Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds (wsj.com)

Up to 95% of all reported trading in bitcoin is artificially created by unregulated exchanges, according to a new study [PDF], raising fresh doubts about the nascent market following a steep decline in prices over the past year. From a report: Fraudulent trading volume has dogged cryptocurrency trading for years, but the extent of the market manipulation has been difficult to determine. Bitwise Asset Management said its analysis of trading activity at 81 exchanges over four days in March indicates that the actual market for bitcoin is far smaller than previously thought. The San Francisco-based company submitted its research to the U.S. Securities and Exchange Commission with an application to launch a bitcoin-based exchange-traded fund.

The study, made public Thursday, is an attempt to alleviate the agency's longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation. Bitwise's fund, if approved, would be based upon the 5% of trading it considers legitimate, said Matthew Hougan, Bitwise's head of global research. That volume comes from 10 regulated exchanges that can verify that their trading data and customers are real. This slice of the market, he said, is well regulated, transparent and efficient. "I hope everyone sees there is a real market for bitcoin," he said.

Comments

What other kind of trading could there be?

[JoeyRox]

How can you have real trading of a fake currency?

Re: What other kind of trading could there be?

[Anonymous Coward]

The other kind is the square root of negative fake.

Re: What other kind of trading could there be?

[Anonymous Coward]

Apples to oranges - what a dumb phrase. Apples and oranges are about the size

Re: What other kind of trading could there be?

[Anonymous Coward]

Me and a friend sold a lot in 2017. If the markets are full of fake trades, did we take the market down?

(Also, "a lot" never seems like a lot when you start comparing it to other people's stashes.)

Re: What other kind of trading could there be?

[Anonymous Coward]

Yeah, yeah, yeah, whatever, man. Did I not say it loud enough? YEAH YEAH WHATEVER. I don't care if bitcoin were trading continuously all the livelong day it would all be fake. So take what you want from the article or can you not read? :P

Re: What other kind of trading could there be?

[Anonymous Coward]

See YouTube video " this is an orange" for an explanation.

Re: What other kind of trading could there be?

[mark-t]

That's ironic, because contrary to the name associated with it, the square root of -1 actually exists.

Descartes believed them to be imaginary (yes, he can be credited with giving them that name) because at the time expanding the idea of a number line to being just one axis of a number plane had not yet been thought of (the notion of a complex plane would come over a century later, and by that time, the term "imaginary" was very well entrenched).

Re: What other kind of trading could there be?

[iggymanz]

No it doesn't exist, it's a mental construct, an invention of the human mind. There is no square root of minus one in reality, it is instead part of useful models of reality.

Re: What other kind of trading could there be?

[Sique]

The square root of -1 does not exist, at least not as a real number.

Having complex numbers might help us to achieve algebraic completeness for the number field, but you lose completeness in regard to order theory. While each finite set of real numbers has a minimal element, you can't define a minimal element of a finite set of complex numbers (at least not one that is consistent with the algebraic properties of complex numbers).

The square root of -1 only exists, if you don't need completeness in regard to order theory.

Re: What other kind of trading could there be?

[Anonymous Coward]

Imaginary numbers are more than just a mathematical construct. There are whole processes that cannot be calculated without the use of "i": https://en.wikipedia.org/wiki/Phasor

mark-t is correct in stating that the term "imaginary numbers" is outdated. "Complex number" is a much more accurate term, since these are numbers that live in the complex plane.

Re: What other kind of trading could there be?

[Trailer Trash]

If you work with electronics you'll find that the square root of -1 actually does exist in reality.

https://www.electronics-tutori...

Re: What other kind of trading could there be?

[Trailer Trash]

Crap, I submitted too quickly.

I would also point out that i to the power of i is a real number, and is e to the power of negative one half pi.

https://www.math.hmc.edu/funfa...

Re: What other kind of trading could there be?

[noodler]

If what you say is true then no math exists in this universe.
Imaginary numbers are just an extension of previous non-existent numbers. I mean, you can't have -3 cows, right? So by your reasoning negative numbers don't exist. And you can't have fractional cows either (well, not life ones anyway), so rational numbers have to go as well.
Even more worrying is to consider what 1 cow is. Where does the cow end, exactly? Do you consider the smell of a cow to be part of the cow or not? What if that smell mixes with the smell of other cows? How do you singularly define a cow in the real world?

Imaginary numbers allow us to solve problems in this universe so one could say that the universe has no problems with producing problems that are better solved with imaginary numbers. In fact, many things we observe in nature are not solvable without imaginary numbers. Why would a number system that works fantastically well for solving real-world physical phenomena be less real than a number system we use for counting cows? It sounds like a prejudice for counting cows (which seems reasonable from an evolutionary standpoint, but is quite limiting once you start digging into the sort of stuff that really happens in the universe).

The fact is, you can't explain over a century of physics without using imaginary numbers. Basically anything involving waves is better expressed with imaginary numbers.
Imaginary numbers are not less real than any other numbers we have 'constructed'.

Re: What other kind of trading could there be?

[Sique]

Still not right.

Imaginary numbers are just the numbers that are real multiples of i. They are a subset of complex numbers, which are sums of real and imaginary numbers.

And the naming of mathematical objects has nothing to do with the meaning of their names in other contexts. For instance, in English, sets with two algebraic operations on it which are abelian and conform to the associative and the distributive laws are called "number fields", associating a two dimensional shape. But in other languages, they are called for instance "number corpus" (Zahlkoerper in German), pointing to a three dimensional shape. But number fields don't have to have dimensions at all (though you can define dimensions in some of them). Shall we call "field" or "corpus" outdated?

Similar with algebraic rings. Only the finite ones are somehow ring-shaped. Shall we thus abandon the ring term?

Imaginary numbers are the numbers that are real multiples of i, where i is short for "imaginary unit". Shall we replace it with c?

Re: What other kind of trading could there be?

[alvinrod]

If imaginary numbers didn't really exist, planes would fall out of the sky. The solutions to equations used to determine lift for an aerofoil will contain imaginary numbers. If you disregard them and treat them as though they don't matter, you will crash. The name is poorly chosen in relationship to the reality of complex numbers and it unfortunately anchors people to a belief that they are numbers which don't exist. An unfortunate artifact of history more than anything malicious, but there are plenty of other examples of things that cease to make sense or won't operate if imaginary numbers didn't exist.

Re: What other kind of trading could there be?

[Anonymous Coward]

Math does not exist as a natural property. The object cat is quite different from the word 'cat'. Numbers are merely the words we use to describe what is, and not what is itself.

All of mathematics is an incomplete mishmash of additions and revisions built up over thousands of years to better model the limited sphere of quantitative relations (and even that is highly controversial). The way it's constructed is inherently flawed, incomplete, and can not be fixed. Kurt Gödel proved that in the 1930's.

"Imaginary numbers" are less real than any other numbers. There's good reason why a subset of all numbers is called "real numbers" and others are not part of that subset. However, all numbers are, in fact, imaginary and as ephemeral as the word 'cat' or 'gato' or 'you little shit'.

Re: What other kind of trading could there be?

[Anonymous Coward]

"Imaginary numbers" is an historical name. If they were called "super real numbers" would you say that they are more real? BTW I think that there are "complex numbers" that have an imaginary part.

Re:What other kind of trading could there be?

[Anonymous Coward]

Don't forget all the crime: Malware money laundring, Ransomware money laundring, drug money laundring etc. That's probably the other 4.99%.

Re: What other kind of trading could there be?

[noodler]

""Imaginary numbers" are less real than any other numbers."

No they're not. You just made the argument that all numbers are not real, but now you're trying to argue that some numbers are more unreal than others?

"There's good reason why a subset of all numbers is called "real numbers" and others are not part of that subset."

Not really. It's an arbitrary notion due to historic developments in mathematics. There is nothing less real about imaginary numbers than about real numbers or integers or rational numbers.

Also, real numbers, together with imaginary numbers, are in a superset called complex numbers. So real numbers are just a subset of other numbers. Not sure how you can see the 'real' part of real numbers signifying something 'real' when they combine perfectly into a bigger set of numbers that can also contain numbers you consider less 'real'. To me, it's just turtles all the way. Integers, rationals, real, imaginary etc.

But the most striking thing about imaginary numbers is how they enable one to describe real-world phenomena. So in some sense, the universe does indeed seem to behave according to laws that include imaginary numbers. We know of no other way to describe these things. So to me, that makes them at least at the same level of 'realness' as the other classes of numbers, possibly even more real because the math applies to more fundamental physical processes.

Re: What other kind of trading could there be?

[mark-t]

They are "imaginary" only because Descartes used the term to describe them, and then only because that is what he believed them to be, and by the time the complex plane was conceived a little more than a hundred years later, the term "imaginary" was entrenched, even though alternative terms such as "lateral" were proposed.

They exist as fully as the real numbers themselves do.

Re:What other kind of trading could there be?

[Anonymous Coward]

There is no other type of currency.

Re: What other kind of trading could there be?

[MachineShedFred]

c is already taken. Let's not confuse anything more than this discussion proves it already is.

Re: What other kind of trading could there be?

[Anonymous Coward]

But the most striking thing about imaginary numbers is how they enable one to describe real-world phenomena. So in some sense, the universe does indeed seem to behave according to laws that include imaginary numbers. We know of no other way to describe these things.

"God did it."

Re: What other kind of trading could there be?

[mbkennel]

> The way it's constructed is inherently flawed, incomplete, and can not be fixed. Kurt Gödel proved that in the 1930's.

No. The way mathematics is constructed has been re-examined carefully in the 20th century and the various kinds of assumptions made explicit and far better understood. As far as 'cannot be fixed' --- the various axiomatic schemes are various forms of doing that. Only if you mean 'there is no universal set of TRVTH axioms upon which everybody agrees to build mathematics" is equivalent to "cannot be fixed".

Godel pointed out limitations in certain kinds of proof procedures.

Re: What other kind of trading could there be?

[Anonymous Coward]

Hate to break it to you, but number we call "i" which is the square root of -1 is exactly as real as the number 1. Show me the number one, or any other number. Numbers, like temperatures, are not tangible things. Doesn't mean they are not real, or that they are not useful, or that they do not have predictive value. "i" is useful, unlike, say, magic sky fairies outside of Zelda games.

Re: What other kind of trading could there be?

[Sique]

They exist only in the sense that a "two" exists. They are numbers. Not things. Even real numbers aren't real in the thinginess sense.

And they exist in the mathematical sense only if you don't need any order on the number field. If you want an order that is consistent with algebraic operations, you can't have imaginary numbers. Algebraic completeness (e.g. the square root of -1) and order completeness (each finite set of numbers has a minimal element) are ruling out each other.

Yes, you can calculate with imaginary numbers. That doesn't make them real things. It makes them useful objects for calculations, if the calculations don't need order completeness.

Re: What other kind of trading could there be?

[Anonymous Coward]

That's ironic, because contrary to the name associated with it, the square root of -1 actually exists.

Descartes believed them to be imaginary (yes, he can be credited with giving them that name) because at the time expanding the idea of a number line to being just one axis of a number plane had not yet been thought of (the notion of a complex plane would come over a century later, and by that time, the term "imaginary" was very well entrenched).

The "imaginary" part is where you are supposed to "imagine" that y=x, then you can simply ignore full 2D vector math and just use i to imply a 90 degree rotation.

Re: What other kind of trading could there be?

[Anonymous Coward]

Imaginary numbers are just an extension of previous non-existent numbers.

An imaginary number is like infinity in that it is a function, not a constant.

Re: What other kind of trading could there be?

[Guignol]

It wasn't so much because of Descartes as it was Caradano's (and Tartaglia's)
Tartaglia's technique to find the root of cubic equations involved some terms that would sometimes be square roots of negative numbers. Which was a problem :)
But if you just decided to permit those 'imaginary objects' to stick around (after all, this is a power of three thing, it obviously crosses zero, so there must be a solution), then eventually the imaginary terms would eliminate each other giving you the real solution.

Re: What other kind of trading could there be?

[mark-t]

Cardano famously discovered and used them, but there was no convention of referring to them as unreal or imaginary numbers until Descartes' time. Descartes famously claimed that square roots were merely hypothetical, "what-if" scenarios, having no practical application to reality, and so Descartes used the term "imaginary" to refer to them, even inventing the "i" notation to specifically refer to the unit-length imaginary number which we still use to describe complex numbers today. From Cardano until Descartes, square roots of negative numbers were simply left in notation as unaltered radicals. Over a century after Descartes, when it was realized that the notion of the number line could be expanded so that it was just one axis of a complex number plane, it was realized that the terminology which had very obviously stuck by that time was simply an unfortunate artifact of what they historically knew at the time. Some effort was made to change it, one of them preferring the term "lateral", for instance, but those efforts never really grew in popularity.... Descartes' "i" notation and terminology was simply too well entrenched, and so it remained.

It's hardly the only time in history that something was named a term that was later discovered to not apply to it... Atoms, for instance, turned out to be very ironically named as well when it was discovered that they were not indivisible as their name suggests.

Re: What other kind of trading could there be?

[Sique]

But different than the 1, which exists in many algebraic objects (e.g. in all Abelian groups), i can only exist in mathematical objects without (partial) order. The problem with i is, that any order you define is not antisymmetric, e.g. from a = b and b = a, you can't conclude a=b, if there is i involved.

Re: What other kind of trading could there be?

[Sique]

Oh... slashcode. From a <= b and b <= a, you can't conclude a = b.

Re: What other kind of trading could there be?

[iggymanz]

WRONG. You are very confused.

I am very well aware of the usefulness of complex numbers, I have degree in physics. they are very useful in the models we use for electrical engineering, aerodynamics, etc.

BUT

that does not "make imaginary numbers real".

You have confounded a part of the model with reality. There is nothing in a real word airplane in a real air stream that is an imaginary number.

There is nothing in a real world electrical circuit that is imaginary either. We model things that produce lags and leads of voltage and current with them... but there are more cumbersome ways to model the same things too.

Re: What other kind of trading could there be?

[iggymanz]

No, you are committing the fallacy of asserting the consequent.

I did not say imaginary numbers aren't useful, they are an important part of the models we make.

"You can't explain over a century of physics without imaginary numbers"

Badly phrased, "we've made useful models for three centuries using imaginary numbers" is more accurate.

Does not change the truth of what i said, there are no imaginary numbers, nothing that corresponds to them, in the real world. They are a way of modeling, and really you could reformulate any quantum, electrical, mechanical or aerodynamic theory without them, instead making steps of calculating leading or lagging causes and effects. The complex number plane is more convenient is all.

Re: What other kind of trading could there be?

[noodler]

"Badly phrased, "we've made useful models for three centuries using imaginary numbers" is more accurate."

Are we talking about numbers or about phrasings of forum posts?

"nothing that corresponds to them, in the real world. "

That is not true tho, especially when you use the word 'correspond'.
There are -relations- that are only described by using imaginary numbers (well, complex numbers).
It's not about the actual magnitude of the numbers. Imaginary numbers are all about how they relate to our 'normal' numbers.
And we see these relations in nature as well.

Re: What other kind of trading could there be?

[noodler]

I'd say that they're more like 2D constants.
Every singular number actually becomes a point on a 2D surface.
Of course you can make a function out of them by substituting parts of it by a variable, but you can do the same with 'normal' numbers as well.
If i have the complex number 3+5i then that's pretty much a constant. There is no variable and so it's not a function.

Re: What other kind of trading could there be?

[iggymanz]

Those relations can be described without imaginaries in every case, they are just a tool for a model.

For example, for the reactive components of an electrical system, we can specify current, voltage, stored energy as reals and mathematically combine with the function for measured voltage and current with leads and lags.... using complex numbers we can more conveniently do that BUT there is nothing in an electrical circuit that "is an imaginary number"... only reals.

Ditto for QM probability density functions, aerodynamics, mechanics (energy in springs for example).... the complex numbers are tool for useful model, but are human constructs. The things that actually happen in the real world are strictly in the realm of reals, and in all cases the models can be done with only real functions combined with some less convenient math

Re: What other kind of trading could there be?

[noodler]

"using complex numbers we can more conveniently do that BUT there is nothing in an electrical circuit that "is an imaginary number"... only reals."
Your real numbers work great for DC circuits.
But please explain complex impedance using only reals.

"the complex numbers are tool for useful model, but are human constructs."
Let's be straight about this. ALL numbers are tools for useful models.
If you consider 'real' numbers to be real then you must also consider complex numbers (which contain imaginary numbers) as being just as real.
It seems you're trying to have the cake and eat it to.

Re: What other kind of trading could there be?

[iggymanz]

Circuits in this world have current and potentials measurable with real numbers, they do not have imaginary currents nor imaginary potentials. The imaginary components in calculations have to deal with modeling stored energies that change and effect the current and potentials. Those could be modeled with real number functions and added to the resistive contributions with time phase shifts.

In fact, would be good question for EE students to see if they understand how components act under time varying potentials and currents. The voltage across an inductor isn't an imaginary quantity, it's proportional to changing current. The current out of a capacitor is proportional to changing potential. The functions of these reals can be combined with the function for the resistive components, but would need time phrase shift.

Re: What other kind of trading could there be?

[iggymanz]

No it doesn't, you have shallow understanding of EE.

Complex numbers are used in EE models.

There is no imaginary current nor potentials in a circuit, those imaginary numbers are a convenient way to deal with stored energies that effect the actual current and potentials.

In fact, that would be great EE exam question, to make the student model the reactive parts with real number functions, then combine them withe the resistive contributions with time phase shifts, but not allowing any imaginary nor complex numbers.

They're a model, a useful construct of the human mind

Re: What other kind of trading could there be?

[iggymanz]

yes these human constructs work that way. But they don't exist in nature, math does not exist in nature. we have useful models, is all.

we know all our models are incorrect and flawed. Some of them even contain "tricks" mathematicians know to be false and bad though useful (e.g. quantum electrodynamics, our best model of electromagnetic phenomenon)

One World Exchange

[Anonymous Coward]

We need a regulated One World Exchange where we can trade cryptocurrencies and tokenized stocks.

Re:One World Exchange

[Anonymous Coward]

So much for that whole "decentralized" thing. You know, what we were told was the entire point of crypto.

Re:One World Exchange

[nitehawk214]

I think this is the joke they were trying to make.

But anymore, who knows, maybe they want government guarantees on digital currency.

Bitcoin is more like an investment for people

[SmaryJerry]

There was hope that it would become a true currency that started getting accepted everywhere when countries allowed it or said they wouldn't ban it. It turned into a speculative investment instead. It was already accepted at very few websites and services but with the massive decrease in value even less websites and services are accepting it as a payment. Who would invest or accept payments in a currency with massive inflation? Basically no one that has alternatives. The downward spiral cycle is now self perpetuating. Even if a company does accept a bitcoin payment they want to convert it out of bitcoin as soon as possible so they don't take a loss, this just lowers bit coins value even further and the cycle continues. There has to be some massive event to stop the spiral and change public perception. Fake trade volumes can only hold off a collapse so long.

Re:Bitcoin is more like an investment for people

[Anonymous Coward]

It's funny watching lolbertarian geeks learn about the purpose and history of banking systems in real time.

When your currency has rampant inflation nobody can save a dime and everyone tries to convert it in to goods and physical assets that store value as quickly as possible (Or another currency that is stable, which is why the physical US cash dollar is used more outside of the US than inside the US) This is pretty inefficient via transnational losses. It also distorts the economy because people hoard goods, gold, etc.

When your currency has deflation people hold on to it instead of spending it. - Which is the whole point of money. The economic engine grinds to a halt as spending slows. Nobody buys anything for fear of losing money.

When your currency is stable people can save without fear - And spend without fear.

Which is where central banking comes in - One of their big jobs is to keep currency stable. Modern institutions have determined that a tiny bit of inflation is good - As it's a realistic and attainable target, and it helps churn the economy as it encourages people to invest their savings to keep over the price of inflation.

This is basic econ 101 stuff that should have been taught in high school. Instead we have supposedly educated people spreading bizarre conspiracy theories, clueless of the even most basic roles of central banking.

And supposedly rational people investing their life savings in btc..

Re:Bitcoin is more like an investment for people

[houghi]

Many years ago I knew somebody working on the Frankfurt Stock Exchange. During a calm period, they would "trade" things that where not standard. e. g. a 10m2 of pie, a truckload of Christmas trees or, as one point, 2 camels.

This was just "fun" for them as they where bored. Buy low, sell high, so they all made some money. That is except for the last one. The camels where donated to the Frankfurt zoo, I believe.

This is the same. The traders do not care what they trade in, as long as they can make a bit of profit on the buying and selling. I9t could be chocolate, bonds, pork belly, white female slaves or Bitcoin. As long as they can take a bit of profit between the seller and the buyer, they are happy to take it.

Re:Bitcoin is more like an investment for people

[Anonymous Coward]

There was hope that it would become a true currency that started getting accepted everywhere when countries allowed it or said they wouldn't ban it. It turned into a speculative investment instead

There is no such thing as "speculative investment" because investments and speculations are opposites.

Re: Bitcoin is more like an investment for people

[Anonymous Coward]

No, no, everything is an investment! Iâ(TM)m lot slacking reading slashdot, Iâ(TM)m investing in myself!

Re: Bitcoin is more like an investment for people

[Anonymous Coward]

0/10, though the unicode is a nice touch.

Re:Bitcoin is more like an investment for people

[Anonymous Coward]

Its funny seeing old people talk about things that they dont understand. Crypto is not just BTC though. There are also other cryptos out there. And the best part is... in 2-3 years most of the stuff you buy is going to be tracked using crypto tech and you wont even know it.

Re:Bitcoin is more like an investment for people

[Anonymous Coward]

Found the high school dropout.

Re:Bitcoin is more like an investment for people

[Anonymous Coward]

This is the same. The traders do not care what they trade in, as long as they can make a bit of profit on the buying and selling. I9t could be chocolate, bonds, pork belly, white female slaves or Bitcoin. As long as they can take a bit of profit between the seller and the buyer, they are happy to take it.

This isn't the same in that there is no actual buyer, seller, or trader. It's fake transactions to create volume and price movement.

Re:Bitcoin is more like an investment for people

[FlamingGuts]

Bitcoin doesn't experience inflation. It's actually the opposite. There is a finite amount of Bitcoin.

Re:Bitcoin is more like an investment for people

[SmaryJerry]

While it is not being flat out printed in mass quantities, the inflation I'm speaking of is the decrease in it's purchasing power. While the overall quantity may be a static number, it's transactions slowly were done in smaller and smaller fractions of coins. It is digital so it has basically infinite coins already, depending on how small you chop it up, with quantity of coin determined relative to the value of coin.

Crypto Currencies Are Scams

[Anonymous Coward]

Are we learning yet?

Wait, so...

[Izhido]

... is it real or is it fake?
This is not the first /. article where the title and its contents contradict each other.

*IN THE YEAR*.

Seriously, Slashdot ?

Re:Wait, so...

[Narcocide]

What he means is, there is a real market for fake exchanges.

Re:Wait, so...

[SmaryJerry]

They are saying 95% of trading is fake but they want to create a fund that ignores that 95% of fake trading and just focuses on real trading. It won't work though because the regardless that 5% will be impacted by the 95% of fake trading.

Re: Wait, so...

[Anonymous Coward]

Great! As a bitcoin shorter I depend on 95% of the market being the greater fool

Re:Wait, so...

[Anonymous Coward]

That other 5% is being propped up by the Tether scam.

Re:Wait, so...

[h4x0t]

Article is clear. 95% is fake, they want to continue studying the 5% that is verifiable.

I'm old and...

[Anonymous Coward]

I dont understand bitcoin, SO ITS FAKE OR TULIPS!

- This site, mostly.

Re:I'm old and...

[Opportunist]

It has less to do with being old per se. Only with having seen a lot of fads, scams and get-rich-quick schemes come and go...

Re:I'm old and...

[Anonymous Coward]

> fads, scams and get-rich-quick schemes come and go...

Oh yea? Which ones have lasted more than a decade?

STILL FAD!

Re:I'm old and...

[Opportunist]

Cellphone-Apps.

Re:I'm old and...

[Rob Cebollero]

Fads that lasted more than a decade?

How about:

• scientology
• anti-vaccination movement
• perpetual motion / free energy (and all fringe science fads in general, of which Blockchain-ism is arguably just another instance)
• spiritual communication a.k.a. lonely grandma parasitism
• kardashians, etc.
• Amway / MLM generally
• Bernie Madoff
• most if not all religions

All of these are likewise 'billion dollar markets,' though they lack one important missing ingredient: a publicly tradeable unit that unifies the basic settlement of valuation among their adherents, which they lack either because they are too dissimilar (in the case of fringe science crowds) or because introducing one would be illegal or at least highly frowned upon (cults, whether of the religious or personality variety, ponzi schemes like madoff).

Thankfully, bitcoin has introduced a 'fix' for this structural deficiency.

The main innovation of Bitcoin is to facilitate a way to ask for actual money in exchange for fan club tokens representing shares in a fan club built around unsubstantiated economic decentralization woo, and then make a speculative market built on highly centralized control over liquidity to goose all the visible public engagement metrics like Tx volume, scarcity and market cap in order to attract and ensnare naive and greedy outsiders. By the time these outsiders figure out they are chasing a mirage, the most of the early promoters/adopters have disappeared, died, or pivoted to different messaging.

This is a feat that Bitcoin and the cryptocurrency sphere as a whole largely accomplished thanks to piggybacking on the larger social media feedback-loop factory which gave it (and a lot of other nonsense) the bionic legs that enabled it to reach legions of greater fools in unprecedented time, long before the truth could possibly hope to catch up.

Exchanges have always been Bitcoin's #1 weakness

[Rob Cebollero]

and it's #1 strength. Exchanges are the dirty little secret that makes Bitcoin's (and every cryptocurrency's) model "work". They are unofficial, unacknowledged, yet fundamental layer of the blockchain protocol (yes, 'blockchain', not just 'cryptocurrency'), the layer that facilitates liquidity.

And therein lies the weakness.

The entire 'decentralization' claim of Bitcoin is utterly vitiated by the fact that the only form of market leverage that actually matters for a supposed store of value - *liquidity* - is highly centralized (even worse, tends toward further centralization with time, rather than away from it), completely opaque due to being gated and obfuscated by a handful of major exchanges, who can only perform real-time price matching by facilitating off-blockchain transactions on their internal ledgers. Opaque, that is, except to those who happen to operate one of these shops and can see all the activity on their internal reports before anyone else does.

The handful of so-called 'decentralized exchanges' are useless science fair toys, as the Tx fees required to operate them, not to mention the enormous aggregate lag in updating their order books makes them complete non-starters as solutions to this problem.

lol

[Anonymous Coward]

lol turdcoin lol

Invest in Bitcoin NOW

[Anonymous Coward]

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Re:Invest in Bitcoin NOW

[Anonymous Coward]

Bitcoin clearly has all the attention needed to become a MAJOR investment target for SMART investors. Obviously SLashdot.Org backs it or else they wont talk about it so much, and now with major companies like IBM and Microsoft and Apple on bord it is an UNBEATABLE investment. People need to get in EARLY or else be at major risk of LOSING OUT. I am a top 500 investment advisor at a major firm and I tell all my clients to sell there bad performing fiat currency and things like gold and other risky investments and instead push everything they have into Bitcoin because it is the absolute FUTURE of everything. All of them have come back and given me prase for being so forward looking and brilliant, but now I want to make sure this information is put out there so others can get the benefits of the AMAZING investment that is Bitcoin!

Thank you for that testimonial APK

Regulations are bad mmm'kay?

[Anonymous Coward]

One again, libertarian dotards hit the wall of reality at full speed.

Unregulated markets are nothing more than a license to steal from idiots.

Fake trade volume has been there since it was $11

[Anonymous Coward]

I know because I mined it at $11 when it cost that much in power using a midrange OpenCL 1.0 GPU right as the 1.1 generation was coming out. The rise from $1 to $11 dollars was carried mostly on hype news by tech websites and then steadily from there up to ~600 or so before the MtGox scam was exposed when all those bitcoins disappeared. During that time is when ASIC mining started becoming a thing, backed by ~3 ASIC design/bitcoin mining companies who after the initial run of units was given out to customers, started taking longer and longer to ship them to customers, as was discussed and later proven: Because they were performing subsidized mining with the equipment for a month or two of maximum profitability then shipping it to the customer as profit declined, allowing them to maximize the revenue for themselves while having the customers foot the bill. Both the exchange manipulation and the miner shipping scams have continued to today, only now Big Money has gotten into the mix as well, just as people are starting to wise up to the myriad of problems with the industry. It's not simply a lack of deregulation, endemic cultural failings of the bitcoin community dating to its earliest days. Most people don't even remember that DogeCoin was made as a memecoin to mock Bitcoin as a real currency, then rapidly inflated in value to be a competitor (Is it still?)

There is no fake trade

[Anonymous Coward]

They are alternative trades.

Krypto Kurrency

[Anonymous Coward]

fake money, this is my surpised face. krypto kurrency. make 'merka greedy again.

Krypto Kurrencies Are Scams

[Anonymous Coward]

No.

Smaller than previously thought?

[Anonymous Coward]

So now we need an electron microscope?

Bitcoin was always a Ponzi scheme

[tomhath]

It required a constant infusion of cash to pay those who got in early and had the sense to cash out when they had a chance.

Re:Bitcoin was always a Ponzi scheme

[Anonymous Coward]

This is such a stupid comment.

EVERYTHING in the market requires people who want to buy a share later to pay a premium in price to the people who bought shares early if the early-adopters want to realize a profit. This is the same for Apple, IBM, Microsoft, etc.

Sometimes fewer people want to buy shares, and the lack of demand causes a drop in value - sometimes so bad that the early adopters lose their money.

That's not a ponzi scheme.

Re:Bitcoin was always a Ponzi scheme

[tomhath]

EVERYTHING in the market requires people who want to buy a share later to pay a premium in price to the people who bought shares early

Completely wrong. Investing means buying shares of a company that is expected to become more valuable by earning a profit through business operations. Apple and Microsoft earn billions per year - that income does not come from people speculating on the share price, it comes from selling their products. The price of a share goes up or down depending on what investors expect the company's income will be in the future; a higher price for a more valuable company is not a "premium".

Of course, some people can be talked into buying based on emotion rather than a reasonable expectation of future earnings (e.g.Tesla). That's speculation, not investment, and also borders on Ponzi schemes.

Re:Bitcoin was always a Ponzi scheme

[MachineShedFred]

Except that those corporations you name have real value behind the share price - actual revenue that is audited, plant, property, equipment, assets, patents, etc. In theory you could liquidate IBM and divide up the proceeds to the shareholders with a ratio according to how many shares each one owns and arrive at some number in the neighborhood of their market cap.

No such thing can be said about Bitcoin, because each coin only represents spent energy to "find" it with a massive mountain of speculative value on top - there's no actual real-world thing backing its value.

Re:Bitcoin was always a Ponzi scheme

[MachineShedFred]

You were making a good point, and then you took a shot at Tesla for no reason. Tesla still has hundreds of thousands of customers, and products they sell, as well as real intellectual property, a factory, several offices, much real estate holdings for stores and service centers, and real revenue in the form of auto sales and energy generation, sales, equipment leasing, servicing contracts, etc.

Not even close to a ponzi scheme by your own god damn logic.

Now if you wanted to say that Tesla is overvalued, or is in a speculative bubble, that's completely fair. But referring to it as a ponzi scheme is hyperbolic at best, and detracts from your own argument.

Re:Bitcoin was always a Ponzi scheme

[Anonymous Coward]

RETARDS.

Cryptocurrencies ARE an investment early on... not by any traditional "returning value" capability... but by being high quality greenfields that naturally soak up massive Fiat inputs on forex markets into fixed quantities, thus massivly increasing relative power of those cryptocurrencies over their inputs over time. UNTIL forex equilibrium is reached. Then cryptocurerncies behave more like traditional Fiat than investments. Of course Fiat will have died by then anyways. That's the whole point.

So long as you buy in with reasonable allocation percentages early on before equilibrium, you'll indeed do quite well tracking and rebalancing among the top cryptos over time.

Only quantity capped fully distributed p2p transaction mineable privacy coins are worth your time. Everything else are worthless Fiat shitcoins.

Re:Exchanges have always been Bitcoin's #1 weaknes

[swillden]

Exchanges are the dirty little secret that makes Bitcoin's (and every cryptocurrency's) model "work".

Bitcoin, yes. Most, perhaps even all, other extant cryptocurrencies as well. But I'd be careful not to exclude the possibility that it's possible to design a cryptocurrency that actually does scale, and could therefore achieve liquidity without exchanges.

Different?

[EllisDees]

>Up to 95% of all reported trading in bitcoin is artificially created by unregulated exchanges,

Is this any different than the automated 'trading' that happens on the regulated exchanges. The kind of trading where 10,000 bids/ are made for a stock in one second and then immediately withdrawn in order to manipulate its price?

Re: Different?

[Anonymous Coward]

No, dumb fuck those are just quotes. They take a risk of the bids being lifted no matter how short the duration. They become executions when matched by the exchange

Re:Different?

[Anonymous Coward]

These are legitimate bids though. They are added / removed based on arbitrage analysis between exchanges and trading venues. When the arbitrage opportunity disappears, they pull the bid. We are also talking fractions of a penny, so no "real" trades are affected. The reason this gets attention is because the old school brokers used to profit handsomely from inefficient markets where the bid/ask spread was wide and they kept the difference. As computers were used to narrow the spreads Stock Brokers lose money, computer algorithms make a fraction of it but in an automated and consolidated way and "real" investors benefit from narrower spreads.

The high speed trading happening on regulated exchanges is completely different than completely fake transactions at fake prices.

Re:Different?

[Rob Cebollero]

No, because the HFT trading you are referring to is not done clandestinely by the exchanges themselves (to create the impression of volume, necessary in order to entice bigger and bigger fish into your exchange, and the sideline balances that come with them - upon which you make float and charge fees for in/egress), but by outside specialist trading companies who pay top dollar for real estate with advantageous geographic position as near as possible to the exchange's trading floor. This necessitates their being physically located in highly visible jurisdictions, as those are where the exchanges are.

Also they are required, as a result of being unable to conceal their physical presence, to submit to regulation by their host state and provide audit trails on demand, which are likewise algorithmically monitored for obvious manipulation tactics. Do some sneaky innovations slip through from time to time? Yes, but these are quite rare and have very short shelf life because their HFT competitors sniff them out and either copy or report them. Discovery risks enormous fines being brought upon the shop, and though they are not on going to obliterate the company, they are calculated to negate any profits gained by their use.

All exchanges operate like this

[Anonymous Coward]

Every stock exchange on the planet operates exactly like this. There are no fake trades. A trade that is executed is not a trade at all.

There are two kinds of trades. One of those types is a trade in good faith. The other is not. A trade in good faith is one where you are buying or selling a security for the purpose of either eliminating risk or speculating for profit. A trade in bad faith is one where you are not trading for one of these two purposes.

Trading a million times a second to speculate for profit, eliminate risk, or both, is still trading in good faith. High speed trading is essential for maintaining stability and liquidity in a market, especially when that market would otherwise have low volumes and wild price swings.

Stop complaining about a crypto exchange behaving exactly like every stock exchange on the planet.

Re:All exchanges operate like this

[Anonymous Coward]

Wash-trading is illegal and that's where the fake volume is coming from.

Re:All exchanges operate like this

[sexconker]

You can report individual transactions as a wash sale on your fucking taxes. It's perfectly normal.
Similarly (but not quite the same) you can report purchases as being replacement shares.

Re:All exchanges operate like this

[Anonymous Coward]

you don't know what you are talking about. wash trading is illegal on all regulated stock exchanges. why comment when you are fucking clueless on the topic.

Re:All exchanges operate like this

[Anonymous Coward]

that isn't wash trading. The wash trading that is illegal is brokers or exchanges selling and buying from themselves, not selling and then buying back to replace. the later is legal, the former is market manipulation and is highly illegal.

Re:All exchanges operate like this

[_merlin]

Wash trading (buying then selling at the same price) is not illegal. It's unprofitable for anyone besides the exchange and possibly the broker depending on the fee structure, so people will try to avoid doing it, but it isn't illegal.

For example on Shanghai Futures Exchange (SHFE), there's a CNY3.6 commission per contract for opening position or closing position from previous day, and no commission for closing position the same day it's opened. So if I buy a future and then sell it at the same price seconds later, I've increased my turnover, but I've lost CNY3.6 in the process. Now if the broker gets on my back saying I'm not generating enough turnover and threatens to take away my 10Gbps Ethernet port and put me on 1Gbps Ethernet, I might tune my quoting strategy to tolerate more wash trades, but I need to be careful about it or I'll eat up all my quoting profit in commission.

Actually trading against your own orders is against the rules on some exchanges, but this is called self-trading or self-hitting, and isn't the same thing as wash trades. Self-trading is strictly prohibited in China, but allowed in Australia, for example. Participant IDs are visible on trades after settlement in Australia, so you can see how much self-trading was going on if you really want to. But as with wash trading, you don't generally want to do this because you'll be paying commission for nothing.

Re:All exchanges operate like this

[Anonymous Coward]

It is perfectly legal in the cryptocurrency market. I can spoof the eff out of you all day long, trade with myself, aggressively push the price wherever I want it on a causality-leading exchange to profit from this on a more liquid and higher leverage exchange at your expense until I have all of your money, and so on. None of this is illegal. Now, you wanna trade with me?

Welcome to the crypto markets, the only totally free market left on earth.

Note, "free" might not mean what you think it means or think it should mean.

"Free" means "shoot to kill, surrendering soldiers will be shot.".

I am simply conveying to you the facts.

Bitcoin To Free Us All BIGLY!

[Anonymous Coward]

Slash mods were such WHORES for this bitbubble. SAD.

Re:Exchanges have always been Bitcoin's #1 weaknes

[Comrade Ogilvy]

It is not impossible, but I am skeptical.

Liquidity is a complex concept, which includes both the ability to convert into and out of an "asset class" at all, but also certain degree of short term price stability. Short term price stability does not easily come from a distributed model. Large exchanges have the resources and skills to help maintain price stability (even imperfectly), and pocket a bit of profit along the way.

This is what you wanted ...

[Anonymous Coward]

So for all of the people who told us that the strength of cryptocyurrency was that it didn't involve governments, and would be magically exempt from regulations by virtue of "because we say so" ... this is exactly what you wanted.

You wanted unregulated financial markets, you've got them.

Now you get to own all of the criminal behavior and scams which come with that, and you also get to own not having a recourse.

Honestly, WTF did people think would happen?

The reason financial markets are regulated is because humans are selfish bastards who will do anything to gain an advantage, especially when it comes to money.

Getting scammed by shady players is a design feature of cryptocurrency, apparently. So stop fucking whining about it.

The problem is all of the people who had no idea of what any of this stuff was who though they'd get rich by doing nothing, and utterly failed to understand they were playing in a market which offered no legal protections whatsoever.

There is no sympathy to be had ... this is what you chose. If you didn't understand what you chose, that's your fucking problem.

Been to a faucet recently

[Anonymous Coward]

Safer to stay away.

BITCOIN FRAUD???

[Anonymous Coward]

"longstanding concerns that a bitcoin ETF would leave investors exposed to fraud and market manipulation"

IMHO, Bitcoin & all its cryptocurrency offspring are just a new kind of scam developed for internet age!!!

IMHO, general public already know this now & that is why their prices & volumes keep going down!!!

IMHO, sooner or later, all HODLers will also see the inescapable reality & the final big panic of selling (for any price) will start & all cryptocurrencies will slam to $0!!!

The reverse of pump and dump?

[Anonymous Coward]

A company trying to get a Bitcoin-related license from a gov't agency says most Bitcoin transactions are bogus? Is anything wrong with that? I'm sure these guys aren't trying to make the Bitcoin market crash a little, so they can drive up the price a bit when they get their license approved.

Bitcoin

[maxiposik]

Trading is quite a difficult theme. If a person is looking for internet job, I wouldn't recommend him trading. If you need money urgently, you'd better try to win in bitcoin casino top. There is no guarantee that you will win, but there is a chance.