An anatomy of Bitcoin price manipulation | Hacker News Reader

An anatomy of Bitcoin price manipulation

singlelunch.com

622 pointsVHRanger441 comments

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.

> 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.

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.

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.

I’ll start the bidding at 1 USD to own all BTC. Anyone want to go higher?

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..

Well, no, it's actually pretty simple, you could sell half of it to jumpstart the ecosystem, and you still own half of it.

i'm talking about hoarding the entirety, specifically.

sure, 2 USD, bring it on

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.

If I suddenly own 100% of Tesla the stock would crash. I'll extract some value but it would be a pittance.

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.)

I really doubt Tesla would survive very long in that state. Stock will crash, public opinion will sour, employees will quit etc. very quickly.

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.

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.

Note that taking 100% of a company has been one of Warren Buffet's activities for decades.

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.

>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.

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.)

Real estate, employee talent, brand value, business knowledge, .. You could do a whole lot with that.

"If I suddenly own 100% of Tesla the stock would crash."

This is a nonsensical statement. If you own 100% of Tesla then it has no stock price.

You would also have control of its physical and intellectual assets as well as receiving its current and future revenue streams.

Yes, yes, in theory it has no stock price. In practice if I do want to sell - privately or not - I wouldn't get anywhere as much as the price was beforehand.

> I wouldn't get anywhere as much as the price was beforehand.

that's not a conclusion, but an assumption you make.

The price of a stock can only be found by transacting, and if this isn't taking place, you cannot draw any conclusions about the price of a stock. You can only guess it - via some method like cashflow analysis, or some other model.

It's pretty obvious we are indeed guessing given that this is a hypothetical. My guess is that if suddenly I own 100% of Tesla, the company will be worth a lot less after that. It is clearly not based on actual transactions or offers to need to specify that it was a guess.

That is true, but only because a) the market for entire companies is fairly small, and b) Tesla, overall, is vastly overvalued.

If you look at other companies like Dell, or the various acquisitions of Berkshire Hathaway, you would find plenty of examples of people deciding the market price of companies was less than the value, doing exactly what you are arguing can't happen, and making money from it.

That's not how it works.

If you own the entirety of TSLA then you've essentially taken the company private.

Then you can turn around and sell to private equity firms with, say, current market cap as asking price.

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.

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.

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.

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.

Share buybacks also create value and have been on the rise.

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.

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?

> 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)

That's like MSFT issuing MicrosoftDollars to pay their dividents.

The MicrosoftDollars they issue to pay their employees seem to be getting them some talent!

Well, great then, they just need to apply the same strategy for their shareholders!

Crypto has this as a governance DAO with voting via the governance (sort of ownership) tokens. Lots of innovation happening.

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.

Its not uncommon to pay dividends in comapany stock.

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.

Look into privacy coins like Monero.

He mentions Monero.

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.

It doesn't matter how secretive you are when you create the wallet, that's not where the privacy issue lies. The problem comes from your use of the wallet. If you only use the wallet to pay for digital goods and only access those digital goods through multiple layers of protection, then you're probably fairly safe.

But that's not very realistic. If bitcoin were to become the primary way to pay for things, you're going to be buying physical goods with it. If you order something online then they have your shipping address to associate with your wallet. If you buy something at a physical store then they can see you and know what wallet paid them.

And lets say you maintain one wallet for the secret all-digital stuff and another wallet for everything else (or however many wallets makes sense for you), it's better that way, but all you have to do is slip up once with the secret wallet to be screwed. Everything you did with that secret wallet can now be associated with you even if the transaction happened 20 years ago.

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.

> 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

> 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.

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

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.

> If you are forbidden by law from sending money from A to B you cannot send it

the crypto-dream (which, i admit is a nice outcome) is that no entity _could_ make such a transaction forbidden under a new regime of crypto finance.

And it is true that today, some gov'ts can have an outsized effect over people that would not be under their juristiction - such as people in iran being sanctioned by the US.

Unfortunately, crypto is hardly being used this way, nor will it be in the near to medium term future.

Maybe you'd like to read my post again? Criminality is a trope. Many people that you don't interface with, because they are low stature and status, transfer monies internationally. Pakistanis, Indians, Filipinos in the UAE, South Americans in the US. These people all send money in small amounts. Paying a percentage to a bank on an electronic transfer is idiotic. Why does a bank earn more money for the same service relative to the amount transferred? Why would YOU agree to such a ridiculous term of service? Crypto is increasingly transactable, making conversion irrelevant. Not to mention all the ways we already achieve this be it through PayPal or venmo or Linepay, in-game currencies, reward points.... on and on. It seems you just have a negative view of the technology or a vested interest in the established world of finance. If you are unable to see ANY value in the technology it is because you lack imagination or chose to ignore it

> It seems you just have a negative view of the technology or a vested interest in the established world of finance

I have neither.

BTW half of my family lives in South America and I'm in Italy, we have no problem in sending money back and forth and it is cheaper to use a bank than exchanging via crypto.

Also I cannot ask my 85 years old grandma to join Coinbase or Kraken or whatever, but she has a bank account and it works pretty neatly (and yet again, it's waaaaay cheaper than Coinbase fees for example)

That "Filipinos in the UAE" is bullshit. Their problem is not about crypto vs banks, their primary problem is the UAE.

That's just tax evasion and/or smuggling.

> Banks have reaped rewards unearned for long enough.

They are getting paid for a service, ridiculously low fees generally. Do you know how much does it costs you an international bank transfer? Between 0 and 0.6% if you're unlucky.

> That alone is enough of a use case to justify adoption.

No, it's not, it's the usual niche use case problem no one I know ever cared for. When was the last time you heard "I want to send money to my aunt in India but those goddamn banks are so expensive!!!!"

> 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?

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?

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.

> 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.

> 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?

No, but the reason would be simpler, the network dying because of low movement.

I think what you're describing is a centralized body that can use due process to resolve disputes. 4 legs good 2 legs better?

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”.

Sounds like you're just talking the banking system and cash. Anonymity + regulation. They already regulate credit and banks have systems for fraud.

What again does Bitcoin solve for over this?

> 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.

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?

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.

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.

> 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?

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.

Economic theory has run this world into the ground in just a single human lifetime. A system that maximizes consumption is insane.

Do you mean that if we had some renaissance banks during the 19xx until 2022, gold coins instead of our modern currencies, no stock exchanges, no financial whatever and maybe all retro economical entities you can think of… would we be in a different position?

You cannot blame the theory, you cannot blame the system… we have a saying in Italy: opportunity makes the thief. Blame the people, not abstract entities.

I'm not seeing how a deflationary currency even addresses this argument.

I wasn't try to. I'm saying "modern economic theory" isn't really a position of strength to reason from. It's not like economists have done a good job at anything. Endless unsustainable growth, a disaster of a financial system, every natural incentive is completely upside down and inequality keeps rising.

Is a deflationary system better or a solution? I don't know.

To my knowledge, no large society in the past two centuries, regardless of economic systems, has been a particularly good steward of natural resources. You're going to have to do better than that.

Deflationary currencies have been an abject disaster in all fronts, and there is nothing particularly contentious about them from even the most contrarian of positions.

Just because an argument is not popular does not indicate it is false.

> Having a currency which gains in value will take you there. Until it doesn't.

As a matter of fact crypto "currencies" are a rotten medium for saving due to their volatility.

Sure, they may go up in value. But then that's pure speculation, certainly not saving.

You can’t avoid being a speculator. Any currency or asset you hold is your speculative position. You may believe that one position is more speculative than another. But fiat currencies can go into hyperinflation and become worthless, for example.

BTC didn’t drop in value did it?

1 BTC is worth 1 BTC.

The fed manipulating the USD and affecting the trading pair of USD/BTC is probably what you’re referring to.

BTC value dropped against all fiat currencies after mining rigs shutting down in Kazakistan and a little bit after the Kosovo news, so yeah BTC value dropped.

In a longer span: BTC is down 33% against EUR in the last 3 months.

> 1 BTC is worth 1 BTC.

That’s tautological, so devoid of any information.

> 1 BTC is worth 1 BTC.

tautologically true, but irrelevant. That's like saying gold costs 1 ounce per ounce, and that price has never changed in the history of its existence.

Current economic pricing happens with USD for most activities, and thus you need to be pricing BTC under USD.

Until the day people would easily accept BTC directly (and hold it instead of converting it into USD), you cannot price BTC in BTC.

I, and everyone else, has to pay taxes in USD. That will never replaced.

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.

This advantage for $USD is already beginning to vanish. Assuming it does, are there any other reasons to be bullish $USD?

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…

Okay but the question was: what’s the bull case for $USD?

We started from your question “What properties does it have that make it superior to currencies like $BTC in your opinion?”.

Then you changed subject about being bullish when replying. So you must either decide: are we talking about currencies or about speculative assets?

There are no reasons to be bullish about currencies, that’s not their purpose.

> There are no reasons to be bullish about currencies, that’s not their purpose.

Whether you hold currencies, stocks, cryptos - these are all positions with various possible outcomes. A currency can become worthless through hyperinflation, for example. So yes, you absolutely should be sizing up your currency position and deciding whether it is to your advantage to hold it.

You can say a currency bull case is that it’s stable representation of value. That thesis could play out or completely break down depending on how the government in control of the currency behaves themselves.

Stocks and currencies don’t behave the same, currencies in the long term are bearish.

Anyway if you think about bulls and bears you are not thinking of currencies, you better put your money into more volatile markets. A bullish currency is against our modern conception of how economical models work, so I wouldn’t place my money on it.

I’m not saying you shouldn’t place your money on BTC or other crypto, it’s kind of a good time right now since we are full bear and a bull period is probably starting soon. I mean, by watching historical trends and aknowledging the contingencies that pushed down values in those last months, maybe we’ll have to wait some time but it should bull during 2022.

All in all, crypto market is still not a currency market but an asset market. Just for one simple reason: crypto (currencies?) are still not currencies. When crypto will turn into currencies you’ll start seeing a inexorable slow bearish course for all of them, it’s economics baby ;)

Not to mention the centralization of much of the coinage of BTC/Ethereum in the cryptocurrency exchanges. The killer feature of BTC is the ability of the entire population to achieve consensus about who owns what and have ultimate faith in the whole process. Owning BTC through an exchange is antithetical to the whole concept of BTC.

It's questions like yours that never get answered when others are trying to sell me on cryptocurrencies. These are basic questions that must have answers before BTC would ever be able to operate as a currency at all, let alone the currency.

> This advantage for $USD is already beginning to vanish.

this is an incorrect premise from which to draw any conclusions tho. Hypothetically, if this was true, then it would also imply the world economy and order to be changing, such that your way of life is going to be turned upside down.

For example, world war 3.

Crypto is one of the great revolutions of the past several hundred years in terms of disrupting the world order and rearranging power on a global level. Few understand this yet.

"What is the bull case for $USD?"

Is Bitcoin a currency or an "investment"? (Here's a hint: you don't want a "bull case" for a currency.)

> you don't want a "bull case" for a currency.

Yes you do. Because currencies are a position to store value just like every other “investment”. Currencies can go bad and become literally worthless via hyperinflation, for example. And some currencies will hold their buying power better than others. To not consider whether your currency has a strong bull case… or whatever you want to call it… is basically blindly trusting it. That’s closer to faith and hope that logic.

Money has no properties or value. Both usd and bitcoin have an intrinsic value of zero. Unless you like staring at bills depicting national heroes, ofc.

The reason you want money is that you know people around you want it and you can use it to acquire goods.

Now, what makes USD a superior currency:

- you don't need internet to use it

- you don't need third party centralized unregulated services to use it (unless you want to run a full node)

- you can exchange it with ease, in multiple formats. Give your daughter 0.0000000000045 bitcoins for lunch.

- no fees for using it.

- practically scales to infinity vs few hundreds transactions per minute.

- doesn't require energy to run. The energy required by each transaction covers the needs (heating and transport included) of a family of 5 for days

- very stable, I know how much things will cost a minute, hour or days from now, so my daughter eats even if whales are short squeezing markets by lunch time.

- used mostly to buy services and goods vs never used to buy anything but other currencies.

- inflationary, creates pressure to spend and invest rather than hoarding. Deflative currencies don't make sense to spend. Why would I buy X today at n bitcoins, if the deflative nature of bitcoin will make it more scarce and will make X cheaper. Why spend bitcoin today, if in few months there will be new highs and I can buy even more and so on.

- de facto currency of international trade. Some countries like Russia try to do international trade in euro. What can have higher consensus?

- 250 years of history

- regulated through democratic means and under clear laws for the benefit of most; vs unregulated, mostly owned by few early anarco capitalists (i know people with thousands and thousands of bitcoin) and offshore scams. Basically very few people own most of bitcoins there are out there, very few people control most of the network.

I think the list can get infinitely longer but it gets boring.

Cash is used for more crime than crypto. London city pretty much is the epicenter of money laundering and financial crime.

Is it though?

Cash may be more in absolute value terms, but in per dollar terms, is cash used more for crimes than regular transactions than crypto?

Yes. There was a report about it recently. Don't have the link at hand.

> 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.

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.

> 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!

You have a lot more faith in the IPO underwriting process than I do. They don’t call it a “pop” for nothing.

Not at all. I'm just saying that the other process is much, much worse than that.

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.

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.

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.

Perhaps consider that this isn't about just you?

It's bad for society to let scam artists operate unfettered. It doesn't just harm the scammed. For one, you've given terrible people more money to run bigger scams. Two, it misdirects resources to negative-sum activity. Third and most broadly, it reduces trust in anything that looks vaguely similar, which increases transactional friction and reduces available investment capital, making society poorer as a whole.

And that's before we even get to your illusion that you are safe from being scammed because only stupid people get suckered and you're one of the smart ones. There are scams for everybody. The whole "crypto" space is proof of that.

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...

Yeah and after all, the world's poker chip factories consume the same amount of energy as Argentina so it's an apt comparison.

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.

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.

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...

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.

> 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.

In the case of buildings, that money went largely to engineers, workers, and materials. It’s not the best way of stimulating local economies (it’s fairly inefficient because of bribes and margins), but still much better than Bitcoin.

>punishing gamblers, eventually people will learn to stay away from it

Just like casinos?

Casinos are deemed acceptable and gamblers are (somewhat) protected instead. Instead of avoiding the bad situation, it makes it less bad. It’s just a different risk management strategy; prohibition would not be ideal either.

I think jayd16's point is that everybody knows that casinos are negative sum and have for a long time. But still, they continue to exist. So we can't assume, as ravar does, that in the long run the market will eliminate negative-sum things.

Right. My point was that we don't punish gamblers. instead we regulate the environment in which they gamble to limit the extent of the damage.

Otherwise, yeah. Negative things don't disappear just because they are negative.

> I don't see how this is more morally repugnant than casinos which are legally accessible in most of the US.

Gambling is heavily regulated in most of the US. It can be morally repugnant because retail investors are being swindled into making terrible "investments". Retail investors really shouldn't be exposed to that kind of manipulation and risk.

You can argue that they're stupid and deserve it, but some of these people have kids to feed and house, and when their house of cards comes falling down, innocent people will suffer.

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?

That is not a fundamental question. Everybody agrees that people should be generally allowed to take risks. However, we also constrain those risks in all sorts of ways so that we can run a reasonably safe and effective society. The eternal questions are which risks lead to generally positive-sum activity and which tend to be dangerously opaque, negative-sum, or with strong negative externalities. You can see this is almost any serious activity. Not just investment. Think of food, or transport, or construction.

"Everybody agrees that people should be generally allowed to take risks."

Not really, the nanny state is a thing.

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...

I think they may be referring to the "pop" some tech companies have gotten lately where they may have been purposely undervalued so when they IPO they get a nice 5-10% "boost" and good publicity when they open.

IPO "pop" is a bit of pejorative usually referring to the deliberate underpricing of an IPO so that the investment bankers' big clients can get a quick profit, the difference between the IPO price and the first available exchange price. In the context of this thread, an example of Wall Street sleaze.

perfect is the enemy of the good. it's not an infallible process, but some checking is better than zero

> 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.

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.

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.

> 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.

> 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.

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...

> 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.

> 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.

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.

It might make your debt cheaper but if you can't afford food & housing at your current wage then it doesn't really matter.

> Yes that's a great point, as long as debt interest rates are fixed, inflation is good for people in debt.

Variable interest rates should be illegal anyway. How can you commit to paying next year a sum that you cannot know? It works somewhat as long as everything is stable, but is a significant fragilisation factor once things go awry. Which they are bound to do, eventually. The answer to that is not to create even more instability in the form of speculative cryptocurrencies; it’s to have better regulations.

> 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.

Also, wages in real terms haven’t gone up for 40 to 50 years now. Inflation is a tax on savings, so it still penalises the wealthy, but it is not as helpful for the middle class as it once was.

> It would definitely be interesting to hear about past examples where income inequality improved under inflation.

Piketty’s book has a couple of them. The gist of it is that most high inflation events reduce inequality by burning money. People who don’t have any are not burnt. Of course it does not mean that it is pleasant for them, or that the wealthy end up starving. But it does reduce inequality.

A total war is a good example as well, because then the state is going to take the money where it is, i.e. in well stuffed bank accounts, and an existential threat is important enough to make it politically feasible.

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.

When do wages ever keep up with inflation? Wages are equivalent to a lagging indicator.

With a steady inflation, the lag does not matter. The current problem is that wages are not following, although inflation had been fairly consistent for a couple of decades (until SARS-CoV 2). Historically, this seems to be an anomaly.

> ...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).

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.

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?

You are assuming the two systems are equivalent.

Ironically a lot of people that would have before criticized Wall Street now seem to be spending more effort criticizing cryptocurrencies ? (Even though they are the same kind of people that created and popularized cryptocurrencies to deal with Wall Street's issues in the first place ?)

I have no problem criticizing both.

Indeed, one good criticism of cryptocurrencies is that the are sucking up a lot of the attention and money that could go into actual reform.

For example, contrast Bitcoin usage in emerging markets with something like M-Pesa. They both started at the same time, but M-Pesa has been a huge boon to the unbanked, whereas Bitcoin is a rounding error in those markets.

Any good source to learn what M-Pesa is ?

Help me understand what you need beyond what you'd get from the top 10 Google hits. Because I see 4 or 5 sources there that seem good to me.

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.

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

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?

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

And if he'd bought last March he'd be down 30%. Bitcoin didn't have a stellar 2021.

I wouldn't count "March" as summer

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 ;)

Looming rate hikes combined with ever increasing correlation of Bitcoin to equities suggests you may even get your day this year.

It's sad to see people genuinely wanting to watch others lose wealth so they can relish in it.

It's always jealousy. People see someone they view as "undeserving" doing better than themselves and react with hatred.

You're not wrong but there's plenty of contemptuous cryptobros who got wealthy via luck and won't admit it.

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.

> How exactly is it luck to recognize the value in crypto and buy a bunch? Because that's not exactly luck.

that's what luck is - they didn't recognize the value, but speculated on the potential value when it originally was valueless.

It could've crashed and burned, and it was luck that it didn't.

It's like seeing a lotto ticket, and claiming that you recognized the value of it (after the ticket has been shown to be a winning one).

> It's like seeing a lotto ticket

No, it’s nothing at all like that. The value of crypto was obvious very very early on. It was never going to crash and burn. Sure a black swan event could have wiped it out and still may. But based on what’s knowable, the value has been obvious since day 1 of bitcoin.

Most of the people I'm lumping into this did not and usually still do not understand why or how cryptocurrencies can solve problems.

This seems to be true of most people period. If there is a lump of people where a majority do understand crypto I haven't found it, possibly outside of tiny academic circles.

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.

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.

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.

I assumed making money was your metric, but if the metric is “change in currency from fiat to digital” I would argue that after nearly fifteen years of little adoption for mainstream, lack of ability to use cryptocurrency for anything but black market goods and super niche products, and what seems like an utter chaotic ecosystem dominated by con artists, cryptocurrencies are a pretty abject failure on that metric as well.

> lack of ability to use cryptocurrency

You can transact at any store that accepts credit cards with a crypto credit card.

There are countless uses for blockchains now from DeFi, gaming, social networks, NFTs, entertainment streaming, DAO’s and decentralized governance, and on and on the list goes.

I recommend you catch up to 2022 crypto if you don’t already know that.

This is such a bad faith argument - you are transacting at any store in the fiat currency that store accepts and not crypto. That a service exists to seamlessly deduct an amount of crypto equivalent to that fiat is no more novel than one providing the same service between two fiat currencies, gold or Nuka cola caps.

The other poster roundly dispatched your comment about using a “crypto credit card” so I’ll defer commentary on that.

On the others: the crux of my argument was adoption and usage, with the implication that cryptocurrency was better for the usecase than traditional methods. Of course you can shoehorn a blockchain or “the chain” into any usecase, just like I can use C to write a frontend service, but it doesn’t make sense because C isn’t the best or even a good tool for the job. I can buy bananas and put them on the blockchain, doesn’t mean there is any reason to do so aside from pumping up any cryptocurrency holdings I might have, perhaps BananaCoin or BananaICO or Gorilla NFTs, which I just invented right now.

In the end your pithy comments aren’t going to convince me to start shoehorning blockchain into my day to day transactions — as much as I might long for a decentralized currency — and my fact-based analyses aren’t going to convince someone who has a financial or psychological interest in bitcoins or cryptocurrency or NFTs to abandon them. I suggest we just agree to disagree.

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.

I wonder how much energy YouTube or Facebook use compared to Bitcoin?

We could argue that Facebook and YouTube are only providing entertainment value. They don't do anything especially novel or provide critical infrastructure.

Rockets that deliver payloads into space are INCREDIBLY bad for the environment. But it provides critical services and infrastructure for now and the future.

Bitcoin provides a novel, decentralised, secure, electronic digital currency. It's being used for that purpose currently.

The FUD is unreal. We accept that certain use cases can persist and use tonnes of energy, but others we think is a crime against humanity.

Use of energy should not be a measure of shame on its own. What use case is it providing now and in the future for that energy usage?

The future will require a lot more energy for things we don't even know about yet. We need to ensure reliable renewable energy will provide for us now and in the future. We should not shut down new technologies just because it uses a lot of energy. When energy is cheap and clean and plentiful, we shouldn't worry about using it.

Nuclear Fusion reactor technology currently uses much more energy than it provides in output. But when that technology is viable it will help us to produce reliable and clean energy. Should we outlaw nuclear fusion because it uses shitloads of energy for no benefit (currently)?

Please educate yourself: PoW cryptocurrency is a red queen's race that is deliberately inefficient. I can't think of any other technology that continuously and deliberately wastes more and more energy. The only analogy I can even think of might be a nuclear arms' race: you have to keep building more and more missiles or there's a risk your enemy might get the jump on you.

Any engineer worthy of the title should be appalled by this inept and abusive design.

Trying to spot the biggest fool is quite entertaining

What if the biggest fool is you? That would be quite the karma.

Then I would be the biggest fool. But i'm not sure your hypothesis will withstand occams razor.

Wouldn’t Occam’s razor favor bitcoin over the usd in the long run?

Bitcoin monetary policy is dead simple and sound. USD not so much.

I can’t think of any advantage to usd unless you consider having physical money an advantage (eg paper bills and coins)

Come off it. Everyone loves to watch a loudmouth fail [1], regardless of what they are bragging about.

[1] Except maybe Buddhists and the elderly.

A watched pot never boils.

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.

Oh I’m not opining on this or that coin being tulips. A lot of it is by volume.

I think the reference is about the phenomenon not the actual comparison between BTC and tulip.

Tulip trading existed for many years before Tulip mania, and it was a profitable business that continues even today. Only the mania part was crazy

> 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.

Do you consider running a poker table a “real business”? Assuming there were no addicts present, what about a casino? Is that “real”?

Isn't a casino with no addicts just an arcade? I'm not sure what your point is, though. The addicts are pretty inextricable.

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.

Nitpick: the House rake makes poker not zero sum amongst players.

What's the house rake in cryptocurrency?

TXN fees for miners to secure the chain.

True. I thought of it as apt because the exchanges/miners, etc. take a fee.

>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.

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.

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.

> 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?

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)

Billionaire activist investors.

The board of directors.

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...

Haha, Alameda or Wintermute? :)

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.

This comment is gold

Haha, we might all die on this tired exploited rock from heat death before that

What is the reference to Island and Archipelago? I'm not familiar and my DDG skills aren't helping.

https://www.investopedia.com/terms/a/archipelago.asp (also talks about Island)

So, I take it you missed out on Bitcoin?

> 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.

> 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?)

> 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?

> 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).

The regulatory arbitrage is a lie they tell themselves. Sure, drugs could be paid for by cryptos, but the ultimate utility of that money requires it to be transferred to fiat (aka, laundering). Unless all of your goods and services can be purchased using only crypto, the tax man and the gov't will always have this weak spot to target.

It's worse than that. Even if ALL your goods an services can be paid in crypto, the government can always demand that taxes be paid in fiat.

This has to be one of the best comments I’ve read on HN.

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.

Broadly speaking lots of very conventional order types are "conditional" (limit orders are technically conditional), but various exchanges have at various times allowed the condition to effectively become "execute this order if I make money on it", which is a wealth transfer from those who can't place that order to those who can. "Displayed" or "displayed size" basically means that other market participants can see roughly "someone is offering to buy X amount at Y price, if I move quickly I can take them up on that". "Hidden" or "non-displayed" means that an order might execute in front of another but other participants can't see that before they act. "Non-displayed" isn't necessarily a bad thing either, but it creates scope for sophisticated participants to further set up advantages for themselves.

The "undocumented" part is the real killer: that's basically the idea that there's a secret API for playing with cheat codes that the exchange only makes accessible to certain actors. That's straight fucked up (and tends towards illegal as markets become more mature).

"Wash Trading" is roughly the idea that (typically) via intermediaries of one kind or another that an actor effectively trades with themselves. An actor might want to do this for several reasons, but a big one (maybe the main one) is to create the appearance of market activity where there isn't any legitimate commerce going on.

"Arbitrage" I think is technically defined as something like: "a transaction or transactions guaranteed to be profitable", but in practice the term gets applied more loosely than that. In the sense I meant: if gold is 100 quibbles in Foobarnia and 50 quibbles in Boofarnia, someone will buy a ton of gold in Boofarnia and ship it to Foobarnia and pocket the 50 quibbles, raising the price in the cheap place and lowering it in the expensive place and fairly quickly this gets you to 75 quibbles in both places (or whatever, there are transaction costs). There's an old quip: "you can shear a sheep many times, but you can skin him only once". If an arbitrageur has unique access to one or both markets, they can play the long game and just bleed profit out without actually providing the social utility of equalizing prices.

People do all this shit and more in practically every electronic market on Earth. It's quite a bit more regulated and monitored in mature markets like US equities and quite a bit more flagrant in e.g. crypto DeFi exchanges but how much net "rich connected people taking non-rich, non-connected people's money" goes on in one vs. the other is quite the controversy, as you can tell from the other comments in this thread.

Thanks for the wonderfully detailed response and perspective. I appreciate it. Cheers.

> 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.

Should the company's assets be liquidated, shareholders are entitled to that value after creditors.

If BTC tanks, there is little value to extract from liquidation.

How much of a bath would you take on one share's portion of the assets? Oh, and how many of those assets are tangible?

It's still something, it has a price and value. Crypto assets have only a price.

> the useful stuff will stick around

There's none though. The markets and especially crypto lunatics themselves clearly show nobody cares about decentralization.

So there's a question fairly deep in the thread asking me to define what I meant by the terms in the first paragraph. I'm reposting my answer up here to both clarify what I meant if it's not clear, and to invite those more knowledgable than myself to correct any ways in which I'm misusing the terminology or otherwise saying something untrue:

So electronic financial markets (whether ARCA/NYSE or Binance) have a number of ways that they can advantage certain participants at the expense of others. One of many is to make certain types of orders difficult or impossible for certain actors. Broadly speaking lots of very conventional order types are "conditional" (limit orders are technically conditional), but various exchanges have at various times allowed the condition to effectively become "execute this order if I make money on it", which is a wealth transfer from those who can't place that order to those who can. "Displayed" or "displayed size" basically means that other market participants can see roughly "someone is offering to buy X amount at Y price, if I move quickly I can take them up on that". "Hidden" or "non-displayed" means that an order might execute in front of another but other participants can't see that before they act. "Non-displayed" isn't necessarily a bad thing either, but it creates scope for sophisticated participants to further set up advantages for themselves.

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...

That seems like very cheap insurance... Even the legal filings to fight someone launching WalMartCoin are more...

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-...

The article that this post is about talks literally about Amazon event...

Ah, you're right. I'd saved it to read later, should have kept my mouth shut until I did.

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.

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

Market makers don’t print riskless money, they are affected by a very real risk of divergence loss.

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.

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.

This is exactly what market makers do. During violent moves prices vary wildly between exchanges and market makers become takers. They instantly buy and sell the same amounts on different exchanges without risk, then re-balance their accounts.

No. To buy and sell on your own schedule, you must take liquidity, paying the spread. This is not what market makers do, they sell liquidity. And it becomes less possible to find efficient clearing trades during rapid moves, because the spread widens exactly because market makers don't want others to arbitrage them.

> 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.

You can do arbitrage without being a market maker and you can be a market maker without doing arbitrage.

Market makers likely know how thing works and react to a volatility spike. I wonder what was the traded volume during the event and how it matches normal order book disposition. If only retail orders left in the boom then there will be very low volume. If there were pre-planted orders from the manipulator then all liquidations should hit them. Remaining orders should disappear shortly after the event, as soon as liquidations complete.

> 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).

This is a deep misunderstanding of market structure. Market makers are algorithmic traders. In times of price stability they benefit from capturing the spread many times. But it is not risk free: they lose money when offering liquidity to "informed trades" (those followed by a price move) because they are holding the wrong position through the price move. For that reason, every market makers implements fail-safes that stop offering liquidity when they are not confident they will be able to clear their position at a break even price.

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...

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.

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.

not really if the fees are high and tons of ppl are doing this with few sales. the nft market is so unbelievably saturated.

Reminds me of this sketch from Enfield and Whitehouse

https://youtu.be/ZiJa9diJOMk

From loadsamoney to lots of money!

https://genius.com/Harry-enfield-loadsamoney-doin-up-the-hou...

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".

The fine art market has been doing this for decades by using auction records to set prices.

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.

> 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.

> 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.

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.

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.

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.

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)

I guess the main difference between the two markets is that with fine art the object is genuinely rare/unique.

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.

Banksy agrees and winks.

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?

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.

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.

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.

> 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.

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.

> 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)?

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.

You would be correct. The wash-trade yourself to popularity thing is frankly a flight of fancy that is a symptom of the larger poverty of the sceptic argument.

Sure you can identify some self-trading: to farm some new upstart marketplace airdrop, or maybe its a dev experimenting, or maybe someone is doing say a flashloan for fun and attention. But show us a collection or artist who "made" it using this strategy, I'll be waiting.

Rather than setting up a web of fake wallets, spending lots of money on gas, then getting almost certainly be caught (how much wash trading and realistic-looking wallet activity do you have to generate to sell out a 10k item collection?!), you can instead pay some crypto influencers to shill your project, or mint.

The reality is: reputation in this space is everything.

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

And if you don't have money you can borrow https://mobile.twitter.com/Foone/status/1457749433844568066

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.

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).

So basically if you are rich you become richer. Same old same old.

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

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.

> 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.

> 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.

> The platforms where these nfts are sold usually charge 1-2% commission which is expensive for a wash trade

This is a misconception; on Polygon for example OpenSea is built on top of 0x v3 (an open protocol for marketplaces); one could wash trade an NFT back and forth on 0x v3 directly and only pay the protocol fee (pennies in comparison) and OpenSea would still show those sales in its UI.

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.

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.

How do you get lots of actual dirty cash into a dirty wallet?

Take payments in crypto instead of cash.

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?

You can have a dirty wallet from crypto that you've gotten illegally. If you are a merchant on a darknet market your wallet is dirty. If you wrote malware and got someone to pay you a ransom you have a dirty wallet. There are basically an infinite number of ways to have a crypto address with significant holdings that the government has "frozen" so that it can't be converted to fiat. Of course there are other strategies for laundering crypto, this one has the added benefit of actually making money instead of losing it.

Oh, so you didn't mean it is great for laundering dirty cash. Maybe cash crimes stopped when NFTs arrived. This is good news for law enforcement because of the public ledger showing all transactions forever.

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.

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/

Curious - does anyone not think Bitcoin or any other cypto coin is being manipulated?

Me. I don't have an opinion.

Great analysis.

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.

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.

>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.

> 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"?

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?

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.

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.

> 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?

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.

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.

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.

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.

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).

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.

>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?

Does it matter either way?

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.

> 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.

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.

> 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?

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.

> but over the long term (decades and centuries) an ounce of gold generally held its inflation-adjusted value.

You sure about that? You woulda been better off holding SPY for 50 years than gold.

https://www.cnbc.com/2021/06/08/gold-as-an-inflation-hedge-h...

https://www.wsj.com/articles/gold-as-an-inflation-hedge-what...

Now if you're talking about centuries then sure, but thats a pretty much impossible comparison to make since the advent of alternative investing strategies.

> You sure about that? You woulda been better off holding SPY for 50 years than gold.

Holding its value in inflation-adjusted terms is very different than getting the highest return. I think most gold investors want the first and ignore the second: if I want profits, holding a piece of metal is the last thing I would do long-term; no question there.

The links you posted did not convince me, sorry (no offense). Yes, you can pick a 5-10 year period when gold did very poorly compared to inflation (and vice versa). But the value drop is not huge. And long term, if you look at food, clothes, housing, etc. you will find that they cost roughly the same in gold 100 years ago as they do today. When I wrote that gold held its value I meant exactly that: preservation of value.

For me (and I am not claiming that this is a universal approach), physical gold is a catastrophic risk protection. I have seen, twice, the currency of the country where I grew up become worthless over a pretty short term: a bill that would be sufficient for a vacation earlier would not buy a loaf of bread anymore. And 5 years earlier I would never have thought it possible.

So I am perfectly happy to put 1-2% of my net worth into gold. If fit hits the shan, it could buy my family a passage and some time of living expenses somewhere quiet and far away; if it does not, my grandkids can laugh about their crazy old man while enjoying most of the value that I originally put into it.

> When I wrote that gold held its value I meant exactly that: preservation of value.

Re-read the articles. If you're looking for short/mid term inflation protection (5~10 years) then gold doesn't hold (unless you happen to get lucky for that period over a 100 year period). If you're looking for long term inflation protection (50+ years) then it doesn't either. If your assumption is that gold is valuable because it stood the test of time during the 1700's and 1800's then

> If fit hits the shan, it could buy my family a passage and some time of living expenses somewhere quiet and far away

If shit really hits the fan, you wouldn't be able to convert to a currency that you could actually live on so this point is moot.

> I have seen, twice, the currency of the country where I grew up become worthless over a pretty short term

This context makes more sense than anything else. I'm talking about USD here.

>> When I wrote that gold held its value I meant exactly that: preservation of value.

> Re-read the articles. ... If you're looking for long term inflation protection (50+ years) then it doesn't either.

How about some specific references? This was not productive (especially since the second reference is behind a paywall). Quote a specific statement and we can drill into this.

> If shit really hits the fan, you wouldn't be able to convert to a currency that you could actually live on so this point is moot.

Forgive me for what I am saying next (it is not a payback for your "re-read the articles" comment; honest), but I find statements like this incredibly naive. I think you have a pink pony view of the "catastrophic risk". Have you seen civil wars? real hunger? deaths from easily treatable infections? cannibalism?

Throughout this type of crap having some physical gold is one of the most reliable tickets out. You can often trade it (with significant haircuts) for stuff you need or a safe passage. Yes, you have to deal with underworld or gangs, but this is still much better than the alternative.

I am now one of the "rich, soft americans" and I hope my kids do not have to go through any of this. And I personally do not see it likely in the US, at least in the next 10-20 years. But the world can change fast and I still want to have a few gold coins in my physical possession, together with a good knife. No offense, mate, and good hunting!

I don't think it's being manipulated in only one direction, does that count?

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.

PS - I'm an investor in a fund that trades on it both going up and down (i.e. volatility).

How does one find such a fund?

I've been told there are hundreds of crypto hedge funds operating now. I happen to have a connection to a friend who runs one. Since most of them can't actively advertise and only cater to accredited investors, I suspect it's harder to "find" them.

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.

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.

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.

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.

> 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

Is Bitcoin already classified as a tradable security or is it still Monopoly money?

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.

Yeah, a replacement set costs about three Euros on Amazon.

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

It's not classified as a security.

they're based in Hong Kong so i'm not sure why US / EU regulation should apply

Actually, Alameda is based in the Cayman Islands as a legal entity

so it's a branch, uh. i'll never wrap my head around the complex corp structure of these crypto juggernauts

That's the idea.

It’s not a security, my friend. Crypto is the land of no rules and caveat emptor.

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.

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.

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.)

> 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.

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."

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

You realize the world isn't beholden to stupid American laws right?

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.

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.

"Ready for a move up again soon."

does not look like it

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

Most SPACs are very lightly traded and are prone to weird patterns.

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...

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.

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.

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

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.

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?

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.

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.

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

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.

> 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.

IMO the other explanatory post by Coral Alexander linked at the beginning this post did a better job to describe the hypothesis in a more accessible and clearer language. https://www.coalexander.com/post/binance-spoofy-bots-and-liq... In this post, the central thesis that spoofing was the key igniter of the event was not clear IMO and it didn’t explain well how spoofing works, while the other post lays it out very well, along with dedicated explainers for the key terms.

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.

Very nice, detailed analysis. Thanks for sharing.

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.

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.

Patrick Boyle's books are a good start.

Generally I would discourage people from trading - 99% of people who try fail.

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

> 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…

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.

https://archive.md/CxQpX

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.

Down down down huh?

https://www.lookintobitcoin.com/charts/bitcoin-logarithmic-g...

Log graphs and almost parallel lines! Perfect tools for dishonest data representation!

How so? What is dishonest about it?

someone could have said the same about Enron in 2001 too

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”?

> How can you look at the log chart and think BTC is “going to zero”?

Because eventually it will be worthless. Your return on investment is entirely predicated by how much demand there is for Bitcoin; currently it's pretty high, correlating with media attention and whatnot. This is just about the highest demand we'll see for it though, the future of all crypto obviously hinges on practical applications, which venture capitalists with unlimited resources have struggled to define.

HODL what you please, but I'd really like to hear the logic behind how people think that Bitcoin can survive an inevitable crash.

Really???

It crashed 70-80% in 2018

And then later went way above the 2017 peak.

It is not guaranteed to recover, but it is FAR from certain that it won’t, and history suggests it will recover

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.

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

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.

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 :-)

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

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

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.

So the entire Crypto space is a "lawless wasteland" just because some folks are trying to manipulate the markets?

Gonna need a bit better argument to buy that.

What this study misses is how much BTC is fueled by altcoins. It’s an ecosystem that’s rarely discussed.

I remember when something similar was going on with AMD stock, which was heavily shorted at times.

Didn't FTX make Solana?

No, but they heavily invested in it

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.

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.

How is Elon Musk a relevant opinion on this matter? Even worse, he is well known for astroturfing his own assets.

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.

...because Musk bought PayPal, he can speak authoritatively on Bitcoin?

This is a bit of misunderstanding of history. He started X.com which would later become PayPal.

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.

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.

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.

> 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

I appreciate your feedback. But I agree with the other poster's comment that the reference to COBOL is a shorthand way of indicating that it's antiquated. Ways this manifests for the user are evident enough (e.g. 2-3 day ACH transfers).

The idea that Musk only thinks COBOL sucks is because it's old... well, most of Tesla's self-driving code is written in C (invented in the '70s).

Overall, I maintain that Musk's opinion is at least relevant. PayPal was disruptive to the financial industry, and Musk was very technically engaged there.

Like the OP, I'm not a Musk fanboy. But I appreciate his perspectives and contributions. Maybe any ire would be better directed towards corporate raiders that aren't manufacturing anything valuable for society, etc.

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.

> 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?

> "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.

> 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.

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

That's a bit like saying having COVID cases in his factories makes him an expert in epidemiology.

That would be a wrong assumption, I believe.

You don't need to know much about crypto to be able to accept it.

Hopefully, one of his reports knows something about it

> 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-...

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/

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

Agreed on the Trump characterization.

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

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

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.

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/

> 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.

In shudder to think of the stupid things I thought in 2008

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.

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.

> 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.

> 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.

> 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.

Just anything you want to manipulate, you fake the news these days.

It’s not a new phenomenon.

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.

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?

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.

If it's significant enough, the SEC will knock on your door when this happens in the regular market

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).

Pardon my ignorance and/or naïveté, but are these real examples?

Apologies, I forget to check my comments for replies all too often.

---

Example 1: 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. (I miss re-called on this one. The company had just finished their phase 3 trial and were about to submit their results to the FDA) [1]

This one is the most damning in my eyes, and is expanded on fully if you are up for reading a 15 page submission made to the SEC.

---

Example 2: Or pushing a stock then pretending to lose connection when asked what the company does. [2]

No easy transcript to link for this one. It happens a few seconds into the clip. "What does Upstart do?"

---

Example 3: Or saying that a company pivoting to online retail will not have the necessary skills and will be facilitating terrorists (name dropping al-Qaeda). [3]

I've linked a transcript, but the specific part I referenced in relation to a company pivoting into e-commerce:

>Then the final issue is anti-money laundering. Imagine if you see some shady organization buying 100 NFTs for $2 million apiece from the same guy. You know, so 200 million being funneled in. Wouldn't that raise the specter that maybe al-Qaeda is funding a terrorist cell?

---

[1] https://www.sec.gov/comments/s7-08-09/s70809-4614.pdf

[2] https://www.youtube.com/watch?v=bKoa5xGwtJk (slightly longer clip but at lower quality https://www.youtube.com/watch?v=wtVMx7ZiOQE )

[3] https://au.news.yahoo.com/gamestops-planned-nft-marketplace-...

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

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.

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.

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.

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.

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.

I think we can ascribe an inherent value - as opposed to market price. When the inherent value is clearly and indisputably zero, but punters are handing over real cash, then you have a fraudulent scheme.

You have provided no definition of this 'inherent value' you claim to exist. You keep stating conclusions in absolute terms with nothing to back it up.

For example gold can be used to make jewellery etc. USD can be used to pay taxes. Shares might yield a dividend. Any physical object could have some use. Crypto has nothing.

The 'market' is not the be all and end all!

I suppose that as crypto maintains a record of transactions, and in so far as we can tie crypto wallets to real individuals, it might be possible to unwind all the transactions and pay reparations to the victims.

You keep saying crypto has no value, but that is false. It may have no value to you but it has value to other people. There is no such thing as 'objective value', which is why there is also no such thing as 'inherent value'.

Some cryptocurrencies have 'valuable' censorship resistance. Cryptocurrency also enables the existence of DAOs. Just because you are fixated on a bunch of NFT scammers doesn't mean there aren't people who 'value' cryptocurrency for other purposes.

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.

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.

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