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Cryptocurrency is just penny stocks (before regulation). Same pump-and-dump manipulation occurs. Why is this surprising?

by auiya 7y ago

sanbor 7y ago
What about the flash crash of stock market by a single individual? https://en.m.wikipedia.org/wiki/2010_Flash_Crash https://en.m.wikipedia.org/wiki/2010_Flash_Crash
- deleted 7y ago
  [deleted]
- DagAgren 7y ago
  Yes, what about it?
  - sanbor 7y ago
    Just pointing out that market manipulation might also happen in heavy regulated and established markets with much more stability and trust than cryptocurrency exchanges.
    - DagAgren 7y ago
      And?
- papln 7y ago
  Your source says that the cause of the flash crash is unknown and not shown to be caused by a single individual.
  - sanbor 7y ago
    Thanks for pointing that out. I missed that part. Anyway in one report it says that "high-frequency traders did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants."
chrischattin 7y ago
Bitcoin would be the ~20th largest company in the S&P by market cap. Hardly a penny stock.
- analognoise 7y ago
  Given the volatility, few if any actual uses, the fraudulent exchanges, crackdown by the SEC, value based entirely on speculation, and not producing anything useful, you're right. It is way worse than penny stocks, and it is unfair to penny stocks to compare them to crypto currencies.
- DagAgren 7y ago
  Bitcoin's "market cap" is completely imaginary.
  - loblollyboy 7y ago
    There are companies offering completely useless software 'solutions' that don't even do their useless task well and many of them have stock prices that have grown 100% + since the bailouts, even if they haven't updated their technology since before then. How is the value of BTC more fake than that?
    - papln 7y ago
      The difference is that if management of the average publicly traded stock shopped it around, they could probably find a buyer for 50% or more of current market cap. Maybe not for the biggest companies like Amazon and Apple. If a substantial fraction of BTC owners tried to exit, they'd have more trouble getting close to nominal value.
      - Acrobatic_Road 7y ago
        For something like this a metric known as enterprise value is used. Assets - cash + debt AKA the takeover price. You can find these numbers on the company's balance sheet. The average company is traded at something like 3.5x their book value (Assets - debt). The market value of a company is likewise some multiple of their EV.
papreclip 7y ago
Unlike penny stocks, bitcoin won't perform a 100:1 reverse-split and print new coins. Many penny stock gamblers have been burned this way, which is why they're moving into crypto
- deleted 7y ago
  [deleted]
- briatx 7y ago
  No, instead Bitcoin forks: https://www.forks.net/list/Bitcoin/ https://www.forks.net/list/Bitcoin/
  - lawn 7y ago
    Which doesn't in any way alter the supply of Bitcoin. It's like saying I would dilute the value of the US dollar by printing billions of my own "fork dollar".
    - briatx 7y ago
      Each time it forks it creates the same supply of bitcoins virtually indistinguishable by anything other than name and mining nodes. Sure, the limit of Bitcoin Core is still set at 21M, but that limit is quite arbitrary and in time maybe more malleable than people currently believe.

Cryptocurrency is just penny stocks (before regulation). Same pump-and-dump manipulation occurs. Why is this surprising?

by auiya 7y ago

Cryptocurrency is just penny stocks (before regulation). Same pump-and-dump manipulation occurs. Why is this surprising?

sanbor 7y ago

What about the flash crash of stock market by a single individual? https://en.m.wikipedia.org/wiki/2010_Flash_Crash https://en.m.wikipedia.org/wiki/2010_Flash_Crash

deleted 7y ago
[deleted]
DagAgren 7y ago
Yes, what about it?
- sanbor 7y ago
  Just pointing out that market manipulation might also happen in heavy regulated and established markets with much more stability and trust than cryptocurrency exchanges.
  - DagAgren 7y ago
    And?
papln 7y ago
Your source says that the cause of the flash crash is unknown and not shown to be caused by a single individual.
- sanbor 7y ago
  Thanks for pointing that out. I missed that part. Anyway in one report it says that "high-frequency traders did not cause the Flash Crash, but contributed to it by demanding immediacy ahead of other market participants."

chrischattin 7y ago

Bitcoin would be the ~20th largest company in the S&P by market cap. Hardly a penny stock.

analognoise 7y ago
Given the volatility, few if any actual uses, the fraudulent exchanges, crackdown by the SEC, value based entirely on speculation, and not producing anything useful, you're right. It is way worse than penny stocks, and it is unfair to penny stocks to compare them to crypto currencies.
DagAgren 7y ago
Bitcoin's "market cap" is completely imaginary.
- loblollyboy 7y ago
  There are companies offering completely useless software 'solutions' that don't even do their useless task well and many of them have stock prices that have grown 100% + since the bailouts, even if they haven't updated their technology since before then. How is the value of BTC more fake than that?
  - papln 7y ago
    The difference is that if management of the average publicly traded stock shopped it around, they could probably find a buyer for 50% or more of current market cap. Maybe not for the biggest companies like Amazon and Apple. If a substantial fraction of BTC owners tried to exit, they'd have more trouble getting close to nominal value.
    - Acrobatic_Road 7y ago
      For something like this a metric known as enterprise value is used. Assets - cash + debt AKA the takeover price. You can find these numbers on the company's balance sheet. The average company is traded at something like 3.5x their book value (Assets - debt). The market value of a company is likewise some multiple of their EV.

papreclip 7y ago

Unlike penny stocks, bitcoin won't perform a 100:1 reverse-split and print new coins. Many penny stock gamblers have been burned this way, which is why they're moving into crypto

deleted 7y ago
[deleted]
briatx 7y ago
No, instead Bitcoin forks: https://www.forks.net/list/Bitcoin/ https://www.forks.net/list/Bitcoin/
- lawn 7y ago
  Which doesn't in any way alter the supply of Bitcoin. It's like saying I would dilute the value of the US dollar by printing billions of my own "fork dollar".
  - briatx 7y ago
    Each time it forks it creates the same supply of bitcoins virtually indistinguishable by anything other than name and mining nodes. Sure, the limit of Bitcoin Core is still set at 21M, but that limit is quite arbitrary and in time maybe more malleable than people currently believe.