Number go down: the single trade that crashed Bitcoin
davidgerard.co.uk
davidgerard.co.uk
Yeah it moved the price. That’s a pretty big trade for BTC. Would BTC have cleared $30 million in actual trading volume a few years ago?
Now the fun part, good luck getting the cash out of the exchange!
Otherwise they would not have done such move at all.
A pro would at a bare minimum split it into a few thousand timed orders.
Err... There are traders easily withdrawing tens of millions of USD every single week on Bitstamp. Bitstamp isn't MtGox.
It's fatal because bitcoin isn't supposed to be some kind of stock that you buy, sell and speculate on. It's supposed to be a currency and that's where it's supposed to get its value from. Unfortunately that's not how it's being used because unfortunately it's not a very good currency.
Nobody wants to use a means of exchange that fluctuates widely from day to day. No one wants to accept $ 1 in bitcoin for a loaf of bread if that $ 1 could be worth ten cents tomorrow. Currencies need to be stable for them to be usable as a means of exchange.
Unfortunately this sort of instability seems to be a feature of bitcoin rather than a bug. Unlimited anonymous transactions means the system will be easy to manipulate.
That said the dream of bitcoin could be one that saves humanity from the financial tyranny imposed by governments. This is particularly true for people who live in third world countries where governments play fast and loose with their currencies and their money can quickly become devalued.
It is also to an extent true for richer nations where government control of the currency led to things like the great depression the great stagflation of the 70s and heaven knows what ill effects it's causing today that economists of tomorrow will learn about.
It is clear to me that having independent currencies will result in a freer more prosperous world. I think what's needed is an alternative to bitcoin that is set up to actually work like a currency rather than a share or forex market with people buying currency that they don't plan to use.
I think the solution is to learn from paypal which also set out to create it's own currency and almost succeeded. Create an alt coin and brand it as a currency and have it be used that way. Maybe go to ebay top sellers or etsy top sellers and convince them to accept your alt coin. Have rules and tracking mechanisms in place to prevent manipulation of the money supply. And most importantly a widespread currency can't have anonymity. I'm not saying anonymity shouldn't be allowed in a currency. But widespread use of a currency requires being able to manually undo transactions that were done through fraud, the way banks and credit card companies can. This is why people tend to avoid making large payments in cash, they want a paper trail so it can be undone if necessary.
One currency like you say, traceable and hard to manipulate and another that preserves the anonymity that bitcoin provides but with a lot more fluctuation in the price? (Not to say that bitcoin is untraceable, but rather, suppose a currency with the same ideals of anonymity the creators held when they created Bitcoin)
Regular money has basically all these features, plus the advantage of enormous institutional support (laws, systems, finance sectors, central banks, markets...)
All reasons for the price to rise or drop are obvious in hindsight. I like to see pundits make these predictions before the price event. Better yet, buy or short sell BTC, make a screenshot and put your money where your mouth is.
> Better yet, buy
you wish
> or short sell BTC
Shorting you can trust turns out to be something Bitcoin doesn't have yet.
It takes remarkably few contracts to actually move the market - especially during the Globex session.
It's a symptom of just how thin trading is in crypto, even for the "biggest" one.
There are many other factors that lead to this sort of thing happening with Bitcoin, including the lack of regulatory oversight you mention.
Also, the slow speed of price propagation isn’t a sign that the market is thick, it’s a sign that the market is inefficient.
It was only the market on a single exchange, Bitstamp, which is extremelly illiquid compared to the largest exchanges. The problem was that Bitmex, a much more liquid exchange, bases the settlement price of its popular perpetual Bitcoin swap on an index of just two exchanges, Bitstamp and one other, so manipulating the price on illiquid Bitstamp also screws with the price on liquid Bitmex.
The real problem is that the exchanges all have separate order books, and it's hard to arbitrage between them.
This is a recipe for volatility.
However, if the issue was only a thin market on Bitstamp, the price fluctuations would have remained localized to Bitstamp and the futures market on Bitmex. But instead the price for bitcoin dropped by about $1k across the board, which to me signals thin markets everywhere.
Also, I wasn't saying anything about slow speeds. I was saying that the ability of the market, on a single smaller exchange, to absorb a $40 million trade in 20 minutes is not traditionally what you'd call a thin market.
To the point that, hmm, you could just trade with yourself to pump or dump the price.
A market composed of yourself and yourself is, by any measure, pretty thin.
https://medium.com/@bitfinexed/wash-trading-bitcoin-how-bitf...
Remember it takes "something like 20 minutes" for _any_ bitcoin transaction to get two confirmations. That's kinda "the speed of light limit" for any transaction in bitcoin, whether it's 1 satoshi, or $40mil...
(I don't know if this $40Mil "dump" was one transaction or a significant portion of the ~4000 you can fit into one block, if it was in a series of transactions averaging less than $10k, if couldn't have been done in one block, and there's no way it could have been confirmed in 20 mins...)
It's pretty irrelevant, though. If you have your Bitcoins stored on a market, your "transactions" don't go through the blockchain. It's just a field in a database then, indicating how many Bitcoins a user has stored on an exchange.
The argument would be the same as as claiming "to transfer stocks, you have to deliver them by mail to the recipient, so it takes at least two days". Or indeed the same with money.
If you wire somebody some money, no actual money is moved. It is just fields in a database of banks changing, that indicate how much money the banks owe you. We are so used to it by now that we think of it as actual money changing hands, but it is not.
So I am sorry, I can only take the article half serious. The author seems to be driven too much by his disdain for Bitcoin than by actual facts.
I guess they orchestrate one more (last) pump&dump hype cycle.