>CoinBene is reported to be the largest bitcoin exchange in the world<p>I literally never heard of this exchange before today. If some random exchange popped up and overtakes all of long time "legitimate" incumbents (eg. coinbase, bitstamp, kraken) <i>combined</i>, I'd be suspicious of that too. The same applies for most of the other exchanges near the top of the list on slide 22. In reality, I don't think seasoned traders are affected by this, only newcomers and the occasional journalist.
This presentation was given with regards to a proposed "Bitwise Bitcoin ETF Trust" that the SEC is considering for approval.<p>Direct link to ETF research PDF linked from the thread:<p><a href="https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca201901-5164833-183434.pdf" rel="nofollow">https://www.sec.gov/comments/sr-nysearca-2019-01/srnysearca2...</a><p>Interesting things to see in the hundreds of pages:<p>page 24: What Do Real Exchanges Look Like?<p>page 43: Trade Size Histograms For Suspect Exchanges<p>page 57: Applying All Three Analyses: BitForex<p>page 111: We Have Reached The Point Of Diminishing Returns For Improvements In Efficiency
You can go to any crypto-trading forum (i.e. /r/bitcoinmarkets) circa 2012 and find that this was common knowledge. Everyone knew/knows that 'Chinese' volume was mostly fake because the exchanges made it easy to do so with low fees. Whether the exchange simply let this happen or actually deliberately created the fake volume was immaterial.<p>UTXOs remain the best way to track overall market use and movement. Through this, you can plainly see that the last year of market activity has been thin, just traders competing with each other. With one notable exception in Nov/Dec of 2018 causing the big dump. This was one of the most singular events in Bitcoin history, with old coins fueling a major drop in price.
This is by far the best analysis of the Bitcoin market I have ever seen. Super interesting. As the Twitter thread mentions, this could actually be good news in the eyes of regulators as it means the Bitcoin price is likely controlled almost entirely by legitimate trading on legal and regulated exchanges rather than the fly-by-night places that are faking their volume.
One villain here is CoinMarketCap, which obviously knows most of its listed exchanges are fake yet continue to show their reported volumes. I believe they are paid by fraudulent exchanges to do this. CMC's product is solid but its values are corrupt.
Faking volume is an issue with exchanges, not Bitcoin. Exchanges are in the business of trading. They have incentives to transact Bitcoin. Bull market produces more volume. Bear market has less volume. I take this as most Bitcoin people now are HODLers. They actually see it as a Store of Value.<p>With this research, the Bitcoin ETF group is telling SEC: Our ETF will better than other exchanges. Please approve.
I find the title a little misleading, "95% of Bitcoin exchange volume is fake." to differentiate from transactions performed inside the network.
"When you remove fake volume, the real BTC volume is quite healthy given its mkt cap. Gold’s market cap is ~$7T with a spot volume of ~$37B implying a 0.53% daily turnover. Bitcoin’s $70B market cap would imply a 0.39% daily turnover, very much in-line with that of gold"<p>So people are using it as a store of value, rather than a medium of exchange? This would count against it being used just to buy drugs etc wouldn't it?
Some of the shady bitcoin exchanges and Bitcoin derivatives product offerings really do remind me of bucket shops that were popular in the early 20th century (<a href="https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)" rel="nofollow">https://en.wikipedia.org/wiki/Bucket_shop_(stock_market)</a>)<p>One difference is that the obvious remedy that was applied to bucket shops at the time (regulation) doesn't seem to be as effective this time around due to the international nature of Bitcoin markets.
Already posted as <a href="https://news.ycombinator.com/item?id=19462894" rel="nofollow">https://news.ycombinator.com/item?id=19462894</a> (EDIT: although this link is from the horse's mouth rather than the WSJ)
I have a couple questions!<p>Please correct me if I’m wrong, but it appears 9 of the largest exchanges are regulated under New York laws.<p>1. Is there a scenario where to US could now immediately stop almost the entire bitcoin exchange process?<p>2. If that’s the case, isn’t that entirely against the point of a “decentralized” currency - in that it’s not worth much if you can’t effectively trade it.<p>3. If 95% of volume is being faked, which according to the histograms is likely, what other discoveries about Bitcoin could be waiting to be revealed?
It’s telling to me that they speak of bitcoin only in reference to value stores like gold and not in reference to utilities like p2p payments. Clearly no one is using bitcoin to spend, and very few people are using it as savings (at negative interest!).
So what is the takeaway here? Is this ETF fund trying to make their plan/offering more favourable or attractive by calling out this "fake" volume?
As an occasional crypto trader I've noticed a lot of fake volume. On the coin I follow <a href="https://coinmarketcap.com/currencies/dragonchain/#markets" rel="nofollow">https://coinmarketcap.com/currencies/dragonchain/#markets</a> most of the volume is fake - most of the real trading is on Kucoin and the stuff on Fatbtc and COSS mostly fake. They do it because they want to be seen as the successful exchange so people use them. It's soon apparent if you actually try trading that it doesn't work as advertised and then you often have to pay a steep charge to get your money back or sometimes have problems getting it back at all.
a security researcher recently claimed that it was massively, overwhelmingly, not-even-close, prices driven by monetary exchange policy within the PRC (china), that caused the jump in BitCoin price.. because bitcoin was used to move money out of the PRC.. but, things changed..
Duh... Any exchange can pretend it's a large reputable player by showing fake volume, it has nothing to do with blockchains.<p>Further, any with a substantial amount of bitcoin, e.g. $1m, who might gain from their assets having a reputation as a means to transfer money, can create $1b in daily volume at the cost of $1 per year on the blockchain, fully automated.<p>The expectation that nobody on the planet will do this is obviously zero. So you naturally get fake volume. I'd be surprised if it wasn't >90%.
Binance standing strong. I'm glad to see what I already believed. The company leadership is solid, and, CZ, continues to build a robust, secure exchange. Removes coins that are crap, always keeps up to date with posts, maintenance updates, new listings, etc.. and hardly ever crashes under extreme loads. (remember 2017?).<p>CZ, keep up the great work!
Kind of a dumb headline though. One exchange can post 1e1000 btc of volume.<p>It also doesn't even mean the exchange is malicious. Some exchanges have 0 fees. So if someone using the exchange trades with themselves, it's 0 cost.
That sounds surprising. How would you fake trades if blockchain is by definition public? Can't people see the amount of actual bitcoin going to and from exchange's bitcoin addresses?
They've detected that 95% of the volume of their somewhat dubiously selected bitcoin speculation markets <i>doing trades off-chain</i> are fake.<p>This has nothing to do with Bitcoin blockchain or Bitcoin itself. It's all about the speculation markets.
But is it really? It would seem to depend on what you define as “trading”. If I sell on an exchange, and someone on the same exchange buys, there’s no reason for them to actually force transactions through the network. It only needs to go through the network if the exchange doesn’t have enough on hand to complete the transaction. This kind of net trading is fairly common. Just because it didn’t go through the network doesn’t mean it didn’t happen.