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I understand that, but it still doesn't make the trend any less "real" than trends seen from other drivers of price movement. To explain a bit more: If a merch
by dperfect 11y ago
I understand that, but it still doesn't make the trend any less "real" than trends seen from other drivers of price movement.
To explain a bit more: If a merchant receives fraudulent credit card transactions, he/she could reasonably refer to those as "not real" because once the banks discover the fraud, they have the power to move money and effectively nullify those transactions in many cases.
In contrast, on the blockchain (and off the blockchain for most bitcoin exchanges), that kind of thing doesn't normally happen. Even in Mt Gox's case where they directly manipulated the price from the inside, the people who bought and sold on the exchange still experienced "real" price movement, and as long as they got their money/BTC out before Gox imploded (which is another matter), those transactions and price movements were every bit as real as any other. From the perspective of other exchanges at the time it didn't matter at all whether the driving force for the trend was fraud or completely legitimate behavior.
Finally, if MMM's "net effect is zero" as you say, then we wouldn't be seeing the price movement that we're seeing (and a price "boosted only by the float" is no different from a price boosted by anything else), or perhaps MMM just isn't the primary driving force in the current trend.
- gwern 11y ago> and a price "boosted only by the float" is no different from a price boosted by anything else But the float is much smaller than the total volume of the fraud. If MMM is doing $10b of fraud a year, then it's not boosting Bitcoin's marketcap by $10b as one might naively guess ('$10b fraud drives Bitcoin price growth!' scream the headlines), it's boosting the price by much much less, by just the float (which could be more like $27m).
- dperfect 11y agoI don't think anyone claimed that there was 1:1 relationship between the volume of this (or any other) fraud and a change in bitcoin's market cap. As far as bitcoin is concerned, the particular details of the fraud are entirely irrelevant.
- gwern 11y agoI don't think anyone was as exactly specific as that, but in reading discussions of MMM's possible contribution, the description was almost universally (on Reddit and HN) comparing, explicitly or implicitly, the previous MMM's total volume to the Bitcoin market cap, showing that pretty much everyone seems to have been intuitively confusing stocks with flows - the unspoken argument seems to be 'the old MMM's total was about as large Bitcoin's market cap is now; the new MMM is also quite large and may be a large fraction of Bitcoin's market cap; therefore, the recent near-doubling of Bitcoin's market cap may be mostly or all due to new MMM's large total'.