When I first learned about crypto currency on HN back in 2012 I was excited. It sounded like a fun technical project that could do good in the world. I bought some along the way, followed projects. Along the way it changed. Yesterday I saw a spam post on Reddit about joining a "pump and dump group", which I had to research. It's groups of people who coordinate a buy of a specific currency, spread false news about this currency to create a mania, drive up the price, sell it at a profit. Not only is this probably illegal, it's immoral. Maybe this is how people who were in the internet in 1992 felt in 2000?
On the bright side, the idiots who join these groups hoping to scam others tend to lose their shirts as well. The person orchestrating the pump-and-dump scheme bought the currency at $X per coin in question long before, and he's using the people in the group as patsies. "Buy the coins at $X + $Y, and the rise in price will make it so that you can sell the coins to some other idiot for $Y + $Z!"
If there aren't enough "outsider" idiots to buy the coins for $Y + $Z before the correction happens, the "insider" idiots lose their shirts. The original person, of course, makes a tidy profit.
---
I learned this the hard way playing Runescape as a 16-year-old. 2007 was an interesting time for that game.
I'm not sure the historical data still exists but would this be around the time of organised market manipulation? The spiking gold rings 500% then dumping just before you told everyone else to springs to mind.
Keeping track of crypto amidst all the hype recently, it's abundantly clear to me that the recent explosion of speculation based trading is a signifier that cryptocurrency is a bubble just waiting to burst.
I don't think this is bad in any right. It looks (and I grew up in the bay area through turn of the century) just like the dot com bubble. The promising part of this is that the underlying technologies being developed, a way to distribute information and business logic in a way where there is an indisputable fully traceable truth, is huge. I think of blockchain-like platforms like Ethereum as the ARPANET to our internet. The opportunities to supplant existing fully centralized systems such as stock exchanges, escrow systems, supply chain/provenance tracking, etc. with a fully decentralized or hybrid approach is huge.
In the end though, I think it will come down to where governments draw the line in the sand. The sad but true reality is that the regulators with the guns will always have ultimate power.
Yeah, heard this 100 times already. But why does it have to be like the dot com? What if it just stays a niche market for 50 years? What you say implies that crypto is as full of potential as the internet was to make it possible for businesses to grow as big as Google, Amazon. Not mentioning of course a lot of other factors that made Google, Amazon big like political influence, globalisation, lack of competition/regulation in certain areas etc.
Not trying to be pessimistic but genuinely curious why so many people make the analogy to the dot com period.
Agreed, I think that's my favorite lesson from the crypto experiment. Sure there are people who use regulation as a gatekeeping function, or as a way to magnify their power, but regulations really do exist for the good of the people.
"Hedge fund schemes, among others, are a good example of why regulated does not necessarily mean good."
One extreme negative, or extreme positive, derivative of a view does not condemn nor justify it. You need to consider the merits as a whole, not with piecemeal bias confirmation or condemnation.
I guess. I mean the regulated stock market has dark pools and super fast algorithms jumping in front of people's trades stealing from them.
I actually feel like the playing field is more uneven between individuals and firms in the regulated stock market vs the btc exchanges.
I also think the bitcoin exchanges are backroom dealing and insider trading, but I feel like they are less sophisticated vs the "legal" theft that is taking place on wall street.
I mean bitcoin exchanges are certainly the wild west, but I honestly don't care if people want to run pump and dumps on unsophisticated investors. That is something you can pretty easily defend against by doing your own research. There are far more nefarious things going on on both bitcoin exchanges and the real stock market.
I'd argue that there is no Bitcoin community to speak of anymore (just like there isn't an "internet community"). The technology evolved a bit but it is still essentially the same.
We got our first 0.01 bitcoin in 2011. Libertarian conference, wife gave her email, got crypto. I literally was stealing Gary Johnson's nametag during this time.
Bought my first whole bitcoin in 2015.
Until the end of last year, I had a good feeling about crypto.
The alt-coin madness has me scared for family and friends. They arent listening when I tell them Bitcoin and diversify. They go all-in on pump and dump new coins like TRON and IOTA.
I see it too, I even have family asking for spare accounts on exchanges! All exchanges are overloaded, not allowing for new accounts, it's crazy.. I just keep telling them: treat it like a casino, don't put money in you can't live without, say goodbye to your money at day 1.
That said, IOTA is actually pretty interesting from a technical standpoint, you should read about the Tangle ;)
Pump and dumps as well as these groups were definitely around in 2012. I agree that cryptocurrencies have drastically changed (IMO for the worse) but pump and dumps on shitcoins are nothing new.
How did it change? People have been scamming with bitcoins forever. Mt. Gox was a scam exchange. There were a bunch of people scamming even before that.
I see it as different. Mt Gox was a legitimate business, with honest employees who were poor at implementing security. Someone saw an opportunity and stole. That exists even with regulation. My issue is with the rise of people who's intent from the beginning is to decieve. Similar to the scam coins that will never deliver a working product.
> Not only is this probably illegal, it's immoral.
But it's decentralized~. Bitcoin was initially hyped by "crypto-anarchists", to be free of government regulation, transfer costs, etc - well that's what you get. Something something cake and eating.
The only cryptocurrencies that will prevail within the next five years are the regulated ones. The rest will be used for shady purposes like tax evasion and paying for ransomware, and they'll get hit hard regularly by hacked or dodgy exchanges. I'm fairly sure the current crypto exchanges operate as a ponzi scheme right now, they won't be able to convert back to fiat with enough volume.
Because I can no longer edit this post, I just wanted to say that I tried doing research and I'm less sure than I was initially. But I will add that just because the SEC currently does very little regulation of crypto, that doesn't mean that federal laws don't apply to it. It just means you're more likely to get away with it and there's more uncertainty about what's allowed and how crypto is thought of legally.
The interesting thing to consider about bitcoins is its value isn't all hype, The cost of electricity use to produce them adds a value to it. Strengthens that emotional bond for the owners. Provides a feedback loop for users etc.
It's just sad this tech will end up being used mostly for black money.
I don't understand how this is immoral. Everybody knows that everybody is just in it because they hope someone else will come along later and pay more for a coin than they did. Who cares about pump and dump and pyramid schemes? Someone dumb enough to put money she/he can't miss into the system is probably also dumb enough to put said money into a gambling machine or any other scheme (prince from Sudan?). Meanwhile people have fun and true innovations may come out (the crypto of monero/zcash combined with the master-node structure of DASH or a Tangle based system like IOTA). Why all the emotion? Literally everywhere on the internet and classic media people say: Don't do it, it's a bubble. If people can't listen, they need to feel, if you don't allow people to feel they become unhappy anyway, they may even be driven to TOR based decentralized exchanges where they are even more likely to get schemed.
Multiple tweets stating this is all FUD. Can someone contradict or corroborate this claim? Lots of
"I talked to my contact in South Korea who works for a major exchange, don't fall into the FUD. The ban is ONLY applicable to exchanges that are not following the previous KYC regulations."
Basically the ministry of Justice announced they are working on banning exchanges between crypto and fiat currency in Korea, and they ultimately aim to close down all exchanges.
Few hours later, ministry of Strategy and Finance calls out that the ministry of Justice is announcing as if their words are final, but not all government bodies have agreed to that yet.
For reference, ministry of Strategy and Finance is one of the most powerful government body in Korea (they fund the ministries). After this news cryptocurrency value is starting to shoot up again in Korea after the crash.
From Reddit (r/cryptocurrency) - a friend messaged me this today:
I'm a South Korean citizen. Let me just tell you what
just happened. About 4 hours ago, Ministry of Justice
issued a statement that the SK government is seeking
to ban all crypto exchanges. They explicitly stated
that this was a decision that was well communicated
between various branches of the government. This
caused the market to crash, and really caused a media
firestorm among Koreans.
And then 2 hours ago, the Ministry of Finance and the
Blue House issued a statement that this decision to
ban all exchanges wasn't something that was
unilaterally agreed upon, and that the statement made
by the MoJ was not their stance on this matter. Now
here is my speculation on what happened.
There was a unilateral agreement to shut all exchanges,
but as you all would know, this is a very anti-democratic
and anti-capitalistic thing to do. So they decided to send
out a trial balloon.
When the statement was made it caused an outrage, as
there are approximately 2 million crypto investors
in SK. National elections are held on April, so to
control the damage I think the Blue House changed
its mind and decided to throw the MoJ under the bus.
A lot of Koreans are speculating that this is what
happened under the hood, which is very amateurish. I
just feel bad for all the guys who cut losses today.
The ban will come. In this video, the commentator goes into detail what the South Korea government plans to do and what the government thinks about it. They see cryptocurrency as the second coming of "Bada Iyagi", which was a gambling game that got banned a couple of years ago [1].
Crazy how fast the markets moved on this news. The price crashed and bounced halfway back before I even found the article, and I was actively searching for the source of the panic.
But, perhaps that's because in the grand scheme, SK is small news and other traders who got there first knew full well that it'd rebound.
Their volume figures are pumped by some exchanges allowing larger traders to pay a flat-rate monthly fee rather than a percentage on trades, and are sometimes so large that it's hard to treat them as credible.
Banning the exchange of digital assets, in my opinion, is like banning the internet. It's not feasible in the long run. Would also be a disappointing move to see coming from a democratic country that has some degree of property rights.
It's more like banning a specific set of companies from opening legal websites in Korea. It's entirely doable, and has been done many times (e.g., porn). I won't comment on its morality: case by case, I guess.
The ban's purpose is not to stop the most determined, persistent crypto-anarchists from realizing their dream. Its purpose is to scare away your average retired dads and office workers from pouring their life savings into BTC, because otherwise the country will have to feed their children when the bubble pops.
(Unlike crypto-anarchists, most Korean people and the government believe that it's the country's duty to keep children well fed and educated, even if their parents are raging idiots. Whether we actually follow through is... debatable, I guess.)
Right after the S.Korean Justice Ministry announced this, the Finance Ministry is like WTF? we were planning on taxing them. We can tax them if you get rid of it.
So far this plan doesn't have the full government support so it might not actually happen.
It's a tough task to let the air of a balloon slowly.
On one hand SK probably has to do something because so many people are jumping on and eventually will likely get burned. On the other, they just removed a bunch of "money" from the hands of their citizenry by tanking the markets. Which in and of itself may be world wide good deed as it could dampen dangerous rampant speculation but it does make less "rich" people.
My guess is the decline continues into spring but picks back up come summer and into next year (although at a slower rate which isn't a bad thing). BTC isn't going anywhere any time soon and although the whole thing is overheated right now I believe more gains are likely in store in coming years. Shaking the weak hands out stabilizes a market and a stable market is what is missing at the moment.
So I'm assuming SK doesn't want their citizens' money 1) exposed to the risk of a bubble 2) for which SK society will blame them 3) flowing through Chinese and Russian miners to 4) pad North Korean state finances?
Readit News
If there aren't enough "outsider" idiots to buy the coins for $Y + $Z before the correction happens, the "insider" idiots lose their shirts. The original person, of course, makes a tidy profit.
---
I learned this the hard way playing Runescape as a 16-year-old. 2007 was an interesting time for that game.
Playing that game over the years was the most thorough education in trusting strangers on the internet anyone could ever need
I don't think this is bad in any right. It looks (and I grew up in the bay area through turn of the century) just like the dot com bubble. The promising part of this is that the underlying technologies being developed, a way to distribute information and business logic in a way where there is an indisputable fully traceable truth, is huge. I think of blockchain-like platforms like Ethereum as the ARPANET to our internet. The opportunities to supplant existing fully centralized systems such as stock exchanges, escrow systems, supply chain/provenance tracking, etc. with a fully decentralized or hybrid approach is huge.
In the end though, I think it will come down to where governments draw the line in the sand. The sad but true reality is that the regulators with the guns will always have ultimate power.
But... those that survived with solid fundamentals have often gone on to thrive spectacularly -- e.g. Google, Amazon.
I can see something similar ultimately happening in the crypto space.
Not trying to be pessimistic but genuinely curious why so many people make the analogy to the dot com period.
One extreme negative, or extreme positive, derivative of a view does not condemn nor justify it. You need to consider the merits as a whole, not with piecemeal bias confirmation or condemnation.
I actually feel like the playing field is more uneven between individuals and firms in the regulated stock market vs the btc exchanges.
I also think the bitcoin exchanges are backroom dealing and insider trading, but I feel like they are less sophisticated vs the "legal" theft that is taking place on wall street.
I mean bitcoin exchanges are certainly the wild west, but I honestly don't care if people want to run pump and dumps on unsophisticated investors. That is something you can pretty easily defend against by doing your own research. There are far more nefarious things going on on both bitcoin exchanges and the real stock market.
Bought my first whole bitcoin in 2015.
Until the end of last year, I had a good feeling about crypto.
The alt-coin madness has me scared for family and friends. They arent listening when I tell them Bitcoin and diversify. They go all-in on pump and dump new coins like TRON and IOTA.
Im actually scared.
That said, IOTA is actually pretty interesting from a technical standpoint, you should read about the Tangle ;)
But it's decentralized~. Bitcoin was initially hyped by "crypto-anarchists", to be free of government regulation, transfer costs, etc - well that's what you get. Something something cake and eating.
The only cryptocurrencies that will prevail within the next five years are the regulated ones. The rest will be used for shady purposes like tax evasion and paying for ransomware, and they'll get hit hard regularly by hacked or dodgy exchanges. I'm fairly sure the current crypto exchanges operate as a ponzi scheme right now, they won't be able to convert back to fiat with enough volume.
Definitely illegal.
It's just sad this tech will end up being used mostly for black money.
That's not true. What makes you think so?
This is a sunk-cost, not added value.
https://twitter.com/iamjosephyoung/status/951428854085689344
Dead Comment
"I talked to my contact in South Korea who works for a major exchange, don't fall into the FUD. The ban is ONLY applicable to exchanges that are not following the previous KYC regulations."
Basically the ministry of Justice announced they are working on banning exchanges between crypto and fiat currency in Korea, and they ultimately aim to close down all exchanges.
Few hours later, ministry of Strategy and Finance calls out that the ministry of Justice is announcing as if their words are final, but not all government bodies have agreed to that yet.
For reference, ministry of Strategy and Finance is one of the most powerful government body in Korea (they fund the ministries). After this news cryptocurrency value is starting to shoot up again in Korea after the crash.
Deleted Comment
https://youtu.be/nK-Lid5wO-Y
The ban will come. In this video, the commentator goes into detail what the South Korea government plans to do and what the government thinks about it. They see cryptocurrency as the second coming of "Bada Iyagi", which was a gambling game that got banned a couple of years ago [1].
[1] http://world.kbs.co.kr/english/archive/program/news_zoom.htm...
Could the peasant class that made money off BTC unite and Lobby/bribe/influence SK politicians?
Also, do American's have a plan if there is a ban?
That's what Reuters is saying right now.
That should trump any tweets you are reading about this being FUD or a market manipulation by the mystical bearwhale.
Reuters is fairly accurate and unbiased imho.
Dead Comment
The transaction fees are so high that it seems useless for anything but speculation at this stage.
Seems to me that it completely lost its original purpouse if that doesn't get ajusted somehow.
Say 1% of transaction value with a maximum of the current transaction fee maybe.
Anyways, people who invested in a single bitcoin yesterday only lost $1000 overnight.
https://www.reddit.com/r/CryptoCurrency/comments/7plk7q/dont...
Maybe Google/FB ought to ban CNBC?
But, perhaps that's because in the grand scheme, SK is small news and other traders who got there first knew full well that it'd rebound.
Bought under 2$, already at $2.25.
This is the bull run market I hate, but I'm also well connected...
The ban's purpose is not to stop the most determined, persistent crypto-anarchists from realizing their dream. Its purpose is to scare away your average retired dads and office workers from pouring their life savings into BTC, because otherwise the country will have to feed their children when the bubble pops.
(Unlike crypto-anarchists, most Korean people and the government believe that it's the country's duty to keep children well fed and educated, even if their parents are raging idiots. Whether we actually follow through is... debatable, I guess.)
So far this plan doesn't have the full government support so it might not actually happen.
On one hand SK probably has to do something because so many people are jumping on and eventually will likely get burned. On the other, they just removed a bunch of "money" from the hands of their citizenry by tanking the markets. Which in and of itself may be world wide good deed as it could dampen dangerous rampant speculation but it does make less "rich" people.
My guess is the decline continues into spring but picks back up come summer and into next year (although at a slower rate which isn't a bad thing). BTC isn't going anywhere any time soon and although the whole thing is overheated right now I believe more gains are likely in store in coming years. Shaking the weak hands out stabilizes a market and a stable market is what is missing at the moment.