Slashdot Mirror
About 40 Percent of Bitcoin Is Held By 1,000 Users. If a Few of Them Want To Sell, That Could Tank Values (bloomberg.com)
On Nov. 12, someone moved almost 25,000 bitcoins, worth about $159 million at the time, to an online exchange. The news soon rippled through online forums, with bitcoin traders arguing about whether it meant the owner was about to sell the digital currency. From a report on Bloomberg: Holders of large amounts of bitcoin are often known as whales. And they're becoming a worry for investors. They can send prices plummeting by selling even a portion of their holdings. And those sales are more probable now that the cryptocurrency is up nearly twelvefold from the beginning of the year. About 40 percent of bitcoin is held by perhaps 1,000 users; at current prices, each may want to sell about half of his or her holdings, says Aaron Brown, former managing director and head of financial markets research at AQR Capital Management. What's more, the whales can coordinate their moves or preview them to a select few. Many of the large owners have known one another for years and stuck by bitcoin through the early days when it was derided, and they can potentially band together to tank or prop up the market.
sounds like internet monopoly money
You are heavily invested in this scam. Enough with the bitcoin stories.
Show of hands if you are tired of the bitcoin stories?
I read at +2. If your post doesn't reach that level I will not see or respond to it.
If they sell and people are buying, now that value is in the hands of more people, which is helpful for the long term outlook.
As the price goes up, there's always more pressure to sell for those who have excess. There's also the knowledge that the inflation rate drops constantly and wallets get lost, so it's not an unlimited supply.
I'm no whale but I've been buying small amounts since 2012 and my bitcoin net worth is greater than all my other assets + cash + stock, but I'm not selling.
Have held their value for THOUSANDS of years. Bitcoin, has been around a few years and is as VOLATILE as they come. Not to mention totally intangible. Anyone dumping REAL CASH into this BS that isn't one of those 1000 people... Is giving away all of their money to those 1000 people. Basically. Because WHEN it tanks, the little guy loses 100% of their investment while they try and scramble to sell. While the 1000 sell out using high powered brokerages during its fall, and keep up to 50%...
By a select few with large amounts who can manipulate things to cash out together at a certain point. This will leave everyone else holding the bag so to speak and the cycle will repeat as large groups left over try to recoup losses from the first group by doing the same thing.
You have to take into account that this isn't a unique situations. If billionaires start dumping all of their dollars they could tank the whole US economy. They don't do that because it would be massively against their own interests, just as it would be against the whale's own interest to tank Bitcoin, they are the folks who have the most to lose in destabilizing it, and are going to do everything they can to stop that from happening.
https://support.bitfinex.com/hc/en-us/articles/115004555165-The-basics-of-Margin-Trading-on-Bitfinex
https://www.investopedia.com/news/short-bitcoin/
https://www.bloomberg.com/news/articles/2017-11-27/calling-a-bitcoin-top-here-s-how-you-can-short-the-digital-coin
https://www.thestreet.com/story/14414500/1/what-to-know-shorting-bitcoin.html
https://coincentral.com/short-bitcoin/
https://99bitcoins.com/short-sell-bitcoin-make-money-on-bitcoin-price-drops-thourgh-bitcoin-short-sale/
https://themerkle.com/top-7-ways-to-short-bitcoin/
http://www.telegraph.co.uk/investing/gold/can-short-bitcoin/
Even for beginners !
...because that's exactly what Bitcoin is. A pyramid.
An investment, but worse than any stock, because it's an investment in nothing.
And yes, it's also a "cryptocurrency" -- congratulations. Blockchain!
It, and systems like it, are not a fantastic idea. Imagine if it were the fate of society hanging in the balance - that's essentially what socialism/communism as a system of government would give us. There are reasons olds think the way they do, millennials.
I'm sure those exchanges and institutional investors are going to dump any second now.
Wow, the big bankster trolls are out in force today...
Lots of things have intangible value. Tangible simply means it is something you can hold in your hand. All debt instruments are completely intangible - stocks, bonds, CDRs, options, all of them. Furthermore, they are completely arbitrary and can be manipulated on a whim.
The value of blockchain currencies is in the complete absence of centralized regulation and manipulation, and complete immunity to tampering.
Who the hell wants fiat? It's starting to become a time where if you want that house, that car, that drug then maybe you should inquire about paying in Bitcoin directly.
Who wants cash? Everyone has cash. Its riddled with debt.
Google 'slaying the bearwhale' for lolz; the last time a whale cashed out, Bitcoin nuts actually convinced each other to buy up the coins as fast as they were released in order to keep the coin value up. Obviously the smart move if you really believed in Bitcoin's long term viability would be to let the price crash and buy at the bottom, but the Bitcoin ecosystem isn't exactly chock full of rational players.
The anonymity of Bitcoins seemed like a good idea because people assumed no one entity would own a significant share of them. Oops.
It's the same inherent assumption non-economists make when they talk about a "free market" (usually in an argument for very little to no government regulation) and assume that "free" includes traits that economists use to define "perfect competition".
I won't dare predict whether the current Bitcoin situation is setting up for a spectacular crash when a bubble bursts, at least not today. But it's getting harder every day not to conclude it's tulips all the way down.
Yeah it's "crypto". For all you nerds insisting on "cryptocurrency" you lost this one.
Bitcoin itself is a ponzi scheme though there may be crypto in the future that isn't and is more viable. And there's a really good chance it will be run by the major banks. You want a currency that's not controlled by the money men (and women but mostly men)? Narcotics and munitions work well in this regard.
The other financial markets already have tons of techniques for making large sells without tipping your hand and getting picked off by front runners, just ask anyone dealing with institutional brokerage. The problem with BTC is, the ledger is public, so if a whale starts moving a large wallet into lots of smaller ones people will know. If I was holding BTC I would definitely want to start breaking it up into lots of smaller wallets just as a precaution. Maybe this whale is getting some professional financial advice and doing just that.
This posting is provided 'AS IS' without warranty of any kind, implied or otherwise.
The valuation may be irrational but people bought the Bitcoins because they valued them higher than the sale price. No selfish actor waits until the price hits the bottom, because to know the bottom you have to know what everyone else is thinking. A selfish actor optimizes for themselves, and they do that by making the decisions that are best for them.
By sell you mean get a real currency
The interesting thing is that the real story seems to be missed entirely. Everyone wonders if it's a bubble or if the valuation is too high. That's not the problem. Bit coin is, in its present algorithmic configuration, doomed by it's algorithmic desgin features. Perhaps it will change but there's two flaws of which I will point out one here.
1. Roughly 2000 transactions can be rolled up into each hash completion event. And by design the system equilibrates towards a difficulty where it take 10 minutes for a hash completion to occur. This means that when this becomes popular it becomes hard to directly record more than 2000 transactions (less due to over heads on side transactions) every ten minutes.
That merely makes it slow. But when it becomes oversubscribed in demand for transactions then people pay bounties to get their transactions at the top of the queue. Right now that bounty is about $20 per transaction.
let's compare this to a visa card. A visa merchant might pay 3% for the service. thus on a $666 transaction you would pay 3% or a $20 fee.
Ergo, for any transaction less than $666 bitcoin is ludicrously expensive.
thus it is slow, expensive and unsuited for ordinary purchases. It could be used to move large sums of money but not simple transactions or even micropayments.
I beleive it is this, not the valuation of the coin that makes bit coin doomed.
We saw the first high visibility retreat the other day when Steam stopped taking bitcoin.
Some drink at the fountain of knowledge. Others just gargle.
You can win up to $200 worth of Bitcoin every hour, for free! Why would you pass up such a chance?
That would be an incredibly risky venture. The problem with shorting is there is limited upside and unlimited downside. IE the stock can never get lower than zero, the delta of the purchase price being your profit margin, but the stock has no cap on how high it can go, the delta being your liability. If you try to dump your bitcoin and it's instantly bought up by other bitcoin "whales" they get the benefit of temporarily lower bitcoin prices, and you are on the hook to cover your short.
So exactly what part of "Pyramid Scheme" do these idiot "investors" not understand.
Bitcoin currently has about 15 million userrs. So 1000 of them is only 0.0067%.
1% of the world's population owns about half the world's wealth.
By creating a currency ostensibly free from the corrupting influence of government control of fiat currencies, bitcoin has managed to become a currency which is 150x even more corrupt.
On Triskelion, just 3 gamesters held 100% of the quatloo supply.
>So exactly what part of "Pyramid Scheme" do these idiot "investors" not understand.
"Shut up you're just jealous because you didn't get in early and I'm going to be rich for doing nothing while you work like a sucker".
I think that about covers it.
Using my new South Seas Flowercoin algorithms, I have cornered the world market in Tulips, and it will never stop going up up up!
-- Tigger warning: This post may contain tiggers! --
If you want mine your own cryptocurrency, you need a motherboard with 19 PCIe 1X slots to plug in 19 GPUs and a couple of 1200W PSUs.
On Nov. 12, someone moved almost 25,000 bitcoins, worth about $159 million at the time, to an online exchange.
Mostly; the online exchanges just aren't equipped to handle massive volumes, as we witnessed Coinbase crashing. If they REALLY wanted to unload such a massive amount, rather than simple trading...... the most efficient way to get the most bang for their $, would likely be to find a large buyer directly ---- for example, sell 25,000 BTC to a major bank or investment firm at a small discount to the exchange price, rather than trying to dump it on the exchange, and getting a lot less $$$, because the price goes down on the exchange the more units you sell, and before you know it the buyer-demand is exhausted and short term price is less than you want to sell for.
Bit coin is digital "hawala". The price is high because
1. Greater fool theory
2. By pass regulatory bodies to move money around
3. Anonymity in getting some**** services/products
4. 98% of people do NOT understand technology
5. 99.9% of people fall into fad trap
6. Lack of governance (is good but will be a liability soon)
7. Premium is on trust.
I've been making money all week. Don't know why everyone here calls it a pyramid scheme or even scam. Don't forget its also a bubble that is going to pop! Said everyone when it hit $100, then $1000, then $10,000. Almost hit $20k but self corrected down to $15k now.
Only the State obtains its revenue by coercion. - Murray Rothbard
Gonna be fun watching what happens when it goes splat. It's already bigger than Madoff's Ponzi scheme, and what's going to be left when it crashes?
and Trump hasn't been mentioned once.
What a blessing.
Please, give us more bitcoin stories.
Holders of large amounts of bitcoin are often known as whales.
Not to be sub-classist, but everyone knows cetaceans are trouble makers, especially dolphins. I'm worried that their laissez-faire attitude toward life may infect monetary stability, solvency and policies.
It must have been something you assimilated. . . .
The part where it applies to Bitcoin. The question was asked, "who is at the top of the Pyramid?" and this remains unnamed. Your belief that BTC is a pyramid scheme is a delusion. BTC is clearly a "greater fools" game, which is different.
Find the investors, or at least 500 of them. Station a snipper at each location.
Problem solved.
That is, if they blackmail the bitcoin market, we can do the same, physically.
"Bitcoin's value fluctuates by 1000% in a single month"... ...Is objectively 1000% good news when trying to find more bag holders in a pump and dump scheme. It surely applies here as well.
Your describing rational actors, not the droves of uninformed people who can only see the upside potential: "1,000% in one month? That's like 12,000% a year potential return!"
There's a reason the casino is filled with "jackpot" machines and not blackjack tables.
There will be a race among whales to buy puts and sell their shares, assuming it hasn't crashed before than by other whales selling w/o the puts. Small timers should get out now.
The Niceahash hack took 4000+ coin out of circulation, possibly for good. If the thieves can't spin their wallets and spend some of it, it's gone forever. 21 million coins can exist, and now a chuck are gone. Those coins were mostly held by small time miners and investors.
Now all the fantasy fueled libertarians should understand why the SEC is truly a great and necessary institution!
so it's pretty much the same as with 'real' money, where the top 1% has 50% of the whole worlds wealth.
On a long enough timeline, the survival rate for everyone drops to zero.
If you want mine your own cryptocurrency, you need a motherboard with 19 PCIe 1X slots to plug in 19 GPUs and a couple of 1200W PSUs.