USD denominated asset for USD or from
| income-stream (wages). I didn't say I don't use USD, I
| said I hold it as short as possible just like with
| crypto.
|
| >So, like cars that depreciate in value the second you
| buy them?
|
| Generally worst example, although a few cars have held
| their value (some Porsche, but I'm not good enough car
| guy to execute this.)
|
| >Like ones denominated in....US currency?
|
| Like the ones not denominated in US currency, like stocks
| denominated in shares.
| preseinger wrote:
| The definition of "manipulated" which allows "the dollar
| and BTC are both being manipulated" to resolve as true is
| so broad that it is effectively meaningless. The dollar
| is not being manipulated in the way that reasonable
| people understand the word to mean. BTC obviously is.
| notch656a wrote:
| No true [reasonable] Scotsman would believe monetary
| policy by fed is manipulation. Got it; your definition of
| unreasonable is so broad that it is effectively
| meaningless.
| preseinger wrote:
| The Fed has a mandate to act in the broad interest of
| society. It doesn't manipulate currency by any non-
| conspiratorial definition of manipulate, no.
| notch656a wrote:
| Ah I see, it's not manipulation because you perceive the
| fed as acting virtuously.
|
| That's actually not the mandate of the fed.
|
| The mandate is: The Board of Governors of the Federal
| Reserve System and the Federal Open Market Committee
| shall maintain long run growth of the monetary and credit
| aggregates commensurate with the economy's long run
| potential to increase production, so as to promote
| effectively the goals of maximum employment, stable
| prices, and moderate long-term interest rates.
|
| Whether prices are currently stable or interest rates are
| moderate are a lively source of discussion. Regardless of
| opinion here, I think you have a generous definition of
| manipulation to exclude acts operating under a nominal
| mandate of some vague interest of society (and I may add
| many other acts made under pretext of interest in society
| are source of outrage on HN).
| preseinger wrote:
| I, an anonymous actor beholden to no authority nor
| regulation, can manipulate Bitcoin _directly_ with
| sufficient capital and a sufficiently intelligent bit of
| code. It's fun and intellectually pointed to say this is
| just a _version_ of the kind of "manipulation" performed
| by the Fed against the dollar but it's transparently and
| categorically a different thing. It's an obviously
| specious argument and it diminishes whomever makes it.
| notch656a wrote:
| >I, an anonymous actor beholden to no authority nor
| regulation, can manipulate Bitcoin
|
| Yes yes we already agreed, I think, that bitcoin can be
| manipulated. I admitted this right off the bat.
|
| >It's fun and intellectually pointed to say this is just
| a _version_ of the kind of "manipulation" performed by
| the Fed against the dollar but it's transparently and
| categorically a different thing. It's an obviously
| specious argument and it diminishes whomever makes it.
|
| So it diminishes no one, because I never said the
| manipulation performed by the fed was the same 'version'
| or 'kind' of manipulation -- whatever that means. Are you
| just kind of arguing with yourself at this point?
| ptero wrote:
| Depends on what you mean by the manipulation. Many stock,
| future, precious metal prices are affected by actors who want
| to temporarily move it for profit. Some are illegal, some
| perfectly legal.
|
| In what way do you expect Bitcoin to be different? This is a
| technical question, once you define it one could debate if this
| particular behavior is present in BTC.
| mbesto wrote:
| > Depends on what you mean by the manipulation.
|
| Fair point. I'll use the SEC's definition: "transactions
| which create an artificial price or maintain an artificial
| price for a tradable security". What the author described is
| exactly this.
|
| > Some are illegal, some perfectly legal.
|
| Agree. My point is probably more about the _ease_ of
| manipulation when you have a completely deregulated
| environment.
| ptero wrote:
| With this definition my guess is there is likely to be some
| manipulation. But as BTC is not regulated by the SEC I
| personally do not see a major problem with it, either.
|
| My guess is that most people that I know that buy BTC,
| either directly or via some holding schema, do it for the
| speculation and in this environment they should expect
| other players to use any method available to them which is
| not explicitly prohibited. I would treat it like a poker
| game, where some action happens outside the strict
| definition of the gameplay (reading facial expressions,
| probing reactions, etc.). Just my 2c.
| mbesto wrote:
| > My guess is that most people that I know that buy BTC,
| either directly or via some holding schema, do it for the
| speculation
|
| I think you're right. But then isn't it essentially just
| a digital form a gold bar with less utility?
| ptero wrote:
| I think the vast majority of the people buying gold bars
| (or their digital equivalents, like shares of physical
| gold holding funds) do this to hedge a variety of life
| risks and value a relatively low volatility.
|
| Gold prices do fluctuate, but over the long term (decades
| and centuries) an ounce of gold generally held its
| inflation-adjusted value. I suspect buyers of gold would
| see a lot of problems with BTC price swings and risks
| that it would be outlawed or restricted in some unknown
| ways.
| mslupski1 wrote:
| What else is new? Kudos for all the research, but I don't think
| any reasonable person needs any proof that all crypto is ripe
| with manipulators and scammers.
| syntaxing wrote:
| I don't have enough mathematical knowledge in this subject to
| back this statement up but I swear I noticed this for SPACs too.
| There's these really odd spikes up and down that does not make
| any sense according to public information
| pcurve wrote:
| The "Bart" pattern had me in stitches because there has been
| similar stock meme among Korean individual traders mocking
| strange price actions and doing technical analysis using cartoon
| characters to figure out the best entry/exit points.
|
| https://m.blog.naver.com/kwonhs225/222201971395
|
| Pretty hilarious.
| somewhereoutth wrote:
| Bitcoin (and friends) is essentially a pyramid (edit: ponzai)
| scheme, where late entrants pay the 'returns' on early entrants -
| but with a technology layer that precisely and and publicly
| records each payin/payout.
|
| In a way it is beautiful - the fraud is so transparent, and so
| technologically guaranteed to be transparent, that it becomes
| legitimised.
|
| Almost as if robbing a bank would be ok if you made an
| appointment beforehand.
| errantmind wrote:
| By that logic, any marketplace is a pyramid scheme because
| later entrants always pay earlier entrants. A pyramid scheme
| has a very particular definition, please look it up.
| somewhereoutth wrote:
| Sorry, I meant ponzai scheme.
|
| Marketplaces are where things with inherent value are
| exchanged. Crypto has _zero_ inherent value - it serves only
| as a record of previous players in the scheme.
| errantmind wrote:
| Gatekeeping 'value' yields no insights. Value is whatever
| people think it is and doesn't require any physical
| connection to reality, nor any rational mechanism.
| blunte wrote:
| I've spent a lot of time, made a lot of manual trades, and lost a
| lot of money on crypto futures in the last three months.
|
| I've learned some things...
|
| One is that the order books are virtually meaningless, at least
| for humans. They change so rapidly, bulking or vanishing, that
| you cannot gain any sense of what the market wants or is doing.
|
| I've also seen strings of tiny trades, apparently strategically
| timed with order book cancellations, causing big price changes on
| almost no volume.
| TheDesolate0 wrote:
| iso1631 wrote:
| Meh, it's more fun than gambling on the superbowl. Put $50 in,
| and with the superbowl you get an hour of watching a game and
| maybe come out with $100 or maybe come out with $0
|
| With bitcoin you get to ride the highs and lows for years and
| maybe come out with nothing, or maybe with $5000
| wcchandler wrote:
| That was a good read. Thanks!
|
| I would've enjoyed the TL;DR (How market manipulation is done) at
| the top to draw me into the actual mechanics behind how it
| happens.
|
| Now I want to make a bot to detect some of these patterns and
| alert me on them.
| StrangeClone wrote:
| This is done in regular stock market too. Fake news, speculation,
| etc are frequent. Ex: "X giant is acquiring Y" claims with no
| data to back up. What's different in case of crypto?
| VHRanger wrote:
| Two things:
|
| 1. Because crypto exchanges are also clearinghouses,
| liquidations tend to cascade.
|
| 2. It's much more blatant in the crypto markets. See the DRW
| lawsuit linked in the article - the CFTC is aware that DRW is
| doing similar things in the CME futures market, but the extent
| to which it's done is smaller.
| hnmullany wrote:
| If it's significant enough, the SEC will knock on your door
| when this happens in the regular market
| jimmydorry wrote:
| I'm not aware of any pundits, that get on the TV to push
| agendas about stocks, getting in any trouble with the SEC.
| I'm not sure if it's just because I have been looking closer
| recently, or had more time WFH, but the blatant manipulation
| on morning shows and financial segments is appalling.
|
| Things like saying a given pharmaceutical is headed for zero
| because their drug failed to get FDA approval, when actually
| the company had just started their trial and not yet sought
| approval.
|
| Or pushing a stock then pretending to lose connection when
| asked what the company does.
|
| Or saying that a company pivoting to online retail will not
| have the necessary skills and will be facilitating terrorists
| (name dropping Al Kaida).
| rowathay wrote:
| Pardon my ignorance and/or naivete, but are these real
| examples?
| hestefisk wrote:
| Very nice, detailed analysis. Thanks for sharing.
| superkuh wrote:
| No, this is the anatomy of an off-chain price manipulation of a
| private futures market that exchanges something that is tradeable
| for Bitcoin. It used to be funny but now it's just sad seeing
| everyone confused about the difference between bitcoin and third
| party markets. Only a vanishingly tiny fraction of this actually
| has any representation on the bitcoin blockchain. It's like
| buying stolen Tide detergent out of the back of a shady car in
| the parking lot of the actual grocery store then complaining
| about the grocer when you get home and it's watered down.
|
| This is the normal finance people with their normal scams
| manipulating private enties like Binance which are vagely
| associated with Bitcoin. The finance people and the public at
| large cannot see bitcoin as anything other than an investment and
| that perception blinds them.
| jokoon wrote:
| I hope it's not going to be a long time before congress swiftly
| enact regulating anything related to crypto currencies when
| interacting with the dollar.
|
| Although bitcoin might also be used to honeypot hackers through
| bitcoin exchangers, so I don't know...
|
| I'm even starting to believe insurance companies might work with
| crypto folk and lobby government so that insurance companies keep
| paying for ransomware.
| benreesman wrote:
| Eh 20-ish years ago the shit happening on Island and Archipelago
| would blow most people's minds. Undocumented, conditional, non-
| displayed order types. Routine wash trading. Shear-but-don't skin
| multi-venue arbitrage. The ECNs were the Wild West. Smoke-filled
| dark pools.
|
| Island and Arca are NASDAQ and NYSE now.
|
| But Ben, US equities have intrinsic value unlike this BTC
| garbage! Well unless they pay no dividend, have dual-class share
| structure, and IPO without a profitable quarter. What's a share
| of SNAP entitle you to exactly? Ah right, you think someone will
| buy it for more.
|
| Crypto will have it's 2001-style GC cycle, the useful stuff will
| stick around until Goldman owns it and the SEC makes a show of
| regulating it, the tulip garbage will wash out leaving behind a
| bunch of rich guys who are really annoying because they never
| built anything, and we'll go back to arguing about programming
| languages.
| kaashif wrote:
| > Well unless they pay no dividend, have dual-class share
| structure, and IPO without a profitable quarter. What's a share
| of SNAP entitle you to exactly? Ah right, you think someone
| will buy it for more.
|
| I think the idea would be like what happened to Apple: they
| eventually grew so much, became so successful, accumulated huge
| piles of cash bigger than they could possibly spend, that they
| had to start paying a dividend.
|
| And there is a difference between a company with an inherently
| unprofitable business model, and a company that would be
| profitable if they didn't spend so much on growth. Admittedly,
| it is pretty hard to distinguish those sometimes, especially
| with the endless rounds of Series D, E, F, G, H, I, etc funding
| some startups are getting.
|
| That is all speculative, but it's not unproductive beanie babie
| trading. It is pretty close, especially when the only
| rationalisation I can think of involves Apple paying dividends,
| which they didn't do for decades, and Facebook and Google still
| don't.
|
| Even tulip selling is actually a real business, the tulip mania
| wasn't as bad as crypto from the "real value" perspective, I
| think.
| sjtindell wrote:
| Do you consider running a poker table a "real business"?
| Assuming there were no addicts present, what about a casino?
| Is that "real"?
| jayd16 wrote:
| Isn't a casino with no addicts just an arcade? I'm not sure
| what your point is, though. The addicts are pretty
| inextricable.
| sjtindell wrote:
| 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.
| vitaflo wrote:
| Don't forget share buybacks, which have become more popular
| as of late. Dell being the prime example in the tech industry
| by leveraged buyout and making it private.
| selectodude wrote:
| >I think the idea would be like what happened to Apple: they
| eventually grew so much, became so successful, accumulated
| huge piles of cash bigger than they could possibly spend,
| that they had to start paying a dividend.
|
| Not a great example, Apple paid out a quarterly dividend from
| 1987 to 1995. They paid out a dividend in those years because
| they were cashflow positive and that was just the thing you
| did because the idea of "hypergrowth" wasn't a thing.
| H8crilA wrote:
| Not to mention they were GAAP profitable pre IPO, same as
| Google, Facebook and Microsoft. Pull up the old S-1s if you
| don't believe me.
| solveit wrote:
| > they eventually grew so much, became so successful,
| accumulated huge piles of cash bigger than they could
| possibly spend, that they had to start paying a dividend.
|
| What mechanism forces this?
| Panzer04 wrote:
| Investors forcing the replacement of shareholder-unfriendly
| management. US companies tend to be better at returning
| cash to shareholders by buyback or dividend than many other
| locations (probably half the reason Asian shares are often
| cheap, they hold loads of useless money on the balance
| sheet)
| tedunangst wrote:
| Billionaire activist investors.
| H8crilA wrote:
| Why do you think this needs to be "forced"? It's the
| purpose of a company to produce income and leave profits
| for the shareholders. The board of directors is chosen by
| the shareholders for a reason.
| dheera wrote:
| > US equities have intrinsic value
|
| Really? My impression is that many US equities in 2022 are more
| like Reddit up/downvote scores than a reflection of intrinsic
| value.
|
| Which isn't a bad thing in my opinion, by the way.
| cillian64 wrote:
| I think of it like this. If you suddenly owned 100% of
| Bitcoin, then you wouldn't actually have anything valuable -
| nobody would buy it off you. If you suddenly owned 100% of
| Tesla then you'd be able to extract a lot of value.
| Tenoke wrote:
| If I suddenly own 100% of Tesla the stock would crash. I'll
| extract some value but it would be a pittance.
| pierot wrote:
| Real estate, employee talent, brand value, business
| knowledge, .. You could do a whole lot with that.
| jcranmer wrote:
| You seem to ignore the fact that you would then have
| access to 100% of the revenue that Tesla makes by selling
| cars and other things.
|
| (This in turn sort of guarantees a price floor for stocks
| in public companies: the price of a stock shouldn't
| really go below the net asset value of the company.)
| Tenoke wrote:
| I really doubt Tesla would survive very long in that
| state. Stock will crash, public opinion will sour,
| employees will quit etc. very quickly.
| dheera wrote:
| Why would public opinion matter if your company wasn't
| public?
|
| IMO it's a beautiful thing if your company can be aligned
| 100% with customers and not some random idiots that want
| participation in your company issues without even owning
| a Tesla let alone an EV. No earnings reports, no SEC
| wasting your time.
|
| Only reason companies (unfortunately) need to go public
| is the need for upfront capital or early-stage capital
| that wants an exit.
| Panzer04 wrote:
| The second part is very significant. Many people want to
| diversify their risk, and public companies allow that.
| Rather own 10% each of 10 companies than 100% of one
| risk-wise.
| jcranmer wrote:
| If you own literally all of the stock in Tesla... how
| could the stock crash? There's no stock being traded for
| its value to change.
|
| Of note, there are examples in the past of companies
| going private without falling apart--Dell is the most
| notable example I can think of off the top of my head.
| Tenoke wrote:
| >If you own literally all of the stock in Tesla... how
| could the stock crash? There's no stock being traded for
| its value to change.
|
| The price will plummet in the sense that nobody would bid
| to buy it for anywhere as much as they would before the
| event.
| jcranmer wrote:
| If nobody is bidding, there's no asks to cause the price
| to go down. More likely, someone buying all of the stock
| either a) intends to take it private, at which point
| _there is no more stock anymore_ or b) intends to fold it
| into another company, at which point _there is no more
| stock anymore_. (Of course, the valuation would likely go
| down anyways, because people usually pay a premium to buy
| all of the stock.)
| coderintherye wrote:
| Sorry, but that's provably false, just look at all the
| Bitcoin knockoffs that forked off the main chain and the
| amount of money people put into them.
|
| If someone managed to somehow own 100% of Bitcoin, it would
| make it worth much less, but it would not make it without
| value.
| benreesman wrote:
| I'll start the bidding at 1 USD to own all BTC. Anyone want
| to go higher?
| foxhill wrote:
| hmm. it might be a bit more subtle than that - if you
| were to own _all_ 21 million bitcoin (i.e, nothing can be
| mined or otherwise created), it'd pose an existential
| crisis for the currency. miners would have no reason to
| mine, transactions on the small scale couldn't happen,
| etc.
|
| at the very least i expect other coins would pop up with
| a different genesis block. or maybe some form of hard
| fork (again, i might add).
|
| owning them _all_ might be problematic. 99% might not be.
|
| that said, i don't think it can be done for >100 years
| yet..
| dheera wrote:
| Well, no, it's actually pretty simple, you could sell
| half of it to jumpstart the ecosystem, and you still own
| half of it.
| foxhill wrote:
| i'm talking about hoarding the entirety, specifically.
| dheera wrote:
| sure, 2 USD, bring it on
| benreesman wrote:
| I mean if they pay a dividend (and you believe it will
| continue) you can do math that treats it like a bond coupon
| and do a present-day valuation.
|
| If they have attached voting rights you can get together with
| other investors and vote yourself a bigger dividend (though
| same goes for Uniswap v2), or a share buyback.
|
| But yeah, mostly it's a Keynsian Beauty Contest.
| fullshark wrote:
| Firms used to give out dividends, that would make it easier
| to claim it had intrinsic value (future cash flows
| discounted). Now it appears the only intrinsic value is how
| much another firm would pay to acquire the company and do X
| with it.
| ratsmack wrote:
| There are plenty of companies that give dividends. I own
| about a hundred different stocks and 99% of them are
| dividend bearing to the tune of about $200K per year.
| vitaflo wrote:
| Share buybacks also create value and have been on the rise.
| dheera wrote:
| Dividends are worthless.
|
| Stocks go down every time they give out dividends so you
| never really make anything. And you will never beat
| inflation with dividends.
|
| Dividend investing is stuff of 1980's folklore. These days
| it's all about modelling and executing on hype. We're
| entering an era where hype _is_ intrinsic value. I 'm not
| advocating for a world like that, but it's the world we
| live in now whether we like it or not.
| Liron wrote:
| No... Your claims are typical of how people talk during
| peak bubbles. It's very similar to how people talked
| about buying any tech IPO stock in 1999, even when the
| companies had hopeless business models. The way I expect
| they'll get disproved is simply when the market cycle
| turns. Right now there's a powerful illusion that asset
| prices have become unmoored from expected returns, but at
| some point macroeconomic conditions change and the demand
| to liquidate the assets becomes significantly higher than
| the demand to keep buying them at their previous prices.
| Like if S&P P/E multiples begin a steady slide from 30 to
| 15 due to less liquidity in the economy, everyone's stock
| portfolio will feel like a bloodbath. In such an
| environment, demand for all these crazy coins also dries
| up and prices plummet (so much for being a "store of
| value"), since there are no cashflows that reward the
| purchasers and set a floor on the price; it's entirely -
| as you say - a function of the current "hype" i.e. buy-
| side demand level.
| muttantt wrote:
| So, I take it you missed out on Bitcoin?
| majormajor wrote:
| > 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 it's been harder to get a big huge IPO purely on
| hope than it was in the recent history. Throw WeWork in against
| Snap there, even. Gambling but against numbers that will
| eventually be reconciled with performance with customers, not
| just other gamblers. Though personally I'm certainly hoping
| that some of that "eventually" starts to turn back into a
| backlash against dual-class stocks.
|
| The equities market is still ultimately betting that at some
| point, the business results will keep the stock comparatively
| more attractive.
|
| There's vague talk about "the backbone of future banking
| systems" or such for crypto as having similar fundamental
| value, but I haven't been convinced. Particularly, I'm not
| convinced today's big chains would be what the future would be
| built on - why pay the huge transaction costs and help the
| current crypto-rich get richer, instead of making purpose-built
| chains for your future applications?
| wallacoloo wrote:
| > 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 (in the uptime sense)
| than something you can deploy yourself.
|
| > There's vague talk about "the backbone of future banking
| systems" or such for crypto as having similar fundamental
| value
|
| another argument is that many cryptos are valuable because of
| "regulatory arbitrage". bitcoin/monero/zcash are all easy
| ways to (partially) shelter your money from tax and legal
| regulations (hence why they are/were largely associated with
| drugs).
| SavantIdiot wrote:
| All I want to know is: will the annoying guy at my gym who put
| brags about putting all of his retirement into Bitcoin this
| summer provide me with some decent schadenfreude at some point?
| dmw_ng wrote:
| Looming rate hikes combined with ever increasing correlation
| of Bitcoin to equities suggests you may even get your day
| this year.
| notch656a wrote:
| It's sad to see people genuinely wanting to watch others
| lose wealth so they can relish in it.
| yokoprime wrote:
| Trying to spot the biggest fool is quite entertaining
| eric_cc wrote:
| What if the biggest fool is you? That would be quite the
| karma.
| mitchdoogle wrote:
| It's always jealousy. People see someone they view as
| "undeserving" doing better than themselves and react with
| hatred.
| [deleted]
| R0b0t1 wrote:
| You're not wrong but there's plenty of contemptuous
| cryptobros who got wealthy via luck and won't admit it.
| eric_cc wrote:
| How exactly is it luck to recognize the value in crypto
| and buy a bunch? Because that's not exactly luck. That's
| recognizing value and managing risk successfully.
|
| It's true that some people just FOMO into anything going
| up. But those types will end up losing all their "gains"
| in due time anyways.
| eric_cc wrote:
| This. A lot of comments in here spewing hatred toward
| crypto seem to come from a psychological defense
| mechanism. People were wrong and decided not to move to
| crypto and are now doubling down on that position to feel
| better about their poor choices.
| catillac wrote:
| It doesn't seem obvious that people who didn't put money
| into cryptocurrencies were wrong. Even if you happened to
| through sheer luck buy low, sell high during one of the
| pops, that doesn't mean everyone else was wrong any more
| than saying someone else was wrong for not playing
| roulette and selecting the right ending slot.
| eric_cc wrote:
| Your "buy low sell high" take is pretty short-sighted.
| For many, it's a change in currency from fiat to digital.
| You on-ramp in but you don't back out into fiat.
|
| You're speaking about a subset of crypto traders that go
| right back to fiat.
| ForHackernews wrote:
| I just want this environmental disaster to end.
|
| If they'd just outlaw proof-of-work cryptocurrencies, I'd
| shut up and you can continue gambling your proof-of-stake
| digital chuck-e-cheese tokens to your heart's content.
|
| But you're wasting more power than Argentina to do it. So
| yes, I hate this garbage and want it to fail.
| throwhauser wrote:
| A watched pot never boils.
| iso1631 wrote:
| If he put it in in June when it was 31k, he'd have increased
| it 30% now, double if he sold in November. Not too bad
| Sanzig wrote:
| And if he'd bought last March he'd be down 30%. Bitcoin
| didn't have a stellar 2021.
| benreesman wrote:
| If I knew that I'd be trading it :)
|
| But there's a fairly active BTC derivatives market (depending
| on what passport you carry), so you could hedge against him
| getting/staying rich by getting a little creative with long-
| dated DOOM stuff.
|
| Depends on how annoying he is I guess ;)
| alecst wrote:
| 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
| this is a form of value.
| eric_cc wrote:
| > 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?
| largbae wrote:
| One thing fiat currencies have that is underrated: a legal
| system to handle special cases. Recently, an apparently
| Bitcoin-rich man named Mircea Propescu died without sharing
| his private key(s). Now that fortune is gone with no
| recourse for next of kin. Maybe this is OK and everyone is
| happy to lose the safety net. But what about fraud? Do you
| want to have to take up arms to get your money back from
| someone who stole from you?
| joering2 wrote:
| 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
| and other countries' bodies, some of it will benefit
| crypto holders, some inconvenience them some more.
|
| One example could be of a Government Body that oversees
| crypto fraud. If you had some coin stolen and you are
| able to prove they were yours and are unable to
| communicate with the party who took your coins, these
| assets can go into some form of public "coins on red
| notice list", where government puts them there, and
| exchanges can see the addresses and know not to accept or
| exchange these assets. If someone tries to, exchange can
| show them a notice information, instead of completing
| transaction. Another list government can maintain is
| "public call notice" (I'm just making these names up)
| similar to how public hearings are made. In this
| scenario, government can call up on an owner of some
| specific questionable coins to explain transactions
| behind. If no owner comes up in 30 days, these coins
| could be again put on "red notice" list.
|
| The bottom line is, since exchanges are regulated by
| governments, the governments will surely regulate even
| more. Ultimately because everything is transparent on a
| block chain, certain coins can become "dirty" just like
| money becomes tainted, and exchange or even possession of
| these coins can be made unlawful.
| acdha wrote:
| > 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.
|
| It's not Ford's fault that someone didn't drive safely,
| and yet they're required to build cars with safety
| features. Bitcoin's design ensures that these mistakes
| happen regularly, and most users end up paying a "I can't
| believe it's not a bank" exchange to hold their Bitcoin
| for them due to the many irrecoverable risks if you do it
| yourself.
| 01acheru wrote:
| Since we cannot have an ever growing amount of BTC, you
| mean that in time more and more coins will be tainted?
| Assuming that frauds and heists and all that are constant
| but BTC generation is less than linear an ever growing
| percentage of coins will be tainted.
|
| Another thing: if someone steals money from me and I can
| prove it, and law can find him, and trial him, etc. I
| want the possibility to have my money back not some
| "coins on red notice".
| giaour wrote:
| > 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?
| largbae wrote:
| I think what you're describing is a centralized body that
| can use due process to resolve disputes. 4 legs good 2
| legs better?
| CaptainZapp wrote:
| > What is the bull case for $USD? What properties does it
| have that make it superior to currencies like $BTC in your
| opinion?
|
| That I can spend USD in just about any shop or for any
| transaction, legal or not. While crypto "currencies"? I'd
| say: not so much.
| eric_cc wrote:
| This is a short term advantage that is quickly
| evaporating.
|
| There are crypto credit cards now that allow you to
| achieve the same effect.
|
| Assuming this advantage disappears, are there any other
| bull cases for $USD?
| squeaky-clean wrote:
| 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.
| felipeko wrote:
| It is a good thing to be encouraged to saving instead of
| spending.
|
| No one needs incentive to spend. You will spend if you
| have plenty to spend. Having a currency which gains in
| value will take you there.
| 01acheru wrote:
| > You will spend if you have plenty to spend. Having a
| currency which gains in value will take you there.
|
| That's some pretty fanta-dreamy-economics. How can it
| possibly be true for everybody? Money from heaven?
| Daishiman wrote:
| There is no modern economic argument to favor saving over
| spending. What you're saying runs counter to pretty much
| all economic theory from any ideological camp you could
| think of.
| fleddr wrote:
| Economic theory has run this world into the ground in
| just a single human lifetime. A system that maximizes
| consumption is insane.
| 01acheru wrote:
| Maybe that you can buy bread with USD, or a house, or a
| car, or pay rent, or insurance, or gas, a coke on a vending
| machine, or stocks, or... well there are a lot of things
| you can do with USD that you cannot do with BTC right now.
| eric_cc wrote:
| This advantage for $USD is already beginning to vanish.
| Assuming it does, are there any other reasons to be
| bullish $USD?
| 01acheru wrote:
| First of all I'm not seeing this advantage "beginning to
| vanish".
|
| Even assuming it completely disappears we still need to
| solve:
|
| - energy inefficiency of BTC
|
| - extremely low number of transactions per unit of time
|
| - a currency lacking the possibility of reversing
| transfers is not compatible with most legal systems
|
| - full traceability of my wallet transactions open to the
| public
|
| - volatility
|
| And those are the first I can think of while paying
| little attention because I'm watching a movie...
| 10x-dev wrote:
| How is digital currency, in general, anonymous? Bitcoin
| records all of your transactions, publicly, essentially
| forever.
|
| If at any point in time there is a way to tie your identity
| to _any_ of the transactions made in your lifetime, then all
| of your other transactions get deanonymized retroactively.
| Maybe you made a mistake, maybe a bug is introduced into the
| Bitcoin software, maybe the government passes a new law, etc.
|
| Cash doesn't have this issue. The bills I'm paying with when
| buying coffee at Starbucks, don't give you visibility into
| all of the purchases I've made with cash for the past 20
| years.
|
| The only exception would be crypto like Monero, but it's not
| the rule. Bitcoin is the flagship coin which somehow got
| people to think it's anonymous.
|
| All it takes is for the government to require you to use the
| same wallet that's tied to your identity and then every
| citizen's transaction, past or future, is traceable to a
| degree that is just not possible with cash. That's a
| dangerous capability and we, the people, should make sure not
| to slowly end up in such a situation.
| stickfigure wrote:
| The relationship between Bitcoin and Monero is symbiotic.
| Bitcoin brings legitimacy and (for crypto) security. Hedge
| funds, corporations, and other big money can hold bitcoin.
| Yet it's easy enough to convert between BTC and XMR, so
| they are effectively fungible.
| chollida1 wrote:
| > Yet it's easy enough to convert between BTC and XMR, so
| they are effectively fungible.
|
| That's not what we mean in finance when we say fungible.
|
| https://www.investopedia.com/terms/f/fungibility.asp
| dougk16 wrote:
| Look into privacy coins like Monero.
| jrm4 wrote:
| Right. I mean, basically you're as safe as your public-
| key/username. If you can make your wallet in some kind of
| very off grid way, the same way you'd have to use Tor; cash
| laptop, McDonald's wifi, etc.
| fleddr wrote:
| Cash is used for more crime than crypto. London city pretty
| much is the epicenter of money laundering and financial
| crime.
| lvs wrote:
| > there is no revenue for a digital currency.
|
| These debates get rehashed ad nauseum, but of course the same
| could be said of the USD, GBP, etc.. Currencies are exchanged
| to meet debt, contract, or tax obligations denominated in a
| particular currency. Trade is the common mode by which a
| currency has to be exchanged. For instance, if an American
| company buys British goods denominated in GBP, it will either
| exchange USD for GBP to close the transaction or borrow GBP
| that it must similarly pay back in GBP. The net result in
| either case is that it buys GBP and sells USD. If the UK
| government levies a duty/tax on the transaction, that too
| generates a demand for GBP requiring an exchange.
|
| Now it is of course somewhat unclear whether a significant
| economy exists in crypto that generates debts/taxes
| denominated in crypto that would create a steady/cyclical
| demand for crypto. It requires either that some productive
| center of the economy is demanding payment in crypto, or that
| governments are demanding tax payments in crypto, or both. If
| either is simply willing to accept multiple possible
| currencies, then demand flows through the most favorable
| path. Perhaps a modicum of anonymity is part of this
| calculus, but costs, difficulty, and risks also probably play
| a role.
|
| My point is that the economic analysis of your claims is more
| complicated. Buying currency serves a classical finance
| purpose that is unrelated to your analysis of equities. I
| think the climate and regulatory consequences of crypto are
| very serious, but I generally agree with those who say the
| credit/payments industry is predominantly parasitic. But
| those who say that no mechanism should exist to control the
| money supply based on economic conditions are just charlatans
| and simpletons and should be ignored.
| benreesman wrote:
| FTX claims they buyback FTT based on financial results. Their
| business model has more historical precedent than e.g. Uber's
| (and is arguably less legally grey).
|
| What difference am I missing?
| md_ wrote:
| > A counterpoint would be that what some call the intrinsic
| value is the expected future share price based on expected
| future revenues.
|
| Sure, but plenty of tech companies have never paid dividends
| and never will. FB's shareholders would have legal claim to a
| portion of: a) a buyout (but nobody could afford to take FB
| private), b) a liquidation (so, you're buying in in case FB
| goes bankrupt), or c) future dividends (but FB's boy-king
| privileged stockholder doesn't want to pay dividends)...
|
| Which I think was Ben's point.
| upsidesinclude wrote:
| 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 enough to manage their affairs can do so
| 01acheru wrote:
| 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 government agency knocking on my door and
| accusing me of money laundering, asking me where this money
| comes from, asking me to pay taxes on it?
|
| If you are forbidden by law from sending money from A to B
| you cannot send it, either because you cannot send from A,
| you cannot receive in B, a mix of the two or whatever. You
| can send me crypto but since I cannot buy food with crypto
| I need to cash out sooner or later so that's end game.
|
| If you can send money from A to B it's way cheaper and more
| secure to send it using our current banking system. And BTW
| you pay a fee to turn money into crypto, in many cases you
| pay a fee to send crypto and lastly you pay another fee to
| turn that crypto back into money, sending crypto is not
| _free_.
| jayd16 wrote:
| That's just tax evasion and/or smuggling.
| shawabawa3 wrote:
| > but there is no revenue for a digital currency
|
| Isn't there? Ethereum kind of has revenue in that transaction
| fees for smart contract execution are burned (effectively a
| stock buyback)
|
| It has around ~$19B in revenue extrapolated at the current
| rate (although it's issuing more than $20B a year for now,
| planning to reduce issuance some time later this year)
| pakitan wrote:
| That's like MSFT issuing MicrosoftDollars to pay their
| dividents.
| chollida1 wrote:
| Its not uncommon to pay dividends in comapany stock.
| DennisP wrote:
| People spend fiat to buy ETH for transaction fees. Value
| is value. If the value of the transaction were less than
| the fee, they wouldn't transact.
| benreesman wrote:
| The MicrosoftDollars they issue to pay their employees
| seem to be getting them some talent!
| pakitan wrote:
| Well, great then, they just need to apply the same
| strategy for their shareholders!
| landemva wrote:
| Crypto has this as a governance DAO with voting via the
| governance (sort of ownership) tokens. Lots of innovation
| happening.
| [deleted]
| lvl100 wrote:
| This has to be one of the best comments I've read on HN.
| wyre wrote:
| What is the reference to Island and Archipelago? I'm not
| familiar and my DDG skills aren't helping.
| reubenmorais wrote:
| https://www.investopedia.com/terms/a/archipelago.asp (also
| talks about Island)
| arberx wrote:
| This comment is gold
| tyrfing wrote:
| With crypto these days alpha is still very easy since it's a
| small backwater. Microstructure is all complete bullshit (and
| has been as long as these markets existed), and leverage is
| basically unlimited. A huge sell order is more likely to
| indicate buying than selling, for example. At least liquidation
| cascades don't literally hit 0 like they have in the past,
| which is an improvement.
|
| There are also all sorts of unpublished arrangements like
| colocating servers for privileged partners; you will _never_
| trade into an order they don't want you to when you have 5ms
| latency and they have microseconds.
|
| On the one hand, people have never really understood just how
| dirty it is. On the other, most of that is now just the long
| flat line on the chart...
| benreesman wrote:
| Haha, Alameda or Wintermute? :)
| syntheweave wrote:
| When I got into crypto back in 2013 I resolved myself to
| long-term holds with self-custody(before HODL was even a
| meme) precisely because I had seen how bad things got in pink
| sheet trading a few years prior and had the losses to prove
| it - I already had no faith in regulated markets, therefore I
| knew it was only going to be more blatant in crypto.
|
| But if I held over the long term and carefully looked for the
| macro picture, I would sidestep manipulation, because it's
| ultimately the product of people sitting in front of a
| whiteboard trying to make their play happen within the span
| of the next business quarter, whereas my bet is on crypto as
| an asset class.
|
| The plan has worked reasonably well; it's had huge ups and
| equally huge downs, so I have not quite "won" yet, but I have
| definitely not lost.
| choppaface wrote:
| > US equities have intrinsic value unlike this BTC garbage!
|
| One major difference is the US Gov & public (e.g. pension
| funds) have much more leverage for holding US equities liable
| vs holding crypto liable in a Financial-Crisis-type leverage
| implosion. While I agree with the suggested notion of "common
| stocks have no real intrinsic value," when it boils down to
| opportunity cost, the retail shareholder has probably one to
| two orders of magnitude less downside in common stocks versus
| crypto. Unless the U.S. ends up bailing out crypto ... (in
| exchange for catching tax evasion?)
| guiomie wrote:
| Tulip garbage? Tulip Mania lasted like 6 months, Bitcoin has
| been running for over 13 years. Don't get me wrong tho, I do
| agree anything not being Bitcoin is garbage.
| StreamBright wrote:
| I think the reference is about the phenomenon not the actual
| comparison between BTC and tulip.
| benreesman wrote:
| Oh I'm not opining on this or that coin being tulips. A lot
| of it is by volume.
| wpietri wrote:
| I truly appreciate your experience and cynicism here. People
| who haven't worked in financial markets have a hard time
| appreciating how deep the muck can get. Which makes them
| especially valuable suckers for the unregulated markets.
| ckastner wrote:
| > _People who haven 't worked in financial markets have a
| hard time appreciating how deep the muck can get._
|
| That's the main reason why I find the battle cry of
| "decentralization" so comically ironic. No government can
| control crypto, how awesome and empowering!
|
| When the truth is that the vast amount of control that we've
| seen develop in the past century (and especially in the past
| two decades) were just to protect people from said muck.
|
| [Edit] Or, as a practical comparison, think of the act of
| raising money from investors.
|
| Centralized: Please file a detailed report with the relevant
| authority in which you list, among other things, all possible
| risks and challenges that you foresee and how this could harm
| investors.
|
| Decentralized: LOL YOU APES, DIAMOND HANDS TO THE MOON!
| beloch wrote:
| When half of the people responsible for regulating markets
| are, instead, using insider knowledge to make a killing at
| day-trading, it's hard to trust the system.
|
| So, the natural response is to build a new system that can
| be made to dance on strings by people you don't even know
| the identities of.
|
| It doesn't exactly seem like progress, does it?
| anonymoushn wrote:
| It's really great that people who don't have tens of
| millions of dollars to burn can't access L2 market data. It
| does a lot to promote fair and efficient markets.
| eric_cc wrote:
| > the truth is that the vast amount of control that we've
| seen develop in the past century (and especially in the
| past two decades) were just to protect people from said
| muck.
|
| Think of the children!
|
| Do you really believe the vast amount of centralized
| control is to protect the poor stupid people? I think this
| is an incredibly naive and gullible take. The vast amount
| of controls in place are to solidify power amongst the
| powerful.
| wpietri wrote:
| Two things can be true at the same time. Power systems do
| tend to work for the powerful. But that doesn't mean they
| can't also be valuable to everybody. Or even valuable to
| the average person much more than the powerful person.
|
| Look, for example, at food regulation. Anybody who has
| worked in a restaurant can tell you a) how important food
| safety is, and b) how much health department regulations
| contribute to keeping them effective. That's good for
| almost everybody, but it's most valuable to those who buy
| food from low-end restaurants, where the incentive to
| cheat is strongest and where the clientele is low on
| political power.
| freedomben wrote:
| It seems pretty hard to me to look at charts of
| inflation, income inequality, and quantitative easing and
| compare them to stock market values and not see how the
| system is allowing the rich and powerful to use inflation
| to suck money away from everyone not heavily in the
| market (especially the poor as inflation is a highly
| regressive tax) and into their own pockets through
| increases in valuation.
|
| And then look at the barriers that regulation throws
| against the average person to keep them from the most
| lucrative investments (like required accreditation) and
| protecting the people stops feeling like a primary (or
| even tertiary) goal.
|
| I don't doubt that initial push for regulation was at
| least in part to protect people from the sharks, but it
| sure doesn't seem like that's the driving motivation
| anymore.
| mtremsal wrote:
| > inflation is a highly regressive tax
|
| Is it? I think a takeaway from Piketty's book was that
| inflation was one of the rare factors that slowed down or
| reversed wealth inequality. Intuitively it would make
| sense that people drowning in debt benefit from
| (moderate) inflation, especially if low wages get bumped
| in the process.
| freedomben wrote:
| Yes that's a great point, as long as debt interest rates
| are fixed, inflation is good for people in debt. It's
| especially great for most home owners, but home ownership
| is largely a middle-class luxury.
|
| But that said a lot of the really bad debt that poor
| people have is variable rate anyway (and usually
| outrageous) like credit cards, payday loans, etc.
|
| Re wages: they tend to be sticky. Wages will get bumped
| up but it's almost always after the fact as a result of
| government reported inflation rates. So people have been
| feeling the inflation for a while by the time wages
| "catch up." And the government inflation rates are
| notoriously underestimates so in reality wages tend to
| stagnate and "drop" (they are the same number but buying
| power has dropped) until market pressures force them to
| rise.
|
| It would definitely be interesting to hear about past
| examples where income inequality improved under
| inflation. In Weimar and Venezuela that doesn't seem to
| have happened. The poor there end up starving and using
| leaves for toilet paper. The really wealthy have access
| to international investing so they're protecting against
| inflation.
| nightski wrote:
| It might make your debt cheaper but if you can't afford
| food & housing at your current wage then it doesn't
| really matter.
| Ekaros wrote:
| And if you think really. The poor who live from hand-to-
| mouth, do they really care about inflation as long as
| wages keep going up with it. It is not like they even aim
| to save anything. So prices going up if also their wages
| do have really net zero effect for them.
| BLKNSLVR wrote:
| When do wages ever keep up with inflation? Wages are
| equivalent to a lagging indicator.
| sorry_outta_gas wrote:
| > It seems pretty hard to me to look at charts of
| inflation, income inequality, and quantitative easing and
| compare them to stock market values
|
| You should have seen what the altanartive charts looked
| like.
| wpietri wrote:
| > look at the barriers that regulation throws against the
| average person to keep them from the most lucrative
| investments (like required accreditation)
|
| If anything, the accredited investor standard is proof
| that regulation doesn't favor the powerful. Taken as a
| whole, those aren't the most lucrative investments.
| They're the riskiest. The whole theory behind it is that
| if somebody is rich enough we won't try to protect them
| as much from scams; they're presumed to be sufficiently
| sophisticated and well resourced that it's their own
| problem.
|
| I agree inflation is a problem, but you can't use that to
| prove much about the regulatory system, because a)
| inflation was low and stable for a long time, only
| increasing due to pandemic-driven disruptions, b) the
| wealthy are the ones yelling the loudest about pinching
| off inflation pronto, and c) the classic way to stop an
| inflationary surge is performative "austerity", which is
| much more disruptive to the poor than to the rich.
| freedomben wrote:
| > _Taken as a whole, those aren 't the most lucrative
| investments. They're the riskiest._
|
| I'm not an accredited investor but I did mountains of
| research on it years ago, and most of the time risk does
| correlate with reward. Also most of the most lucrative
| investments where people can get really rich are startup
| investments, which are off limits to most people who
| aren't already rich. There is definitely a ton of risk in
| startups, but also so much reward.
|
| I think a better system for protecting people would be
| education/certification based. If the person truly
| understands the risk, they shouldn't be stopped by the
| government from investing IMHO.
|
| I think the reason many of the richest people want
| inflation to stop is because it forces them into riskier
| investments in order to stay ahead of inflation. They
| care a great deal about maintaining wealth and high
| inflation erases a big class of "safer" investments from
| their list of options.
| wpietri wrote:
| Risk correlates with reward, sure. On a very general
| basis. But there are a ton of specific exceptions to
| that.
|
| There's plenty of reason to think that opportunities to
| "get really rich" offered to unsophisticated people
| without a lot of money will be a big exception.
|
| Just think of it from a startup's point of view. Would
| you want to take a lot of small checks from people who
| don't know what they're doing and for whom it's a major
| portion of their assets? I wouldn't, because it's always
| a bad idea for people to gamble what they can't afford to
| lose. I'd feel bad taking their money for something I
| know has a small chance of success. And just as a
| practical matter it's low return on effort.
|
| The people who are most eager to take money like that?
| Idiots, goofs, and fraudsters who cannot get money from
| serious investors who know better.
|
| In any case, the accredited-investor system already has
| certification-based exceptions:
| https://www.investor.gov/introduction-investing/general-
| reso...
| tablespoon wrote:
| > ...the system is allowing the rich and powerful to use
| inflation to suck money away from everyone not heavily in
| the market (especially the poor as inflation is a highly
| regressive tax) and into their own pockets through
| increases in valuation.
|
| It's not that simple. You're talking like poor people are
| debt-free and keep jealously-guarded meager savings in
| cash. However, chances are they have far more debt than
| assets and no savings whatsoever, so inflation doesn't
| hurt them (so long as their wages keep up) and may even
| _help_ them.
|
| I'm not sure if this actually applies to you, but your
| comment reads a bit like cherry-picking in the name of
| some ideological fixation (e.g. crypto/gold bug
| opposition to the idea of inflation. leading to attempts
| to paint inflation as the worst thing ever).
| aeturnum wrote:
| I think the gullible take is to imagine that the wealthy
| and powerful maximize their gains in an unstable system.
| They don't care about stupid people, but they care about
| the instability that comes with people getting taken in
| by scams or bad deals.
|
| People who are currently at the top of a power structure
| have an interest in stability. One way of doing that is
| allowing people further down the power structure to
| profit in a limited way from the system. This both won't
| change anyone's relative position, and is a genuine
| improvement for all parties.
|
| My other critique of "rules are about protecting the
| rich" is that the counter-factual of no rules does hurt
| the rich, but it hurts everyone else as well. It just
| doesn't seem true that striking down rules against
| manipulating markets is helpful to the non-rich, so it
| feels like cutting off your nose to spite your face.
| benreesman wrote:
| You have a lot more faith in the IPO underwriting process
| than I do. They don't call it a "pop" for nothing.
| ckastner wrote:
| Not at all. I'm just saying that the other process is
| much, much worse than that.
| ravar wrote:
| thats like, your opinion bro. In all seriousness I am ok
| with crypto punishing gamblers, eventually people will
| learn to stay away from it, or be forced to stay away
| from it because they have nothing left to gamble. I don't
| see how this is more morally repugnant than casinos which
| are legally accessible in most of the US.
| skrebbel wrote:
| Yeah and after all, the world's poker chip factories
| consume the same amount of energy as Argentina so it's an
| apt comparison.
| Tenoke wrote:
| This seems sarcastic but the amount of resources that has
| went into building all casinos, casino sites, and
| everything related to the industry dwarfs the amount of
| resources that have went into bitcoin by a lot.
|
| If it seems otherwise it might be because you see
| articles on Bitcoin's energy consumption all the time,
| and not as much about casinos.
| wpietri wrote:
| I look forward to seeing your math on that. But for a
| fair comparison you can't just look at "casinos to date"
| and "Bitcoin to date". After all, as Bitcoin proponents
| never tire of telling us, this is supposedly the early
| days.
| Tenoke wrote:
| Some of the most expensive casinos (just the building) to
| build are:
|
| Venetian Macau - $2.4 billion, Wynn Las Vegas - $2.7
| billion, Resorts World Sentosa - $4.53 billion, Marina
| Bay Sands - $5.36 billion, CityCenter Las Vegas - $9
| billion.
|
| That already likely costs more than the combined
| electricity used by Bitcoin so far, if it doesn't you can
| easily reach trillions by combining the costs of just
| Casino buildings. Money roughly translates into
| resources, so I can't see a way in which the gambling
| industry hasn't consumed much more than Bitcoin as of
| right now. Maybe in a century if Bitcoin keeps going
| really strong it can start to catch up.
|
| 0. https://casino.partycasino.com/en/blog/the-most-
| expensive-ca...
| wpietri wrote:
| Comparing the cost to build a casino with the raw
| electricity cost of Bitcoin is not so much an apple-to-
| oranges comparison as apples-to-tire-rims.
|
| But if your point is that Bitcoin is basically a big
| casino, I agree. And I think we should regulate it like
| one.
| joshuamorton wrote:
| > you can easily reach trillions by combining the costs
| of just Casino buildings.
|
| I have my doubts about this.
|
| BTC energy cost was in the realm of 10 billion/year this
| year, and increasing quickly year over year. That's from
| around 150 TW hours, or around 5x Nevada's consumption.
|
| The hash rate this year averaged around 140 million
| THash/sec. It appears that efficient equipment costs
| about 10k per 100THash/sec. So you're looking at another
| 14 billion in currently running hardware, conservatively,
| not to mention the price of the buildings those Asics
| need to be put in.
|
| There's another big flaw here, which is that cost isn't
| just reflective of consumption but of demand. The same
| hotel building on the Vegas strip is a lot more expensive
| than if you built it in rural Idaho, and BTC has the
| advantage of being able to use the cheapest land and
| electricity.
| jayd16 wrote:
| >punishing gamblers, eventually people will learn to stay
| away from it
|
| Just like casinos?
| wpietri wrote:
| It's more morally repugnant because it's much less
| transparent. Casinos are exploitative misery factories
| and I'd be happy to see them vanish forever. But they're
| at least carefully regulated to exploit people at an
| agreed-upon level and with all the rules known
| beforehand.
| ravar wrote:
| Personally I am ok with both crypto and Casinos existing,
| just because some people are stupid doesn't mean i should
| have my freedoms restricted. Stupid Should Hurt.
|
| As an aside crypto has the potential to change the world
| for the better if it ever becomes used as a real
| currency. I think the people that stand to lose in that
| situation love spreading FUD about crypto. However it is
| probably not bitcoin that is going to become that imho,
| but rather some POS coin.
| Ekaros wrote:
| If I play slot machines I know I lose money. But at least
| I know the return isn't absolutely horrible. Usually
| around 90%... Same applies to many casino games if played
| sensibly.
|
| The lotteries and scratch tickets are the truly horrible
| crap. Return is absolutely abysmal with them...
| kkjjkgjjgg wrote:
| It's a fundamental question wether people should be
| allowed to take on risks or not.
|
| If you are leaning towards the "no they should not" side,
| then consider that doing a startup is also very risky. So
| maybe that should be illegal, too? Or at least, there
| should be government startup specialists that evaluate
| ideas and decide wether people should be allowed to
| create such startups?
|
| Or should there be an elite of people who would be
| allowed to create startups, and the poor people (can't
| afford the risk) should be restricted to union jobs?
| arcticbull wrote:
| Companies are free to direct list without underwriters
| and even issue new shares in the process.
|
| I'm not sure what a "pop" (the idea that prices often go
| up on listing) has to do with anything. It generally
| means that the company underpriced its equity but by no
| means does this always happen.
|
| Are you referring to a greenshoe? There's some
| misinformation there too, but it serves a purpose, too.
| [1]
|
| [1] https://www.investopedia.com/articles/optioninvestor/
| 08/gree...
| fragmede wrote:
| perfect is the enemy of the good. it's not an infallible
| process, but some checking is better than zero
| cobertos wrote:
| Still remember going to a crypto meetup and met an older guy
| who worked at Arthur Andersen (auditor of Enron). Told me
| "you know what those Oak Doors stand for right? Your
| financial secrets never leave the firm."
|
| Was blown away
| bogomipz wrote:
| Might you or someone else explain what these things and how
| they are used/exploited?
|
| > Undocumented, conditional, non-displayed order types. Routine
| wash trading. Shear-but-don't skin multi-venue arbitrage.
| nathanvanfleet wrote:
| Haha, we might all die on this tired exploited rock from heat
| death before that
| arcticbull wrote:
| > But Ben, US equities have intrinsic value unlike this BTC
| garbage! Well unless they pay no dividend, have dual-class
| share structure, and IPO without a profitable quarter. What's a
| share of SNAP entitle you to exactly? Ah right, you think
| someone will buy it for more.
|
| Folks always levied these criticisms about Apple. So long as
| the company is growing and can do better re-investing the
| capital in itself, it should do so. Companies intentionally
| avoid creating profits to avoid paying taxes, electing instead
| to re-invest that capital tax-free. The idea of going public
| without a "profitable quarter" is meaningless if they could
| just be profitable at will.
|
| Apple has paid over $1B in dividends to Warren Buffet alone
| since he took his stake, and returned just around $100B to
| investors last year between $85B in buybacks and $15B in
| dividends.
|
| Buying shares you are paying for a combination of the present
| intrinsic value and your estimation of its future assets and
| cash flows. That doesn't mean your appraisal of these future
| outcomes are _correct_ , and that's the risk.
|
| But equities are fractional ownership stake in businesses whose
| value increases through non-investor participants. You know,
| customers? That's the difference between a positive-sum game
| and a zero-sum game like futures and options, or a negative-sum
| game like crypto assets. With especially proof of work crypto
| assets, value is constantly being _removed_ by external
| participants, rather than added.
|
| Yes traditional assets are mired in garbage behavior, but that
| doesn't mean that crypto is better - far from it.
| Decentralization makes it borderline impossible to control the
| behavior of bad actors while providing essentially zero
| material value to anyone beyond a few edge cases. And as usual,
| folks mention there will be some crypto folks who create value
| left behind after some wash-out. 14 years later, zero value
| created. It is true that not all equities are good investments
| (of course), in the fullness of time, zero crypto token
| investments as we see today will ever be good investments.
| Animats wrote:
| There's a hype cycle right now with the claim that Walmart is
| going to issue NFTs, or get into cryptocurrencies, or
| something.[1] Walmart is not saying that. They filed for a
| trademark for "WALMART" for the trademark class that includes
| cryptocurrencies. Which means only that WalMart, Inc. spent $400
| to protect their brand name from someone creating "WalMartCoin".
| WalMart, asked for a statement, said they had no immediate plans
| in that area.
|
| [1] https://www.theverge.com/2022/1/16/22887011/walmart-
| metavers...
| Ekaros wrote:
| That seems like very cheap insurance... Even the legal filings
| to fight someone launching WalMartCoin are more...
| paulgb wrote:
| Reminds me of the whole market-moving news cycle about Amazon
| accepting cryptocurrency "by the end of the year" last year.
| Tons of coverage, like this[1]. It never passed the smell test,
| all traced back to one anonymous City A.M. source, and of
| course it didn't happen.
|
| [1] https://gizmodo.com/amazon-to-accept-bitcoin-by-end-
| of-2021-...
| hoffs wrote:
| The article that this post is about talks literally about
| Amazon event...
| paulgb wrote:
| Ah, you're right. I'd saved it to read later, should have
| kept my mouth shut until I did.
| lvl100 wrote:
| What this study misses is how much BTC is fueled by altcoins.
| It's an ecosystem that's rarely discussed.
| kordlessagain wrote:
| I remember when something similar was going on with AMD stock,
| which was heavily shorted at times.
| bitxbitxbitcoin wrote:
| May I suggest a similar look at September's fake press release
| about WalMart accepting Litecoin.[0] Unlike with the Amazon hype
| which had arguably an unknown non zero price signal at the time,
| price manipulation here was the alpha and omega for the initial
| so obviously fake press release.
|
| [0] https://www.nytimes.com/2021/09/13/business/litecoin-
| walmart...
| mwattsun wrote:
| I'm suspicious of Bitcoin as a store of value. Some seem to think
| that because there is a fixed amount of Bitcoin it will
| automatically rise in price as demand confronts scarcity, but
| that assumes there will continued demand. Elon Musk says Dogecoin
| is better because it has some inflation built in, encouraging
| people to spend instead of hoard, but adds "I'm not saying that
| it's the ideal system for a currency"
|
| "Elon Musk - SpaceX, Mars, Tesla Autopilot, Self-Driving,
| Robotics, and AI", Lex Fridman Podcast #252".
|
| Clip from a discussion about money starting minute 48:41
|
| https://youtu.be/DxREm3s1scA?t=2923
|
| Lex: You mentioned that Doge is the people's coin.
|
| Elon: Yeah.
|
| Lex: And you said that you were literally going, SpaceX may
| consider literally putting a Dogecoin on the moon. Is this
| something you're still considering, Mars perhaps, do you think
| there's some chance, we've talked about political systems on
| Mars, that a Dogecoin is the official currency of Mars, it's the
| coin of the future?
|
| Elon: Well, I think Mars itself will need to have a different
| currency because you can't synchronize due to speed of light, or
| not easily.
|
| Lex: So it must be complete standalone from earth?
|
| Elon: Mars is, at closest approach, it's four light minutes away
| roughly, and then add for this approach, it's roughly 20 light
| minutes away, maybe a little more. So you can't really have
| something synchronizing if you've got a 20 minute speed of light
| issue, if it's got a one minute blockchain. It's not gonna
| synchronize properly. I don't know if Mars would have a
| cryptocurrency as a thing, but probably, seems likely. But it
| would be so kind of localized thing on Mars.
|
| Lex: And you let the people decide.
|
| Elon: Yeah, absolutely. The future of Mars should be up to the
| Martians. I mean, I think the cryptocurrency thing is an
| interesting approach to reducing the error in the database that
| is called money. I think I have a pretty deep understanding of
| what money actually is on a practical day-to-day basis, because
| of PayPal. We really got in deep there. And right now the money
| system, actually for practical purposes is really a bunch of
| heterogeneous mainframes running a old COBOL.
|
| Lex: Okay, you mean literally
|
| Elon: Literally. That is literally what's happening in batch
| mode. Okay.
|
| Lex: In batch mode.
|
| Elon: Yeah. Pity the poor bastards who have to maintain that
| code. Okay. That's pain.
|
| Lex: Not even Fortran?
|
| Elon: COBOL, yep. That's COBOL. And they still, the banks are
| still buying mainframes, in 2021, and running engine COBOL code.
| The federal reserve is like probably even older than what the
| banks have, and they have an old COBOL mainframe. And so the
| government effectively has editing privileges on the money
| database. And they use those editing privileges to make more
| money whenever they want. And this increases the error in the
| database that is money. So I think money should really be viewed
| through the lens of information theory. You're kind of like an
| internet connection. Like what's the bandwidth, total bit rate,
| what is the latency jitter, packet drop, errors in the network
| communication. Just think of money like that basically. I think
| that's probably what I really think of it. And then say what
| system, from an information theory standpoint, allows an economy
| to function the best. Crypto is an attempt to reduce the error in
| money that is contributed by governments diluting the money
| supply as basically a pernicious form of taxation. So both policy
| in terms of with inflation, and actual like technological, COBOL,
| cryptocurrency takes us into the 21st century in terms of the
| actual systems that allow you to do the transaction, to store
| wealth, all those kinds of things.
|
| Like I said, just think - In theory - of money as information,
| people often will think of money as having power in and of
| itself. It does not. Money is information, and it does not have
| power in and of itself. Applying the physics tools of thinking
| about things in the limit is helpful. If you are stranded on a
| tropical island and you have a trillion dollars, it's useless.
| Because there's no resource allocation. Money is a database of
| resource allocation, but there's no resources to allocate except
| yourself. So money's useless. If you're stranded on a desert
| island with no food, all the Bitcoin in the world will not stop
| you from starving.
|
| Lex: Yeah.
|
| Elon: Just think of money as a database for resource allocation
| across time and space. And then what system, in what form should
| that database, or data system, what would be most effective?
| There is a fundamental issue with, say Bitcoin, in its current
| form in that it's, the transaction volume is very limited. And
| the latency, the latency, for a properly confirmed transaction is
| too long, much longer than you'd like. It's actually not great
| from transaction volume standpoint or latency standpoint. So it
| is perhaps useful as, to solve an aspect of the money database
| problem, which is the sort of store of wealth or an accounting of
| relative obligations, I suppose. But it is not useful as a
| currency, as a day-to-day currency.
|
| Lex: But people have proposed different technological solutions.
|
| Elon: Like Lightning and the Layer 2 technologies on top of that.
| I mean, it's all, it seems to be all kind of a trade-off, but the
| point is, it's kind of brilliant to say, to just think about
| information, think about what kind of database, what kind of
| infrastructure enables the exchange of - Yeah, let's say like
| you're operating an economy, and you need to have some thing that
| allows for the efficient, to have efficient value ratios between
| products and services. So you've got this massive number of
| products and services, and need to, you can't just barter.
| Because that would be extremely unwieldy. So you need something
| that gives you a ratio of exchange between goods and services.
| And then, something that allows you to shift obligations across
| time, like debt, debt and equity shift obligations across time.
| Then what does the best job of that? Part of the reason why I
| think there's some merit to Dogecoin, even though, it was
| obviously created as a joke, is that it actually does have a much
| higher transaction volume capability than Bitcoin. The costs of
| doing a transaction, the Dogecoin fee is very low. Like right
| now, if you wanna do a Bitcoin transaction, the price of doing
| that transaction is very high, so you could not use it
| effectively for most things. And nor could it even scale to a
| high volume. And when Bitcoin was started, I guess around 2008 or
| something like that, the internet connections were much worse
| than they are today, like order of magnitude. I mean, they were
| way, way worse in 2008. So like having a small block size or
| whatever it is, and a long synchronization time made sense in
| 2008, but, 2021, or fast forward 10 years, it's like, comically
| low. And I think there's some value to having a linear increase
| in the amount of currency that is generated. So, because some
| amount of the currency, if a currency is too deflationary or
| like, or should say if, if a currency is expected to increase in
| value over time, there's reluctance to spend it. Because you're
| like, "Oh, if I, I'll just hold it and not spend it because its
| scarcity is increasing with time, so if I spend it now, then I
| will regret spending it. So I will just, you know, hoard all it."
| But if there's some dilution of the currency occurring over time,
| that's more of an incentive to use that as a currency. So
| Dogecoin just somewhat randomly has just a fixed a number of sort
| of coins or hash strings that are generated every year. So
| there's some inflation, but it's not a percentage at base. It's a
| fixed number, so the percentage of inflation will necessarily
| decline over time. I'm not saying that it's like the ideal system
| for a currency, but I think it actually is just fundamentally
| better than anything else I've seen, just by accident.
| Hokusai wrote:
| How is Elon Musk a relevant opinion on this matter? Even worse,
| he is well known for astroturfing his own assets.
| mcbishop wrote:
| Elon Musk in the exchange above:
|
| > I think I have a pretty deep understanding of what money
| actually is on a practical day-to-day basis, because of
| PayPal.
|
| His comments in the exchange seem insightful to me. I assume
| you didn't bother reading them.
| danaris wrote:
| ...because Musk bought PayPal, he can speak authoritatively
| on Bitcoin?
| gunshai wrote:
| This is a bit of misunderstanding of history. He started
| X.com which would later become PayPal.
| Cederfjard wrote:
| To be even more precise, X.com merged with Thiel's
| Confinity, which already had a product called PayPal, and
| later the whole company was renamed after the latter.
| PayPal existed as a thing before Musk's involvement.
| mml wrote:
| oh, and musk was fired for incompetence, and all his code
| thrown away after the x.com acquisition. he also isn't
| the founder of Tesla. basically everything "everyone
| knows" about Elon "monorail" Musk, is a lie.
| jcranmer wrote:
| I read them. "Insightful" is not the word I would use.
|
| For example, one of the points is that the current
| financial system is problematic because it runs on COBOL.
| There's no actual criticism as to _why_ running on COBOL is
| bad, other than the indirect insinuation that COBOL is
| _old_ , not modern, and therefore it sucks. Basically, it's
| futurism for the sake of futurism--new is inherently better
| than old, and anything that is old is attacked as being bad
| without analyzing the relative benefits of new and old (see
| also Musk's comments about Hyperloop and Loop, which are
| severely lacking in the 'mass' department compared to the
| 'mass transit' options they are notionally competing
| against).
|
| It _is_ possible to be insightful about issues with the
| current financial system. You could point to issues like
| the reliance on unsecured FTP of text files to actually do
| settlement in SWIFT. Or you might point to issues like the
| fact that ATH doesn 't have protections against
| unscrupulous users stealing all your money. That kind of
| information _would_ be insightful, but instead, we get mere
| castigation at the age of COBOL, which is completely
| orthogonal to any _actual_ issues with the financial
| systems.
|
| Outside of this dismissal because of COBOL, the only other
| main point that Musk makes is, well, the standard
| libertarian viewpoint on economy that inflation is a hidden
| government tax. But even here, it's not fully developed--
| perhaps because the "benefit" of dogecoin over bitcoin is
| that the former has more inflation than the latter, and if
| you think about it too hard, you might be poking holes in
| his argument.
|
| In any case, "insightful" is not an adequate adjective to
| describe Musk's comments here.
| mwattsun wrote:
| > problematic because it runs on COBOL
|
| I assumed this was his way of saying the system is
| antiquated and encompasses your other criticisms, because
| the show is already long enough for him to spend more
| time on it
| mwattsun wrote:
| He knows more than I do, is surrounded by people smarter than
| I am and has a track record of success and overcoming
| failures. If I thought I shouldn't listen to Elon Musk
| because I thought I knew better, then I think my chances of
| understanding anything about this would be greatly
| diminished.
| ceejayoz wrote:
| > He knows more than I do, is surrounded by people smarter
| than I am and has a track record of success and overcoming
| failures.
|
| He's also got a track history of being _massively_ wrong at
| times on things that aren 't inside his wheelhouse, like
| confidently predicting the end of COVID by April 2020.
| [deleted]
| breck wrote:
| > like confidently predicting the end of COVID by April
| 2020.
|
| I'm guessing you are referring to this Tweet, which
| indeed was very wrong "Based on current trends, probably
| close to zero new cases in US too by end of April":
| https://twitter.com/elonmusk/status/1240754657263144960
|
| But other than that, I would say he's been ~90% right
| about COVID. Much more accurate than our main media
| organizations.
|
| This hit piece on Forbes lists 5 times he was wrong, but
| in fact he was right in 4 out of 5 of those,
| https://www.forbes.com/sites/joewalsh/2021/03/13/elon-
| musks-...
| mwattsun wrote:
| I'm not here to defend Elon Musk, but since he is
| tentatively experimenting with accepting crypto as
| payment for some of his products, I assume crypto is in
| his wheelhouse
| ceejayoz wrote:
| That's a bit like saying having COVID cases in his
| factories makes him an expert in epidemiology.
| everfree wrote:
| That would be a wrong assumption, I believe.
|
| You don't need to know much about crypto to be able to
| accept it.
| mwattsun wrote:
| Hopefully, one of his reports knows something about it
| wonderwonder wrote:
| This is a terrible way to go through life. Just because
| someone is successful at X does not mean they are in any
| way knowledgeable in Y. Want to know about something, just
| read about it yourself or seek the opinion of someone that
| actually works in the field, don't blindly take the word of
| someone that is not even from the field in question.
|
| Doge is a joke crypto currency, and I don't mean that as an
| insult I mean it was literally started as a joke by the
| developers to make fun of the crazy crypto speculation.
| Elon latched onto it as part of a joke and I think it just
| spiraled out of his control and he does not want to admit
| to being out of his league. He even alluded to this in his
| SNL skit.
|
| Would you go to a world renown brain surgeon for advice on
| what is wrong with your car engine? Of course not but the
| brain surgeon is likely a very smart person surrounded by
| other very smart people. Car engines are just not their
| fields of expertise, much like cryptocurrencies are not
| Elon's. Elon is a meme lord, and goes to where the social
| media attention is. I am a huge fan of the guy but pretty
| much ignore everything he says outside of renewables and
| space because that's his wheel house. Don't get trapped in
| cults of personality.
|
| Want to understand crypto, follow the people that are
| building in it. I recommend:
|
| https://twitter.com/VitalikButerin
| https://twitter.com/aantonop
|
| Someone that understands crypto second to none but acts
| like he does not while delivering incredible content:
| https://twitter.com/cobie
|
| want someone smart that lives in the space that is anti -
| crypto: https://twitter.com/nntaleb
| gjvc wrote:
| _Someone that understands crypto second to none but acts
| like he does not while delivering incredible
| content:https://twitter.com/cobie_
|
| This guy is a bull market genius who is also a master
| shitposter. Much, if not all of his content is moronic,
| but this sort of content is posted ironically but then
| becomes part of the in-jokes people mistake for talent.
| Toxic.
| wonderwonder wrote:
| Guy also co-founded lido finance which has over 10
| billion staked. I find him to be one of the more pleasant
| crypto personalities who occasionally dramatically
| changes peoples lives for the better. Your mileage may
| vary.
|
| https://lido.fi/
| mwattsun wrote:
| You are misunderstanding me
|
| > don't blindly take the word
|
| What makes you think I am? Elon's opinion is a data point
|
| > he does not want to admit to being out of his league
|
| You don't know this
|
| > Don't get trapped in cults of personality
|
| I've made many criticisms of Musk, especially his
| pronouncements about self-driving cars
|
| I think you're mistaking me for a fanboi. I'm just
| gathering information. I do follow Vitalik Buterin, but
| there are plenty of criticisms of his tech too.
|
| "The Ethereum virtual machine has the equivalent
| computational power of an Atari 2600 from the 1970s
| except it runs on casino chips that cost $500"
|
| Steven Diehl - Web3 is Bullshit
|
| Thanks for the links. I'll add them to my list. I just
| really got serious about this subject so I started
| compiling a list of skeptics and enthusiasts who write
| about it often so I can follow along. Here they are in
| case you can use them.
|
| Skeptics
|
| SwiftOnSecurity https://twitter.com/SwiftOnSecurity
|
| Nicholas Weaver https://twitter.com/ncweaver
|
| Molly White https://twitter.com/molly0xFFF
|
| Dare Obasanjo https://twitter.com/Carnage4Life
|
| Stephen Diehl https://twitter.com/smdiehl
|
| Enthusiasts
|
| Ser Jeff Garzik https://twitter.com/jgarzik
|
| Marc Andreessen https://twitter.com/pmarca
|
| Bram Cohen https://twitter.com/bramcohen
|
| jack(@jack) https://twitter.com/jack
|
| suzuha https://twitter.com/dystopiabreaker
|
| cdixon.eth https://twitter.com/cdixon
| root_axis wrote:
| He has some amazing successes, but also has a terrible
| track record in terms of what he says vs what he actually
| delivers, he is more often way off the mark than he is
| accurate.
|
| https://www.elonmusk.today/
| mwattsun wrote:
| This is funny. He's a promoter and a salesman. I disagree
| with the tag line "Like Donald Trump, But For Nerds".
| Musk actually hires and surrounds himself with brilliant
| people, Trump not so much
| root_axis wrote:
| Agreed on the Trump characterization.
| ahtihn wrote:
| > He knows more than I do
|
| What do you base this on? I mean, how are you assessing his
| level of knowledge in this domain?
| mwattsun wrote:
| > "I think I have a pretty deep understanding of what
| money actually is on a practical day-to-day basis,
| because of PayPal."
|
| PayPal is a thing I actually use and it works well. He
| knows more than I do, which is not saying much, but I'm
| trying to learn. If Hacker News says he's doesn't know
| anything about crypto, that's a piece of information I
| can stick in my notes to consider.
| keymone wrote:
| > So like having a small block size or whatever it is, and a
| long synchronization time made sense in 2008, but, 2021, or
| fast forward 10 years, it's like, comically low.
|
| just shows how hopelessly moronic he is on this issue and how
| surface-level his understanding of what is valuable about
| bitcoin is.
| mwattsun wrote:
| In shudder to think of the stupid things I thought in 2008
| keymone wrote:
| guess what, satoshi made some prescient decisions designing
| bitcoin, with such level of complexity, that you in 2022
| still don't understand them. to be fair, the (briefly)
| richest person in the world doesn't either.
| mwattsun wrote:
| I just started studying the topic. I also don't know how
| to do brain surgery, but I'm confident with enough
| schooling and study I could do it. With Bitcoin I don't
| need satoshi level understanding, I just need to know
| enough to either make a little money or avoid it
| altogether, kind of like I don't need to be a master chef
| to enjoy a great meal. I just need to know enough about
| cuisine and my likes to pick out a nice restaurant.
|
| I don't know how much Elon understands it. That's what I
| am trying to determine. The feedback on HN is he doesn't.
| I'm checking that against other sources.
| keymone wrote:
| > I just need to know enough to either make a little
| money or avoid it altogether
|
| fundamental value doesn't matter for short term
| speculative trading. if you're coming at it from this
| angle - chance that you'll learn anything about
| fundamental value of bitcoin is quite low.
| mwattsun wrote:
| > fundamental value doesn't matter for short term
| speculative trading
|
| Agreed, but gambling is not my gig. I don't live that far
| from Las Vegas if I so prefer. I think smart contracts
| are interesting because I'm a programmer. Someone once
| wrote that Bitcoin also has executable code so that's on
| my list to investigate. It's something to do in
| retirement. I wish Elon Musk well, but he's only human,
| so I don't expect him to have investigated in depth every
| thing he talks about. He forms half-assed opinions just
| like the rest of us.
| keymone wrote:
| > I just need to know enough to either make a little
| money or avoid it altogether
|
| > gambling is not my gig
|
| i find it hard to reconcile the two?
|
| > Someone once wrote that Bitcoin also has executable
| code so that's on my list to investigate.
|
| yes, bitcoin doesn't even have a way to do payment
| without going through bitcoin script.
|
| it's all in active development. there are more convenient
| languages that compile into bitcoin script, like
| miniscript and sapio. and finally there's rootstock
| project that allows running ethereum contracts directly
| on double-pegged bitcoin sidechain.
|
| > I wish Elon Musk well, but he's only human
|
| s/only/the richest (briefly)/
|
| a wise man one said - with great power comes great
| responsibility. elon seems to enjoy shittalking and flip-
| flopping on topic of various cryptocurrencies that it's
| crossed (for me) the threshold of market manipulation for
| personal gain.
| paulpauper wrote:
| The price is nothing but down, down, down. it is not manipulation
| but just ppl dumping at every opportunity, like bank stocks in
| 2007-2008 or dotcom stocks in 2000-2002. Would not want to own
| this.
| epinephrinios wrote:
| It's "down, down, down" only if you entered at a very high
| price: https://athcoinindex.com/coin/bitcoin
|
| As the great Andreas Antonopoulos said, everyone gets the
| Bitcoin price they deserve.
| dadoge wrote:
| Slight correction:
|
| It's down down down if you entered at a high price AND sold
| within 3yrs
|
| No one who held BTC for 3-4 yrs straight has lost money on
| their investment throughout the entire history of BTC
|
| There will be a point in time where this won't be true
| anymore, but I think we are far from it
| cuteboy19 wrote:
| 70% of people who bought Bitcoin bought it in the past
| year. With these statistics, it is very likely that more
| people lost money through Bitcoin than gained it.
|
| Someone has to pay for all the Bitcoin mining around the
| world, so it's probable that Bitcoin as a whole is net
| negative. That is, the average investor loses money on
| Bitcoin.
| dadoge wrote:
| What about anyone who fully understood its value
| proposition and held for a 3-4 yr timeframe?
|
| EDIT: let's check back in in 1-3 yrs here and see if
| people who bought last year and held are doing :-)
| cuteboy19 wrote:
| I'm sure such people exist, its just that there are
| probably more losers than winners in this net negative
| game.
|
| Analogously, there are some people who have won a lot of
| money from casinos but the average gambler loses money
| because the house always wins. Miners are 'the house' for
| this analogy
| dadoge wrote:
| I don't buy that analogy one bit.
|
| BTC supply is growing at a rate of less than 2% now. 90%
| of the supply is already mined.
|
| Miners play a very small role now in getting new supply
| jazzyjackson wrote:
| mining rewards in the form of new supply is not the only
| way miners make money - they are the house because they
| take a cut of every transaction. admittedly I don't know
| the ratio, and I've always been puzzled by the end game -
| will fees continue to rise as the difficulty ratchets up
| such that the only incentive to mine is transaction fees?
| Anyway they can keep winning regardless of price
| volatility.
| dadoge wrote:
| Down down down huh?
|
| https://www.lookintobitcoin.com/charts/bitcoin-logarithmic-g...
| paulpauper wrote:
| someone could have said the same about Enron in 2001 too
| dadoge wrote:
| Enron was run by a corrupt CEO who lied about its
| accounting.
|
| Bitcoin has no CEO or accountants.
|
| It has also gone up A LOT more than Enron did over a much
| longer timespan.
|
| How can you look at the log chart and think BTC is "going
| to zero"?
| cuteboy19 wrote:
| Log graphs and almost parallel lines! Perfect tools for
| dishonest data representation!
| dadoge wrote:
| How so? What is dishonest about it?
| evrydayhustling wrote:
| 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 cascade.
|
| - People with large orders often cancel them in order to improve
| their orders when chasing the price. (This happens in non crypto
| markets too, but some of those markets have incentives and
| regulation to force market makers to provide stabilizing
| liquidity.)
|
| The most explicit manipulation is the news outlets designed to
| amplify positive news. But even that can be explained by desire
| for clicks as much as short term market shifts.
| VHRanger wrote:
| 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 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).
|
| > People with large orders often cancel them in order to
| improve their orders when chasing the price.
|
| It's absurd to think this is the case when the order
| cancellation pattern is precise to ~3ms and repeated >5 times
| in a 30 second span. What you see on 26/7/2021 0:59:20-1:00:45
| is intentionally done by bots designed to do this.
|
| > But even that can be explained by desire for clicks as much
| as short term market shifts.
|
| Agreed, there's a footnote that posits other actors than the
| momentum ignition traders could have planted the fake news
| because they saw the same opportunity
| stepanhruda wrote:
| Market makers don't print riskless money, they are affected
| by a very real risk of divergence loss.
| VHRanger wrote:
| You dont have a risk of divergence loss if you're
| simultaneously buying and selling the same product in the
| same order book.
|
| Bid/ask spreads were as wide as double or triple digits
| during the liquidation event. At this point the only limit
| to riskless profits is your liquidity and the speed at
| which you can execute.
| iakh wrote:
| 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.
| gruez wrote:
| > you're simultaneously buying and selling the same
| product in the same order book.
|
| How's that even possible? Suppose the bid is at $95, the
| ask is at $105, and you receive a buy order for $100, you
| can't "simultaneously" sell that and make a profit.
| huac wrote:
| I agree with most of this and would add that the article could
| be organic and the subsequent trading opportunistic (rather
| than being tied together).
|
| I am somewhat surprised that bots react to news within 5ms --
| your execution delay on crypto exchanges is quite a bit longer
| than that, since the exchanges are generally hosted in public
| clouds and you are subject to network latency to get in there.
| Even within the same cloud _and_ even within the same k8s
| cluster, you should expect 2-4ms for an inter-pod hop.
|
| That being said, maybe there is a hedge fund literally in the
| same k8s cluster as FTX...
| mthoms wrote:
| Well, Alameda and FTX were founded by the same person. Up
| until very recently Sam was CEO of _both_ companies at once.
|
| https://en.wikipedia.org/wiki/Sam_Bankman-Fried
|
| Edit: I _suspect_ Alameda uses data from FTX but might not
| trade there: as per the article, the manipulation needs thin
| order books to work.
| [deleted]
| naveen99 wrote:
| It's not so much price manipulation as timed restrictions /
| throttled deposits / withdrawals / order execution. basically
| market malfunctions / barriers. you can always arrange over the
| counter transactions though.
| madduci wrote:
| The bad thing is, it directly influences also the price of
| other coins, especially the top 5. Only Tether is "stable" in
| all the senses
| albert_e wrote:
| https://archive.md/CxQpX
| echopurity wrote:
| mulcyber wrote:
| I take advantage of the post to ask.
|
| Anyone has a good introduction to trading for
| engineers/mathematicians/programmers?
|
| Something that goes into the theorics and the math of the thing.
| Like an MIT open course or something. I'm always a bit lost with
| these things.
| VHRanger wrote:
| Patrick Boyle's books are a good start.
|
| Generally I would discourage people from trading - 99% of
| people who try fail.
| rasengan wrote:
| Didn't FTX make Solana?
| VHRanger wrote:
| No, but they heavily invested in it
| tdherzl wrote:
| It should be noted that OP is a staunch BTC skeptic and a
| proponent of MMT. This seems to be one of his many attacks on
| BTC.
| VHRanger wrote:
| Uh, author here, I have no idea how you could ever think I'm a
| proponent of MMT. I'm a vocal critic:
|
| https://www.singlelunch.com/2018/10/01/bad-economics-shame-o...
|
| As for BTC, yes, I hate it and am vocal that PoW
| cryptocurrencies should stop existing. But this piece isn't
| focused on that.
| gfd wrote:
| Dumb question, but is price manipulation wrong when it's for
| something that doesn't have a "true" price?
|
| Like I get why it should be illegal for stocks. If you pump it
| and the price reverts back to some true price (calculated from
| expected future earnings or whatever), then people who bought it
| expecting it to be at an efficient price will lose money.
|
| In the case of crypto where everything is driven by supply and
| demand only, who loses?
| lcvw wrote:
| Stocks also don't have a "true" value. Their price is driven
| entirely by supply and demand, which in turn is weakly anchored
| by investors doing fundamental valuations on the stock (there
| is more demand for an underpriced stock). The issue is that
| market manipulation is outright theft, usually from retail
| investors.
|
| Think of it like playing blackjack. When I hit, I make a bet
| and I know roughly what the odds are that the bet will pay out.
| If the house was to manipulate the cards in the deck so that
| the odds are different, I would lose much more often then I
| should, and it would be theft. Similarly, if someone uses
| artificial demand to drive up the price of btc above the
| natural demand and I overpay, then they are selling to me at an
| unfair price. Eventually the price with fall to the natural
| price and I will lose money. Btc is weird because people keep
| buying more, but the principle is still the same. If the price
| is going to go from 40k and 50k over the next few months, and
| the price is artificially raised to 45k (which is when I buy in
| this example) then even if I get out at 50k I've lost 5k of
| profits I would get if the market was fair.
|
| So the short answer is that in any case of any market
| manipulation, it is theft from other investors. Usually (but
| not always) small retail investors.
|
| Now the argument some crypto folks make is that market
| manipulation is part of this market, so take that how you will.
| shrimpx wrote:
| > I know roughly what the odds are that the bet will pay out
|
| > natural price
|
| In low-volume situations (almost all cryptoassets) you don't
| have these properties. The price is "fake"/random to begin
| with.
| c7DJTLrn wrote:
| I'd argue there's no right or wrong at all when it comes to
| this. There's only bigger and smaller, stronger and weaker,
| early and late. We draw an arbitrary line somewhere and say
| that people on one side cannot trade on information they have
| and the people on the other side can. And we trust that the
| people on the former side will never try to find a cheat or
| workaround.
|
| The market is completely made up. It's driven by inequality in
| access to information. You're only going to make money if
| you're:
|
| A. Lucky
|
| B. Ahead of the game in some shape or form
| prox wrote:
| Because (layman here) you could still pump & dump and influence
| prices. Perhaps it's tougher with bigger established coins BTC
| or ETH, but it's still a thing afaik.
| woodruffw wrote:
| This is only a partial answer: broadly, we lose as a society.
| Openly fake markets and obvious manipulation erode trust in
| systems that, even when corrupt and manipulated, are ultimately
| tied to real value (people's labor, their retirement accounts,
| &c.)
|
| None of what we have is great, and I'm not going to bother
| justifying traditional financial markets. But cryptocurrencies
| represent a massive moral hazard to our handling of hundreds of
| millions of peoples' economic security.
| wesapien wrote:
| Just anything you want to manipulate, you fake the news these
| days.
| jondwillis wrote:
| It's not a new phenomenon.
| tarsinge wrote:
| It's a bit fuzzy but I remember a chapter in the Count of
| Monte Cristo where the Count bankrupt an enemy by bribing a
| telegraph agent to pass a false geopolitical (Spain?) report
| to cause market crash of bonds of that country and push his
| enemy to sell low.
| lend000 wrote:
| While I appreciate the amount of work that went into this
| article, there are at least 50-100 potential current "news"
| stories in the crypto space at any given time. It's easy to find
| one that correlates with price movements after the fact, but more
| or less impossible to do so with forward testing. Virtually no
| successful crypto trading firms are using real time news data as
| a centerpiece of their trading, because news has almost no impact
| (contrary to popular belief and the assertions of this article),
| especially compared to equities. Elon Musk's tweets, which
| ostensibly should matter least for fundamental value, are
| probably the biggest drivers of capital, albeit only in the short
| term. See [0].
|
| And then the part about "suspicious" orders on the book before
| the liquidation cascade. Come on. Amateur crypto traders are
| reinventing religion, where mysterious unknown "whales" are the
| gods, pulling all the strings.
|
| [0] https://en.wikipedia.org/wiki/Data_dredging
| setr wrote:
| > And then the part about "suspicious" orders on the book
| before the liquidation cascade. Come on. Amateur crypto traders
| and outsiders are reinventing religion, where mysterious
| unknown "whales" are the gods, pulling all the strings.
|
| Sounds like something a whale would say...
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