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> For example, 800M has been artificially pumped into the Bitcoin. This is impossible with Bitcoin. Bitcoins can only be created via mining, Bitcoin mining is

> For example, 800M has been artificially pumped into the Bitcoin. This is impossible with Bitcoin. Bitcoins can only be created via mining, Bitcoin mining is a proof-of-work crypto currency. Crypto's typically use proof-of-work or proof-of-stake in order to have value. Tether, on the other hand, seems to have no proof-of-work or proof-of-stake at all and just claims to have a 1:1 ratio of their currency to dollars. Seems there is some skepticism around this claim of a 1:1 ratio. If Tether, was found out to be a fraud I think it would have minimal impact on real Crypto currencies that use proof-of-work or proof-of-stake. The only negative impact would be the people that exchanged a real Crytpo for Tether might be burned and decided not to use/accept Crypto at all, which could impact the larger Crypto market a bit, but IMO I don't think it would shake it too badly, unless of course the main stream media took the story and click baited it with crappy headlines and poorly written articles that would falsely come to the conclusion that such a artificial pump is possible with real Crypto.

aaavl2821 9y ago
The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand
- python-guy-vt 9y ago
  > fully determined by supply and demand With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.
  - querulous 9y ago
    that's not how markets work. bitcoin has no intrinsic value, just a exchange rate with other things
    - python-guy-vt 9y ago
      that is exactly how markets work. > bitcoin has no intrinsic value, just a exchange rate with other things 1. It has proof-of-work, which gives it value 2. Supply of the coin and demand for the coins determine the price. The only thing that can vary widely is the demand, the supply cannot be fucked with (unlike fiat currency). It is impossible for whole bunch of new coins to suddenly appear out of thin air. There is no way to artificially inflate the supply.
      - querulous 9y ago
        we're not talking about the number of bitcoins though, we're talking about it's value
        python-guy-vt 9y ago
        you can't talk about value without talking about supply
      - Nursie 9y ago
        Proof of work doesn't give it value. That value (energy) is lost to heat, and the amount put in tends to rise with the market value. The value dictates the amount of PoW needed, not the other way round.
      - FooHentai 9y ago
        >1. It has proof-of-work, which gives it value "I burned a bunch of electricity and created a cryptographically provable magic token". There is no value here beyond exchanges with the other bitcoin speculators around you. The value you describe is no different to the value of a pixel on the million dollar homepage. There will be a point where the emperor is revealed to have no clothes and when you try to extract actual value from the bitcoins that you are holding (i.e. sell them), you will find there is nobody who wants to buy. Although if you like, I'll trade for beanie babies. I've got rare ones, nobody else has these. They only made a few.
  - gmueckl 9y ago
    Not true. A simple recipe for manipulating Bitcoin supply by acting as a bank: 1. Create accounts for customers. Balances are private and not connected to wallets 2. Keep Bitcoins used to cover the accounts in a single bank wallet. 3. Rely on the observation that customers won't withdraw all their Bitcoins at the same time and use bank wallet for trading in the bank's name. This is basically how every normal bank in the world operates, except that the amount of money the have to keep in reserve is heavily regulated so that this scheme does not turn into an infinite pool of money. There is no such regulation for cryptocurrencies.
  - aaavl2821 9y ago
    But the demand can change. Given a constant quantity supplied and an increase in demand, price goes up If you cannot increase supply in response to a higher price driven by higher demand, prices will increase even more See this Econ 101 chart [1]: Y axis represents price, x axis represents quantity. The lines represent simplified supply and demand curves (Wikipedia can explain why they are shaped as they are) Initial supply and demand is represented by supply "s" and demand "d". Their intersection gives us initial price "p1" and quantity produced "q1". If demand increases from "d" to "d2", normally suppliers would produce more to meet the new demand. So the price would increase to "p2" and quantity increase to "q2". So even here you get a price increase But with supply constrained assets like bitcoin, you can't increase quantity supplied to q2. So the only way the market can absorb new demand is by a further price increase. Basically more people want a good, but more can't be made, so sellers rationally realize they can charge more. In the chart, the new price would be the point where the dotted vertical line above q1 intersects with d2 [1] https://goo.gl/images/PT23GG https://goo.gl/images/PT23GG
    - pascalxus 9y ago
      Just like housing in the bay area. The supply can never increase, hence prices must go up, even if no almost no one can afford it. All that matters is that the .001% of the population that's buying houses can afford those higher prices.
  - mancerayder 9y ago
    You're fundamentally missing the main idea here. If you don't understand the fake Tether situation then in this case consider: Someone makes 1M of counterfeit US Dollars using their own printing machine and puts it in a suitcase, and they exchange that suitcase with you, and in return you give them 1M of bitcoin in their digital wallets. Now do you understand the thread?
    - python-guy-vt 9y ago
      Your example is a reflection on counterfeiter and the person being deceived. That has nothing to do with the value of bitcoin.
      - cstrat 9y ago
        The value of BTC skyrockets back in 2014 with MtGox due to the WillyBot (https://willyreport.wordpress.com https://willyreport.wordpress.com)... The price of BTC on other exchanges (which had no direct trades from that bot) was still affected and it went up across the board on all exchanges. So the value of BTC can be manipulated...
  - uberrr 9y ago
    You’re assuming that the balances claimed by the exchanges are actually held in reserve.
empath75 9y ago
> Bitcoins can only be created via mining Why do people think that it's impossible for exchanges to do fractional reserve with bitcoin?
- python-guy-vt 9y ago
  Because you can't lend out a Bitcoin you don't have, unlike fiat currency.
  - Agebor 9y ago
    But as an exchange, you can lend out Bitcoin you have, while still displaying unchanged balances on people's accounts. So you have a fractional reserve.
  - tarsinge 9y ago
    Couldn't they do it partially by betting that not all their customers would withdraw their funds simultaneously? Lot of less technically inclined people seem to keep their coins on one exchange like Coinbase
    - python-guy-vt 9y ago
      Good point. I am taking for granted that people will have their coins in their wallets, and lot just leave them up on an exchange.
      - empath75 9y ago
        how many people do you think keep their bitcoins in wallets vs on exchanges?
        python-guy-vt 9y ago
        don't know, but I would think leaving it on an exchange is a terrible idea (Mt. Gox)
    - 9y ago

aaavl2821 9y ago

The statement that "this is impossible with bitcoin" is false. While initially bitcoins are issued as proof of work, as soon as there is a somewhat liquid secondary market then bitcoin becomes a financial asset with a value determined by the market. That value is effectively completely indepdent of any "inherent value" and fully determined by supply and demand

python-guy-vt 9y ago
> fully determined by supply and demand With bitcoin you cannot manipulate the supply, therefore you can't magically create $800M out of thin air.
- querulous 9y ago
  that's not how markets work. bitcoin has no intrinsic value, just a exchange rate with other things
  - python-guy-vt 9y ago
    that is exactly how markets work. > bitcoin has no intrinsic value, just a exchange rate with other things 1. It has proof-of-work, which gives it value 2. Supply of the coin and demand for the coins determine the price. The only thing that can vary widely is the demand, the supply cannot be fucked with (unlike fiat currency). It is impossible for whole bunch of new coins to suddenly appear out of thin air. There is no way to artificially inflate the supply.
    - querulous 9y ago
      we're not talking about the number of bitcoins though, we're talking about it's value
      - python-guy-vt 9y ago
        you can't talk about value without talking about supply
    - Nursie 9y ago
      Proof of work doesn't give it value. That value (energy) is lost to heat, and the amount put in tends to rise with the market value. The value dictates the amount of PoW needed, not the other way round.
    - FooHentai 9y ago
      >1. It has proof-of-work, which gives it value "I burned a bunch of electricity and created a cryptographically provable magic token". There is no value here beyond exchanges with the other bitcoin speculators around you. The value you describe is no different to the value of a pixel on the million dollar homepage. There will be a point where the emperor is revealed to have no clothes and when you try to extract actual value from the bitcoins that you are holding (i.e. sell them), you will find there is nobody who wants to buy. Although if you like, I'll trade for beanie babies. I've got rare ones, nobody else has these. They only made a few.
- gmueckl 9y ago
  Not true. A simple recipe for manipulating Bitcoin supply by acting as a bank: 1. Create accounts for customers. Balances are private and not connected to wallets 2. Keep Bitcoins used to cover the accounts in a single bank wallet. 3. Rely on the observation that customers won't withdraw all their Bitcoins at the same time and use bank wallet for trading in the bank's name. This is basically how every normal bank in the world operates, except that the amount of money the have to keep in reserve is heavily regulated so that this scheme does not turn into an infinite pool of money. There is no such regulation for cryptocurrencies.
- aaavl2821 9y ago
  But the demand can change. Given a constant quantity supplied and an increase in demand, price goes up If you cannot increase supply in response to a higher price driven by higher demand, prices will increase even more See this Econ 101 chart [1]: Y axis represents price, x axis represents quantity. The lines represent simplified supply and demand curves (Wikipedia can explain why they are shaped as they are) Initial supply and demand is represented by supply "s" and demand "d". Their intersection gives us initial price "p1" and quantity produced "q1". If demand increases from "d" to "d2", normally suppliers would produce more to meet the new demand. So the price would increase to "p2" and quantity increase to "q2". So even here you get a price increase But with supply constrained assets like bitcoin, you can't increase quantity supplied to q2. So the only way the market can absorb new demand is by a further price increase. Basically more people want a good, but more can't be made, so sellers rationally realize they can charge more. In the chart, the new price would be the point where the dotted vertical line above q1 intersects with d2 [1] https://goo.gl/images/PT23GG https://goo.gl/images/PT23GG
  - pascalxus 9y ago
    Just like housing in the bay area. The supply can never increase, hence prices must go up, even if no almost no one can afford it. All that matters is that the .001% of the population that's buying houses can afford those higher prices.
- mancerayder 9y ago
  You're fundamentally missing the main idea here. If you don't understand the fake Tether situation then in this case consider: Someone makes 1M of counterfeit US Dollars using their own printing machine and puts it in a suitcase, and they exchange that suitcase with you, and in return you give them 1M of bitcoin in their digital wallets. Now do you understand the thread?
  - python-guy-vt 9y ago
    Your example is a reflection on counterfeiter and the person being deceived. That has nothing to do with the value of bitcoin.
    - cstrat 9y ago
      The value of BTC skyrockets back in 2014 with MtGox due to the WillyBot (https://willyreport.wordpress.com https://willyreport.wordpress.com)... The price of BTC on other exchanges (which had no direct trades from that bot) was still affected and it went up across the board on all exchanges. So the value of BTC can be manipulated...
- uberrr 9y ago
  You’re assuming that the balances claimed by the exchanges are actually held in reserve.

empath75 9y ago

> Bitcoins can only be created via mining Why do people think that it's impossible for exchanges to do fractional reserve with bitcoin?

python-guy-vt 9y ago
Because you can't lend out a Bitcoin you don't have, unlike fiat currency.
- Agebor 9y ago
  But as an exchange, you can lend out Bitcoin you have, while still displaying unchanged balances on people's accounts. So you have a fractional reserve.
- tarsinge 9y ago
  Couldn't they do it partially by betting that not all their customers would withdraw their funds simultaneously? Lot of less technically inclined people seem to keep their coins on one exchange like Coinbase
  - python-guy-vt 9y ago
    Good point. I am taking for granted that people will have their coins in their wallets, and lot just leave them up on an exchange.
    - empath75 9y ago
      how many people do you think keep their bitcoins in wallets vs on exchanges?
      - python-guy-vt 9y ago
        don't know, but I would think leaving it on an exchange is a terrible idea (Mt. Gox)
  - 9y ago