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Goldman-Backed Circle Buys Digital Exchange Poloniex

223 points by tesrx 9y ago

tesrx 9y ago
The Poloniex press release: https://poloniex.com/press-releases/2018.02.26-Poloniex-joins-Circle/ https://poloniex.com/press-releases/2018.02.26-Poloniex-join...
mk44 9y ago
Banking institutions are slowly making crypto more and more legitimate. I hope this trend continues. Disclosure: I REALLY believe in Bitcoin.
- lbotos 9y ago
  I don't usually engage on Crypto posts but I'll bite. What specifically do you believe in with regards to Bitcoin? I'm bullish on crypto as a global "internet dollar" but bearish that Bitcoin is the right one. I might add that banks want in because they make money on orderflows. Bankers will trade anything (orange juice concentrate/pork belly/oil/derivatives/shares/you name it.)
  - lawlessone 9y ago
    Personally i think bitcoin and maybe Eth and LTC will be the only long term survivors. Every new "coin" that comes along now just becomes a pump and dump. Bitcoin was around before it had any value and people were just giving it to one another for fun or buying Pizzas for 20,000. It has benefited most from the "network effect" . My only major concerns about it are the environmental effects and transaction throughput.(other coins are allegedly faster for now but will probably buckle if they become as big as the above three.) LTC is around nearly as long ,, and ETH is a whole new concept, though it has security and programming issues. I should mention its survival doesn't mean it's value will go up.
    - nugga 9y ago
      I'd add something like Monero, or other coin designed with privacy/fungibility in mind, as a long term survivor. Bitcoin's development bureaucracy is too slow and cumbersome and who knows how much the community is willing to embrace absolute privacy, yet that is exactly what plenty folks in the crypto scene prefer.
  - CraigRood 9y ago
    I know the question may not be directed to myself, but I will answer why I believe in Bitcoin. The real value is in the Decentralised/P2P store of money. This allows not just people, but entities and even software can "own" bitcoin. For example a coffee machine that accept BTC, it can then pay for the water, electricity and buy more beans, milk etc from the Bitcoin it earns itself without human attention. Arguably easier to track the profitability and economics of the machine, with less effort - still needs to be cleaned and refilled (for now!). You could take this one concept and apply them to things like self-driving cars or mobile phones.
    - s73v3r_ 9y ago
      I fail to see anything regarding that coffee machine example that couldn't just as well be done with automated ordering.
  - mihaifm 9y ago
    I find it unlikely that bitcoin will remain so dominant in the market. Other currencies are slowly solving bitcoin's problems, like transactions speed, fees, anonymity. It might ultimately come down to the best implementation, or we might see a great degree of diversification, different currencies for different needs.
- cm2187 9y ago
  I would keep in mind that about 12 years ago Goldman was piling in on CDOs and Subprimes before going short the very same asset classes a year later. The fact that there is money to be made immediately doesn't mean they believe in it long term.
  - JumpCrisscross 9y ago
    Exchanges are price-neutral volume plays. Better if you offboard customer service and custodian services to someone else. You make money on volume, and thus volatility, independent of price. (Similar to Berkshire Hathaway’s acquisition of a gasoline additive company a few years ago.)
    - cm2187 9y ago
      Agree, but for volumes to be meaningful, crypto currencies still need to be a thing.
      - JumpCrisscross 9y ago
        > for volumes to be meaningful, crypto currencies still need to be a thing Not necessarily. Certainly not if you see theee accounts as a source of lead generation.
    - AlexCoventry 9y ago
      Unregulated exchanges are money pumps, though.
  - bhouston 9y ago
    Goldman Sachs is getting in because it see a future in making profit from others trading in cryptocurrency. Goldman Sachs believes that the profit it will make from this exchange's trading fees will be greater than the cost of purchasing it. It is that simple.
    - charlesdm 9y ago
      Selling shovels pays off. But now they might have an incentive to cause more volatility, by moving the price up and down and thus scaring people.
- avenoir 9y ago
  I tend to agree, but I am afraid we're just going to end up with another Wall Street here once major financial institutions put their hands on it.
- clarkmoody 9y ago
  I also believe in Bitcoin, but there may be a case against legitimacy at this point in the game: future changes to the protocol might become subject to state scrutiny. Scenario: (a) Regulators approve Bitcoin for use in banking, let's say (b) Some change is proposed to the Bitcoin protocol, improving privacy (c) Regulated firms are not able to do proper KYC/AML stuff if the upgrade activates (d) Firms and regulators (and maybe legislators) push back against the upgrade Now you have core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol.
  - TheSpiceIsLife 9y ago
    > core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol. It could be argued this would be a good thing. As it stands, if someone nabs your crypto you have no means of recourse, this is a bad thing.
    - tobltobs 9y ago
      How do you want to solve this problem without giving up decentralization?
      - vkou 9y ago
        The answer is that you can't, but that's not an answer liked by the people who: 1. Are optimistic about bitcoin. 2. Want to see it be useful for something besides speculation.
        SilasX 9y ago
        You have the same recourse that you would if someone took your physical cash, which Bitcoin seeks to mimic properties of. Do you make the same arguments against physical cash, or is there some other substantive difference, are you singling out Bitcoin?
- sitepodmatt 9y ago
  Would of disagreed a year ago, however since then we've seen BTC explode due in part to unchallenged Tether/BitFinex shenanigans and zero verifiable transparency.
lawlessone 9y ago
woah
sna1l 9y ago
Coinbase/GDAX has to be feeling pretty good about this. My personal experience with Poloniex was abysmal. It took months before I was verified, and the platform was constantly down and too slow to use. Coinbase/GDAX isn't perfect by any means, but they do seem to be getting more stable, while doing 3-4x the volume of Polo.
- mtgx 9y ago
  Why would this be good news for Coinbase?
  - lordnacho 9y ago
    Parent is suggesting that a better exchange is more likely to get bought, and at a better price.
- tomasien 9y ago
  Coinbase made a billion dollars in 2017 - a literal billion. I don't think they're thinking much about being acquired anymore....
  - Outofthebot 9y ago
    A billion in revenue, not profit, just to be clear. Still nothing to scoff at.
    - riku_iki 9y ago
      And are those billions of revenue from customer fees, or amount of all trades processed by coinbase?
sna1l 9y ago
I'm surprised that Nasdaq, BATS, or some other conventional equities exchange operator hasn't gotten into the cryptocurrency exchange business. A lot of the issues with current exchanges is a combination of scaling issues, scaling/trust, and regulation. I feel like conventional equities exchange would be able to deal with those issues quite easily
- avenoir 9y ago
  Curious, how much of these scaling issues are due to limitations of blockchain tech rather than conventional exchange architecture. I feel like that would be a different area of expertise.
  - deleted 9y ago
    [deleted]
- Klathmon 9y ago
  In my opinion it's a completely different area that isn't as similar as you'd expect. For starters, cryptocurrency exchanges need to know the crypto they trade with VERY well. It's an area where the law won't help you if you mess up. If someone steals a bunch of bitcoin from your exchange, a police report isn't going to get it back, it's gone for good. Then add in that crypto exchanges are 24/7 (not just during business hours), and I'd argue that scaling them is much harder, nobody knows if cryptocurrencies will double (or more) in usage over the next few months, or if they will halve (or more) in that same time. A single runup could cause 10X the trading activity overnight. I do think that we need more legal, regulated competition in this area, but I don't think for a second that the answer is Nasdaq trying to shoehorn cryptocurrencies into their current systems, they are just too different.
  - saosebastiao 9y ago
    > For starters, cryptocurrency exchanges need to know the crypto they trade with VERY well. It's an area where the law won't help you if you mess up. If someone steals a bunch of bitcoin from your exchange, a police report isn't going to get it back, it's gone for good. With good KYC regulation and enforcement many "hacks" can be mitigated. The Bitgrail hack, for example, was performed by customers taking advantage of shitty code. Presumably they know which accounts withdrew funds, but if they knew who the customers were that belonged to those accounts, they could go after them. This stuff is a big reason why I support exchanges being regulated as money transmitters.
baccredited 9y ago
'The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.' https://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 https://www.rollingstone.com/politics/news/the-great-america...
- dsacco 9y ago
  This is an edgy soundbite, but I don’t think it contributes anything substantive to the discussion of a cryptocurrency exchange being acquired by a GS subsidiary. I could have replaced “Goldman Sachs” with “Google” and I’d have received the same amount of insight.
  - zaroth 9y ago
    If you replaced GS with Google, it would still be funny, but it would no longer be true.
    - dsacco 9y ago
      The statement is sufficiently underspecified that it’s not falsifiable for any large company, which is my point. If you dislike Goldman Sachs, you’re inclined to believe it. If you don’t dislike Goldman Sachs, you’re inclined to be more skeptical about it. The description is fully open to interpretation, which means believing it is a function of ideology and identity more than facts and reality. Descriptions are only meaningful insofar as they help differentiate things. There is no precision in calling a giant financial company a vampiric squid. So what do we actually learn? It’s a total sideshow to a meaningful discussion about cryptocurrencies, cryptocurrency exchanges, the evolving role of traditional financial institutions in cryptocurrency trading, or the future legitimacy of digital currencies as an asset class.
  - barkingcat 9y ago
    Goldman Sachs is so much bigger than Google. Google is substantial, but it's nothing compared to Goldman Sachs. Goldman is a company that's funded entire wars, on both sides of conflicts. If you dig behind almost all revolutions, governments, and companies, on the planet chances are Goldman Sachs is behind there lurking. Google can only dream of having 1/1000th's the influence of Goldman.
mjehanzeb 9y ago
This is good for crypto asset class. BTC is already trading on futures market. More big players are joining. This whole thing is still in infancy and at experimental stage. A lot is happening and many real world use cases will start to emerge.
tlrobinson 9y ago
I wonder if this says something (good) about the Tether situation, given Poloniex uses USDT.
- ShorsHammer 9y ago
  Im sure the conspiracies will continue unabated despite Goldman Sachs buying the largest tether exchange in the US. There's a certain hivemind around tether that wont necessarily be convinced by the due diligence on a large deal. For some that Goldman is involved is only more evidence. Tether is a lesson in not believing the commonly accepted "truths" in online forums. Paid comments and self-interest abounds. Reader beware.
  - wepple 9y ago
    Claiming that people who don’t love tether are “Paid comments” is especially weak coming from a 27-day-old HN account. They’ve taken a lot of regular folks money and provided no confidence to date that they’re solvent.
    - ShorsHammer 9y ago
      Having faced the wrath of a real name associated with comments on cryptocurrency and especially tether I'll happily wear the month old badge. It was implied to not trust any comments including mine, account age doesnt seem to be a problem for such statements. Online sentiment is purchasable, many icos offer pay-per-comment schemes and unsuspecting people read enough sockpuppet comments eventually believing it as fact, this is not contained to cryptocurrency and I worry when it seriously spreads to more important parts of modern life. > provided no confidence to date that they’re solvent. Goldman Sachs just bought a good fraction of all tether in existence for hundreds of millions, does this not say something? Please check my other comment here for a proposition.
      - Nursie 9y ago
        >> Goldman Sachs just bought a good fraction of all tether in existence for hundreds of millions, does this not say something? It still doesn't say 'audit', which is claimed right there on the tether homepage
TaylorGood 9y ago
Great article about this acquisition and the emerging world of cryptocurrency according to the Circle founders: http://fortune.com/2018/02/26/circle-cryptocurrency-trade-bitcoin/?utm_source=fortune.com&utm_medium=email&utm_campaign=term-sheet&utm_content=2018022614pm http://fortune.com/2018/02/26/circle-cryptocurrency-trade-bi...
JustAnotherPat 9y ago
Serious question: How does Circle afford a $400 million price tag when they've only raised $135 million? Their main product seems to be a Venmo clone, complete with the lack of fees. Surely, they're not making that much money selling user data.
- xenity7 9y ago
  Circle also has a profitable crypto prop trading arm.
  - deleted 9y ago
    [deleted]
- icey 9y ago
  My guess is that equity in Circle was part of the purchase price -- hard to know for sure since the terms weren't announced, but this probably wasn't an all-cash deal.
- dgacmu 9y ago
  Stock deal. Circle got $135m cash on a valuation higher than that. (480m in 2016: https://www.bloomberg.com/news/articles/2016-06-24/circle-internet-said-valued-at-480-million-in-latest-financing https://www.bloomberg.com/news/articles/2016-06-24/circle-in...) So they're probably buying Polo for X shares of Circle, where X depends on their current undisclosed valuation. But it's probably a pretty big chunk of their total.
- tomasien 9y ago
  Circle's main product is an OTC crypto trading desk which has been killing it. They move huge volumes for big players.
  - nnx 9y ago
    TIL that Circle pivoted into OTC, there's no mention of it on their main https://circle.com https://circle.com where they had the previous product running. https://www.circletrade.com/ https://www.circletrade.com/ and simple searches do not give much information.
DINKDINK 9y ago
I'm surprised that Circle and by extension Goldman-Sachs would acquire Poloniex. It was always my relatively unconfirmed belief that, at best, Poloniex had horrible customer support and infrastructure and at worst was insolvent and or doing questionable transactions ala BTC-e.
vthallam 9y ago
>Circle’s mobile app lets people make instant money transfers. The company also has a trading operation, which handles about $2 billion in crypto trading a month with large institutional buyers and sellers How does this work now? Like, can you own a large exchange and also trade on it?
- encoderer 9y ago
  Sure. It’s just an entry in the book. But if they’re doing large orders like it says, they need to spread across multiple exchanges to ensure best prices.
lostmsu 9y ago
Funny in the light of Goldman Sachs' statements about the future of cryptocurrencies https://www.cnbc.com/2018/02/07/most-cryptocurrencies-will-crash-to-zero-goldman-sachs-says.html https://www.cnbc.com/2018/02/07/most-cryptocurrencies-will-c...
deleted 9y ago
[deleted]
rl3 9y ago
On a related note, is cryptocurrency HFT a thing? As much as I delight in seeing a traditional firms add legitimacy to cryptocurrency, I can't help but be slightly suspicious when a known HFT player buys an exchange in a market that's largely unregulated. Granted, to the best of my knowledge true HFT isn't really possible in the FX market, and major players there still find a way to make everything a veritable cesspool.
- dsacco 9y ago
  Yes, it is. DRW’s Cumberland Trading branch engages in cryptocurrency HFT, as far as I’m aware.
- ascendantlogic 9y ago
  There is a lot of bot-driven trading going on. To the degree it starts approaching HFT-levels of speed I'm not sure. I don't know what sort of algorithmic trading arms race is going on in that space since the order books are still thin enough for a small number of well-moneyed people to impact the price in a non-trivial manner.
- philipodonnell 9y ago
  To my knowledge the only way to do true HFT is with co-location, and GDAX offers co-location via hosting EC2 instances in a certain region. I can get an offer posted and cancelled in ~150ms (with some fancy race-condition logic across the websocket and API) which is good, but still nowhere near "HFT". Competing against someone who bought an exchange and is running an HFT bot on the same servers, yeah I would stay far away from anyone doing that.
  - sitepodmatt 9y ago
    150ms is huge given latency within a EC2 region should be a millisecond or less, although I suspect this could be working similar to BetFair where they internally queue and process the orders in a batch every 200/250ms rather than real time whilst giving the appearance of real time ('taker' being matched within the first batch since queued).
jeofken 9y ago
What is the legal structure and country of residence of a company such as Poloniex? What books or websites should one read to learn about such things?
- cdiddy2 9y ago
  US private LLC registered in Delaware https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=309559982 https://www.bloomberg.com/research/stocks/private/snapshot.a...
giles 9y ago
I wonder if Poloniex will immediately fall under Circle's BitLicense. Presumably it will, which is good for those wanting to trade in New York State.
stevievee 9y ago
None of these exchanges regulate against price manipulation. Based on Goldman's well documented history of price manipulation tactics (in regulated markets), allowing them to own an unregulated exchange is just about the worst thing to happen to cryptocurrencies in a long, long time.
allpratik 9y ago
Surprising! 1. But does that mean now that Goldman Sach will allow their clients (or their own internal) to at least allow investment in crypto? 2. How to know if there are not manipulating the market? 3. If Poloniex suffers liquidity issues (if USDT is invalidated) then is Goldman going to take care of the situation? I genuinely wish now, DEX platforms should be promoted like the one we have for BitShares. Centralised crypto exchanges are beating the purpose of decentralization.
Scott_Sanderson 9y ago
Will Polo be the first shitcoin buffet to offer fiat trading pairs?
mancerayder 9y ago
"If you can't beat them, own them." It will help them perhaps more easily manipulate the market. After all, they can collect info on all the players' behaviors and predict trends accordingly? Deploy massive amounts of capital where needed? The possibilities are endless.
deleted 9y ago
[deleted]
dmix 9y ago
> there has been more hesitancy around what to do with digital assets like Bitcoin due to volatility and a history of it being used in shady transactions like drugs and evading taxes. Yes, all of those low-level tax evaders with their thousands of dollars in Bitcoin avoiding taxes via easily traceable transaction and plenty of digital forensic evidence! That's the real concern preventing bitcoin's adoption by legitimate businesses. /s The IRS could employee <10 people fulltime to monitor these guys each year and not break even in returnable taxable income... There are far bigger problems with cryptocurrency adoption/scaling that are tirelessly being worked on. Money laundering and tax evasion via cryptocurrencies has hardly resulted in any level of significant criminality, despite the endless years of FUD/hype that it's attracted...
- nosuchthing 9y ago
  Have you followed the bitcoin / cryptocoin community at all? https://bitcointalk.org/index.php?topic=1102135.0 https://bitcointalk.org/index.php?topic=1102135.0 https://forum.bitcoin.com/dev-tech-talk/simple-guide-to-tumbling-bitcoins-t16395.html https://forum.bitcoin.com/dev-tech-talk/simple-guide-to-tumb... Freedom from law and oversight is mostly what the Cryptocoin anarcho-capitalist and libertarians focus on as the primary benefit. Satoshi's white paper stresses the feature of pseudo-anonymous transactions. Bitcoin tumbling has been going on since the very early days of the Bitcoin network. zKSnarks are an innovation to make this even more obfuscated and less traceable. This is why a few of the most famous Bitcoiners are trying to establish a tax haven in Puerto Rico. Dozens of American entrepreneurs, made newly wealthy by blockchain and cryptocurrencies, are heading en masse to Puerto Rico – a US overseas territory – this winter. They are selling their homes in California and establishing residency on the Caribbean island in hopes of avoiding what they see as onerous state and federal taxes on their growing fortunes, some of which reach into the billions of dollars. https://www.independent.co.uk/news/long_reads/us-bitcoin-puerto-rico-blockchain-cryptocurrency-steve-bannon-pierce-brock-a8198491.html https://www.independent.co.uk/news/long_reads/us-bitcoin-pue... ICOs and fundraisers are an easy front for money laundering in cryptocoin land. http://www.fraud-magazine.com/article.aspx?id=4294993747 http://www.fraud-magazine.com/article.aspx?id=4294993747
  - 9y ago

223 points by tesrx 9y ago

The Poloniex press release: https://poloniex.com/press-releases/2018.02.26-Poloniex-joins-Circle/ https://poloniex.com/press-releases/2018.02.26-Poloniex-join...

mk44 9y ago

Banking institutions are slowly making crypto more and more legitimate. I hope this trend continues. Disclosure: I REALLY believe in Bitcoin.

lbotos 9y ago
I don't usually engage on Crypto posts but I'll bite. What specifically do you believe in with regards to Bitcoin? I'm bullish on crypto as a global "internet dollar" but bearish that Bitcoin is the right one. I might add that banks want in because they make money on orderflows. Bankers will trade anything (orange juice concentrate/pork belly/oil/derivatives/shares/you name it.)
- lawlessone 9y ago
  Personally i think bitcoin and maybe Eth and LTC will be the only long term survivors. Every new "coin" that comes along now just becomes a pump and dump. Bitcoin was around before it had any value and people were just giving it to one another for fun or buying Pizzas for 20,000. It has benefited most from the "network effect" . My only major concerns about it are the environmental effects and transaction throughput.(other coins are allegedly faster for now but will probably buckle if they become as big as the above three.) LTC is around nearly as long ,, and ETH is a whole new concept, though it has security and programming issues. I should mention its survival doesn't mean it's value will go up.
  - nugga 9y ago
    I'd add something like Monero, or other coin designed with privacy/fungibility in mind, as a long term survivor. Bitcoin's development bureaucracy is too slow and cumbersome and who knows how much the community is willing to embrace absolute privacy, yet that is exactly what plenty folks in the crypto scene prefer.
- CraigRood 9y ago
  I know the question may not be directed to myself, but I will answer why I believe in Bitcoin. The real value is in the Decentralised/P2P store of money. This allows not just people, but entities and even software can "own" bitcoin. For example a coffee machine that accept BTC, it can then pay for the water, electricity and buy more beans, milk etc from the Bitcoin it earns itself without human attention. Arguably easier to track the profitability and economics of the machine, with less effort - still needs to be cleaned and refilled (for now!). You could take this one concept and apply them to things like self-driving cars or mobile phones.
  - s73v3r_ 9y ago
    I fail to see anything regarding that coffee machine example that couldn't just as well be done with automated ordering.
- mihaifm 9y ago
  I find it unlikely that bitcoin will remain so dominant in the market. Other currencies are slowly solving bitcoin's problems, like transactions speed, fees, anonymity. It might ultimately come down to the best implementation, or we might see a great degree of diversification, different currencies for different needs.
cm2187 9y ago
I would keep in mind that about 12 years ago Goldman was piling in on CDOs and Subprimes before going short the very same asset classes a year later. The fact that there is money to be made immediately doesn't mean they believe in it long term.
- JumpCrisscross 9y ago
  Exchanges are price-neutral volume plays. Better if you offboard customer service and custodian services to someone else. You make money on volume, and thus volatility, independent of price. (Similar to Berkshire Hathaway’s acquisition of a gasoline additive company a few years ago.)
  - cm2187 9y ago
    Agree, but for volumes to be meaningful, crypto currencies still need to be a thing.
    - JumpCrisscross 9y ago
      > for volumes to be meaningful, crypto currencies still need to be a thing Not necessarily. Certainly not if you see theee accounts as a source of lead generation.
  - AlexCoventry 9y ago
    Unregulated exchanges are money pumps, though.
- bhouston 9y ago
  Goldman Sachs is getting in because it see a future in making profit from others trading in cryptocurrency. Goldman Sachs believes that the profit it will make from this exchange's trading fees will be greater than the cost of purchasing it. It is that simple.
  - charlesdm 9y ago
    Selling shovels pays off. But now they might have an incentive to cause more volatility, by moving the price up and down and thus scaring people.
avenoir 9y ago
I tend to agree, but I am afraid we're just going to end up with another Wall Street here once major financial institutions put their hands on it.
clarkmoody 9y ago
I also believe in Bitcoin, but there may be a case against legitimacy at this point in the game: future changes to the protocol might become subject to state scrutiny. Scenario: (a) Regulators approve Bitcoin for use in banking, let's say (b) Some change is proposed to the Bitcoin protocol, improving privacy (c) Regulated firms are not able to do proper KYC/AML stuff if the upgrade activates (d) Firms and regulators (and maybe legislators) push back against the upgrade Now you have core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol.
- TheSpiceIsLife 9y ago
  > core protocol changes subjected to the scrutiny of the broader political process, which would be a total nightmare and may permanently stop development of the protocol. It could be argued this would be a good thing. As it stands, if someone nabs your crypto you have no means of recourse, this is a bad thing.
  - tobltobs 9y ago
    How do you want to solve this problem without giving up decentralization?
    - vkou 9y ago
      The answer is that you can't, but that's not an answer liked by the people who: 1. Are optimistic about bitcoin. 2. Want to see it be useful for something besides speculation.
      - SilasX 9y ago
        You have the same recourse that you would if someone took your physical cash, which Bitcoin seeks to mimic properties of. Do you make the same arguments against physical cash, or is there some other substantive difference, are you singling out Bitcoin?
sitepodmatt 9y ago
Would of disagreed a year ago, however since then we've seen BTC explode due in part to unchallenged Tether/BitFinex shenanigans and zero verifiable transparency.

lawlessone 9y ago

woah

sna1l 9y ago

Coinbase/GDAX has to be feeling pretty good about this. My personal experience with Poloniex was abysmal. It took months before I was verified, and the platform was constantly down and too slow to use. Coinbase/GDAX isn't perfect by any means, but they do seem to be getting more stable, while doing 3-4x the volume of Polo.

mtgx 9y ago
Why would this be good news for Coinbase?
- lordnacho 9y ago
  Parent is suggesting that a better exchange is more likely to get bought, and at a better price.
tomasien 9y ago
Coinbase made a billion dollars in 2017 - a literal billion. I don't think they're thinking much about being acquired anymore....
- Outofthebot 9y ago
  A billion in revenue, not profit, just to be clear. Still nothing to scoff at.
  - riku_iki 9y ago
    And are those billions of revenue from customer fees, or amount of all trades processed by coinbase?

sna1l 9y ago

I'm surprised that Nasdaq, BATS, or some other conventional equities exchange operator hasn't gotten into the cryptocurrency exchange business. A lot of the issues with current exchanges is a combination of scaling issues, scaling/trust, and regulation. I feel like conventional equities exchange would be able to deal with those issues quite easily

avenoir 9y ago
Curious, how much of these scaling issues are due to limitations of blockchain tech rather than conventional exchange architecture. I feel like that would be a different area of expertise.
- deleted 9y ago
  [deleted]
Klathmon 9y ago
In my opinion it's a completely different area that isn't as similar as you'd expect. For starters, cryptocurrency exchanges need to know the crypto they trade with VERY well. It's an area where the law won't help you if you mess up. If someone steals a bunch of bitcoin from your exchange, a police report isn't going to get it back, it's gone for good. Then add in that crypto exchanges are 24/7 (not just during business hours), and I'd argue that scaling them is much harder, nobody knows if cryptocurrencies will double (or more) in usage over the next few months, or if they will halve (or more) in that same time. A single runup could cause 10X the trading activity overnight. I do think that we need more legal, regulated competition in this area, but I don't think for a second that the answer is Nasdaq trying to shoehorn cryptocurrencies into their current systems, they are just too different.
- saosebastiao 9y ago
  > For starters, cryptocurrency exchanges need to know the crypto they trade with VERY well. It's an area where the law won't help you if you mess up. If someone steals a bunch of bitcoin from your exchange, a police report isn't going to get it back, it's gone for good. With good KYC regulation and enforcement many "hacks" can be mitigated. The Bitgrail hack, for example, was performed by customers taking advantage of shitty code. Presumably they know which accounts withdrew funds, but if they knew who the customers were that belonged to those accounts, they could go after them. This stuff is a big reason why I support exchanges being regulated as money transmitters.

baccredited 9y ago

'The first thing you need to know about Goldman Sachs is that it's everywhere. The world's most powerful investment bank is a great vampire squid wrapped around the face of humanity, relentlessly jamming its blood funnel into anything that smells like money.' https://www.rollingstone.com/politics/news/the-great-american-bubble-machine-20100405 https://www.rollingstone.com/politics/news/the-great-america...

dsacco 9y ago
This is an edgy soundbite, but I don’t think it contributes anything substantive to the discussion of a cryptocurrency exchange being acquired by a GS subsidiary. I could have replaced “Goldman Sachs” with “Google” and I’d have received the same amount of insight.
- zaroth 9y ago
  If you replaced GS with Google, it would still be funny, but it would no longer be true.
  - dsacco 9y ago
    The statement is sufficiently underspecified that it’s not falsifiable for any large company, which is my point. If you dislike Goldman Sachs, you’re inclined to believe it. If you don’t dislike Goldman Sachs, you’re inclined to be more skeptical about it. The description is fully open to interpretation, which means believing it is a function of ideology and identity more than facts and reality. Descriptions are only meaningful insofar as they help differentiate things. There is no precision in calling a giant financial company a vampiric squid. So what do we actually learn? It’s a total sideshow to a meaningful discussion about cryptocurrencies, cryptocurrency exchanges, the evolving role of traditional financial institutions in cryptocurrency trading, or the future legitimacy of digital currencies as an asset class.
- barkingcat 9y ago
  Goldman Sachs is so much bigger than Google. Google is substantial, but it's nothing compared to Goldman Sachs. Goldman is a company that's funded entire wars, on both sides of conflicts. If you dig behind almost all revolutions, governments, and companies, on the planet chances are Goldman Sachs is behind there lurking. Google can only dream of having 1/1000th's the influence of Goldman.

mjehanzeb 9y ago

This is good for crypto asset class. BTC is already trading on futures market. More big players are joining. This whole thing is still in infancy and at experimental stage. A lot is happening and many real world use cases will start to emerge.

tlrobinson 9y ago

I wonder if this says something (good) about the Tether situation, given Poloniex uses USDT.

ShorsHammer 9y ago
Im sure the conspiracies will continue unabated despite Goldman Sachs buying the largest tether exchange in the US. There's a certain hivemind around tether that wont necessarily be convinced by the due diligence on a large deal. For some that Goldman is involved is only more evidence. Tether is a lesson in not believing the commonly accepted "truths" in online forums. Paid comments and self-interest abounds. Reader beware.
- wepple 9y ago
  Claiming that people who don’t love tether are “Paid comments” is especially weak coming from a 27-day-old HN account. They’ve taken a lot of regular folks money and provided no confidence to date that they’re solvent.
  - ShorsHammer 9y ago
    Having faced the wrath of a real name associated with comments on cryptocurrency and especially tether I'll happily wear the month old badge. It was implied to not trust any comments including mine, account age doesnt seem to be a problem for such statements. Online sentiment is purchasable, many icos offer pay-per-comment schemes and unsuspecting people read enough sockpuppet comments eventually believing it as fact, this is not contained to cryptocurrency and I worry when it seriously spreads to more important parts of modern life. > provided no confidence to date that they’re solvent. Goldman Sachs just bought a good fraction of all tether in existence for hundreds of millions, does this not say something? Please check my other comment here for a proposition.
    - Nursie 9y ago
      >> Goldman Sachs just bought a good fraction of all tether in existence for hundreds of millions, does this not say something? It still doesn't say 'audit', which is claimed right there on the tether homepage

TaylorGood 9y ago

Great article about this acquisition and the emerging world of cryptocurrency according to the Circle founders: http://fortune.com/2018/02/26/circle-cryptocurrency-trade-bitcoin/?utm_source=fortune.com&utm_medium=email&utm_campaign=term-sheet&utm_content=2018022614pm http://fortune.com/2018/02/26/circle-cryptocurrency-trade-bi...

JustAnotherPat 9y ago

Serious question: How does Circle afford a $400 million price tag when they've only raised $135 million? Their main product seems to be a Venmo clone, complete with the lack of fees. Surely, they're not making that much money selling user data.

xenity7 9y ago
Circle also has a profitable crypto prop trading arm.
- deleted 9y ago
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icey 9y ago
My guess is that equity in Circle was part of the purchase price -- hard to know for sure since the terms weren't announced, but this probably wasn't an all-cash deal.
dgacmu 9y ago
Stock deal. Circle got $135m cash on a valuation higher than that. (480m in 2016: https://www.bloomberg.com/news/articles/2016-06-24/circle-internet-said-valued-at-480-million-in-latest-financing https://www.bloomberg.com/news/articles/2016-06-24/circle-in...) So they're probably buying Polo for X shares of Circle, where X depends on their current undisclosed valuation. But it's probably a pretty big chunk of their total.
tomasien 9y ago
Circle's main product is an OTC crypto trading desk which has been killing it. They move huge volumes for big players.
- nnx 9y ago
  TIL that Circle pivoted into OTC, there's no mention of it on their main https://circle.com https://circle.com where they had the previous product running. https://www.circletrade.com/ https://www.circletrade.com/ and simple searches do not give much information.

DINKDINK 9y ago

I'm surprised that Circle and by extension Goldman-Sachs would acquire Poloniex. It was always my relatively unconfirmed belief that, at best, Poloniex had horrible customer support and infrastructure and at worst was insolvent and or doing questionable transactions ala BTC-e.

vthallam 9y ago

>Circle’s mobile app lets people make instant money transfers. The company also has a trading operation, which handles about $2 billion in crypto trading a month with large institutional buyers and sellers How does this work now? Like, can you own a large exchange and also trade on it?

encoderer 9y ago
Sure. It’s just an entry in the book. But if they’re doing large orders like it says, they need to spread across multiple exchanges to ensure best prices.

lostmsu 9y ago

Funny in the light of Goldman Sachs' statements about the future of cryptocurrencies https://www.cnbc.com/2018/02/07/most-cryptocurrencies-will-crash-to-zero-goldman-sachs-says.html https://www.cnbc.com/2018/02/07/most-cryptocurrencies-will-c...

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rl3 9y ago

On a related note, is cryptocurrency HFT a thing? As much as I delight in seeing a traditional firms add legitimacy to cryptocurrency, I can't help but be slightly suspicious when a known HFT player buys an exchange in a market that's largely unregulated. Granted, to the best of my knowledge true HFT isn't really possible in the FX market, and major players there still find a way to make everything a veritable cesspool.

dsacco 9y ago
Yes, it is. DRW’s Cumberland Trading branch engages in cryptocurrency HFT, as far as I’m aware.
ascendantlogic 9y ago
There is a lot of bot-driven trading going on. To the degree it starts approaching HFT-levels of speed I'm not sure. I don't know what sort of algorithmic trading arms race is going on in that space since the order books are still thin enough for a small number of well-moneyed people to impact the price in a non-trivial manner.
philipodonnell 9y ago
To my knowledge the only way to do true HFT is with co-location, and GDAX offers co-location via hosting EC2 instances in a certain region. I can get an offer posted and cancelled in ~150ms (with some fancy race-condition logic across the websocket and API) which is good, but still nowhere near "HFT". Competing against someone who bought an exchange and is running an HFT bot on the same servers, yeah I would stay far away from anyone doing that.
- sitepodmatt 9y ago
  150ms is huge given latency within a EC2 region should be a millisecond or less, although I suspect this could be working similar to BetFair where they internally queue and process the orders in a batch every 200/250ms rather than real time whilst giving the appearance of real time ('taker' being matched within the first batch since queued).

jeofken 9y ago

What is the legal structure and country of residence of a company such as Poloniex? What books or websites should one read to learn about such things?

cdiddy2 9y ago
US private LLC registered in Delaware https://www.bloomberg.com/research/stocks/private/snapshot.asp?privcapId=309559982 https://www.bloomberg.com/research/stocks/private/snapshot.a...

giles 9y ago

I wonder if Poloniex will immediately fall under Circle's BitLicense. Presumably it will, which is good for those wanting to trade in New York State.

stevievee 9y ago

None of these exchanges regulate against price manipulation. Based on Goldman's well documented history of price manipulation tactics (in regulated markets), allowing them to own an unregulated exchange is just about the worst thing to happen to cryptocurrencies in a long, long time.

allpratik 9y ago

Surprising! 1. But does that mean now that Goldman Sach will allow their clients (or their own internal) to at least allow investment in crypto? 2. How to know if there are not manipulating the market? 3. If Poloniex suffers liquidity issues (if USDT is invalidated) then is Goldman going to take care of the situation? I genuinely wish now, DEX platforms should be promoted like the one we have for BitShares. Centralised crypto exchanges are beating the purpose of decentralization.

Scott_Sanderson 9y ago

Will Polo be the first shitcoin buffet to offer fiat trading pairs?

mancerayder 9y ago

"If you can't beat them, own them." It will help them perhaps more easily manipulate the market. After all, they can collect info on all the players' behaviors and predict trends accordingly? Deploy massive amounts of capital where needed? The possibilities are endless.

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dmix 9y ago

> there has been more hesitancy around what to do with digital assets like Bitcoin due to volatility and a history of it being used in shady transactions like drugs and evading taxes. Yes, all of those low-level tax evaders with their thousands of dollars in Bitcoin avoiding taxes via easily traceable transaction and plenty of digital forensic evidence! That's the real concern preventing bitcoin's adoption by legitimate businesses. /s The IRS could employee <10 people fulltime to monitor these guys each year and not break even in returnable taxable income... There are far bigger problems with cryptocurrency adoption/scaling that are tirelessly being worked on. Money laundering and tax evasion via cryptocurrencies has hardly resulted in any level of significant criminality, despite the endless years of FUD/hype that it's attracted...

nosuchthing 9y ago
Have you followed the bitcoin / cryptocoin community at all? https://bitcointalk.org/index.php?topic=1102135.0 https://bitcointalk.org/index.php?topic=1102135.0 https://forum.bitcoin.com/dev-tech-talk/simple-guide-to-tumbling-bitcoins-t16395.html https://forum.bitcoin.com/dev-tech-talk/simple-guide-to-tumb... Freedom from law and oversight is mostly what the Cryptocoin anarcho-capitalist and libertarians focus on as the primary benefit. Satoshi's white paper stresses the feature of pseudo-anonymous transactions. Bitcoin tumbling has been going on since the very early days of the Bitcoin network. zKSnarks are an innovation to make this even more obfuscated and less traceable. This is why a few of the most famous Bitcoiners are trying to establish a tax haven in Puerto Rico. Dozens of American entrepreneurs, made newly wealthy by blockchain and cryptocurrencies, are heading en masse to Puerto Rico – a US overseas territory – this winter. They are selling their homes in California and establishing residency on the Caribbean island in hopes of avoiding what they see as onerous state and federal taxes on their growing fortunes, some of which reach into the billions of dollars. https://www.independent.co.uk/news/long_reads/us-bitcoin-puerto-rico-blockchain-cryptocurrency-steve-bannon-pierce-brock-a8198491.html https://www.independent.co.uk/news/long_reads/us-bitcoin-pue... ICOs and fundraisers are an easy front for money laundering in cryptocoin land. http://www.fraud-magazine.com/article.aspx?id=4294993747 http://www.fraud-magazine.com/article.aspx?id=4294993747
- 9y ago