Bitfinexed

This paper mainly focuses on the miner-transaction fee-protocol economics, completely neglecting the real world economic interactions and history of BTC.

Satoshi's core design of bitcoin minting favored early adopters to mint coins at extremely low cost and processing power, this is why someone traded 10,000 bitcoins for two pizzas because it took no effort to generate those early on. Satoshi decided to decrease the amount of rewards as the network grew older and presumably more users would adopt it, why? This is a marketing gimmick seen with beanie babies and base ball cards where the cost of production is low yet you tell customers the supply is very limited so you must act quick while supplies last. And the supplies of this type of service are increasing with every day as alternative networks offering the same service (blockchains, trustless distributed databases) are increasingly sprouting up. The question speculators should be considering when evaluating the economic worth in trading bitcoins or any other altcoin should certainly take into consideration what value the network provides them versus alternative service networks, what the risk of volatility in each network is especially because extreme drops in value are much easier than rises in price as liquidity is severely limited and many "whale" accounts often own enough supply of coins to crash the entire market [1] [2] [3].

Exchanges like MTGox, Bitfinex, etc have been suspected of manipulating exchange rates and…

You realize Bitcoin/Ethereum are simply computer software right?

And you missed the essential caveat; aprox 4.11% of Bitcoin addresses control 96.53% of all BTC in circulation. This is a conservative estimate, as anyone familiar with how Bitcoin addresses and wallets work, would know one user is likely controlling many addresses.

A perfect example of this, is a few days ago 1933phfhK3ZgFQNLGSDXvqCn32k2buXY8a created a script to subdivide 111,114 BTC into several hundred addresses, from 60,000 / 30,000 / 20,000 / 10,000 / 5,000 / 500 and then to 100 BTC accounts, over the course of a few hours. [2] Following the movement here now leads to recent deposits into the Binance and Bitfinex wallets.

And most importantly, on the computer science behind Ethereum - In any DLT network with an adversarial threat model it's impossible to create a smart contract with any functionality relying on external data inputs (betting on the outcome of a sports game, or tracking any real world data input) within the network as there's no way to validate the authenticity of that data unless a trusted 3rd party is designated, at which point the network becomes useless. Not even to mention the question of why anyone would want to use a token with such wildly fluctuating market price, and who's supply is controlled by a small userbase of oligarchs.

Additionally, the entire cryptocoin market has an Achilles' heel.. Tether, and Bitfinex are widely suspected of counterfeiting aprox $4,000,000,000 USD…

The difference is crypto is a chance to get in at the top
for once.

Not if you buy other cryptocoins like Bitcoin or Ethereum that someone else created for nothing to sell to bagholders. All you're doing there is becoming a late adopter and you must pray you're not too late in the pyramid that you'll be able to sell to some other speculator at a price higher than you bought meanwhile you're at a 1000x-10,000x disadvantage to anyone who acquired the coin for pennies/fractions of the cost to you. Simple game theory.

Anyone who wants to just needs to create their own crypto-asset and market it like the others to convince "speculators" it's worth purchasing.

Notice how bitcoin/cryptocoin advocates tell others to "HODL" - psychological manipulation is needed to maintain the artificial market scarcity as there's no real demand, use, or acceptance from retailers. [1]

If you're genuinely concerned about control of the money supply, you would voice concern about how cryptocoins are majority owned by only a few hundred people [2] and because of how tether [3] has been marketed and used on exchanges it's essentially like the federal reserve of cryptocurrencies except it's just 2 guys and it's alleged to be backed by nothing which could mean they're stealing large amounts of cryptocoins. Given all the theft in the cryptocoin system, one might wonder if regulations and security standards exist for a reason. What happens if thieves become the majority wealth holders of all the…

Bitfinex stopped trading with US Dollars after their bank accounts were closed / blocked / whatever. To workaround that, they invented a custom cryptocurrency called Tether, which they claim is pegged to the US Dollar by keeping 1 USD in their bank account for each Thether that is issues.

The really suspicious thing is that over the last couple of months almost 1 Billion Tethers have been issued, which is highly suspicious because we wouldn't expect sane people to send such a gigantic amount of money to a shady Bitcoin exchange in the other end of the world, in exchange for a crypto token of dubious value. The most likely thing is that Bitfinex is using these unbacked Tethers that they are printing to purchase bitcoin in their exchange and push up the price.

It feels similar to the last bubble, which started out in MtGOX. MtGOX was insolvent (due to having a good chunck of their deposits lost to hackers and fraud). Eventually, they stopped letting people withdraw their US dollars so the only option people had was to purchase bitcoin and withdraw that instead. This extra demand pushed up the price which attracted outside speculation (the bitcoin price was higher than average in MtGOX but also quickly rose elsewhere) and kept MtGOX afloat for a bit longer than it should (because new investors kept throwing money on the dying exchange to get into the action).

For more Bitfinex news, I would recommend following https://medium.com/@bitfinexed

Its a fraud in that the money/gold/intrinsic fiat that is supposed to be backing it has not been credibly proven to exist, at least at a value matching the current amount of USDT in supply.

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Let's say I decide to make NerdBucks. I offer to sell you n NerdBucks for n dollars, 1-to-1, and tell you I will always buy those NerdBucks back at the same price. This is how NerdBucks get "pegged" to a dollar -- if someone will always buy the currency for a given rate, it will then always be worth at least that much.

Now, you might say, "Okay, what's from stopping you from selling a billion NerdBucks, and when people try to sell them back to you, you just refuse?" Well, normally nothing (outside of litigation, but that is a rabbit hole I'm not going to talk about here). In theory, though, I could have a bank account that I publish the amount of inside it, to show you I am prepared to buy every single NerdBuck back in a worst-case scenario.

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Going back to Tether: The issuing body of Tether has suggested they are holding reserves of USD equivalent to USDT in circulation. If you look at some of the other articles linked in this thread [0] you can find deep-dives that suggest they are lying, and in fact have been using USDT as a way to print money.

They are relying on the hope that more people will buy USDT than come calling to cash in. That is fundamentally the same hope that a Ponzi scheme relies…

Why Bitcoin forks? Exchanges would be where the fraud happens. MtGOX was insolvent and yet they inflated the price of Bitcoin across all exchanges. Bitfinex is alleged to be engaging in the same market manipulation through margin wash trades and their central bank scheme of free Tether minting.

Bitcoin forks are funny because it's decentralized software with a shared database history from the time of the fork. After an update, users can choose to use one or the other. Unfortunately the incentives are warped for miners and devs, so users might not have the best possible design.

There's an excessive amount of propaganda surrounding cryptocoins because "investors" need to psychologically lure you in to buy their supply, which they've acquired for significantly lower value, lower capital, and lower computational work then you if you're starting after them.

[0] https://medium.com/@bitfinexed/latest