Most Bitcoin Trading Faked by Unregulated Exchanges, Study Finds (wsj.com) 102
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.
Re: What other kind of trading could there be? (Score:4, Interesting)
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? (Score:5, Informative)
If you work with electronics you'll find that the square root of -1 actually does exist in reality.
https://www.electronics-tutori... [electronics-tutorials.ws]
Re: What other kind of trading could there be? (Score:4, Informative)
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... [hmc.edu]
Re: (Score:2)
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)
Re: (Score:2)
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 numb
Re: What other kind of trading could there be? (Score:5, Insightful)
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: (Score:1)
"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: (Score:1)
""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
Re: (Score:2)
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 e
Re: (Score:2)
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: (Score:2)
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 re
Re: (Score:2)
"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.
Re: (Score:2)
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 functio
Re: (Score:2)
"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
Re: (Score:2)
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 potenti
Re: (Score:3)
Re: (Score:2)
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
Re: (Score:3)
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
Re: (Score:2)
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, t
Re: (Score:2)
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: (Score:2)
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 wit
Re: (Score:2)
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: (Score:2)
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 Des
Re: (Score:2)
c is already taken. Let's not confuse anything more than this discussion proves it already is.
Re: (Score:2)
Re: (Score:2)
One World Exchange (Score:1)
We need a regulated One World Exchange where we can trade cryptocurrencies and tokenized stocks.
Re: (Score:1)
So much for that whole "decentralized" thing. You know, what we were told was the entire point of crypto.
Re: (Score:2)
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 (Score:2, Insightful)
Re: (Score:3)
Fake trade volume has been there since it was $11 (Score:2)
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 custome
Bitcoin was always a Ponzi scheme (Score:2)
Re:Bitcoin was always a Ponzi scheme (Score:4, Insightful)
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: (Score:2)
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
Re: (Score:2)
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
Re: (Score:1)
Re: (Score:2)
Crypto Currencies Are Scams (Score:1)
Are we learning yet?
Wait, so... (Score:1)
... is it real or is it fake? /. article where the title and its contents contradict each other.
This is not the first
*IN THE YEAR*.
Seriously, Slashdot ?
Re: (Score:1)
What he means is, there is a real market for fake exchanges.
Re: (Score:2)
Re: (Score:2)
Re:I'm old and... (Score:4, Informative)
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: (Score:2)
Cellphone-Apps.
Re: (Score:2)
Fads that lasted more than a decade?
How about:
All of these are likewise 'billion dollar markets,' though they lack one important missing ingredient: a publicly tradeable unit that unifies the basic settlem
Exchanges have always been Bitcoin's #1 weakness (Score:5, Insightful)
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.
Re: (Score:2)
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.
Re: (Score:3)
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.
Different? (Score:1)
>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: (Score:3)
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
Re: (Score:1)
Wash-trading is illegal and that's where the fake volume is coming from.
Re: (Score:2)
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: (Score:2)
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 secon