Thursday, October 4th 2018
Cryptocurrency Trading Bots Manipulating Bitcoin, Altcoins' Pricing
The Wall Street Journal has come forward with a story confirming what we all knew, but could have been left out of the cryptocurrency narrative for various reasons: that bots are used on a daily basis to manipulate pricing of these digital assets. The practice includes various tricks, such as spoofing (creating a hue order in the ledger and then canceling), pump-and-dump schemes (where players can resort to a variety of manipulation techniques to pump um a given product's pricing in order to then dump all their positions at the ballooned price) and ping-pong transactions (where a holder of multiple wallets makes extensive trades between his assets, never moving crypto in or out of his control, but placing extra orders and volume on the markets.
Of course, most of these practices have been outlawed in real-world investment scenarios, as price manipulation doesn't really bode well for a free market. However, some players in the crypto sphere (trader Kjetil Eilersten, who developed the market-manipulation program Quatloo Trader) go as far as defending pricing manipulation tools' implementation, saying that a market where "everybody manipulates" results in a zero-sum loss for anyone. Now isn't that refreshing.
Sources:
The WSJ, via CCN
Of course, most of these practices have been outlawed in real-world investment scenarios, as price manipulation doesn't really bode well for a free market. However, some players in the crypto sphere (trader Kjetil Eilersten, who developed the market-manipulation program Quatloo Trader) go as far as defending pricing manipulation tools' implementation, saying that a market where "everybody manipulates" results in a zero-sum loss for anyone. Now isn't that refreshing.
37 Comments on Cryptocurrency Trading Bots Manipulating Bitcoin, Altcoins' Pricing
Common sense is not common apparently - but this is one of the reasons Bitcoin was and is never going to work and this was clear as day from the very beginning.
This should also serve as the one argument to end them all: non-regulated trade is never going to work out. You cannot rely on algorithms to be able to respond to the ingenuity of greedy people. Every game requires an arbiter.
All this should be managable at the exchange, if they were willing to ban users for this behavior.
I believe cryptocurrencies can be legitimately useful, but not like this... not in any large scale, anyway. I'm still mining cause I can, and do expect to make something out of it at some point.
Nevermind the fact that the housing crisis was mainly caused by "Government Regulated" agencies giving AAA+ ratings to junk packages. I mean really people...There are bots trading normal stocks as well genius. In fact the richest hedge funds and investments firms bid insane amounts of money just to get a small office next to the NYE stock exchange - literally so their computers can send data to the exchange the fastest.
That's right, even at the speed of light it matters to be closer. Those extra few seconds make your bot win more often...
Moronic "articles" like this one just illustrate that most people know absolutely nothing. There are bots doing everything described here in tradtional stocks lol. Already!
But it is also Naive to assume there can't be some manipulation going on in any market - it's always possible. Cover your weaknesses, and there are always improvements we can make to any system.
How bots are manipulating cryptocurrency prices
It was obvious during the BTC boom that manipulation was at play and it was called out for it back then. Got no idea why WSJ is writing about it now. Must be a slow news day.
Only Bitcoin truly can claim it has "store of value."
Maybe you would use them to move money, but I doubt you would ever consider long term storage. It would be too risky after seeing Bitcoin die.
Yeah, maybe another generation would consider something like it in the future, but I am uninterested in talking about what happens 20 years from now. Everyone who got burned in BTC would likely not touch the stuff for a long time, and everyone's prediction is right if you wait long enough lol.