Bitcoin Records 2nd Largest Crash in History After Mt. Gox
I've been in since May 2017, lessons learned, and some real talk.
I've only been in the crypto game since mid 2017. I remember back then when I was assessing the market, BTC was below $1k a few months earlier, LTC was around $4 that January and by the time I finally got in BTC had more than doubled to around $2,500 and LTC was $30. I thought ETH and XRP (and everything else) were just shitcoins because I didn't know shit and I just listened to the herd (Back then the argument was "Bitcoin is digital gold and LTC is digital silver and everything else is a scam.") Now, I'm pretty invested in several coins, because this market is anything but rational. Screw off if you think otherwise. Try to think logically in this market, and you're going to get smacked in the face. After exchanging my first fiat for crypto, in the next couple of months the market "crashed" and I was fearful. By crashed, I mean BTC went from $2,800 to $1,800. I just decided to let my cryptos ride. I pretended that money was gone, but I'd check prices every day for whatever damn reason. I wasn't even putting that much in. Hell, I would spend more eating out and going to the bars every weekend with friends or work colleagues than I was dropping into BTC. It was pretty common that I'd drop $100 a night on sushi, beers, and Sake Bombs. But, when money you could get back loses value, it makes you feel dumb for putting money in. Logic is out the window when I can't get that $100 back from my sushi and drink purchases, but my crypto dropped 30% that week, so I was dumb for investing in crypto but not for my $500+ per month on eating out and drinking with friends. Several weeks later, I was back to even on my crypto investments. Well shit, that was fast. Then I was suddenly up 25%. "Fuck it, I'm just putting money in. I'm not missing out." By the the winter of 2017, I was up over 10x with my crypto speculation. My initial LTC went from $30 to over $350; my BTC went from $2,500 to $20,000. I also just threw $300-$1,000 here and there on random sub-200 market cap coins only to see them 6x in a few weeks. I remember thinking how stupid I was for not buying during that dip down to $1,800, but how good of an investor I was because my gains. What a fucking dope I was. I was sitting there looking at my account on December 10th, 2017. I was about to sell because I could have paid off my car and 50% of my student loans. I wasn't even using my car because I was in another country traveling. "Nah, I can't sell. This is just the beginning; let's wait until I can pay off all my student loans" my delusional self said. I never cashed out. I remember sitting there with a dude who had his GDAX account open after BTC "crashed" from $20k to $13k two weeks later. We just got back from surfing. He was still sitting at $250,000 in his account and was nervous as shit. "What should I do?" he asked rhetorically. Then immediately answered himself, "It will rebound," he said, "it always does." This guy had been through the MTGOX hack and gave me plenty of advice while we surfed. And I listened as if he was prophetic. What a fucking dope I was. When hopium is in the air, we all get irrational. I still wonder about that guy and his cryptos. He went north back home for the Christmas holiday, while I headed south for more traveling, and I've never seen him again. February 2018 was both euphoric and scary as shit. "Holy shit! BTC is under $10k I never thought it would be down here again. But it could keep dropping. But it was just $20k a month ago." I was skeptical that it wouldn't keep dropping so I waited. Then, I didn't want to miss out. BTC was making a run from $6,500 up to testing $10k. "If it breaks $10k, I'm getting back in." A short time later, it did break $10k, only to be hit a wall at $12k, then again...then, the inevitable crash to $6,200 happened where it fluctuated in August - November of 2018 up until, what, November 10th-ish when BCH shitfork shat out and then BTC-Shit-Vision and BTC-LMNOP started paying miners to mine their forked fork of BTC and everyone shat themselves as the market tanked yet again. That was it for me. That was the day I stopped caring. I remember thinking how stupid I was to invest so much time in this. You can't predict this shit. I didn't regret investing in crypto, I regret all the time spent looking at my portfolio, trying to time the market, pretending I was some guru in my head because I threw $300 at POE when it was less than a penny and weeks later it was selling for $0.21 and could buy another trip to whatever country I wanted. Sure, you can use TA to see what support or resistance is there, but it's still a 50-50 chance whether Fake Satoshi is going to spoof trade or some rando is going to drop three 7,000 BTC market buys to break through resistance. So, what did I learn through this whole experience? Other than what I've already stated (You have no way to predict whether it's breaking through resistance or crashing through support). I just remember the main thing that has persisted this last two years. "I wish I could go back in time to when BTC was around $3,000 and LTC was $30." When BTC dropped below, $4k that was heaven. I never thought it would get back to when I was buying when I first got into the market in 2017. So, I bought, and I bought hard. This time around, I have strong buy strategies and sell strategies. They are set; no question. For me, I'm not selling until two weeks before the LTC halving in August. Even then, I'm only selling my LTC for BTC. Then I'll sell 25% of my BTC for fiat 2 weeks before the BTC halving in 2020. I will never have less than my preferred number of BTC's, ETH's, LTC's and a few others. Don't follow my advice here, I'm just saying I know what I want and what my strategy is. You need to have a strategy to buy and strategy to sell. Be reasonable. I previously had a "strategy." It was once I could pay off my student loans with all of my crypto gains minus taxes, I would sell. Yeah, well, looking back if I would have just sold when could pay off my car and 50% of my student loans, I would have been able to invest even more when BTC was down in $3,xxx range and LTC was $22-$35, etc from December 2018 through March 2019. DCAing is the way to go. No question. You don't need to do TA, you don't need to check your portfolio, you don't need to do shit but either 1) setup an automatic buy order with your exchange or 2) login and buy whatever you want. You have your buy strategy (DCA at x interval) and you have your sell strategy. Figure it out. Don't pretend you're gonna time the market. Don't pretend you're some guru. Those people, like me, learn the hard way. No TA, no waiting for google searches of BTC to increase, no waiting for BAKKT, no waiting for Faktoshi to shut the fuck up. Before November 2018, I would only throw money when BTC was on a run. "Oh, we're finally on the way up. It's time to buy!" Like when it went from $2,800 up to $6,200 in the summer 2017, then from $10k to $20k in late 2017. Or when it went from $6,200 back up to $10,000 then to $11,900 in February of 2018. I would think I could time the market. What a pathetic loser, right? Some people grow up in this market like the cable version of themselves only to transition to the directv version. Listen to us dopes that have been there and done that. Learn from our mistakes, but also don't think that we have all the damn answers. Anyone that comes in here acting like the 2nd coming of Craig Wright's dumpster twin, you can be rest assured they are as delusional as Justin Sun. The problem is, even if they are delusional, this market is anything but rational, so they might just be proven right enough for you to think you should follow their advice. This shit is crazy. Stop acting like you've got it figured out. Nobody does, but it feels good to have confidence in this random speculation, right? I'm here to tell you this. My life has drastically improved since November 2018 when I started viewing Crypto investments like a bill. Every two weeks, I would send money from my paycheck to my exchange. Then, I'd buy a certain amount every single week after it had cleared. That money, is all but "gone." It was a "bill" I paid. When the market is going down, I send more fiat and I buy more crypto. When it is rising, I still buy, but not as much; I pull back. You may say I'm trying to catch a falling knife. I just learned that the way I was investing before was bad practice. I'd rather people think I'm trying to catch a falling knife than to feel that FOMO and only buy when the market is up. Right now for example, I'm not buying this week. Not because I think I know what hell is going to happen, but because it's my strategy to not chase a run, and to spend more when it drops. I'll wait until next weekend and see what the market is doing. What happens in between now and next weekend, I don't give a shit. Could I miss out on another run? Sure, but I don't give a shit. Maybe it's because I'm 2 years in and I've seen this shit before, or maybe it's because I've been buying BTC when it was around $3,000 both in 2017 and just about a month ago, so I feel fortunate to have gotten another chance at BTC at $3,xxx. I also learned my lesson that fakeouts happen. I've been burned enough to not give a shit about being BTC going from $3500 to $5,200 in the last, what, 5 weeks? Been here, done it, don't give a shit. I don't know if this helps anyone, but seeing the last two years of this shit, I don't care about some random 30% pump. I also don't care that BCH is up 86%, or ADA is up whatever it is. I'm not into them, but if you made gains, I'm happy for you. I'm serious too. Maybe you're new to this game, or maybe you've only been in since $20k. If so, you're still here, and there are plenty others like you. I'm not a BTC maximalist, I don't think LTC is the truth, I don't think only ETH is the dApp platform. I don't know shit. I'm just some speculator that is speculating on some of this sit. There are also plenty of people that were like me in 2017 that are waiting in the wings, only to buy when the market is on the rise. There are plenty more that buy when it's rising then set stop losses that whales will fish for only to wreck the market in a day then to see a bounce back even stronger while those people FOMO back in. Also, the turd version of satoshi could start shitting in public this week and the media could write about how Satoshi is literally shitting on a physical Bitcoin as we speak and some shitcoin creator then posts a Twitter video that goes viral about how the hashrate and energy consumption of the satoshi shit-pile is not sustainable and then some whale market sells down to below the new TA shit-support level of $4,400 and then all the dopes with stop losses in that range get shit fucked only to see a spoof limit order set at $4,400 of 10,000 BTC and everyone's dick shrinks into their stomach as they hurry to Tether as BTC drops back down to $3,500 before whale #2 shit fucks your emotions with a $1,500 green dildo in a 15 minute span sees the "sell wall" disappear which starts the next FOMO run on up to $6,200 a few weeks later while TAers say "We broke out on great volume" then other TAers agree and the self-fulling prophecy starts another run only to get hit with more whale fuckers. You can't predict this shit. Give it up. Market goes up, market goes down, can't explain that. With the LTC halving in August, the BTC halving in May 2020, I think we are about to get into the 2017 euphoria again though. We are getting closeTM to the point you could just thrown money at any coin and get 10x your investment. What does "close" mean? I have no idea. Eff anyone that thinks they know. Someone could predict it is this week, next month, or after this current fakeout bull run, or in December, or next Spring, and someone will be right. The only advice I have is to do your best to not get emotional about your money or crypto. It's going to do the exact opposite of what you think it will. Even when you try to do the opposite, crypto will shit-fuck you in your sleep. If you believe that the sentiment is changing, and let's be real, we are in speculation phase and this is all based on hopium and belief, then DCA at certain intervals. This isn't some cult. It's all based on sentiment. If you think people are starting to get interested, then that is a sign speculation is about to be in our favor. If you are putting money in that needs to be rent money, do yourself a favor and just walk into a casino and put it all on red. If you win, then put your winnings in crypto. If you lose, I saved you the anguish of checking your portfolio every hour only wish you would have done the opposite of what you did. You're welcome... Or, do the opposite. Check the market every hour for the next 12 months only to look back and realize that you kept buying on the way up, got scared and sold on the way down, and then FUD yourself in your sleep because of your stop loss sells were triggered while whales were fishing for fear. So, there are all of my shit thoughts. What are yours? What are your strategies? There are plenty of people that have been in longer than me, what are your strategies? Are we heading for a the next bull run? Is the bottom in? Do we still have a massive, short-lived capitulation event coming? Let's chat. TL;DR: You can't predict this shit, just DCA, live your life, get a buy strategy, choose a sell point, make this shit as simple as possible. If you try to complicate things by predicting the next run, the next drop, the next consolidation, then you're probably going to be wrong like 99% of people. And don't be that guy that ends up $250,000 in your account in the next bull run only to see it drop down $67,000 literally a week later.
A word of caution. All major exchanges are not even fiat gateways. The actual fiat in the system is likely grossly overestimated. Crypto is decoupled from USD. Implications.
First of all i should disclose i'm fully out of crypto since last Sunday, i'm just waiting for my EUR wire from Bitstamp as that has been my gateway since 2014. I would like to thank bitcoinmarkets for the good times, i've been around for a long time but not really participating that much, and even when I did i used throwaways. I decided to make this topic as a warning and to explain why I got out and why I think you should be very careful. So we have a situation in which: 1) 80% or more of trading is in USDT (tether) 2) Coinmarket cap is an accomplice to Bitfinex which implies USDT-USD parity. To which degree this is intentional, irresponsibility or just incompetence I would not know. Basically conimarketplace lumps all USDT trades and prices with actual USD trades and prices. If you go there https://coinmarketcap.com/ and try to select PAIR, you get THIS. No USDT, even though most exchanges are USDT. Even if most of liquidity is USDT. Again, this is a major factor in implying parity along with what Bitfinex/Tether try to do. As if this wasn't enough, they also willingly or stupidly inflate USDT price itself. I have to remind you Coinmarketcap is THE point of reference for all cryptosphere. It's oscilating Alexa rank is 100-400. Betfair (real life gambling company) for example uses coinmarket price average for their own system. etc. 3) If/when tethebitfinex crashes, not only does bitfinex crash, it will crash all crypto pairings using USDT on all exchanges using USDT. 4) There are very few fiat gateways. Until recently I assumed the major(top) exchanges have some kind of fiat pairing. I mean.. any respectable exchange would have some way of actually getting money in and out, right? I didn't even think to check. Well, they don't. Literally all the major exchanges are USDT (and/or another stablecoin or proprietary coin) and nothing else. No USD, no EUR, no fiat whatsoever. https://coinmarketcap.com/rankings/exchanges/ . Only the 11th one has actual USD pairing. Didn't check lower but most exchanges don't have fiat. I did a full check on Binance myself as it's the biggest exchange and I had an account there for lulz. There is no fiat. What does this mean? It means that an allegedly 200 BILLION market cap of all crypto has a fiat gateway of only a couple of exchanges. Most exchanges not using any fiat are not only immune to the risk, they offload risk on the much smaller exchanges that are fiat gateways. And on clients, of course. The cash side of the actual exchanges would need to have to siphon even a fraction of this are unimaginable. If any of these exchanges use crypto to evaluate their own fiat balance (it is illegal but crypto is hardly regulated or audited), they're fucked. 5) If the first four points looked bad, this one is by far the worst. The system is running on a presumed liquidity provided by Tether and on presumed USD capital. Even if tether was legit it's just 2b USD rolling 200b USD. And that 200b USD is just presumed quantity of USD that is in. We don't know how much USD is in the system, there could be and there probably is way less, as over the past 8 years or so crypto ran mostly on funny exchanges that could "provide" whatever USD value they wanted. More so, even if they went bust, people would usually get to withdraw crypto and store it on some other exchange. Even when an exchange was slowly withering, people just pulled out crypto and the exchange actual liquidity was hardly tested out. Or btc-e crashing or MtGox crashing. Their cash side crashed but "crypto" side did not crash. It was bailed out so to speak. So we have crypto running around that should've been worth 1/10 or 1/100 of it's price but it's instead running on par value with crypto on legit exchanges. This grossly inflates price. Even if tether (or other stablecoin) is legit, it can be drained in a couple of hours. What happens to the pairings of crypto/USDT? People just trade one bitcoin at the presumable price of 6k for 6k USDT that are 100% backed but have no value because there's no USD in the treasury? Who is stupid enough to deposit USD there to get stuck waiting for another fool to bail him out by getting himself stuck? edit: [Even if tether is 1%, it holds much more assumed/created value, which is the actual issue. Look at it this way. It only adds 1 cent to a real dollar market buy order for example. Each buy order made in a system that implies USDT:USD parity is now worth 1% more than a true USD purchase. Now repeat that buy order millions of times. It's not 1.01+1.01 times 1 million. It's more like 1.01$1.000.000 Each added value comes from USDT injection and USDT has to be liquid on the way down as well. It's added value to the market value is NOT it's market cap. That's a shitfest all "stablecoins" inject into the market, no matter how backed or audited they are.] As I was saying, all the exchanges that are not holding any fiat are immune to any crash or actual liability. If/when cryptos fail, they'll give you back any number of cryptos/stablecoins you had, even if they're worthless. It's just entries in a database. If/when USDT fails, all it's corresponding crypto prices will go to infinity. If you're holding any USDT, you can't get out of the exchange because 1 btc will cost infinity. If you're in any margin position, no matter where your stops are you'll get margin called instead, as stops are just suggestions in high/extreme volatility. You can't get out through fiat cause there's no fiat. Your only hope is you were actually holding crypto and they don't block withdrawals. Best case scenario you move your crypto to a fiat gateway exchange and hope to cash out there as fast as possible because it will have had become evident that cryptos were overvalued because of USDT (and even hypothetical USD in the system). Will most likely be too late as people that were already in fiat gateway exchanges already sold/cashed out. There will be enormous sell pressure. And no buyers. The whole stablecoin issuance is idiotic and I just hope it crashes now and we won't see another bubble built on presumed capital, cause that will hurt way more people. All of this is a mess. Crypto is completely decoupled from real fiat now. The potential money that are in the crypto sphere is exponentially greater than available money to trade out of. Or maybe we should be grateful for stablecoins for finally crashing a system that would've crashed anyway in the long run.
5 Reasons Why Storing your Crypto on an Exchange is a Bad Idea!
Most of us already know that storing cryptocurrency is inconvenient and almost too difficult. It’s not surprising, given how new the technology is. We’re still a little while away before we hit high adoption rates for cryptocurrency because of this. But with tech startups paving the way for innovative solutions around storing cryptocurrencies,we’ll hopefully experience more convenience, security, and trustworthy services. For some of us that continue with the struggle, we continue the with the hard route and ‘be our own bank_’. Others continue to go down the _somewhat easier route: leaving their cryptocurrency on the exchange. Keeping your cryptocurrencies on exchanges does offer some benefits though. Pros:
Offers liquidity — transfer coins in/out very quickly
No danger of losing access because of forgotten passwords or seeds
Low fees to transfer between coins
Access to a large number of altcoins
Offer multi wallet capability (storage for multiple cryptocurrencies)
No technical knowledge required to setup
Offers two factor authentication
These are significant advantages over cold storage solutions currently. However, the following will make you think twice before you keep your cryptocurrency on an exchange.
5. Exchange BTC-E seized by FBI- locking users funds
Mid 2017 BTC-E, a popular exchange in the past, was seized by the FBI over the alleged Alexander Vinnik who was found guilty of laundering funds through the exchange. Alexander Vinnik was originally thought to be one of the operators of the website, however these claims were denied by BTC-E later on. Since then BTC-E has shipped operations to New Zealand and re-branded to WEX. It is believed that most users have been able to access their funds. Having said that, it was difficult time during the down-time, with all users unsure if they’d ever be able to access their funds. Although the user base continues to grow, the community had been split over BTC-E. Several users have resisted transacting on the exchange due to their secretive operations. On the other hand BTC-E has had significant support, one user commenting “BTC-E deserves respect” over their commitment to re-opening the portal to it’s users. It has been in-evident that BTC-E played any part in the laundering. So, although BTC-E may not have been 100% at fault- the story does show you the risk you put yourself against trusting a third party to mind your coins for you.
4. Indian crypto exchange Coinsecure loses $3.5m in customers’ bitcoin
April 2018 An exchange operating in India had nearly $3.5 million worth of user’s Bitcoin stolen. The company blamed the security chief, Dr Amitabh Saxena for stealing the funds. Regardless of how the 438.318 Bitcoin went missing- it clearly shows the lack of protective measures exchanges get away with. Coinsecure claims that they are working “_day in and day out, and investigations are in full swing for a possible recovery of the lost BTC_”. However they are treading carefully, even with their promises, their website states “should we be able to recover all of our BTC, all BTC holdings will be refunded”. Key words being ‘should we be able to’.
3. Italian exchange BitGrail claims $195 million worth of Nano (XRB) lost through hack
February 2018 The exchange claimed that the cryptocurrency was stolen through a hack. Bitgrail have not accepted responsibility for the breach, claiming that the Nano cryptocurrency was flawed. Nano on the other hand continues to hold its ground, stating: “to date, all reliable evidence we have reviewed continues to point to a bug in BitGrail’s exchange software as the reason for the loss of funds.”
Once again, BitGrail confirms to have been a victim of theft. A crime made possible by taking advantage of known failures in the NANO team’s various software (Rai Node and the Official Block Explorer) and therefore, for these reasons and in accordance with the law, BitGrail doesn’t consider itself responsible for the unforeseen circumstances.- Official statement from BitGrail
After several months of halt, Bitgrail has announced a commencement of operations on 2 May 2018 at 10:00 UTC stating, “the markets and withdrawals will be operating for all coins, except for NANO/XRB. BitGrail re-open the NANO/XRB market for users at a date to be announced shortly.”
2. $400 Million Goes Missing From Japanese cryptocurrency Exchange Coincheck
January 2018 Yet another unsettling few months for investors as they wait for 500 million XEM tokens to be refunded after they were stolen. The Japanese exchangehalted all trading at the time and have recently restarted trading. This was regarded as one of the biggest cryptocurrency thefts, next to the infamous Mt Gox saga.
1. Mt. Gox Declares bankruptcy over 850,000 missing Bitcoin
2011–2014 Mt. Gox at its prime was regarded as one of the biggest Bitcoin exchanges. Unfortunately, it came to a nasty end once it was found that an extensive number of Bitcoins went missing. Investigations in 2015 found that the coins went missing over time, starting in 2011. By far, the most infamous and nerve wrecking loss in the history of cryptocurrency. The saga continues to date though, with the trustee claiming to have sold a large chunk of Bitcoin in early 2018. It was speculated but not definitive that this had a large hand in causing the Bitcoin crash around the time. The above is not intended to spread FUD. It is a reminder to be careful on how you store your cryptocurrency and raise awareness of the potential risks. The statement ‘be your own bank’, rings true still. It will continue to do so until we can receive service offerings that combine cryptocurrency with convenience, trust, and security. Having said that, there are also severe risks you carry if you do become your own bank. Damned if you do, damned if you don’t! Here’s a quick run down on different storage methods for cryptocurrencyand their associated risks. Most of the cryptocurrencies in the market today are based on ERC20. So you can also download this free guide on storing Ethereum and ERC20 tokens. But if you decide to continue storing your cryptocurrency on an exchange you may want to do the following:
Diversify across multiple exchanges- keeping your crypto on multiple exchange means less risk of losing ALL your holdings in case one exchange goes down or shuts down
Keep a small portion on an exchange for transfers while the rest in cold storage.
Possible reason for BTC sell offs. Tin Foil Hat time.
This is total tin foil hat ish however I think futures came online in Jan for a reason.It may not be a coincidence that the market crashed 4 weeks after BTC crashed.The last thing 'the centralized bankers' want is BTC to be a hedge for overprice equity and bond markets. They knew they could not stop the BTC so what they did is bought enough coins 1500 to 3200 range to be able to then leverage their coins at key times to cool off BTC. Remember derivative markets can and often do distort supply levels (at least in the short term) It is 'akin to counterfeiting' as you are introducing coins into the market that would ordinarily not have been sold. 'Supply limits' is what makes BTC fundamentally stronger than any other asset on the planet, but if they can be counterfeited via derivatives? (perfectly legal for the immoral banker cabal - sigh) They knew in January that a major correction had to happen (which it did in February) So by helping fuel the bull run in Jul-Dec they could accomplish a few things;
They support the meme of 'bitcoin is too volatile to be useful' (ironically caused by them and their unbacked paper derivatives)
They dumped on leverage along side the mtGox trustee and used media to further panic people. (bubble bubble bubble bubble etc)
BTC then did not 'look' like a good hedge when it came to equity markets deflating a few weeks later.
I think they are doing it again and stocks and perhaps bonds will suffer a huge 'unexpected' correction again very soon (any day to next 6 weeks). So despite the good BTC fundamental news it will not come into the mind of most to use BTC as a hedge. For me , while this is total speculation, but I am shorting stocks (as of a Friday) and will long btc as the market tumbles. Ok now go ahead and beat me up since I have insulted the establishment and their dubious practices.
Ethereum still has a bright future. Let's learn from this experience.
I've been involved in cryptocurrencies for many years as a miner, investor, etc and have seen many turbulent times (all of the worst). The multiple large thefts of bitcoin, the MtGox crash, forks, etc. In every case, lessons were learned by each the miners, service providers and general user community. While events like TheDAO exploit are painful ones, there are important lessons to be learned. Newcomers may have a tendency to panic and dump their coins, but the cooler heads usually prevail and come out on top. In fact, even profit off of those who panic sell, knowing the price drops are not rational but rather emotional. We watched Ethereum drop from a $2 billion market cap to a $1 billion market cap over a flaw in something which had nothing to do with flaws in Ethereum itself. All of this because of some unproven code that people gambled $100 million on. Sure, I want TheDAO to work just as much as the next guy, but let's accept what has happened and not repeat that mistake again. I realize there are good arguments on both sides of TheDAO / fork debate, but let's make sure we learn from this and grow. Failure is ok, that's how humanity advances. But with failure, pay attention to the lessons: * Don't gamble more than you are willing to lose. If you don't understand the technology (intimately) then you're simply gambling on faith (in devs, in advisors, in technology, etc). Accept it or not, but don't complain if you get burned knowing that you did not have full understanding going in. * Don't get caught up in hype and illusions of getting rich quick. * Don't panic on negative news. Consider the possible ramifications of the event and then decide if you should hold, buy or sell. Sometimes it's counter-intuitive and the opposite action is actually your best move. Ask yourself both why and why not before acting. Weigh both sides. Ethereum wasn't the first cryptocurrency and likely won't be the last. This experience was a good thing in many ways. Better it happened now than later when it's more mature with a bigger audience. Imagine the news headlines if this happened in Bitcoin. We are still in the pioneer phase of Ethereum; the early adopters and risk takers. In my mind, Ethereum is heavily undervalued at the moment. A $3 million leak (?) caused a $1 billion dollar market cap drop, largely due to panic. If anything, Ethereum is amazing simply for it's fast transaction times alone. So stay confident as the technology is still sound. Whatever the developers decide to do (fork or not) we will look back and grow from this experience into a more mature platform. I am as excited about Ethereum as I was about bitcoin 6 years ago. Hopefully I am not alone.
TL/DR: A young man had a secret. To keep it hidden, he kept digging until the hole was a billion dollars deep. This is a speculative tale of a great bitcoin theft from MtGox in 2011 and the efforts that this man undertook to fix it. The tale explains the bitcoin bear market of 2011, the explosive rally of 2013, delayed fiat withdrawals, malled transactions, and a bot named Willy. “By the time you realize that real life has begun, you are already three moves in.”—Author unknown It was June 19, 2011. Mark, a 26 year-old young man—a boy really—was ecstatic. He had recently purchased MtGox—a small, online exchange for trading virtual tokens—and business was booming. These virtual tokens were called bitcoins and Mark loved them. Bitcoins were an obscure curiosity: a peer-to-peer electronic cash system that allowed users to store and exchange credits with any other user in the world, nearly instantly, and without the assistance of a third-party or the permission of an authority. All that was needed was a 78-digit secret number—a key if you will. In order for his customers to withdraw their bitcoins over the internet, MtGox stored some of these keys on its online server. The remaining keys were stored on USB drives and backed up on paper to prevent theft should the server be compromised. But theft was hardly a concern. In October of 2010, bitcoins were trading for $0.10 and the half a million bitcoins held by MtGox was worth only $50,000. But still Mark took precautions, diligently moving bitcoins to offline storage and leaving only what was necessary for customer withdrawals online. He truly wanted both his business and bitcoin to succeed. By April, the bitcoin price had risen to $1 and by June it had exploded to $30. Between June 1 and June 15, an additional one million bitcoins were sent to MtGox and immediately sold, crashing the price back to $10. It was a hectic time, with hundreds of customers needing help, visits from the FBI related to the Silk Road black market, and stress related to the recent market crash. Young Mark was becoming a victim of his own success: there simply wasn’t enough time to get everything done. On this very day in June 2011, the keys to the recently-deposited 1,000,000 BTC were still sitting on his server. Later this day, a group of hackers gained access to MtGox servers and executed fake trades that the world could see, driving the nominal price of bitcoin near $0. Mark was frantic. He quickly regained control of the servers and learned the dark truth: the million bitcoins that had recently flooded in earlier that month were gone. Mark admitted publically to the hack, rewound the false trades, but kept the truth of the missing coins a secret. How could this 26-year old explain to his customers that he had lost their bitcoins? And if the world found out, would this kill the thing he loved so dearly? Would he go to jail? Or worse yet, would someone kill him? Mark decided that he would do what he thought was right: he would slowly earn back the lost bitcoin with MtGox trading fee profits and eventually make his customers whole again. He still had over 500,000 BTC left—he moved 424242.42424242 BTC between bitcoin addresses and convinced the community that MtGox was solvent. As long as withdrawals didn’t exceed deposits over a long period of time, no one would ever find out the truth. Or so he thought. Meanwhile, the bitcoin thieves slowly mixed their coins with other coins, obfuscating the chain of ownership, and then re-selling these coins on MtGox using sock-puppet accounts. Mark tried to stop them, but there was no way he could know for sure which accounts were fraudulent—he even accused innocent people of bitcoin laundering. The constant selling of these stolen bitcoins drove the price down to $2 in November 2011. Mark faithfully used all of the MtGox profits to purchase coins back during this decline. But he would never use customer funds—that was a line he swore not to cross. The selling of these stolen bitcoins continued at a diminished rate over 2012, and Mark continually purchased coins using the MtGox trading fees. The bitcoin economy was growing and new exchanges were opening up across the world. His bitcoin reserves weren’t building fast enough but the price of bitcoin kept rising (along with the dollar value of the missing bitcoins). He was worried that other exchanges would suck coins out of Gox and reveal his secret. He decided he needed to take decisive action: for the first time, he used customer funds to purchase real bitcoins. These large purchases by Mark further increased demand and ignited the great rally of spring 2013 when the bitcoin price shot from $20 to $266. Mark had reduced his liability in bitcoins, but in dollar terms the coins that were still missing were worth more than ever before. On May 15, 2013 the US Department of Homeland Security seized millions of dollars from the MtGox Dwolla bank account. MtGox dollar reserves were already depleted at this point, and with the recent seizure, Mark could no longer make good on customer withdrawals in US dollars. Under the guise of “banking problems,” MtGox slowed US dollar withdrawals to a trickle in the summer of 2013. Customers became increasingly worried and began to bid up the price of bitcoin on MtGox, as this was the only way to escape with their funds. MtGox had little fiat and very little bitcoins, but it learned one thing: as the price differential between Gox and BitStamp grew, the outwards flow of bitcoin slowed dramatically. And so Willy was born. Willy was a bot, discovered by Wall Observers from bitcointalk.org and named by Opet on Bonavest's trading show, who would consistently purchased bitcoins at regular intervals between November 2013 and February 2014. Evidence that Willy belonged to Mark was revealed when both web and API trading at Gox was disabled for a brief period of time, exposing Willy as the only one left buying. Willy served two purposes: he drove the price of bitcoin on the MtGox exchange high, thereby slowing and sometimes reversing the outward flow of real BTC, and he reduced the number of GoxBTC held by clients. Of course, this meant that Willy eventually became the owner of a huge number of GoxBTC (that were of course no longer backed by real BTC). By December, the situation at MtGox was grim. In a desperate attempt to attract more funds, Mark offered reduced trading fees under the guise of celebrating their 1,000,000th customer. This partially worked, but Mark knew it was too late. If MtGox collapsed, it must appear that he didn’t know about the theft until now—for it was better to appear incompetent than criminal. It was time to cover his tracks. He purposely mixed immature coins into bitcoin withdrawals to delay the outward flow of coins, and later began malling his own transactions. He added the Gox malleability weakness not as a bug, but as a feature, so that it would seem plausible that outsiders had recently stolen the coins without his awareness. No coins were actually lost to malleability. The MtGox coin supply dwindled to 2,000 BTC and on February 7, 2014. He had no choice but to disable bitcoin withdrawals. The end was near. The problem Mark faced was that his customers had $150,000,000 credited to their accounts, yet the MtGox bank account only contained $38,000,000. He could blame the missing bitcoins on transaction malleability, but how could he explain where the fiat money went? He shifted Willy into reverse and cranked the throttle. Willy relentlessly dumped bitcoins into the open bids. The price fell further and further, eventually dropping well below the BitStamp price. But still not enough people were buying! He needed his customers to buy the GoxBTC. Willy kept dumping coins until finally the price dropped below $100. MtGox even acquired new USD bank wires from customers looking to purchase the cheap coins. By this time, the majority of Gox customers had converted their dollars into bitcoins. On February 28, 2014, Mt Gox filed for bankruptcy protection in Tokyo, reporting 6.5 billion yen in liabilities, 3.8 billion yen in assets, and 750,000 of customer bitcoins missing. Willy had failed to completely close the fiat solvency gap and Mark finally admitted to having lost the coins. Now we watch the rest of the story unfold. A story of how an oversight during a hectic period, an untimely theft, and an attempt to cover it up, lead to the greatest loss in the history of bitcoin. Cross-posted from: https://bitcointalk.org/index.php?topic=497289.0
Hi Bitcoiners! I’m back with the third monthly Bitcoin news recap. For those unfamiliar, each day I pick out the most popularelevant/interesting stories in bitcoin and save them. At the end of the month I release them in one batch, to give you a quick (but not necessarily the best) overview of what happened in bitcoin over the past month. Now archived on Bitcoinsnippets.com As promised, I launched a website as an archive, where I post the version with links to the original posts and discussions so this post doesn't get auto-moderated. Special thanks goes out to Bitttburger for thinking of the name Bitcoin Snippets. I went back in time and made an overview for December 2016 too. I’ll probably make recaps of 1-2 previous months for each month I progress, so that I eventually end up with everything in a few years. Starting from this month, I’m going to cut back on including memes, there’s too many and they overtake the interesting news. A recap of March 2017 in bitcoin Version with links on Bitcoinsnippets.com
01: Bitcoin reaches its all-time high on all exchanges & Jihan Wu, co-founder of Bitmain, considers Bitcoin Core to be the biggest threat of the long-term development of Bitcoin
02: Digital gold is now worth more than the common measure of physical gold & SegWit has been thoroughly tested for a year on the Testnet & Bitcoin passes the all-time high that was once set on MtGox
03: People realise the parity of Bitcoin and an ounce of gold doesn’t actually make them equal in value & A reminder of the Bitcoin Core scalability roadmap
04: Gemini Exchange is SegWit ready as one of 53 businesses and another 55 on the way & A discussion started by Adam Back on the moderation in bitcoin
05: XO.1 announces a stresstest on the Bitcoin network for their voting application & The Central Bank of Nigeria states they can’t stop Bitcoin
06: A thank you from the community to the Winklevoss Twins & Antpool mines a BU block
07: The CIA has backdoors in every Windows PC in “a world shocking revelation”
08: Bitcoin Core 0.14.0 released & The state of New Hampshire is about to completely deregulate Bitcoin
09: BitPay’s point of view on the blocksize debate & Charlie Lee, inventor of Litecoin and head of engineering at Coinbase, on BU
10: Bitcoin ETF disapproved again and crashes to below $1000 & Bitcoin goes from $1200 to $1320 to $1080 to $1250 in 15 minutes
11: The bitcoin price rose back to pre-ETF after crashing, which leaves a lot of people impressed
12: Breeze Wallet will implement TumbleBit, which enhances privacy in Bitcoin
13: AntPool will switch their entire pool to Bitcoin Unlimited
14: A Bitcoin Unlimited remote crash vulnerability is found after a year
15: Many stories about the dishonesty around the Bitcoin Unlimited and Classic bugs, including an interview with the security researcher that found and reported the bugs & Bitcoin Core passes 10.000 pull requests
16: The EU Parliament states they don’t want Virtual Currencies to be anonymous, while rain was wet this day
17: 20 Bitcoin Exchanges announce their hard fork contingency plan
18: A scale of the Bitcoin scalability debate (made by me)
19: Bitmain wants to accelerate the plans for a hardfork & A BIP is made for a user-activated-softfork of SegWit
20: Jihan Wu from BITMAIN talks about miner concerns with 2nd layer scaling & BTCC releases multicurrency Bitcoin wallet with Twitter payments, a debit card and 154 currency conversions
21: Full translation of Chinese miners’ concerns with 2nd layer scaling & Christian Decker, a Lightning Developer, explains the benefits of Lightning for miners & Bitcoin Unlimited suffers from another exploit that causes their nodes to go offline
22: People speak out against Bitcoin Unlimited after they go from open source to closed source software to fix a bug & Luke-jr proposes a BIP that would allow non-full nodes to identify false versions of the blockchain, instead of having to rely on full nodes
23: Bitcoin Core Technology Roadmap: Schnorr signatures, which will allow native multi-signature transactions and save more blockspace & Large Bitcoin Collider has tried over 1000 trillion private keys
24: Gavin Andresen, Peter Rizun and Jihan Wu are all in favour of attacking the minority chain after the BU hardfork, to force people onto the BU chain
25: BIP148 is released, a proposal that allows nodes to activate soft forks such as SegWit & A German Bitcoin exchange asks its users whether they want BU or SegWit & Andreas Antonopoulos on BU: It doesn’t change the rules, but the rulers who set the rules
26: Mining pool 1Hash with 3% hashpower speaks out against BU & SegWit support reaches a new ATH as ViaBTC and Antpool partially go offline
27: Armory wallet’s developer disagrees with the BU approach on almost every point & Nick Szabo’s bit gold design featured off-chain scalability layers back in 1998 & F2Pool owner Wang Chun states Bitcoin can’t and won’t fork & Canadian bitcoin businesses reject Bitcoin Unlimited
28: Core developer explanations on their visions on scalability & Hal Finney on layer 2 scalability in 2010 & Rootstock smart contracts to be launched in June 2017
29: BIP148’s for a user-activation of SegWit gets a startdate of August 1st & Adam Back gets told to read up on Proof-of-work in the Bitcoin whitepaper, which Satoshi cited him for 9 years ago
30: How Japan prepares to recognize Bitcoin as a method of payment & Ledger (hardware wallet) raises $7M
31: A reminder that Bitcoin core has no central planning & A simple walkthrough of the changes brought by BIP148
Thanks to everyone who contributed to Bitcoin in a positive way this month!
Erowid, a non-profit drug educational organization, gives a detailed look at how they used Bitcoin as a source of donations since March 2011
I recently sent Erowid a question about their Bitcoin donations (the quoted parts) and I got an extremely detailed reply about their history with Bitcoin donations. Thought I would share. But first, here is a link for donating with a wide range of crypto-currencies.
Thanks! We really appreciate it. Bitcoin is one of the most useful and interesting new payment systems since zero-fee paypal in 1999, which has ended up nothing at all like it started. It's now a very useful email-address-based gateway to the giant international VISA/MC conglomerate. It's a handy system, but that whole transaction skimming conspiracy is a little disturbing, costly, and monopolistic.
I was looking at your address and see that it is only a month old, yet you have been accepting Bitcoin since Mar 2011. In the spirit of openness I'm curious about why you changed addresses and
Many Bitcoin advocates and technologists state that a new address for every transaction is actually the right way to improve privacy and to firewall tracking of payments and transactions. I believe that viewpoint is kind of the opposite of openness, it is based on trying to keep people's transactions more private, despite the entire BTC blockchain database being fully public and exposed. I spent some time a couple years ago trying to get a server-based wallet set up that would generate a new address for each transaction and it wound up being a lot harder than I could get working reliably. The more unique addresses, the less erowid donors are tied together, thus a little more privacy. We will try again at some point. Currently, we keep a local bitcoin wallet and backups and rotate the BTC addresses every month or three, depending on a variety of factors.
and how much you received on your previous ones. Also I would like to know if you hold a fraction of Bitcoin or convert all to fiat directly.
At the moment, I can give you a rough outline of how we choose when to sell bitcoins. It different than people who are on the buying end. We have always conceived of BTC as 'micro donations', but some number of people over the years (let's say 30) have asked directly to pay for a membership with BTC instead of other methods. In order for that to make sense as an organization, we need to convert those bitcoins around the time of the donation so that the donation in bitcoin results in the amount near the dollar value that the donor was offering. So, for a t-shirt that might be a $45 donation. If/when that happens, we transfer the appropriate number of bitcoins out on or near that day to convert BTC into USD. Then we can enter that person's donation into our donation system and the accounting matches up: person gets a $45 membership, we get $45 into our bank account. Accounting is fun! :\ Further, because we are entirely a donation-based non-profit, we are always in the position of trying to have BTC donations be of non-zero USD value to the organization. That means selling them at some point. The question of when to sell them is obviously complicated. One can view BTC as a deflating currency or an investment or a security or maybe a commodity. We are generally conservative about them and have mostly sold the BTC we've received within a few months of their donation in order to generate USD for the organization. So, say we got 1 bitcoin 2 years ago when they were worth $30 each. If it wasn't tied directly to getting a sweatshirt or otherwise needed to wind up as a row in our banking records, I would hold onto to the coin and wait for a time when the value of BTC was going upwards and sell that bitcoin for more than it was worth when we received it. But I did not hold onto them for years, since that defeats the purpose of supporting the organization and it locks up the bitcoin trading market if everyone holds and never sells. However, the goal is always to wind up with money in the bank sooner rather than later, since we run a business. As far as previous addresses go, I believe that the reasoning behind the privacy concept is NOT to give out previous addresses, though obviously it's a tiny figleaf. We sold 1 BTC last week when the value hit $500 and another this week when the value hit $600 and will probably sell again if the price continues to rise. If I had a completely configurable trading system, I would likely set a sell order for 1BTC at $675 OR sell 0.5 BTC in 14 days if the price is >= $600. My reality is that I have to make the sales manually, because I don't have a reliable trading site that delivers to my US bank. The vast majority of total bitcoins we've sold were sold for under $30 a piece. When we opened our first bitcoin address to check out the system, The Faucet gave me 1 BTC just to help get the ball rolling. Obviously such things no longer exist and we're in a period where bitcoins are both volatile AND valuable. We had one donor give us some bitcoin back in early December and requested we wait to sell it until it hit $1200, but ALSO required that we open a separate account at a bitcoin trading company that took two weeks to complete as the company confirmed our banking information and identity, etc. By the time we'd gotten the new account set up, we were well into the price crash and so we are holding onto that bitcoin for some future price that is closer to what the person donated it at. On the other hand, we received several BTC last september when they were in the 100-200$ range and we sold all of those at between $800 and $1200 each in late november and early december as the price was running up. That was actually during the fall of MtGox who was our only trade location until October, 2013. I had initiated a sale of two bitcoins in early September and six weeks later, MtGox had not deposited the money in our account and had no estimate for when they would do it. Happily, they credited my account the USD, I bought BTC, and moved them back to an offline wallet. I'm not sure how to be both transparent AND private, but I can tell you the current address is typical of better months from the last year. We currently get a few hundred dollars a month in BTC, unless we're doing a big fundraising push, in which case we get double or triple that. With the price increase in the last 14 days, May was a good month. Happy to answer more questions and chat about how we manage bitcoin, but the main concepts to keep in mind are : trying to limit the exposure of blockchains for privacy reasons, trying to optimize for USD coming into our budget, generally being conservative so we will choose to sell rather than hold bitcoins, and having a rule of never selling all our bitcoins but selling off parts of what we receive over time to reduce risks and exposure. We currently use coinbase and bitpay, after having gone through 10 or so different BTC->USD systems. What we need is reliable and stable and most of the others have run afoul of the federal money cops in the US and have been shut down or had their banking connection shut down. I'm always interested in recommendations for other trading / sales sites, but we need one that can deposit into a US bank for it to be useful for erowid center. And we need one that is stable, represents a real business, and is unlikely to poof into a cloud of oily smoke. I see today we got a .01 and a .05 bitcoin donation to the current address, bringing our total for the last month up to .654 ish, which is great! With the price heading upwards (rather than hovering at $400), that's actually a useful amount of money. Thanks! Looking at the charts today, it seems like a lot of people decided to start selling as the price hit 650+ and so the price had a small crash today while I wasn't paying attention. Anyway, hope some of that is useful. Erowid Center's budget (income and expenditures) are all public information, but our list of donors is not and we do what we can to protect the privacy of the people who choose to support our controversial project. Thanks again for your contribution! Hurray that you didn't have to pay VISA 0.35 + 2% to do it. earth
LTC is fine and Jihan Wu will get what he deserves one day!
It's time to stop looking at the charts for a while and come back in a few weeks! It's important to see the positives: -BTC is currently over 1200$ and holding strong. (probably getting ready for another huge bullrun) -LTC hast close to 4 Million $ buy orders on Btc-e. (Yes it's 3.6 to be precise) -LTC/BTC has 600 BTC buy support compared to 100 a few weeks ago... (Keep in mind these values change but it's def. looking good. -Anyone who is comparing this to the crash from 8$ a Year ago to 4$ is tripping hard. LTC is a very different spot today and if you think it will crash back down to 4$ think again. -Half of the Bitcoin community wants to see Segwit on LTC (maybe more than half). If you just go to Bitcoin you will see that there are a lot of discussions regarding segwit and Litecoin. -Anyone who has been around since 2012-2013 knows something is going on. The signs are all there. So stop looking at the charts and just relax. Sigwit is going to happen sooner or later. Remember folks, the miners have been around since 2013 for the most part... They know its probably a good idea to scoop up as MANY cheap LTC as possible. (Remember back in the day when mtgox got ddodsed so that the BTC price would fall? Well look where we are now...Jihan can't stop Segwit on LTC, all he can do is delay it and scoop up more coins) -Relax and enjoy the rollercoaster. Shit is probably going to go nuts. To the m00n :)
Backstory: Recently, one of the largest Bitcoin exchanges said they weren't letting people withdraw Bitcoins due to technical issues (a process called "transaction malleability," which I can't really explain but has been known for awhile). This caused much consternation and a precipitous drop in the value of BTCs. This exchange also released a statement blaming Greg Maxwell, one of the original Bitcoin developers for the "technical issues" they were having. This has caused much drama. Keep calm, transaction malleability is not double spending. One of the big "selling points" of Bitcoin is that you can't double spend. As the name suggests, double spending is when you spend the same money twice. It's bad for business and good for thieves.
So Gox decided to take the Bitcoin ship down with them blaming their shortcomings on well known and documented protocol limitations. Shame!
so gox can buy cheat coins to make up for the loss.
That's right, folks, this exchange is crippling their business and reputation...so they can sink the cost of Bitcoins so they can buy them more on the cheap.
Mt Gox's incompetence once again puts BTC on sale? I'm not complaining.
Yep, my buttcoins just dropped in value 20%, but IDGAF because I'm gonna buy more.
You make it sound a lot less apocalyptic than the MT Gox press release did. To the top with you!
They just purposefully spread FUD throughout the bitcoin world for the sole purpose of diverting attention while they fix their shit. This transaction malleability thing has been known for a long time and has plenty of easy ways to work around it, like just look and see if there's a double spend attempt on outputs before auto-crediting your internal books. The fact that Gox's shitty coding didn't do that is entirely their fault, and instead of owning up to it, they're trying to cause an earthquake of FUD to divert attention and buy themselves time. That's not just sneaky, that's truly evil. Fuck them. Fuck them so much. /rant
FUCK THEM THIS PR MOVE IS LITERALLY EVIL. Now, I tend to save concepts of "good" and "evil" for actions that have a considerable moral weight, like when some piece of shit steals my parking spot, but this takes the cake. I speculated invested in a volatile commodity and my speculation investment has tanked, so I'm totes raging about it on Reddit.
Tin foil hat time. What if a bunch of BTC got stolen and MtGox knows this. So they make FUD that blames bitcoin protocol knowing it will crash the price. They then take USD and buy up cheap bitcoin to cover the BTC that got stolen. What if this new USD will actually drive the price to new HIGHS!
If your going to claim to be the representative entity for Bitcoin then act like it. Otherwise you are just as big of a joke as that incompitent twit Mr Krabapple bouncing around on his blue ball. I mean, Jesus H. tap dancing on a crispy truiscuit Christ, do something, anything, or gtfo. *Edit: Help us Obi-Wan Antonopoulos, you're our only hope.
He's literally tanking Bitcoin! Let's take a rash action in response to a rash action!
Karppoopels is on the BTC foundation board? fuuuuuuck thats bad.
Anyone else from The Bitcoin Foundation want to shit on Bitcoin some with more negative PR?. Drugs, money laundering, "bugs"…c'mon guys…gun running could be next? or something worse?????. I'm sure you've got plenty more from where Shrem and Krapeles came from.
Perfectly timed manipulation on the part of MTGox, this news comes as the 3 day MACD happens, (exponential average crosses the average bitcoin price), it hadn't crossed since early 2013, so big movement was to be expected. You can see it on the 3day chart on bitcoinwisdom, the blue line and brown line crossing, this is a BIG sign for automated trading bots to make a move, in this case the exponential average (indicating the latest movement trend) went below the average, this means the trend is downwards. So MTgox preps up their sells, sets a weekend climate of "some big news is about to come out on monday, everyone keep an eye on your coins" Then DROPS the bad news, and BOOM goes the dynamite. we have an epic crash. Meanwhile MTgox sets up its orders on BTC-E around 200.
Most people trust MtGox. It's the oldest exchange, was the most mentioned in the media. Their press release is pure bullshit but it's a subject that's way too technical anyway for most people to grasp. We need other big players to step up and reassure people, or this could be the death of Bitcoin.
And what will happen now?
Go on, sell your bitcoin, and bang your head into the wall when the price goes back up. In the mean time, I'm enjoying the cheap coins. Hmmm. If one were a Gox insider, today would've been a good day to buy bitcoins. Either for a personal account or for the company's, in order to cover past fuckups. Are you concerned about the price of your holdings? I appreciate that we just got cheap coins.
Plus the general hatejerk:
How I look forward to the day bitcoin won't be goxed anymore. Even those outside of gox managed to get goxxed today. Gox has done the greatest service & disservice to Bitcoin. Sounds like Mark is trying to raise more fear. He needs to step down from the Bitcoin Foundation. I guess most of the other players fear legal problems if they say anything bad about Gox...
This press release from Gox was incredibly shady and deceitful. The majority of Bitcoin market crashes are because of them. We need to step up. I'm willing to step up. Get ahold of me on here! I'm willing to invest $50,000 in a LEGIT U.S. Bitcoin exchange for 5% of the business. We can't stand for this, people. We can't let lies like this affect the Bitcoin community this much
Hi everyone, I know very few people will see this and that's okay. I decided after a week of severe depression, anxiety, self-loathing, and general fucked up thoughts that I needed to talk about what I did. On the scope of a confession, it isn't much to some people, but to me it is a huge and daunting fuck up that I'll be paying out the nose for. The reality is I might even be homeless due to this. I used a throwaway for this because a few people I know have my primary acct and I can't bear the shame of them knowing yet. To get to it, I made a huge mistake and lost all my money. ALL OF IT. If it isn't obvious already, I don't have a lot of money. I am not a all that familiar with bitcoin and only recently began taking part in the community. /Bitcoin has been my bible and go to source nearly every day for the last 6 months. But again, I don't have much money and I decided that I have a this tremendously good feeling about where bitcoin is going so I warily invested in a couple coins around January 2nd at about 809 a coin from coinbase. I was terrified of losing what I put in. Then the next day, the price jumped about $30! I was ecstatic! I was amazed! I couldn't believe that my investment had begun working for me after only a day! It was a great feeling. At the same time of all this, I had just finsihed up a huge ordeal with Bank of America over fradulent charges on my debit card that sent my account into the negative and had intitially accured almost $1000 in overdraft and other fees. It took months to get all my money back and in the end still lost out on about $200 dollars. Needless to say, I was more wary of my bank than bitcoin at this point and bitcoin was GIVING me money instead of giving it away. So I did the only logical thing I could think of at the time and put the rest of my savings into BTC. And guess what? It went up again! I was so happy with my decision that I started reading more and more about BTC. Then the fluctuations in the BTC market started happening. I started to get nervous because the only cash I had was losing value and fast. I knew that it had a habit of fluctuating like that but I never had any money invested before. The anxiety was real for me every day I'd hop on /Bitcoin and see the news about mtgox ( then after that the silkroad 2 hack.) So, about a week ago when coinbase's price was plummeting still due to gox's problems and bad press and so on I started getting nervous. More nervous than I had been before. My "investment" had lost almost 200 a coin and I was sick to my stomach watching and waiting for the price to come back up like it "always" does. I was posting around a few forums and asking questions about what I should do? What could I do in the mean time? Should I pull out and take my losses? I got to talking to this guy on one of the forums who seemed to know what he was talking about. He mentioned the dice site satoshi bones and how he was in the same spot as me, made one bet and came out 10BTC richer. Even sent the tx ids. It was awesome to see and was even more awesome to imagine. He went as far as to send me .05 btc (holy shit!) and said "Make a few bets and watch, some of the odds are great." So I did that. I sent a few bets of .001btc and made nearly .5 btc in 5 minutes. I was hooked. I was going to make my money back. I was going to make a few bets and get out with what I put in, no more. So I proceeded to make bigger bets. I was making money. I was getting good at watching and "considering the odds." It wasn't really the case, I was just geting lucky here and there. I had no idea what the fuck I was doing. Then the transaction malleability thing happened. Or, rather, it was probably happening the whole time. I don't know. I don't know what it did to my MultiBit account, but it was sending my coins and not updating my balance. I was losing more than I knew because the double spends ended up looking like I had more in my overall account than I did. At one point, it appeared that I had TRIPLED my initial BTC investment over all and I was nearly crying with joy. Then I couldn't access my funds. It said I had a "Balance" of 30btc, but "Spendable" was .05. I knew that it took a little while for the transactions to get through the system and clear but minutes turned into hours and hours into days. When the whole story about the transaction malleability broke into full swing I started tracing my tx IDs back. I was a nervous wreck at that point. I had so many double spends and unconfirmed transactions that there was no way to actually find out how much I truly had left. When I looked through multibit's logs, it had mulitples of the "wins" that I knew I had but numerous tx Ids. I couldn't keep track of it all. Attempting to "reset" the blockchain on Multibit would only cause it to crash (probably because I had sent and received sooooo many unconfirmed transactions back and forth between that game.) I decided to grab my private keys and attempt to use Bitcoin-QT to sort it all out to no avail. It too said I had a balance around 30 BTC unconfirmed (a mind blowing amount of money for me!!!!!) I relaxed and decided I would just have to wait it out to get my money and I'd hold off on grocery shopping until the weekend (today.) Even if I had half of that after it all cleared up, I'd have made a HUGE profit. About two days ago everything calmed down and my balance began fluctuating like mad on both the Multibit client and Bitcoin-qt. It went UP at one point to 40 BTC even! Then transactions started to disappear. Mostly, the transactions that disappeared were the "wins." I assume this is because all of the unconfirmed txs or double spends started being pushed out of the system? I have no idea. I'll take a second to mention that I've never had an interest in gambling whatsoever. I've been to vegas, played a few slots, sat in for some poker and blackjack, would lose and just walk away. However, the last couple days I was consumed by the dice game. I thought I was making incredible money, hand over fist. Yesterday, my balance completely cleared up. I'm broke. I have nothing left. I pissed away even my winnings (maybe 3btc) I had before the transaction malleability started fucking things up. I cried for the first time in 10 years yesterday. Today, I cried again. Over the last week I fell into a depression and was overcome by this urge to just stop existing. Not really suicide at first, but, more of a "I want to close my eyes and let it all blow over." Then, when that didn't happen, I did start considering suicide. I have no money left. I don't know what the fuck I'm going to do for rent, for food, for gas, for my fucking books next quarter. I moved to california on my own about 3 years ago and have zero family in the area. I don't have family to lean on finacially whatsoever (I come from a seriously bad luck/misfortune/poor family.) Monday I'll be heading to my university to find out what I can do and if I qualify for any loans. Or something. I don't know. But right now, I need to tell people and persevere and try to make it out of this. But, my point of posting here isn't a pity party or to draw out "sorry for the bad luck" responses. I did this to myself and this pales in comparison to the bad luck others have had. I want people to use my sincere and obvious FUCK UP as a lesson. I got caught up thinking I was making money. I wasn't fully aware of what was happening during the transaction malleability shit and made decisions without fully comprehending the situation (and it is NOT the fault of Mulitbit or the dice game even if I wanted something to blame.) Most of all, I was GAMBLING my money away. It was greed and poor decisions. But mostly greed. So, I fucked up. I don't want YOU to fuck up like I did. Please look at the story and realize that it can happen to anyone without fully thinking through your decisions and having a grasp on the situation. And SERIOUSLY consider when you're putting too much money at stake when gambling. You could regret it and be in a shitty spot like myself. Thanks for reading. TL;DR Holy shit I wrote a novel. Sorry. In short, I inadvertently gambled away my only $7000 during the transaction malleability crisis and it is no one's fault but myself. I am now broke and terrified and I don't want YOU to suffer like I did. Do not gamble and do research before you do anything with your money especially if it is all you have. EDIT: Though my intial reason for posting was NOT to focus on why my balance said one thing and the actual balance was another, here is what the balance looks like on my Multibit client right now. However if you look at the blockchain, that's clearly not the case and hasn't been for days and days. These are the addresses I used off and on. Not all of them but those were the most active I think. 17cHzgxRLumqfu6UAddUrJmTujd7goHLrx 1BAKHq37qj1xekitr7adXapLqFrVtAhm8A 1KLug6D1mXoyS12BZipyQ8WHAdNzDmQxMp. Also, when I opened the Client today it seemed to send or revieve "stuck" transactions? I don't know what to tell you all beyond that.
I first learned of Bitcoin in 2010, installed the client and got my first bitcoin from The Bitcoin Faucet. Thank you Gavin, I assume it was your property. I fell down the rabbit hole after reading Satoshi's paper (read it about 10 times so far. It gets better each time). I enabled bitcoind's mining feature on my home CPU (and possibly my work machine) and managed to solo mine a block. At the time, they were worth about $0.50 ea. A few months later, and zero blocks found, I compiled some code that allowed me to mine using my nVidia GPU. Still no blocks. Welcome slush pool! Bitcoins were flowing again (about 1/week). At this point, I figured I could make some money at this (price ~$1.00), so I spent $170 on an ATI GPU (about 10 times faster than the nVidia). Difficulty was increasing, people were building huge GPU rigs - I wasn't one of them. I bought a few coins through MtGox and a few more with paypal. But for the most part, I was happy getting about 1BTC/week on my ATI card. I wasn't ready to spend my "real" money just yet. I "invested" some assets on GLBSE and put it into a mining company called BITBOND. Was feeling pretty good until GLBSE was shut down and lost 50% of what I invested. I guess Bitcoin Savings and Trust (BST) was a bad idea. But, hey we're just playing around with digital tokens. No worries, I could afford to lose it - maybe $200 worth at the time. Live and learn. Bitcoin velocity started to increase with Eric's Satoshi Dice and Charlie's BitInstant. Up to $28... Have to buy more. Crash! Back to $2.00 and bailed. Lost another $200.00. In 2012, I made some paper wallets and gifted all my family members some BTC for x-mas. They were worth about $13/BTC. I still keep an eye on the accounts with watch only addresses on Blockchain.info. Paper wallets were created with Diceware and Amir's sx/libbitcoin, pen and paper. GPU mining was puttering out, so I spent $300 on a BFL 5GHz ASIC with paypal. I received mine in July of 2013, mined 2 BTC over two weeks, then sold it for $350 on ebay. The mined coins were worth about $300, so I doubled my money. The difficulty increases went lunar, and that BFL miner never mined another full bitcoin. Sorry e-bay buyer. My mining days were over and Coinbase came online. Since then, I've been lazily buying $50/week using Coinbase's recurring buy feature. All the way up to $1200 and all the way back down to $170. I've been here before. Each time though, I have more coins than I had before - and that's all that matters to me. Bitcoin's not made me rich. I'm not driving a Ferrari with BITCOIN plates... yet. I'm only in as much as I can afford to lose. It's been a fun ride. To all the people and companies mentioned, and to all of you building the future, Thank You.
I'm donating 5057 BTC to charitable causes! Introducing The Pineapple Fund (20020 points, 2927 comments)
Farewell from the Pineapple Fund (10944 points, 610 comments)
🍍 $4mil will fund MDMA trials for PTSD; marked 'Breakthrough Therapy' by FDA. Pineapple Fund is matching MAPS donations 1:1. Reddit, let's make history by crowdfunding an incredible treatment for PTSD, in bitcoin! (10650 points, 558 comments)
Day 2: I will repost this guide daily until available solutions like Segwit & order batching are adopted, the mempool is empty once again, and transaction fees are low. You can help. Take action today (5145 points, 766 comments)
Day 9: I will post this guide regularly until available solutions like SegWit, order batching, and Lightning payment channels are mass adopted, the mempool is empty once again, and tx fees are low. Have you done your part? (2070 points, 190 comments)
Day 5: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and transaction fees are low. User demand from this community can help lead to some big changes. Have you joined the /Bitcoin SegWit effort? (2017 points, 268 comments)
Day 7: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and tx fees are low. Do you want low tx fees, because this is how you get low tx fees (1959 points, 166 comments)
Day 3: I will repost this guide daily until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and transaction fees are low. ARE YOU PART OF THE SOLUTION? News: Unconfirmed TX's @ 274K, more exchanges adding SegWit, Core prioritizes SegWit GUI (1758 points, 220 comments)
Day 8: I will post this guide regularly until available solutions like SegWit, order batching, and Lightning payment channels are mass adopted, the mempool is empty once again, and tx fees are low. BTC Core SegWit GUI coming May 1, Coinbase incompetence exposed, more exchanges deploy SegWit (1454 points, 177 comments)
Day 6: I will post this guide regularly until available solutions like SegWit & order batching are mass adopted, the mempool is empty once again, and tx fees are low. Refer a friend to SegWit today. There's no $10 referral offer, but you'll both get lower fees and help strengthen the BTC protocol (1193 points, 99 comments)
Amid a deafening market bubble implosion and repeated exchange crashes, u/smurfmaster over at r/bitcoin suggests adding suicide hotline info to the sidebar
smurfmaster's suggestion for a hotline Background After going parabolic for three months, the Bitcoin cryptocurrency speculation bubble worth almost $2 billion popped at $265 Wednesday going as low as $65 ($55 dip this morning) on some exchanges amid extreme volatility. MTGOX, the online exchange handling 80% of transactions (which also claims to have been adding 20,000 accounts a day recently) crashed yesterday due to the huge trading load, was abruptly turned off for 12 hours today to let the market cool down. It again appears to be crashing repeatedly as it tries to reopen. Conspiracies and anger fly as users alternately blame the MTGOX's incompetence, trade volume, DDoS, and occasionally the community itself 12 Despite all this, bitcoinbillionaire has pranced about the community, sprinkling btc on unsuspecting users. According to stattit, the subreddit is the 20th most active in terms of online users (as a comparison, trees is 19th), and was at least 16th most active during the crisis yesterday. Its subscriber rate has also gone parabolic as of late. Market chart for the last 60 days Wednesday's crash initially, illustrated Several of the more extreme speculators 12 Previously on SRD
My bitcoin value has surpassed my decade long stock account
Throwaway account because I'm revealing more than I want tied to my primary account. I'll put the TL;DR at the top. TL;DR: Apparently, I'm well off and 2 years of bitcoins are worth more than 10 years of stock market investment. I'm nearly 50 years old. A few years out of college and I just barely broke $20k salary. That was worth more than $20k today, but was still a lousy wage with college loan debt. I briefly (1.5 years) had a dotcom job at the turn of the millineum making more than I do now, but I had never had money like that before and boosted the economy instead of putting any aside. I did get some nice toys, though. Add on another 1.5 years of unemployment, living off my wife's meager salary and a few odd under-the-table jobs, and I finally landed a decent paying job again. Nothing like the dotcom days, but close. However, I'd learned we could live on much less and I wanted a cushion. I dumped tons into my 401k, my savings account and opened a Scottrade account. A little money goes each month to savings and Scottrade. Roughly ten years later, my 401k is about 3 times my annual income. The Scottrade account is about 30% of it. Two years ago, I heard about bitcoin on Slashdot. It sounded interesting. I started mining on my son's gaming machine, which meant it was only mining when my son wasn't playing games and if he remembered to start the miner when he was done. I mined solo for a few days, and quickly joined a mining pool. I was getting a bitcoin every three or four days initially. That didn't last long. I opened a MtGox account, added some cash and purchased btc almost at the height of the 2011 spike. I felt like an idiot. I bought some Casascius coins. I left my MtGox account alone. This was also around the time the 99% protests were going on. I felt very sympathetic. I remember in reading about the protests, I stumbled across a site that showed what percentage people were based on annual income. With mine and my wife's income, I was above the 90th percentile and below the 95th. I remember the horror and disbelief I felt. Througout it all, I continued mining. I got lucky during the early 2013 spike and sold some of the MtGox stuff I'd had sitting there. I also got a high end SLR camera at bitcoinstore.com almost at the peak. I was feeling pretty good. I bought a ButterflyLabs Jalapeno with bitcoins just before that first 2013 spike. I also stopped even trying to mine with a graphics card soon after that because it made no sense. I did eventually get delivery of the Jalapeno. It's earned almost .68 bitcoins. Don't ask what it cost in bitcoins, because I don't remember and I don't want to know. After realizing my MtGox profits couldn't be pulled out in dollars in any reasonable timeframe, I converted them to bitcoins and pulled them out. I got more bitcoins than I sold them for, but not by much. So, now I own bitcoins in the high 2 digits, about a third of them are still in physical Casascius coins. I only have an account on MtGox, so I have no real way of converting any of them to cash. I still have $100 sitting in the MtGox account, which I should have converted into bitcoins and pulled out long ago, but I'm frustrated by the premium bitcoins require in USD on MtGox. For nearly ten years, I've been putting money in my Scottrade account. I saw the collapse in 2008 and mostly held. I bought bank stocks at that time and made a killing. That killing was offset by the REITs I'd invested in before the crash. In ten years of regular transfers to Scottrade and investment that has gotten better as I've gotten older and more cynical, I've accumulate about 30% of my annual income. In the last few days, even with the purchase of a cool SLR and the cut involved in Casascius coin purchases, my double-digit bitcoin ownership has now surpassed my Scottrade account in value. I don't have an easy way of converting that bitcoin to USD, but I'm also not concerned about that because I think that easy methods will exist soon. I fully expect that my bitcoins will be worth less in the near future. However, I believe in the long term, they'll be worth more and that I'll have a number of easier possibilities for converting them to USD if I want to. I also believe the analogies to the early WWW are flawed. I think analogies to the IP protocol are more apt and that we've only begun to imagine the possibilities. I'm in it for the long haul. They'll either be worth nothing or much more than now. And, if I add up my electricity costs and the small investment I made during the spike in 2011, I'm still ahead of the game because I have an SLR camera that my wife would never have let me buy with cash. I'm already ahead of the game and I think the game hasn't even started. EDIT: Grammar
A word of caution. All major exchanges are not even fiat gateways. The actual fiat in the system is likely grossly overestimated. Crypto is decoupled from USD. Implications.
So we have a situation in which: 1) 80% or more of trading is in USDT (tether) 2) Coinmarket cap is an accomplice to Bitfinex which implies USDT-USD parity. To which degree this is intentional, irresponsibility or just incompetence I would not know. Basically conimarketplace lumps all USDT trades and prices with actual USD trades and prices. If you go there https://coinmarketcap.com/ and try to select PAIR, you get THIS. No USDT, even though most exchanges are USDT. Even if most of liquidity is USDT. Again, this is a major factor in implying parity along with what Bitfinex/Tether try to do. As if this wasn't enough, they also willingly or stupidly inflate USDT price itself. I have to remind you Coinmarketcap is THE point of reference for all cryptosphere. It's oscilating Alexa rank is 100-400. Betfair (real life gambling company) for example uses coinmarket price average for their own system. etc. 3) If/when tethebitfinex crashes, not only does bitfinex crash, it will crash all crypto pairings using USDT on all exchanges using USDT. 4) There are very few fiat gateways. Until recently I assumed the major(top) exchanges have some kind of fiat pairing. I mean.. any respectable exchange would have some way of actually getting money in and out, right? I didn't even think to check. Well, they don't. Literally all the major exchanges are USDT (and/or another stablecoin or proprietary coin) and nothing else. No USD, no EUR, no fiat whatsoever. https://coinmarketcap.com/rankings/exchanges/ . Only the 11th one has actual USD pairing. Didn't check lower but most exchanges don't have fiat. I did a full check on Binance myself as it's the biggest exchange and I had an account there for lulz. There is no fiat. What does this mean? It means that an allegedly 200 BILLION market cap of all crypto has a fiat gateway of only a couple of exchanges. Most exchanges not using any fiat are not only immune to the risk, they offload risk on the much smaller exchanges that are fiat gateways. And on clients, of course. The cash side of the actual exchanges would need to have to siphon even a fraction of this are unimaginable. If any of these exchanges use crypto to evaluate their own fiat reserves (it is illegal but crypto is hardly regulated or audited), they're fucked. 5) If the first four points looked bad, this one is by far the worst. The system is running on a presumed liquidity provided by Tether and on presumed USD capital. Even if tether was legit it's just 2b USD rolling 200b USD. And that 200b USD is just presumed quantity of USD that is in. We don't know how much USD is in the system, there could be and there probably is way less, as over the past 8 years or so crypto ran mostly on funny exchanges that could "provide" whatever USD value they wanted. More so, even if they went bust, people would usually get to withdraw crypto and store it on some other exchange. Even when an exchange was slowly withering, people just pulled out crypto and the exchange actual liquidity was hardly tested out. Or btc-e crashing or MtGox crashing. Their cash side crashed but "crypto" side did not crash. It was bailed out so to speak. So we have crypto running around that should've been worth 1/10 or 1/100 of it's price but it's instead running on par value with crypto on legit exchanges. This grossly inflates price. Even if tether is legit, it can be drained in a couple of hours. What happens to the pairings of crypto/USDT? People just trade one bitcoin at the presumable price of 6k for 6k USDT that are 100% backed but have no value because there's no USD in the treasury? Who is stupid enough to deposit USD there to get stuck waiting for another fool to bail him out by getting himself stuck? Even if tether is 1% it holds much more assumed value, which is the actual issue. Let's say only adds 1 cent to a real dollar market buy order for example. Each buy order made in a system that implies USDT:USD parity is now worth 1% more than a true USD purchase. Now repeat that buy order millions of times. Each added value comes from USDT injection and USDT has to be liquid on the way down as well. It's added value to the market value is not it's market cap. As I was saying, all the exchanges that are not holding any fiat are immune to any crash or actual liability. If/when cryptos fail, they'll give you back any number of cryptos/stablecoins you had, even if they're worthless. It's just entries in a database. If/when USDT fails, all it's corresponding crypto prices will go to infinity. If you're holding any USDT, you can't get out of the exchange because 1 btc will cost infinity. If you're in any margin position, no matter where your stops are you'll get margin called instead, as stops are just suggestions in high/extreme volatility. You can't get out through fiat cause there's no fiat. Your only hope is you were actually holding crypto and they don't block withdrawals. Best case scenario you move your crypto to a fiat gateway exchange and hope to cash out there as fast as possible because it will have had become evident that cryptos were overvalued because of USDT (and even hypothetical USD in the system). Will most likely be too late as people that were already in fiat gateway exchanges already sold/cashed out. There will be enormous sell pressure. And no buyers. The whole stablecoin issuance is idiotic and I just hope it crashes now and we won't see another bubble built on presumed capital, cause that will hurt way more people. All of this is a mess. Crypto is completely decoupled from real fiat now. The potential money that are in the crypto sphere is exponentially greater than available money to trade out of. Or maybe we should be grateful for stablecoins for finally crashing a system that would've crashed anyway in the long run.
A quick word about bulk cross trades (and about the Mtgox trustee crashing the market)
Some of you already know me from my previous reddit post. Today I am going to talk to you about an aspect of the crypto market that I discovered a few months ago and which continues to blow my mind on a daily basis. A market that only a few people really are familiar with, because it simply did not exist 6 months ago: Cross trades for amounts over 10k BTC (>$100m). I will explain how a buyer and a seller try to exchange OTC large quantities of crypto aginst fiat, or crypto vs crypto (e,g BTC/ETH) for large amount, in a single transaction. I thought no single individual except Satoshi possibly had more than 100k btc until I saw it with my eyes. It took me time to realize it was true. It's ironical I drafted this post way before the Mtgox Trustee decided to screw us up by unleashing its stack on the market in the most unappropriate way. As I highlighted in my previous post, bitcoin is still a very thin market and trading on exchange and not OTC is a sure way to crash the market. If you are an early bitcoin adopter and held all these years, you certainly care about the price. If you want to let the market unaffected by your exit, cross trades are the way to operate. This post might be boring to some of you, it does not intend to be funny, but to clarify how this market is operated right now, and how it should be organized. How I got involved. Following my reddit post, I was contacted on telegram at year end. Private chat with 2mn self distruct. A simple message: "I have a seller for 40k BTC willing to sell at 5% discount" My philosophy in life is always to give a chance to people. Even though I thought this was 99% likely to be a scam, that I had not sleept for 2 days following the inflow of messages that had buried my reddit inbox, I gave a chance to this guy; and the nightmare begun. The problem with cross trades today. You must be familiar with the concept of "Six degrees of separation" Anyone in the word is 6 phone calls away from any other guy. Might be Donald Trump. But it might also be Satoshi after all. Anyone knows someone who knows a bitcoin whale. In this context, if someone tells you he knows a seller, and you naïvely start looking for a buyer, what will inevitably happen is the following: You will be right in the middle of a chain of 7 introducing agents that connects a distruful seller to a distrustful buyer. 7 people who think they are entitled to a cut on the trade just for the privilege of providing the name and phone number of the next guys in the chain. All of them will picture themselves as the new Jordan Belfort, and explain to you rationaly why he diserves a bigger cut than you. Meanwhile, the deal does not progress, negociations between introducing agents go on and on endlessly, the 5% discount is completely eaten up by their greed and when eventually an informal agreement is found with everyone, the fluctuations of bitcoin has gotten either the seller or the buyer dead cold. And that's when an end party does not turn up to be ghost bid or offer in the first place, potentially wasting the time of everone involved in the transaction. Some people in the chain would also patronize you. They would claim they have settled such deals in the past and know better than you. They would even try to intimidate you to squeeze you or get you out of the chain. One guy threatened to report my company to the FINMA for alledgedly misrepresenting a trade. I have spent over a year setting up my business in the most professional way, hiring full time crypto trader, in-house lawyer, compliance officer, analyst, relationship managers. Paid hundred thousands of Swiss Francs & BTC in salaries, expenses and legal opinions to be able to legally and transparently operate according to the regulations in Switzerland, and just like this, one guy thinks he can shut me down to increase his cut ? come on. That's what a cross trade generally looks like today. The wild wild west. An emerging market full of non-professional introducing agents eager for a get-rich-quick 1% introducing fee on a crypto wealth that was created out of a long and painful hodling by the seller. Distrustful Buyer and Distrustful Seller. One big issue with cross trades is who should show his cards first. Typically the buyer would not want to disclose his identity before the seller shows a proof of life of his wallet. I will spare you the kind of scams whereby a would-be seller replies to the request with a virus-infected video of his wallet. Similarly, legit sellers would not want to disclose their id easily before seeing a proof of funds. This problem quickly becomes a dead end when communication is not direct and information gets lost in translation within the chain of introducing agents. To solve this issue we have elaborated a neutral procedure for both parties, but I have to say I am generally on the side of the seller here. First, it is common for sellers to spread their crypto wealth behind several address for security or confidentiality reason, so showing a proof of BTC ownership for 50k BTC at once is not easy. No seller would consolidate their assets in bulk before negociations have moved to an advanced stage just to please a potential buyer they are not even sure is legit. Message signature to show proof of bitcoin wealth, as well as micro transaction from several addresses become quickly a cumbersome process. Besides, many sellers who are historic holders sometimes went in BTC early on a ideology basis, for the sake of privacy and anonymity. They have a hard time easily compromising the confidentiality they have clung to for years. This is a cutural issue that buyers fail to understand, especially so as buyers for this size generally are financial institutions, late to the game, coming from a world where confidentiality towards governement was given up centuries ago. Buyers are impatient, they are used to quick deals on financial markets, settled bank to bank. Sometimes I can feel they have a old generation mindset. A legit buyer came to me looking to buy 40k BTC, just because his (well known) company, which is involved in commodity trading, could afford to pay for it. He was talking to me in CAPS LOCK on SMS, quickly started to insult everyone in the chain, asking to talk in direct to the seller, bargaining my fee despite me showing a full 5% discount. When you do not know a market and its specificities, you don't see the opportunities. After weeks of work on that trade, being treated of miserable broker by this guy who was so full of himself was hard to swallow on my end. I am active in the finance industry at an institutional level for more than 15years, just because on that trade I offer liquidity in bitcoin does not make me less legit than if I was brokering on other another market. 5% discount really ? Most of the deals I have seen over the last 3 months involved the seller showing a discount from 5% to 8%. It does make sense when you think about it. Liquidity in fiat is scarce for such amount. Cashing out could take weeks. Even through OTC desks like cumberlandmining, selling btc for tranches over $1m widens the spread as you wipe out their order book. The privilege of selling so many bitcoins in just a single transaction, makes it worth it to accept getting rid of them at a 5% discount. Another reason why a discount is a common thing is because of the amazing BTC price increase over the last years. What is 5% when you have increased your asset by 20000% in 5 Years in $ terms. Still 5% discount is an effort from the seller and at least should pay for the privilege to show your cards in second not first. Traditionally the discount comes from the seller, however beginning of February this year, when Bitcoin crashed from its top of $20k a piece to $6-8k an interesting dynamic happened. A buyer came to me and he was fine paying a premium on the price since he was in a rush to close the deal at this attractive price. This is a real market. Premium/discount should vary dynamically depending not only on market prices but also on the eagerness of either party to close the transaction. I might be hated within the industry for saying this but if you are a seller, do not get intimidated. Do not get talked into showing a discount as if it were natural. Anything above 5% discount is abusive to me. Similarly, a buyer bargaining endlessly to trade at a 2% discount is a joke. Volatitlity is the very nature of crypto. Arguably, saving 2% on a $400m trades saves some decent money. But if you fix the price at 4pm, bitcoin can trade 2% away at 4.01 pm anyway. If you are really willing to buy such a large amount of crypto, at least try to understand the market. Also, be commited. If during the negociations, the typical price movements get you cold I might blacklist you as a time waster. Remember that your counterparty, the seller, has probably been holding for years, and during this time he had the market moved against him by more than 80% from the top. In this context, the seller will disregard your bid and won't take you seriously if you start bargaining for 2% discount. The economic rational of cross-trades and the philosophical issue My personal opinion is that direct cross trades should be settled at market though a predetermined fixing date & time agreed contractually, based on a reference website price like blockchain.info or coinmarketcap for greater transparency. The escrow or financial intermediary in between should not take more than 1% flat of the trade to be split 50-50 by both parties. Then it becomes rational to trade in block for everyone, as it is actually cheaper and quicker than trading in tranches of $1m btc equivalent on Genesis. 0.5% for each leg on trades of 50k btc, that's what my company does when I have selling and buying interest I can match. It is a price no one can compete with. Now, because it is a young market and so many introducing agents are typically involved in connecting buyers and sellers, the anarchy prevails. But I can tell you already from experience what will happen soon: Goldman will enter the market, they will open their crypto desk and they will try to crush everyone. Buyers will rush to trade there because hey, it's Goldman Sachs, and sellers who actually hate the banking industry will have no choice but to hand over their BTC to an investment bank if they want to sell in bulk. Sad, but true. Cross trades would make Satoshi cry out from his grave in its current form: Crypto was created to exchange peer to peer, without midlemen of financial intermediation. Bulk cross trades right now involve several layers of intermediraies. Besides, it is currently a mecanisme that transfers the wealth from miners and early adopters to the hands of financial institutions. Most of the buyers I have seen in all these trades were financial institutions or banks. It's not a surprise for this amount. There were some individuals amoung the buyers: late comers rich sheiks or rich families from Emerging Markets. But generally speaking it was the financial world buying bitcoin. Shockingly, I can even reveal a central bank was involved in a very large block trade. When all the banks will have acquired bitcoin, the same thing will happen to this market as what happened to gold. The price will be manipulated. Having gold in collateral, banks like JP Morgan were able to neutralize the price by shorting the futures safely. For each ounce of physical gold now, you have 400 ounces of paper gold in existence. Physical gold is only $8 trillion market cap, so it can be manipulated easily. Unfortunnately, the same might happen to bitcoin when the transfer from individuals to financial institutions is complete. I do not judge what's happening right now, I just feel a little sad about it. I have banks willing to buy in my book. I have hedge funds. I try to execute in the most professional way. And if I close a trade after working so hard, I am happy. The buyer and seller are happy because the trade was cheap and fast, and somehow I have modestly contributed a little more, at my level, to global adoption. I know you guys do not like this theme but some banks entering the crypto scene is a way for us to introduce our trojan horse: Adoption is closer than it ever was before. At the end of the day, Goldman might open a crypto desk, they will certainly get the buyers, but I doubt they will get the sellers so easily. A lot of sellers are still ideologically oriented and biased negatively towards banks, and fortunately they still prefer to deal with crypto intermediaries like my company than with a bank. KYC...KYC is mandatory. So let me get this straight: If you intend to make a 40k BTC deal (>$400m) without showing a passport, think again. It won't work. If you are not willing to show it to a Swiss regulated entity, bound by banking secrecy laws, then you will never show it to anyone, and you will never do the trade. Besides, if you are not ready to give me information about you, and I can't draft your kyc for my records, I cannot include you in my book and show your interest to other counterparties. It means that even if you are legit and can proof ownership over 40k BTC, I will not show your offer to a potential buyer because I cannot certify you are AML compliant. Same thing for buyers: You are an asset manager and you claim you have a buyer for $400m, but you have no power of attorney nor are willing to disclose the kyc and Id of your buyer, then I am not interested. I only deal in direct. I would share revenue with you and would consider you as an introducing agent obviously, but I want to deal in direct with the end party. If I don't know the end client, how will I be able to show any legitimacy to a potential seller ? In any case, kyc is the first mandatory step for a X-trade. I would keep the info confidential, but I badly need it. I am audited, and anyway nowadays it has become impossible to transit fiat in the banking system without establishing and documenting an extensive profile and full paper trail for any client. As a financial intermediary subject to Swiss Anti-Money Laundering Act, we shall be provided with extensive KYC information relating to the buyer and the seller. It protects everyone in the trade, not just us. *kyc for seller. The kyc for the seller is the most difficult to write. I will refer you to my reddit post where I explain in detail what's needed. If we meet physically, and you collaborate on every aspect of your story, the documentation for your kyc can be done in half a day and the drafting would take another couple of days. What takes longer is the account opening. If you sell 40k BTC, you do need an account that will not freeze the money after execution. This is something I can provide, but account opening can take up to 4 weeks in Switzerland, even with a crypto friendly bank like the ones I work with. You have to start the account opening process early before we start negociations with prospective buyers. Besides we will need an extract from your wallet to run services like elliptic.co, chainanalysis.com or scorechain.com *kyc for buyer As I said, buyers for this kind of amounts are generally financial institutions. If you are a bank or a hedge fund I need: Shareholding structure Regulatory status from your financial supervision authority Trade registry extract with authorized signatories list Bylaws Board resolution to show the intention to buy X btc, and formally authorizing the signatories of the contract to represent the bank in this context ID, CV,and proof of Address of the representative appointed by the board resolution. Proof of funds. If you are an individual: Copy of the passport CV, name, surname, date of birth, address, country of residence, professional activity proof of residence, and explain to me how in the world you are able to buy half a billion USD of bitcoin in one shot. If you want to buy for $10m "only" ;) it is the same, I need to understand your background and source of wealth. Also tell me where the funds will be wired from (Bank, country, city of provenance) ., so I can liaise with your bank officer. *kyc for the introducing agent. just because you introduce me to a bitcoin whale or to a large buyer won't save you from a kyc sorry guys. pm me to see what's needed. the procedure and the solution After failing consistently to close block trades for over a month, I realized something was wrong- Buyers and sellers of bulk trades all have their own procedure, which has been generally drafted to their advantage, in detriment to the other party. One seller would insist for instance to install bitcoin core on the buyer's computer; the buyer couldn't care less. There are two ways to solve the problem: 1.the first solution is what actors like Jonathan De Rin and his group, Nordic partneSatoshi trading have adopted. They would force their way up the chain of intermediaries to try to take control over all introducing agents, connect the buyer and seller in direct, and re-structure the deal holistically rather being confined in the russian doll problematics of layers of introducers. It is agressive, requires a lot of nogociation and bargaining, but could work. The problem with this approach is that it only solves part of the solution: when buyer and sellers are eventually connected they can decide to squeeze everyone in the chain. you generally need an escrow account to settle the transaction. setting up an escrow for a crypto transaction is not so easy and takes time. Unlike the buyer, the seller often has no connection to the finance industry so he would have to rely on the buyer for the escrow set up: At that point the seller would be giving his counterparty more power, or he would need to involve a lawer who would take an additional cut. Besides, an escrow account belongs to both the buyer and the seller. Both of them are the beneficial owners. Let's be honnest, because of price fluctuations, the deal can fail at any time before execution. So once you have set up two escrows for nothing the bank will be nervous and will never want to do business with you again. Setting up a escrow costs about 0,25% of the amount of the trade. But as usual some banks and lawyers will try to benefit from the situation and try to ask for way above than 1% for the set up ( Abusive, once again) 2.our solution is different. We do not act as traditional intermediary. We are the direct counterparty to the buyer and the seller. It changes everything: We build a book of interests so we are ready to pull the trigger when another leg arrives to the party. Buyers and sellers don't need to be connected directly. A seller could be selling against 3 different buyers in a real OTC way. When the funds arrive on our corporate account/wallet we become the beneficial owner of the funds. This model is backed by strong legal opinion drafted by Pr. Bahar from Bär karrer, an expert in Switzerland, it was validated by VQF our SRO, and approved by the Finma. Sellers and buyers get comfort from the fact we are regulated. If the deal fails we return the fiat. similarly if a buyers vanishes, we return the crypto to the seller. Funds transit and clear properly through a Swiss Private Bank. We give a dedicated IBAN for each buyer, even though all your funds are belong to us, during the deal. it's all agreed by contract. From a contractual viewpoint, we would simultaneously sign a purchase agreement with the seller and a sale agreement with the buyer, both contracts being subject to the delivery of the cryptocurrencies, respectively the official currencies (ie. If one party fails to deliver in the predetermined deadline, the deal would fail and any paid amount reimbursed) It's a mystery to me why Genesis or other OTC desks focus only on tranches between 50 and 100btc and do not facilitate large trades. My fee is the same, whether you trade 100btc through my company or 10k btc, I do not increase the spread. 1% for each block trade, 0.5% for each party. Quite cheap. Dealing as a direct counterparty to the seller and buyer gives us the power to close the trade swiftly, because when the end party asks "show me your funds, if you want me to believe you", we can go ahead and show proof of life of wallet or proof of funds. our limitation is we cannot park cash for more than 60 days because of Swiss laws on public deposit for non-bank. Fortunately such trade settle in less than 60days. If you fly to Geneva to do your kyc, chances are the other party will be in the next desk, doing the same. And we might probably be able to settle the next day. here is our procedure:
KYC checks and NDA signed with business introducers;
Business introducers disclose the identities of the buyer and the seller;
We perform a full KYC check on both buyer and seller, including a physical meeting with both parties preferably at our office in Geneva (or travel expenses at the charge of the party to be met);
The seller provides us with (i) a wallet extract so the balance in BTC can be checked and address can be scanned through dedicated forensics services, (ii) a proof of ownership of the wallet (message signature or micro transaction), and (iii) any KYC/AML information required in relation to the origin of the BTC;
The buyer provides us with a proof of funds and any KYC/AML information required in relation to the origin of the funds;
Once the buyer and the seller are cleared, we discuss with both side to fix the price for the BTC and any other specific conditions;
Simultaneously, we makes sure that (i) the seller has a bank account where the proceeds of the transaction can be transferred and (ii) the buyer has a wallet where the purchased BTC can be transferred;
Purchase and sale agreement stating the number of BTC and the applicable price as well as fees are entered into between our company and the buyer, respectively the seller;
Business Introducer Agreements are entered into between our company and the parties introducing the buyer and the seller;
Transfer of the BTC to our company's wallet;
Once the BTC are received, transfer of the payment to our companie’s bank account;
Once the payment is received, transfer of the BTC to the buyer and the payment to the seller, less 1% of each leg if the deal involves business introducers, 0.5% if the deal is in direct.
Regarding the involvement of business introducers, we suggest them to sign a “Business Introducer Agreement” in relation to the leg of the deal they introduce to us. Specific conditions such as a premium or a discount negotiated by the business introducer will be reflected in the Purchase and/or the Sale Agreement between our company and the buyer respectively the seller so all the parties have a clear and transparent view of the deal. In this context, the business introducers’ cut will be adapted accordingly, our company will not claim any of the special discount/premium negotiated. we do not want to be greedy. We just want to make some trades and as said earlier, we prefer to deal in direct with end buyeseller. Bulk trade of Altcoins. At the moment BTC/Fiat is the main market for block trades. However, I had a specific request for BTC/ETH for a very large amount and also IOTA/BTC. If you are looking to buy IOTA in bulk, please contact me on pm. As long as atomic swaps have not avanced to the next level, cross trades of Altcoins might be needed, and they should be operated through transit wallets, in a similar way as what I described above. bottom line Again, it's a crazy long post. Sorry if I sounded doctrinal. I have spent countless hours on deals that went nowhere, and had a lot on my chest. Bitcoin is a fascinating market. Now that some deals are closing, and central banks are getting involved in crypto very discretly, I thought a clarification post was needed. If you are a large crypto holder, interested in such transactions, then please contact me on telegram or signal @swisspb. I will try to make it work for you. If you are Mtgox trustee, I know you dont care about where bitcoin is headed. you just want to get rid of it asap. Please consider cross trades, for the sake of all the people you are representing in this trade. They have suffered goxing 1.0 and don't want to be involved in goxing 2.0 just because you do not know how to execute! Cheers, @ swisspb on telegram
Don't show me this message again ... The cryptocurrency crash takes bitcoin below $6,000 ... The fall of MtGox. The world's biggest bitcoin exchange, MtGox, filed for bankruptcy in February 2014 ... Breaking: Bitcoin and crypto Crash again to Mt. Gox? If you look at the prices of all crypto currencies in the last hours, will see once again a deep red Tableau. Almost all of the Cryptocurrencies out of the Top 100 are part of the two-digit values in the Minus. The reason currently can be a mystery, one only. Feb. 27, 2014 (NaturalNews) In April of 2013, I warned Natural News readers about investing in Bitcoin, saying on the record:. The bitcoin infrastructure is subject to the whims of just one person running MTGox who can arbitrarily decide to shut it down whenever he thinks the market needs a "cooling period." Bitcoins Crash . . . Again. Gary North - February 13, 2014. For the naive souls who bought bitcoins from Mt. Gox at $1200 in December, ... By "bitcoin withdrawal" we are referring to transactions from a MtGox bitcoin wallet to an external bitcoin address. Bitcoin transactions to any MtGox bitcoin address, and currency withdrawals (Yen, Euro ... At the beginning of 2014, Mt Gox, a bitcoin exchange based in Japan, was the largest bitcoin exchange in the world, handling over 70% of all bitcoin transactions worldwide. By the end of February of that year, it was bankrupt. Anyone who was using Mt. Gox lost access to their assets, and it has been a cautionary tale for crypto investors.
Mt Gox still haunts us and is contributing to the panic sell-off happening in the market right now. Mix that with fear and uncertainty about what happens next for Bitcoin and you have the perfect ... Hope you enjoyed the video. If you liked and learnt from it please like this video and share it with your friend and family on Facebook, Twitter, Word of Mouth etc. DONATIONS ♥ BTC ... BITCOIN JUST CRASHED HARD! YOU NEED TO KNOW RISK MANAGEMENT. In todays video i give a brief risk management tutorial for when you are leverage trading bitcoin on bybit or duedex. Duedex has a risk ... Mt. Gox At It Again?! Will This Crash Bitcoin Again? - Duration: 6:08. Crypto Jedi 1,250 views. 6:08. Charlie Lee - Future of Bitcoin & Litecoin - Duration: 58:46. Nugget's News 10,400 views. Mt Gox CRASHES Bitcoin and Cryptocurrency Market! ($500m Selloff) - Hello everyone, todays video is about the March 7 Bitcoin Crash. The cryptocurrency market has gone through quite a crash today ...