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Honestly it sucks that these incredibly sketchy exchanges do so much volume. Poloniex and Bitfinex are sketchy as hell, but I guess their fees are low so no on

• cperciva 9y ago
  Is there any independent evidence that they do in fact do so much volume? I know bitfinex in particular has been accused of creating fake wash trades in order to manipulate prices; this would also have the effect of increasing their reported trading volume.
  • pfisch 9y ago
    I mean that is definitely possible. https://coinmarketcap.com/exchanges/bitfinex/ https://coinmarketcap.com/exchanges/bitfinex/ I put some btc on bitfinex to quickly buy some NEO and move it off the exchange this year.
  • mrb 9y ago
    Why do you suspect volume is faked? Bitfinex's volume is not even that high. It's only twice the volume of GDAX ($550M vs $250M in last 24h: https://coinmarketcap.com/currencies/bitcoin/#markets https://coinmarketcap.com/currencies/bitcoin/#markets) and we know GDAX isn't faking volume or wash trading because of all exchanges in the world GDAX are the most law-abiding/professional, plus they have high taker fees (~0.25%) which make wash trading expensive/impossible. So, with Bitfinex (1) trading 10 times more currency pairs than GDAX, (2) being older, and (3) having somewhat smaller fees, it's perfectly plausible they have manage to trade (only!) twice the volume of GDAX.
    • cperciva 9y ago
      I don't have any reason to be suspicious beyond "they have been accused of this". BTW the fact that GDAX has high fees doesn't mean it's expensive for them to create fictitious trades... they don't have to pay themselves fees!
      • mrb 9y ago
        I don't believe GDAX is creating fictitious trades. As I said they are the most law-abiding/professional. Plus they have 30,000 new users signing up everyday, so they certainly don't need to pretend they are successful. Besides, I personally day-trade an average daily volume of ~$200k on GDAX's BTC/USD pair. And I am just one small fish. Imagine about a thousand other persons like me and it would easily explain their $250M daily volume...
        • philfrasty 9y ago
          Jeeeez you wrote hdminer in 2010...that is... being suuuuuper early in BTC! Congrats on sticking with it all the time! (Just realized I read that Whitepixel article on your blog a while back, awesome content!)
    • ActsJuvenile 9y ago
      0.25% rates are only for plebs and noobs. There are whale volume discounts available on almost every exchange. Mid-level whales can get 0% rate for trading over certain number of Bitcoins. Back in 2013-14 you could even get NEGATIVE rates for trading large amounts. I.e., if I trade a certain number of BTC, I get a rebate at the end of the month. High volume boosts exchange's rating and brings more customers, so it is a no brainer to offer rebates. If you remember early days of Chinese exchanges, they were doing millions of coins a day in first week of their launch. That was clear example of Exchanges themselves doing wash trading. All volume data is available in public domain for verification.
      • mrb 9y ago
        I was talking about GDAX. You CANNOT get 0% taker fees on GDAX. The lowest is 0.10%: https://www.gdax.com/fees/BTC-USD https://www.gdax.com/fees/BTC-USD
        • ActsJuvenile 9y ago
          You are talking about Bitfinex, and using 24-hour GDAX volume to support your argument. Bitfinex has traded 1 trillion (not billion) dollars in volume. How did a hacked exchange with no USD deposit or withdrawal method did it? Answer: wash trading and self-manipulation.
          • mrb 9y ago
            No, my sentence here was about GDAX: «GDAX are the most law-abiding/professional, plus they have high taker fees (~0.25%) which make wash trading expensive/impossible» You somehow replied to me implying fees could be zero or negative on GDAX. They can't. Bitfinex traded $1 billion, not $1 trillion: https://coinmarketcap.com/exchanges/bitfinex/ https://coinmarketcap.com/exchanges/bitfinex/ ($1,168,128,071)
            • ActsJuvenile 9y ago
              You are claiming that Bitfinex cannot do wash trading because GDAX has higher fees. Doesn't make any sense! I am suggesting that Bitfinex is doing tons of Wash Trading: https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-who-and-why-is-someone-wash-trading-on-bitfinex-e1c7b5e0b3bb https://medium.com/@bitfinexed/wash-trading-bitcoin-part-ii-...
• goialoq 9y ago
  Why does volume matter? BTC is failing as a currency because it's in a speculating bubble. So, volume is just BTC circulating among traders and storage systems, not being used for anything.
  • peteretep 9y ago
    > BTC is failing as a currency because > it's in a speculating bubble This feels pretty inevitable. There's no reliable tie to any economic activity, virtually no raw materials are priced in Bitcoin, and there's no central institution that can price stabilize, so pricing anything in Bitcoin (rather than: x USD/EUR/GBP/whatever as Bitcoin) seems a long way off. It's also -- comparative to fiat or commodities -- massively untested, so price shocks seem inevitable. Regulatory or technical risks that could reduce (or massively inflate) the value seem almost certain.
    • ActsJuvenile 9y ago
      Apparently Bitcoin is trying to re-position itself as Digital Gold instead of currency now. https://multicoin.capital/2017/09/21/bitcoin-better-digital-gold/ https://multicoin.capital/2017/09/21/bitcoin-better-digital-... https://medium.com/@tuurdemeester/bitcoin-digital-gold-or-digital-cash-both-382a346e6c79 https://medium.com/@tuurdemeester/bitcoin-digital-gold-or-di...
      • umanwizard 9y ago
        What does it mean that "Bitcoin is trying to re-position itself" ? There is no central "Bitcoin" organization, and the only person who might have been able to speak with authority about the goals of the project hasn't been heard from in years.
      • kobeya 9y ago
        Bitcoin was always digital gold. That was it’s value proposition from the beginning: a return to the gold standard, in digital form.
  • pfisch 9y ago
• panarky 9y ago
  It seems like an example of market failure that radical transparency isn't rewarded. In the cryptocurrency wild west, there are no government regulations, no deposit insurance, no SIPC. But a new kind of exchange could hold themselves accountable and publish their assets and liabilities every day. They could publish the addresses that hold cryptocurrency and sign messages to prove they control these addresses. They could authorize their banks to confirm deposits of national currencies. With this data, audits of their positions could be automated and updated every day. Why would traders risk losing their funds to sketchy, secretive exchanges? A radically transparent exchange would have an enormous competitive advantage and attract large volumes. This liquidity would drive down spreads and the exchange could operate profitably with lower fees, further driving up volumes. So why doesn't this exist?
  • pfisch 9y ago
    That is basically GDAX. The fees are higher so it isn't worth it necessarily if you are day trading.
  • Klathmon 9y ago
    There is a very vocal minority of the cryptocurrency space that are against any companies that do follow the regulations. There are thousands that are boycotting Coinbase because their KYC systems take too long, or their deposits/widthdraw take 2 weeks sometimes. Just today I was reading a thread on Reddit where someone was claiming to be currently sueing Coinbase because their account was closed due to them depositing from a bank account that didn't match the name on the coinbase account... Or people don't use them because the fees are marginally higher. I just don't get it. If I'm going to put my money somewhere, I want the place to be following every US law, and charge enough fees that I'm not worried they will go bankrupt or resort to shady tactics to make money.
    • eldavido 9y ago
      Yeah it'll be interesting to see how this all shakes out. I used to be pretty Randian/anti-regs but I now see that places like this need to operate under some level of regulation to ensure they aren't massive conduits for money laundering, and are subject to basic rule of law (e.g. following court orders). The real question is the extent to which people see operating outside the law as a good thing. Sure, it may be cheaper in the short run, but in the long term, having recourse to courts, police, and other standard norms of civilized society might be worth more than people realize.
• empath75 9y ago
  The only practical use cases for bitcoin as a currency are money laundering, selling drugs, evading capital controls and tax evasion so the least regulated exchanges are going to draw a lot of volume. As a store of value, you’re depending on its continued use as a tool for criminals for it to appreciate in value beyond pure beanie baby-style speculation, so you depend on you still depend sketchy exchanges to drive the price. When the futures contracts come out, there is going to be a massive price correction as bitfinex isn’t going to be able to print enough tether to counteract all the shorts. Once the price of bitcoin starts dropping, people are going to try and cash out of bitfinex en masse, causing a run on the bank and collapsing the whole house of cards. I wouldn’t be surprised to see sub-1000 bitcoins by January.
  • bonestamp2 9y ago
    > The only practical use cases for bitcoin as a currency are money laundering, selling drugs, evading capital controls and tax evasion Bitcoin is actually terrible for these use cases since the blockchain is public and more traceable than your credit card. If you're really trying to hide your financial transactions then a better option would be something more anonymous like cash, or one of the other cryptocoins that actually does provide anonymity. Your inaccurate and misconceived perception of what bitcoin's use case is would be laughable if it weren't so popular and wrong. I fear you're completely misunderstanding the new world economy. You think that bitcoin is a sideshow for criminals, and seemingly failed to see that maybe a large parallel economy is being created digitally. You see, Bitcoin was created after the 2008 crash where the banks, the organizations we've trusted with our money for a century, made some deliberate and knowingly poor decisions and they lost a lot of money for many of us. Bitcoin was invented so that never has to happen again, so that we can have a secure storage for our money without someone else controlling that money. You might say that bitcoin was created to get away from the wall street criminals. I suggest you pick up some cryptocoin (of any kind) so you're not completely left in the dust as the centralized banks lose power and the decentralized economy reigns.
    • amarkov 9y ago
      > You see, Bitcoin was created after the 2008 crash where the banks, the organizations we've trusted with our money for a century, made some deliberate and knowingly poor decisions and they lost a lot of money for many of us. I hadn't heard about that. Which banks lost their customers' money in the 2008 crash?
• thisisit 9y ago
  It is not the fees but anonymity which these exchanges guarantee to a certain level. But with the increasing prices is making it hard for people not to get greedy and do something stupid.
• user5994461 9y ago
  There is no verification on the volume. They could say any number they like. That's how it usually play out. Source: I ran exchanges before. That's one of the first trick you learn.