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> When you know that there’s, what, 13 million coins in circulation, and more than 50% of the them are owned and managed by about 950 people, you realize how sh

> When you know that there’s, what, 13 million coins in circulation, and more than 50% of the them are owned and managed by about 950 people, you realize how shallow the market it is and how subject the market is to manipulation. Is it wrong to apply this to say, Microsoft stock? For the sake of the argument let's say Bill Gates owns 50%, and a handful of other employees 20%. Does that intrinsically make it a shallow market, subject to manipulation? And what sort of manipulation is he talking about exactly? > There’s no evidence that people who spend down their wallets buy back in. There is evidence, people do this all the time. I'm not sure if he literally means no evidence, or that he's suggesting it's an insignificant minority. > When you heard the hype coming from the community, and … that people were spending money on this stuff, they needed to know the truth. I really just don't think this is as objective as he thinks it is... there isn't a 'truth' that desperately needs exposing here. It's more complicated than that and we're still yet to see how it develops. He does raise some good points though, and I find it interesting he says Bitcoin isn't very good for money laundering. I can also see why someone would think it's a pump and dump - it does appear to share many characteristics from an outside view. People pump it sure, but the vast majority of 'pumping' I observe is sincere, backed by a strong belief and excitement in Bitcoin. Not to realise quick profits. Also now with a total dollar value of billions, it's not really in the traditional value range for 'pump and dumps', schemes that tend to rely on much lower value and easily manipulable assets. I do think telling the average Joe on the street right now to probably stay away from Bitcoin is becoming an increasingly savvy advice. There's a lot of scams and bad ideas out there.

gatehouse 12y ago
The enthusiastic and energetic manipulation of the stock market is well documented and is the reason for the formation of the SEC in 1933. One difference between pre-SEC stock manipulation and bitcoin is that the "controllers" of bitcoin can't arbitrarily issue more bitcoin. Controlling a company you can issue new stock and debt at will which opens up a lot more possibilities for market manipulation. My personal opinion on bitcoin (the specific blockchain, not the tech), is that it is either a good currency or a good investment, it can't be both. Since people are calling it a currency and treating it like an investment, I've only bought/sold it before/after transactions. With a pump-and-dump scheme, you have a small number of people who are insincere (the dumpers) and a large number of people who are sincere (the pumpers). For example, you have promoters saying "BTC is decentralized" because the ledger is decentralized, but on the other hand ownership and mining power are highly concentrated. One area where I think the author is wrong is that he seems to be predicting a slow death. I think that is unlikely since it has already crashed hard twice in three years: https://blockchain.info/charts/market-price?timespan=all https://blockchain.info/charts/market-price?timespan=all EDIT Here is an example of some stock market manipulation from the 1800s: The entire period in the affairs of the Erie system from the ascendancy of Daniel Drew in 1851 to the end of the Civil War witnessed an endless succession of stock-market exploits both large and small. In the spring of 1866, however, Drew found an opportunity to achieve a real masterpiece in manipulation. The stock of the Erie road was then selling at about 95 and the company was in pressing need of funds. The treasurer came to the rescue as usual and made the necessary advances on adequate security. The company had in its treasury a considerable amount of unissued stock and had also the legal right to issue bonds to the extent of $3,000,000 which could be converted into stock. Drew took these bonds and the unissued stock as security for a loan of $3,500,000. It so happened, naturally, that Drew was soon heavily short of Erie stock in Wall Street. The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor. All this time our friend, Daniel Drew, was quietly selling Erie stock and closing contracts for the future delivery of the certificates; and he was doing this at rising prices. As the days went by, his grave, desponding manner grew more and more apparent. Erie stock continued to rise. In the loan market its scarcity became greater hour by hour. The rumor began to spread that "Uncle Daniel" was cornered. His large obligations for future delivery must be met. Where was the Erie stock to come from? The stock continued to soar, and Treasurer Drew seemed to become more and more depressed. Then the blow fell. Drew laid his hands on the collateral which he held for his loan to the Erie. In the twinkling of an eye his $3,000,000 in Erie bonds was converted into Erie stock, which he proceeded to dump in Wall Street. Eric quotations fell from 90 to 50. Every one at last realized the trap—but not before Daniel Drew had pocketed a few millions in profits. Source: Moody, The Railroad Builders, Chapter 6. http://www.gutenberg.org/ebooks/3036 http://www.gutenberg.org/ebooks/3036 https://archive.org/stream/cu31924070687961#page/n93/mode/2up https://archive.org/stream/cu31924070687961#page/n93/mode/2u... The struggle for control that follows the part I quoted is also pretty interesting.
- jacquesm 12y ago
  The pumpers and the dumpers are the same people, pump and dump relates to the two different phases of the fraud, the first where the stock is hyped either by cold calling, spam or some other way to artificially increase demand for an otherwise remarkable stock that was obtained at a very low price. Once the price has gone up enough for the fraudsters to unload they start selling their stock (the dump phase) leaving the investors with a stock worth pennies. It only works because of the hype ('pump'), and it's pretty rare for a pump to go viral enough that the pumping would be sustained without the perps marketing their trash. That would move their clients into the realm of the pumpers as well. Think of pump-and-dump as a mini bubble inflated by high pressure marketing to gullible targets.
swartkrans 12y ago
> Is it wrong to apply this to say, Microsoft stock? Stock is not a currency either.
- dragontamer 12y ago
  Its also illegal for any major shareholder to sell without filling out SEC Form 3 and SEC Form 4. This means that anyone who is a major shareholder is forced to publicly announce whenever they are buying, and whenever they are selling. With Bitcoin, it is basically anonymous whenever the "insiders" are making a move.
  - tankenmate 12y ago
    Not so with proper data analysis; you can't move large amounts of coins (even through mixers) without it showing up somewhere. The issue is the information horizon; i.e. the deal may be done before the analysis can say for certain what happened. Obviously some people in the market have access to better analysis tools than others, and not all analysis is made public; either in a timely or complete fashion.
    - dragontamer 12y ago
      If I moved 10,000 BTC to a wallet, and gave it to you, and then both of us sat on our BTC for a year or two... no one else would know that $3 Million was transferred between the two of us. And yes, people are trusting wallets that have been generated by others. https://www.casascius.com/ https://www.casascius.com/ Hell, we don't even know the identity of Satoshi. We only know that he has roughly 3 million BTC to himself. (or maybe he sold it off to someone else. No one knows)

gatehouse 12y ago

The enthusiastic and energetic manipulation of the stock market is well documented and is the reason for the formation of the SEC in 1933. One difference between pre-SEC stock manipulation and bitcoin is that the "controllers" of bitcoin can't arbitrarily issue more bitcoin. Controlling a company you can issue new stock and debt at will which opens up a lot more possibilities for market manipulation. My personal opinion on bitcoin (the specific blockchain, not the tech), is that it is either a good currency or a good investment, it can't be both. Since people are calling it a currency and treating it like an investment, I've only bought/sold it before/after transactions. With a pump-and-dump scheme, you have a small number of people who are insincere (the dumpers) and a large number of people who are sincere (the pumpers). For example, you have promoters saying "BTC is decentralized" because the ledger is decentralized, but on the other hand ownership and mining power are highly concentrated. One area where I think the author is wrong is that he seems to be predicting a slow death. I think that is unlikely since it has already crashed hard twice in three years: https://blockchain.info/charts/market-price?timespan=all https://blockchain.info/charts/market-price?timespan=all EDIT Here is an example of some stock market manipulation from the 1800s: The entire period in the affairs of the Erie system from the ascendancy of Daniel Drew in 1851 to the end of the Civil War witnessed an endless succession of stock-market exploits both large and small. In the spring of 1866, however, Drew found an opportunity to achieve a real masterpiece in manipulation. The stock of the Erie road was then selling at about 95 and the company was in pressing need of funds. The treasurer came to the rescue as usual and made the necessary advances on adequate security. The company had in its treasury a considerable amount of unissued stock and had also the legal right to issue bonds to the extent of $3,000,000 which could be converted into stock. Drew took these bonds and the unissued stock as security for a loan of $3,500,000. It so happened, naturally, that Drew was soon heavily short of Erie stock in Wall Street. The market was buoyant; speculation was rampant; and the outside public, the delight and prey of Wall Street gamblers, were as usual drawn in by the fascination of acquiring wealth without labor. All this time our friend, Daniel Drew, was quietly selling Erie stock and closing contracts for the future delivery of the certificates; and he was doing this at rising prices. As the days went by, his grave, desponding manner grew more and more apparent. Erie stock continued to rise. In the loan market its scarcity became greater hour by hour. The rumor began to spread that "Uncle Daniel" was cornered. His large obligations for future delivery must be met. Where was the Erie stock to come from? The stock continued to soar, and Treasurer Drew seemed to become more and more depressed. Then the blow fell. Drew laid his hands on the collateral which he held for his loan to the Erie. In the twinkling of an eye his $3,000,000 in Erie bonds was converted into Erie stock, which he proceeded to dump in Wall Street. Eric quotations fell from 90 to 50. Every one at last realized the trap—but not before Daniel Drew had pocketed a few millions in profits. Source: Moody, The Railroad Builders, Chapter 6. http://www.gutenberg.org/ebooks/3036 http://www.gutenberg.org/ebooks/3036 https://archive.org/stream/cu31924070687961#page/n93/mode/2up https://archive.org/stream/cu31924070687961#page/n93/mode/2u... The struggle for control that follows the part I quoted is also pretty interesting.

jacquesm 12y ago
The pumpers and the dumpers are the same people, pump and dump relates to the two different phases of the fraud, the first where the stock is hyped either by cold calling, spam or some other way to artificially increase demand for an otherwise remarkable stock that was obtained at a very low price. Once the price has gone up enough for the fraudsters to unload they start selling their stock (the dump phase) leaving the investors with a stock worth pennies. It only works because of the hype ('pump'), and it's pretty rare for a pump to go viral enough that the pumping would be sustained without the perps marketing their trash. That would move their clients into the realm of the pumpers as well. Think of pump-and-dump as a mini bubble inflated by high pressure marketing to gullible targets.

swartkrans 12y ago

> Is it wrong to apply this to say, Microsoft stock? Stock is not a currency either.

dragontamer 12y ago
Its also illegal for any major shareholder to sell without filling out SEC Form 3 and SEC Form 4. This means that anyone who is a major shareholder is forced to publicly announce whenever they are buying, and whenever they are selling. With Bitcoin, it is basically anonymous whenever the "insiders" are making a move.
- tankenmate 12y ago
  Not so with proper data analysis; you can't move large amounts of coins (even through mixers) without it showing up somewhere. The issue is the information horizon; i.e. the deal may be done before the analysis can say for certain what happened. Obviously some people in the market have access to better analysis tools than others, and not all analysis is made public; either in a timely or complete fashion.
  - dragontamer 12y ago
    If I moved 10,000 BTC to a wallet, and gave it to you, and then both of us sat on our BTC for a year or two... no one else would know that $3 Million was transferred between the two of us. And yes, people are trusting wallets that have been generated by others. https://www.casascius.com/ https://www.casascius.com/ Hell, we don't even know the identity of Satoshi. We only know that he has roughly 3 million BTC to himself. (or maybe he sold it off to someone else. No one knows)