A new Forbes analysis of 157 crypto exchanges finds that 51% of the daily bitcoin trading volume being reported is likely bogus.
At best, the investors and exchanges are people who want to reinvent finance but are underestimating its complexity. As Matt Levine says, a lot of crypto is simply repeating financial history’s mistakes. At worst, it’s rich guys teaming up with their buddies to exploit a bubble and help them buy $100 million dollar mansions. It’s time these big companies and regulators stepped to make sure the same standards and data are available to everyone. Until then, buyer beware.
Bitcoin and its users employ a variety of obfuscation techniques to increase their financial privacy. We visualize a representative selection of these techniques in Figure 1 based on their time of invention/creation and our assessment of their similarity to obfuscation vs. cryptography. We make several observations. First, techniques used in Bitcoin predominantly fall into obfuscation, with stronger techniques being used exclusively in alternative cryptocurrencies (altcoins). Second, there is a trend towards stronger techniques over time, perhaps due to a growing interest in privacy and to the greater difficulty of developing cryptographic techniques. Third, obfuscation techniques proposed at later points in time are seeing less adoption, arguably a result of their increased complexity and need for coordination among participants (Möser & Böhme 2017).
Discussions of cryptocurrencies and other blockchain technologies are bedeviled by a nearly universal assumption that attributes that are possible to achieve in theory are guaranteed to be realized in practice. Examples include decentralization and anonymity.Back in June David Gerard asked: How good a business is running a Lightning Network node? LNBig provides 49.6% ($3.7 million in bitcoins) of the Lightning Network’s total channel liquidity funding — that just sits there, locked in the channels until they’re closed. They see 300 transactions a day, for total earnings on that $3.7 million of … $20 a month. They also spent $1000 in channel-opening fees.Even if the Lightning Network worked (which it doesn’t), and were decentralized (which it isn’t), Gerard’s point was that the transaction fees were woefully inadequate to cover the costs of running a node. Now, A Cryptoeconomic Traffic Analysis of Bitcoin’s Lightning Network by the Hungarian team of Ferenc Béres, István A. Seres, and András A. Benczúr supports Gerard’s conclusion with a detailed analysis.
Bitcoin conspiracy theorists have long suspected the U.S. government, among others, would like to shut down bitcoin.Bitcoin’s first decade has seen its price explode, making early adopters overnight millionaires, and prompting some of the world’s biggest technology companies to create their own versions of bitcoin.Now, it’s been revealed federal prosecutor-turned bitcoin and cryptocurrency expert Katie Haun was asked to look into “shutting down” bitcoin by her boss at the U.S. attorney’s office in 2012.
When Satoshi Nakamoto designed the Bitcoin protocol, he had the insight to include the notion of transaction fees. These fees incentivized miners to include transactions into blocks. But initially, Bitcoin did not have, in any meaningful sense, a fee market.A large portion of early Bitcoin transactions were completely free up until 2013 (blue in the above chart). Wallet developers eventually hard-coded tiny fixed fees into their clients, thought of as donations to miners. At first these fees defaulted to 0.1 BTC, but they were driven down as the Bitcoin price rose.
“If you bribe 51 percent of the miners, they will change the ledger for you. [This] tells you just how little irreversibility there is in PoW coins,” tweeted Cornell University professor and researcher in blockchain consensus protocols Emin Gün Sirer.A 51% attack on the blockchain network is not a new attack vector for PoW blockchains. However, as highlighted by Gün Sirer, it’s also not really an attack vector. On very special instances, the majority of self-interested miners on PoW blockchains have voluntarily agreed to alter a transaction history to undo critical situations.While the situation isn’t entirely the same, in the past, blockchain networks have seen their histories altered in the wake of critical moments. This happened on the ethereum blockchain back in 2016 when over $60 million worth of coins were siphoned off from the now-defunct smart contract The DAO. It also happened on the vericoin blockchain back in 2014 after $8 million worth of coins were hacked.While controversial, both decisions were supported by the primary developer community who launched system-wide upgrades or hard forks to enable otherwise infeasible amendments to the blockchain transaction history.Yet those choices weren’t without their repercussions; the resulting ethereum fork resulted in two distinct chains, ethereum and ethereum classic, respectively.A resounding noStill, many in the bitcoin community took to social media to deride the idea as both infeasible as well against the philosophical underpinnings of the technology.In Binance’s particular case, prominent members of the bitcoin community point out that bitcoin being the world’s largest blockchain is a particularly unique case with a reputation to uphold.“Talk of forking or reorganizing the blockchain is close to heresy,” tweeted billionaire bitcoin investor Michael Novogratz. “When the ethereum community did it the project was like 5 months old. A baby. Bitcoin now has $100bn market cap and is a legitimate store of wealth.”It would also be unfair according to Adam Back – CEO of bitcoin development startup Blockstream – given that the latest Binance hack is nowhere near as severe as previous hacks suffered on the bitcoin blockchain.“A Bitcoin reorg is just not happening, and I doubt any Bitcoin industry, miners nor developers considered it either. Recall 2014 $473mil, 2016 bitfinex hack $72mil, 2019 binance $40mil etc. #NotHappening,” tweeted Back.
Many central banks reduced policy interest rates to zero during the global financial crisis to boost growth. Ten years later, interest rates remain low in most countries. While the global economy has been recovering, future downturns are inevitable. Severe recessions have historically required 3–6 percentage points cut in policy rates. If another crisis happens, few countries would have that kind of room for monetary policy to respond.To get around this problem, a recent IMF staff study shows how central banks can set up a system that would make deeply negative interest rates a feasible option.
All of this is a sign of a micro-economy in trouble, as Muhammad Salman Anjum, an investor who eats dinner alone by himself in the buffet hall each night, explains. He has a pragmatic take on all these beautiful young women having blockchain exhaustively explained to them by schlubby-looking guys who can’t believe their luck. ”One of the elements in blockchain is about fundraising the ICOs. So you can guess why they are here—to pamper the investors. Because it’s tough now.”In 2017, Salman says, it was relatively easy to raise funds for a nine-figure ICO. Now that crypto prices have crashed, demand on “the supply side of the ICOs is booming, and the demand for the investors is shrinking.” Since the actual mood at this moment is conservative-going-on-terrified, these glamorous models seem to have been hired to give the ship—and the passengers’ selfies—the glitzy appearance of the boom times of 2017.One of the ways men bond is by demonstrating collective power over women. This is why business deals are still done in strip clubs, even in Silicon Valley, and why tech conferences are famous for their “booth babes.” It creates an atmosphere of complicity and privilege. It makes rich men partners in crime. This is useful if you plan to get ethically imaginative with your investments. Hence the half-naked models, who are all working a lot harder than any of the guys in shirtsleeves.The cruise’s panelists all tout decentralization’s promises of shared responsibility, community, and freedom, but the version I see here means that nobody knows precisely who is responsible for all of this. It’s nobody’s specific fault that we’re trapped on a floating live-action walkthrough of how un-trammelled free-market capitalism can be bad for women, given that money and power are things women tend to have less of.
A new study that was undertaken by Queen Mary University of London and the University of Cambridge, UK, came to some interesting conclusions about how blockchain could fit into the EU’s complex regulatory structure.