5 ms·

OK, let's play a game. Say you had $5mm. How would you manipulate the Bitcoin market and earn a guaranteed return?

zalzane 14y ago
A government entity looking to destroy the market wouldn't necessarily care about getting a return. Even if they were, take a look at what happened yesterday when someone dumped 5k bitcoins onto mtgox. http://i.imgur.com/K8T4F0Y.png http://i.imgur.com/K8T4F0Y.png
- reaclmbs 14y ago
  He drew an analogy to wall street and called it a "rigged game". So, I'm curious to hear how he'd rig it.
- blocktuw 14y ago
  This is excellent. Any explanation to accompany the graph? How about a link to the source?
  - cadetzero 14y ago
    Source, on the whole, is http://bitcoincharts.com/ http://bitcoincharts.com/ You can break down all the numbers yourself. You can also get a giant history table of all buy/sells with times from either bitcoinity or bitcoin charts, I forget which.
    - jlogsdon 14y ago
      http://bitcoinity.org/markets http://bitcoinity.org/markets is the place I watch. The table on the right is aggregated buys/sells, so if you see something like "200 for 90.00" it could be 20 people buying/selling 10 coins, not 1 doing 200.
- waterlesscloud 14y ago
  The mini-crash yesterday was interesting. The 5k dump itself only moved the price down a couple of dollars, but there was a mass movement of smaller transactions that followed it and caused the price to really drop. My personal (amateur) theory is that people were hovering over their "sell" buttons, looking to cash out as we approach the landmark $100 point. Once they thought someone with a lot of coins was bailing, they took that as a sign to head for the exit. I also think that MtGox's horrible lag factors into the dips. Their trading engine was running as much as 8 minutes behind during this event, which causes people to not be able to modify or place orders. Along with not being able to see actual "current" trading info, this causes a certain segment of the trading population to go into full panic mode. Placing market sell orders in an engine that's showing you ancient data during a crash seems suicidal, but for some reason people do it. I'd love to see Gox upgrade its engine. I honestly think it would make a notable difference in price stability. Even better, I'd like to see the market grow strong enough to support 3 or 4 primary trading sites. There are a number of others now, but the rest have such low volume that you should only use them to pursue specific opportunities (arbitrage).
  - deleted 14y ago
    [deleted]
zenocon 14y ago
Invest that money in private ASIC dev. and mine away
gyom 14y ago
My first idea would be to see if it's possible to create massive sell-offs by crashing through many people's "stop on loss" barriers. For example, let's say that the exchange rate is 100 USD per bitcoin at the moment and that you have tons of people who would absolutely sell their bitcoins if it went below 90. I'm not in the bitcoin game, but I think mtgox offers "stop on loss" features so that people could get out of bitcoins automatically. If you're sure that you want to be in bitcoins, but you think that there are a lot of scared players who put their "stop on loss" too high, you might be able to provoke some kind of selling avalanche by selling sufficiently many bitcoins at once. The price drops below 90, which triggers a lot of automated selling. This makes the price drop even further, triggering other stop on loss barriers, driving the price to 80 and so on. With your $5 millions you buy up all those bitcoins at a rate of 50 USD per bitcoin when the avalanche stops. Then people realize what just happened and the price of bitcoins crawls back to 100 because that was more or less the fair market price. The point is, with $5 million dollars you might have the power to create digital panics, a "flash crash", and use that to your advantage. I don't know if $5 million is enough for that, and it's not a guaranteed return.
- cadetzero 14y ago
  Oh, this literally happened yesterday. Someone sold off 5k bitcoins (~USD $450k at the time). That's exactly what happened. Big sell off from 95 to 80ish, and then it sprang back to ~$90 today. There's low confidence in it right now, but that's because most players are actual players. They aren't using bitcoins for groceries, like a bank reserve (yet). They're playing them like stocks.
  - gyom 14y ago
    And maybe the 5k seller wasn't even trying to game the system. He/she just wanted to get out. Imagine a hedge fund with an order of magnitude more monetary mass trying to provoke those kind of sell offs and benefit from them.
    - cadetzero 14y ago
      It totally stands within reason that until it has wide spread adoption and regular people stop caring about what the exact exchange rate is that we will see large runs like that. As I stated, we have several people (myself included) invested to make money and take care of an investment, not to use a daily currency.
niggler 14y ago
Run your own bitcoin exchange: https://www.youtube.com/watch?v=7fvSYT7vhQY#t=279s https://www.youtube.com/watch?v=7fvSYT7vhQY#t=279s
paulhodge 14y ago
Personally I would just fabricate a very intelligent-sounding report where I claim to have found a serious, exploitable flaw in Bitcoin's encryption. I don't think it would be too hard to convince people, because many people expect that something like this might happen. And if the fabrication is good enough then it'll take days or weeks for researchers to fully evaluate the claim. In the meantime the uninformed panic causes a price dip and I buy a bunch of cheap coins.
rmc 14y ago
You find out who Satoshi is (private investigator) , and you hack their computer. Since they invented bitcoin there's a good chance that they own a nontrivial percentage of all currently mined bitcoins. Likewise you could hack the computers of early adopters who own a lot of bitcoins (back when mining was easy). For example, someone paid someone else 10,000 bitcoin for a pizza a few years ago. You now own a significant portion all all the bitcoins. Alternatively, hire security professionals and finds bugs in the bitcoin protocol or client software. You may be able to force another fork.

A government entity looking to destroy the market wouldn't necessarily care about getting a return. Even if they were, take a look at what happened yesterday when someone dumped 5k bitcoins onto mtgox. http://i.imgur.com/K8T4F0Y.png http://i.imgur.com/K8T4F0Y.png

reaclmbs 14y ago
He drew an analogy to wall street and called it a "rigged game". So, I'm curious to hear how he'd rig it.
blocktuw 14y ago
This is excellent. Any explanation to accompany the graph? How about a link to the source?
- cadetzero 14y ago
  Source, on the whole, is http://bitcoincharts.com/ http://bitcoincharts.com/ You can break down all the numbers yourself. You can also get a giant history table of all buy/sells with times from either bitcoinity or bitcoin charts, I forget which.
  - jlogsdon 14y ago
    http://bitcoinity.org/markets http://bitcoinity.org/markets is the place I watch. The table on the right is aggregated buys/sells, so if you see something like "200 for 90.00" it could be 20 people buying/selling 10 coins, not 1 doing 200.
waterlesscloud 14y ago
The mini-crash yesterday was interesting. The 5k dump itself only moved the price down a couple of dollars, but there was a mass movement of smaller transactions that followed it and caused the price to really drop. My personal (amateur) theory is that people were hovering over their "sell" buttons, looking to cash out as we approach the landmark $100 point. Once they thought someone with a lot of coins was bailing, they took that as a sign to head for the exit. I also think that MtGox's horrible lag factors into the dips. Their trading engine was running as much as 8 minutes behind during this event, which causes people to not be able to modify or place orders. Along with not being able to see actual "current" trading info, this causes a certain segment of the trading population to go into full panic mode. Placing market sell orders in an engine that's showing you ancient data during a crash seems suicidal, but for some reason people do it. I'd love to see Gox upgrade its engine. I honestly think it would make a notable difference in price stability. Even better, I'd like to see the market grow strong enough to support 3 or 4 primary trading sites. There are a number of others now, but the rest have such low volume that you should only use them to pursue specific opportunities (arbitrage).
- deleted 14y ago
  [deleted]

zenocon 14y ago

Invest that money in private ASIC dev. and mine away

gyom 14y ago

My first idea would be to see if it's possible to create massive sell-offs by crashing through many people's "stop on loss" barriers. For example, let's say that the exchange rate is 100 USD per bitcoin at the moment and that you have tons of people who would absolutely sell their bitcoins if it went below 90. I'm not in the bitcoin game, but I think mtgox offers "stop on loss" features so that people could get out of bitcoins automatically. If you're sure that you want to be in bitcoins, but you think that there are a lot of scared players who put their "stop on loss" too high, you might be able to provoke some kind of selling avalanche by selling sufficiently many bitcoins at once. The price drops below 90, which triggers a lot of automated selling. This makes the price drop even further, triggering other stop on loss barriers, driving the price to 80 and so on. With your $5 millions you buy up all those bitcoins at a rate of 50 USD per bitcoin when the avalanche stops. Then people realize what just happened and the price of bitcoins crawls back to 100 because that was more or less the fair market price. The point is, with $5 million dollars you might have the power to create digital panics, a "flash crash", and use that to your advantage. I don't know if $5 million is enough for that, and it's not a guaranteed return.

cadetzero 14y ago
Oh, this literally happened yesterday. Someone sold off 5k bitcoins (~USD $450k at the time). That's exactly what happened. Big sell off from 95 to 80ish, and then it sprang back to ~$90 today. There's low confidence in it right now, but that's because most players are actual players. They aren't using bitcoins for groceries, like a bank reserve (yet). They're playing them like stocks.
- gyom 14y ago
  And maybe the 5k seller wasn't even trying to game the system. He/she just wanted to get out. Imagine a hedge fund with an order of magnitude more monetary mass trying to provoke those kind of sell offs and benefit from them.
  - cadetzero 14y ago
    It totally stands within reason that until it has wide spread adoption and regular people stop caring about what the exact exchange rate is that we will see large runs like that. As I stated, we have several people (myself included) invested to make money and take care of an investment, not to use a daily currency.

niggler 14y ago

Run your own bitcoin exchange: https://www.youtube.com/watch?v=7fvSYT7vhQY#t=279s https://www.youtube.com/watch?v=7fvSYT7vhQY#t=279s

paulhodge 14y ago

Personally I would just fabricate a very intelligent-sounding report where I claim to have found a serious, exploitable flaw in Bitcoin's encryption. I don't think it would be too hard to convince people, because many people expect that something like this might happen. And if the fabrication is good enough then it'll take days or weeks for researchers to fully evaluate the claim. In the meantime the uninformed panic causes a price dip and I buy a bunch of cheap coins.

rmc 14y ago

You find out who Satoshi is (private investigator) , and you hack their computer. Since they invented bitcoin there's a good chance that they own a nontrivial percentage of all currently mined bitcoins. Likewise you could hack the computers of early adopters who own a lot of bitcoins (back when mining was easy). For example, someone paid someone else 10,000 bitcoin for a pizza a few years ago. You now own a significant portion all all the bitcoins. Alternatively, hire security professionals and finds bugs in the bitcoin protocol or client software. You may be able to force another fork.