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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.
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.
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).
File under 'M' for 'Manic ranting'
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.
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.
Decentralization: the brief interval between the decline of one centralized regime and rise of another.
If you work with electronics you'll find that the square root of -1 actually does exist in reality.
https://www.electronics-tutori...
Do you have ESP?
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...
Do you have ESP?
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'.
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.
Don't fight for your country, if your country does not fight for you.
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?)
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...
We used to have a Bill of Rights. Now, with the rights gone, all we have left is the bill.
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.
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.
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.
Decentralization: the brief interval between the decline of one centralized regime and rise of another.
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.