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Bitcoin Businesses The Almighty Buck

Researchers Find That One Person Likely Drove Bitcoin From $150 to $1,000 (techcrunch.com) 117

An anonymous reader shares a report: Researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman have written a fascinating paper on Bitcoin price manipulation. Entitled "Price Manipulation in the Bitcoin Ecosystem" and appearing in the recent issue of the Journal of Monetary Economics the paper describes to what degree the Bitcoin ecosystem is controlled by bad actors. To many it's been obvious that the Bitcoin markets are, at the very least, being manipulated by one or two big players. "This paper identifies and analyzes the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired," the researchers wrote.

"During both periods, the USD-BTC exchange rate rose by an average of four percent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity. Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months." The team found that many instances of price manipulation happened simply because the market was very thin for various cryptocurrencies including early Bitcoin.

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Researchers Find That One Person Likely Drove Bitcoin From $150 to $1,000

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  • by bobbied ( 2522392 )

    I was selling a bridge and some beach front property in Arizona...

    • by Anonymous Coward

      Arizona? You mean the state now known as Blockchainizona?

    • by Oswald McWeany ( 2428506 ) on Monday January 15, 2018 @02:11PM (#55933187)

      I was selling a bridge and some beach front property in Arizona...

      If you have any left I'll buy it with some dogecoin.

    • I was selling a bridge and some beach front property in Arizona...

      Nice try, Rusky troll! That sneaky Putin is paying you to post messages on \. to try & throw us off the trail. We know it was Donald Trump, aided by your comrades using Facebook ads to manipulate the price of Bitcoin! Mueller's has the goods and is going to spill the beans to the media any day now!

      • Maybe the Russian shills get paid in Bitcoin and perverse incentives cause them to shill for Bitcoin on company time to try to protect their nest egg.

        That would explain why the people getting paid to spend Moscow Gold on Facebook ads only ended up spending a few bucks on some laughable awful ones.

        https://www.politico.com/story... [politico.com]

        'Buff Bernie' coloring book

        This ad promoted a coloring book called "Buff Bernie," filled with "very attractive doodles of Bernie Sanders in muscle poses." It added that "I've recently heard some hateful comments from the Hillary supporters about Bernie Sanders and his supporters" - language aimed at stirring up the kinds of intra-party divisions that would later flare after the first release of Russian-hacked Democratic Party documents during the summer of 2016.

        Posted on: LBGT United group on Facebook
        Created: March 2016
        Targeted: People ages 18 to 65+ in the United States who like "LGBT United"
        Results: 848 impressions, 54 clicks
        Ad spend: 111.49 rubles ($1.92)

        Whoever did paid for that ad to try to influence a US election didn't care about their job.

    • by SScorpio ( 595836 ) on Monday January 15, 2018 @02:55PM (#55933505)

      You wouldn't happen to be selling the London Bridge, would you? If so I might be interested.

      https://en.wikipedia.org/wiki/London_Bridge_(Lake_Havasu_City) [wikipedia.org]

    • by Actually, I do RTFA ( 1058596 ) on Monday January 15, 2018 @02:59PM (#55933521)

      some beach front property in Arizona

      I wonder if future generations won't get the joke, due to there being beachfront property in Arizona.

  • by Anonymous Coward

    (searches feelings)

    Nnnnnooooooooooooo!!!!

  • This was discovered years ago. Why is it being published again now?
    • by Anonymous Coward

      Someone is looking to buy and wants to get their bitcoin for less.

  • Poorly worded (Score:5, Insightful)

    by JeffSh ( 71237 ) <jeffslashdot@m[ ].org ['0m0' in gap]> on Monday January 15, 2018 @02:00PM (#55933111)

    this is a disingenuous post. It doesn't mention the analysis is about the 2013 mt gox event until the second paragraph yet somehow infers during the first paragraph that bitcoin is a highly manipulated market subject to the whims of 1 or 2 individuals.

    i don't believe that's the case in 2017. the market is completely different in 2017 vs 2013 yet a naive reading of this post may infer conclusions are being drawn about 2017/18.

    • Re:Poorly worded (Score:4, Insightful)

      by JoeyRox ( 2711699 ) on Monday January 15, 2018 @02:08PM (#55933163)
      i don't believe that's the case in 2017. the market is completely different in 2017 vs 2013 yet a naive reading of this post may infer conclusions are being drawn about 2017/18.

      The daily volume for bitcoin is less than $150M, so the market is still exceedingly vulnerable to price manipulation from a few large holders trading back and forth.
    • Re: (Score:2, Insightful)

      by mysidia ( 191772 )

      This is more evidence that Slashdot editors are non-neutral reporters pushing an anti-Cryptocurrency agenda and
      happy to include fake news in order to further it. I am not asserting the study was biased, but the bias is being shown in the SELECTION OF ARTICLES that
      Slashdot chooses to post on this topic, AND the biased wording of the summaries.
      This makes me sad.

      I mentioned previously the copy+pasting of articles misrepresenting the South Korean position on virtual currencies.

      The study this article is talki

      • Re: (Score:3, Funny)

        by Black Parrot ( 19622 )

        This is more evidence that Slashdot editors are non-neutral reporters pushing an anti-Cryptocurrency agenda

        Funny, I thought it was a bitcoin/tesla fan site.

      • The fake news bit is the article implying without saying that the LAEST / Current rise could be related to manipulation.

        Couldn't it?

        • by mysidia ( 191772 )

          Couldn't it?

          It is not impossible -- there are various theories that could made about the price,
          but the study does not offer any evidence or lend any valid credibility supporting that theory,
          and this article is listed as a News / Study, not an editorial, therefore an objective reporter should not be suggesting this....

      • What do you expect? Slashdot has been spamming us with about 2 Bitcoin articles a day for the past few years, with no way to filter them out. I'm sure that there are more than a few of us here who are rooting for Bitcoin to fail, so we can go back to badmouthing Microsoft and IBM instead.

    • Re:Poorly worded (Score:5, Informative)

      by DarkOx ( 621550 ) on Monday January 15, 2018 @03:26PM (#55933661) Journal

      don't believe that's the case in 2017. the market is completely different in 2017 vs 2013

      Completely different in that yes there is wider distribution now than back 2k13. To say the market is completely different is a bit of streach. This page has some tables with data from September '17. You can clearly see that top 1-2% people have about half the BTC market.

      https://medium.com/@BambouClub... [medium.com]

      Oddly that is pretty close to the distribution of wealth in general across the world. Maybe this is simply a feature of some other driver in modern finance....Another topic.

      At any rate it cannot be said that BTC isn't thinly traded and their are not a handful of people with large enough holdings to manipulate the market. This isn't a BTC specific problem, Soros did it with the Pound in the 90s but... its clearly not a problem BTC has solved either.

      • by JeffSh ( 71237 )

        I appreciate your thoughtful comment, and I agree with you. I think it's a very wise observation that you make about 1-2% of people have half the BTC market and that this reflects the global economic reality of where the wealth is also.

        I think this is a great insight and very useful in thinking about the future of our global economy and whether bitcoin plays a role in it, and if it does, what that role might be. i am hopeful a sound digital money like bitcoin will help fix the rules from outside manipulatio

      • Repeal the 17th Amendment TODAY! Also Please Read http://www.gnu.org/philosophy/... [gnu.org]

        Have never seen anyone else who was with me on this one. Glad to learn there is at least one.

      • No. It's a bullshit article. The writer MODELED Bitcoin AS THOUGH it reflected the real world; i.e., he just assumed that to be the case and made a graph depicting that. It's a what-if scenario, not an actual analysis of the Bitcoin marketplace.

        Quote:

        "I have modelled the distribution of Bitcoin Wealth in a way that disregards Wallet and Address data entirely.

        Assumptions

        Power Law applies to Distribution of Bitcoin Wealth.
        Distribution of Bitcoin Wealth exactly mirrors that of Global Wealth.
        25 million Bitcoin

    • the market is completely different in 2017 vs 2013

      Yes, in 2013 we only had geek speculators, today we have wall street and non-geek general public speculators. A far healthier environment. ;-)

    • i don't believe that's the case in 2017. the market is completely different in 2017

      ABSOLUTELY Why it'd probably take at least six people to rig the Bitcoin market today.

      I am curious why it is hypothecated that rigging a cryptocurrency market is a bad thing. Seems to me that if you have a bunch of this stuff stashed someplace safe (And, tangentially, where might THAT be?) You'd be rooting for someone to come along and arrange another quick 600% jolt.

      • by JeffSh ( 71237 )

        its plausible that bitcoin may be an asset class that accidentally becomes relevant through the early adopters efforts.

        so if you hold bitcoins, you have an incentive to increase its value, so you manipulate the market to increase its value, but then adoption takes off. so adoption takes off, people buy some, lots of people buy some, when do you sell? how do you sell? if you sell over a long enough time and manage to not tank the market, if demand is steady and its sound money system, then naturally it will

    • It is? 97% of all bitcoins are held by just 4% of all addresses [businessinsider.com]. With about 600,000 unique addresses [blockchain.info], that means that 24,000 addresses control 97% of Bitcoin. It does take a small fraction of the total value of the currency to break it; witness George Soros doing it to the UK in 1992 (Black Wednesday) with $1 billion - against ~$300 in currency. That means about 0.3% of all Bitcoin would be all you need to break it, in terms of value. With so few controlling so much, there are bound to be many, many pe
  • Wealth distribution (Score:5, Interesting)

    by Solandri ( 704621 ) on Monday January 15, 2018 @02:03PM (#55933131)
    Why do people get upset that 1% of the population owns 50% of the world's wealth [theguardian.com]. And in response they flock to something like bitcoin, where 1000 people [bloomberg.com] or 0.007% [statista.com] owns 40% of the wealth?
    • by Anonymous Coward

      Because they don't actually care about equality and are only interested in what they can get for themselves.

      They complain about 1% of people having the world's wealth because they want some of that money. They flock to bitcoin because they see it as a get rich quick scheme.

      • by hey! ( 33014 )

        The problem with some notions of equality is that they don't take into account the fact that money, like everything else has diminishing returns.

        About ten years ago researchers looking at this question discovered that while perceptions of personal success do continue to rise with income, income above $70,000 ($98,000 in current dollars) has essentially zero impact on emotional well-being -- the actual quality of life experienced by the individual on a day to day basis. In other words while our wants are fl

        • by ad454 ( 325846 ) on Monday January 15, 2018 @04:06PM (#55933949) Journal

          Oh please, not this again.

          The minimum amount of money required to be successful at life varies per region, and must be sufficient to buy a modest 2-3 bedroom family home and car, while being able to raise a small family in modest comfort without incurring massive debt, while still having enough for retirement and unforeseen medical issues.

          In the San Francisco Bay or Vancouver BC area, not even $100k per year is enough for this, due to massive home prices.

          • by hey! ( 33014 )

            Sure, it varies; about $100,000 is an average figure. But again the point isn't income, it's consumption levels.

          • Re: (Score:3, Insightful)

            by rogoshen1 ( 2922505 )

            I've always thought that study, and the theory behind it is something cooked up by MBA types to justify not handing out raises/bonuses

            "See, we'd pay you more -- but we care too much about you and your emotional well being to give you more money."

            The corollary is that the C levels and board members are so lavishly compensated out of deep seated feelings of self loathing.

            • by ceoyoyo ( 59147 )

              I doubt it. There's strong association in management theory between financial compensation and performance. If you pay people more, they're more likely to do what you want.

              That study suggests that's only true up to a point, that point being what you tend to pay your best non-upper management employees.

              The logical implication of that is that paying upper-level managers more money will not correlate with better performance, which is certainly the opposite of what the MBA-types like to claim ("we have to pay

          • by ceoyoyo ( 59147 )

            One of the reasons for that is the presence of rich people. If there are lots of people with high incomes, they do things like buy up the best real estate and what's left is more expensive.

            The actual numbers don't really matter (as should be expected, because they're made up anyway), just your position in the distribution.

        • by ceoyoyo ( 59147 )

          That's an interesting take on that observation.

          I read it more along these lines: very high income doesn't really make you happier, and the happiest places are countries where income inequality is low. So not only do super rich people make a bunch of people unhappy and poor, they also don't make themselves happy.

          As another poster pointed out, the actual number required to have an optimum income varies in different places, but that's in large part due to the amount of money other people have. If a bunch of

      • Because they don't actually care about equality

        Of course they care about equality. They just want to be most equal.

        (Oh, OK, George Orwell said it first and better "Some animals are more equal than others" Animal Farm 1945)

    • Don't confuse them with facts.... This isn't about facts but feelings!
    • Re: (Score:1, Insightful)

      by Anonymous Coward

      Plenty of people have avoided flocking to bitcoin. Myself included. And the reason you gave is just one of many reasons why.

      Once upon a time, I was also upset that so much of the world's wealth was concentrated among the top 1%. I thought long and hard about what I could do about this, and came up with a plan. It involved getting an education in a high-paying field that had a low labor supply. And subsequently, a job.

      Now, I am a member of the 1%, and much less upset about things.

      If you can't beat 'em,

    • A few things:

      1) Your post is a little ambiguous. Do you want an explanation as to why people get upset that 1% of the population owns 50% of the world's wealth? Or are you just asking why those people who are upset also like bitcoin?
      2) I'm not sure it's the same people. That is, the people who are upset about the disparity in wealth distribution are the same people buying bitcoin, at least not exclusively.
      3) In either case, I doubt that they're buying bitcoin in response to being upset about the dispa

    • Re: (Score:3, Informative)

      by Gavagai80 ( 1275204 )

      Because they're different people. The ones flocking to bitcoin (besides the speculators who have no personal values, and the drug addicts) are the libertarians who object the government regulations and taxation and laws that limit the 1% to a mere 50% of the world's wealth.

      • >The ones flocking to bitcoin (besides the speculators who have no personal values, and the drug addicts) are the libertarians who object the government regulations and taxation and laws that limit the 1% to a mere 50% of the world's wealth.

        HAAHAHHAHHA. That may be the most naive thing I've ever read here. Do NOT assume that just because "you and people you associate with" represent the population.

        Bitcoins are extremely popular for drug dealers and human traffickers. Way nicer people than "evil gubnents!

        • Bitcoins are extremely popular for drug dealers and human traffickers. Way nicer people than "evil gubnents!"

          A) No sarcasm tag?

          B) Actually, maybe that is extremely correct... have you ever MET a drug dealer? A lot of them are actually pretty nice, and wait for you to give money to them instead of taking it from you without even asking.

          As for human traffickers they are scum but it's still hard to say many governments are that much more advanced morally, since they also prey on the weak and steal lives.

          You'r

        • It is a little known fact that all crime up until Bitcoin was generated was done is fiat currency controlled by the government, at least after the gold standard made it illegal to own gold.

    • The same it's always been. You can keep the people in line as long as you sell them the dream they might end up rich some day too. As long as people keep believing it, unrest stays low. Once the facade starts cracking, people start considering "taking the wealth back" through wealth redistribution, uprising, etc.
    • most of the folks I know who are gun-ho on bitcoin are libertarian types, not leftists. e.g. they're flocking to bitcoin because they see it as a way out using fiat currencies. The actual left are nervous about bitcoin for the same reason. Too much power in anyone's hands usually get abused.
      • Anyone who sees the current round of cryptocurrencies as an escape from fiat currency has very little understanding of just what fiat currencies ARE. So little understanding that you can probably assume that their grasp of even the most basic understanding of economics is non-existent. At some point in the future some cryptocurrencies may evolve to be able to be considered commodity currencies, and some people are working right now to accomplish that, but they are still very far away from turning any cryp

    • by bspus ( 3656995 )

      You can't draw any conclusions about ownership distribution from addresses. They don't map to persons 1:1
      First, many experienced users hold bitcoin in dozens of addresses each. They have different addresses in different wallets for different uses (storage, spending etc)

      Second and most important, many of the huge amount addresses you see are actually exchange addresses. Exchange hold bitcoin for millions of people (if not millions by now, they are in the hundreds of thousands) but they consolidate them in ju

    • by Anonymous Coward

      Why do people get up set that 50% of the world's wealth is held by 1% but not get upset that 0.007% hold 40% of bitcoin?

      Because bitcoin isn't wealth. bitcoin isn't even currency [investopedia.com]. bitcoin is any arbitrarily valued token like complex home mortgage derivatives. Everyone with a regular day job is only concerned how much bread, milk and beer they can buy with it. Currently what you can buy with bitcoin directly is effectively nothing almost anywhere.

      Now, if bitcoin was real estate (some place to be) or

    • Then there's this:
      http://www.businessinsider.com... [businessinsider.com]

  • by slashmydots ( 2189826 ) on Monday January 15, 2018 @02:39PM (#55933393)
    So they said "in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired." and the article explains "The manipulation happened primarily via two bots, Markus and Willy, that seemed to be performing valid trades but did not actually own the bitcoin they were using." If you own BTC, all you can do is sell it. So someone who owns or controls a bunch of bitcoins can only drive down the price. Someone who owns a ton of USD can make the price go up. So at a fundamental level this article makes no sense. Now registering trades for currency they didn't actually own through some kind of security vulnerability makes sense because the exchange would register that the trade happened without verifying fund ownership change, which absolutely would drive up the price. So maybe they're saying that happened instead?
    • by deKernel ( 65640 )

      My question is this, how can the transactions be considered valid if the person initiating the transaction didn't actually own the coins?

      To me it seems people were just pumping the volume up with transactions that were not valid which triggers a price increase. I am going to assume I am missing something, so could people please fill me in.

      • by dknj ( 441802 )

        a) there was a transaction malleability issue which could be exploited for free bitcoins on the mtgox platform. this is rumored to have happened, thus someone could have had a database entry of 6000 BTC when in reality his wallet was already emptied. trades on mtgox were offchain.

        b) if you own the platform, then you can turn an invalid scenario into a valid one.

      • A glitch in the trading verification system I assume. I mean when you buy and sell BTC for USD they aren't actually entering entries into the blockchain because it'd flood it. It's more like an online banking system so all you need to do is convince it to say you own them and it just goes with it.
  • by wonkey_monkey ( 2592601 ) on Monday January 15, 2018 @02:53PM (#55933489) Homepage

    the paper describes to what degree the Bitcoin ecosystem is controlled by bad actors.

    Jeez, Shatner gets the blame for everything these days.

  • This old story making the rounds again? The paper underlying it was published over a year ago but the claims have been circulating online conspiracy boards since the fall of mtgox.

  • I suspect George Soros, after all, currency manipulation is his shtick. That guy has truly harmed millions of people over his evil money destroying schemes as he made himself and his investors rich.

    Remember when he screwed over the British pound: https://priceonomics.com/the-t... [priceonomics.com]

    Or when he screwed over Thailand: http://www.businessinsider.com... [businessinsider.com]

    Or when he was caught illegally insider trading: http://www.nytimes.com/2002/12... [nytimes.com]

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