Monday, January 8, 2018

The $2B Joke

Everything you need to know about cryptocurrency is in Timothy B. Lee's
Remember Dogecoin? The joke currency soared to $2 billion this weekend:
"Nobody was supposed to take Dogecoin seriously. Back in 2013, a couple of guys created a new cryptocurrency inspired by the "doge" meme, which features a Shiba Inu dog making excited but ungrammatical declarations. ... At the start of 2017, the value of all Dogecoins in circulation was around $20 million. ... Then on Saturday the value hit $2 billion. ... "It says a lot about the state of the cryptocurrency space in general that a currency with a dog on it which hasn't released a software update in over 2 years has a $1B+ market cap," [cofounder] Palmer told Coindesk last week.
So blockchain, such bubble. Up 100x in a year. Are you HODL-ing or getting your money out?


David. said...

Today's headlines.

Uproar over crackdown on cryptocurrencies divides South Korea:

"On Thursday the justice minister, Park Sang-ki, sent global bitcoin prices temporarily plummeting and virtual coin markets into turmoil when he said regulators were preparing legislation to halt cryptocurrency trading."

A Wall Street consultancy eviscerated crypto in a massive report — and it should strike fear into the heart of every bitcoin bull:

"Quinlan & Associates put out a report Thursday titled "Fool's Gold: Unearthing The World of Cryptocurrency" in which they outline a case for bitcoin dropping to $1,800 by December 2018."

Bitcoin Rebounds, Still Heads for Weekly Slump as Scrutiny Rises:

"bitcoin mining -- the process needed to facilitate transactions -- is set to become more expensive as China’s government cracks down on the industry, in part out of concerns about power use."

David. said...

"One of the biggest cryptocurrency exchanges was down more than 40 hours this week, causing clients to freak out. It was still down as of 4 p.m. Friday.

San Francisco’s Kraken went offline at 9 p.m. on Wednesday for maintenance that was initially scheduled to last two hours, plus an additional two to three hours for withdrawals, according to an announcement on the company’s website." writes Camila Russo at the San Francisco Chronicle.

David. said...

Tyler Durden reports that New Survey Reveals Staggering Number Of People Are Buying BitCoin On Their Credit Cards">:

"nearly a quarter of the folks who bought BitCoin using their attractive 25% loans admitted that they're now stuck rolling their new debt month-to-month..."

This isn't a joke.

David. said...

Hackers Hijack DNS Server of BlackWallet to Steal $400,000 is today's heist report from Catalin Cimpanu. $400K seems hardly worth the effort in comparison to recent heists. But I guess it is enough for a Lamborghini or two.

David. said...

"Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months" John Biggs at TechCrunch quotes from the abstract of Price Manipulation in the Bitcoin Ecosystem by Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman. Note that the paper is behind Elsevier's paywall.

David. said...

"Cryptocurrency investors in South Korea will be fined for refusing to convert their virtual accounts into real-name ones, financial authorities said Sunday. ... According to the authorities, cryptocurrency traders will be allowed to convert their virtual accounts into real-name ones within this month, but those who refuse to accede to real-name identification will face fines." according to a report from South Korea's Yonhap News Agency.

Hat tip to an anonymous /.-er.

David. said...

David Gerard's commentary on the price manipulations surrounding today's Bitcoin crash is worth a read.

David. said...

It looks like what stopped today's collapse was $100M-worth of Tethers created out of thin air, making $350M printed this month. David Gerard explains Tethers:

"Tether runs a dollar-substitute blockchain token, the USDT, which is theoretically pegged to the US dollar. The problem is, Tether lost its banking relationships in March 2017 at the same time as Bitfinex — and, in fact, was a co-plaintiff when the Bitfinex companies attempted to sue Wells Fargo in April 2017 for cutting them off — and, since then, has had no visible method of getting US dollars into its claimed reserves backing the USDT."

See also here.

So, apparently, despite no banking relationship, someone dumped 350M actual USD into Tether's kitty this month. Or not, as the case may be.