Wednesday, December 04, 2013

Can Bitcoin Be The Digital Con Scheme? - Quantitative Analysis of the Full Bitcoin Transaction Graph

  We do not know whether it is the shellbomb or just another scam around Bitcoin, but decided to share it and find comments from more technically sophisticated readers. All our analysis before was based on the Bubble signs which can be attributed to Bitcoin exorbitant rise and that it is unsustainable in the long term. 
  From this report we can take that Bitcoin Open Source is not that open after all and we can see the attempt to game the other Bitcoin participants with artificially inflated prices - pure OTC stock style Pump and Dump run by insiders. This report analyses transactions in 2012, but its findings are particularly interesting now in light of recent parabolic rise of Bitcoin. How do we know that similar type of coordinated transactions are not taking place now artificially inflating Bitcoin prices?
  Before you can make any of your conclusions we must accept that this report and its findings are real and correct and not just another scam around Bitcoin apart from its price. We welcome any comments from technically sophisticated readers.

Dorit Ron and Adi Shamir
Department of Computer Science and Applied Mathematics, The Weizmann Institute of Science, Israel {dorit.ron,adi.shamir}

"5 Conclusions
The Bitcoin system is the best known and most widely used alternative payment scheme, but so far it was very difficult to get accurate information about how it is used in practice. In this paper we describe a large number of statistical properties of the Bitcoin transaction graph, which contains all the transactions which were carried out by all the users until May 13th 2012. We discovered that most of the minted bitcoins remain dormant in addresses which had never participated in any outgoing transactions. We found out that there is a huge number of tiny transactions which move only a small fraction of a single bit- coin, but there are also hundreds of transactions which move more than 50,000 bitcoins. We analyzed all these large transactions by following in detail the way these sums were accumulated and the way they were dispersed, and realized that almost all these large transactions were descendants of a single transaction which was carried out in November 2010. Finally, we noted that the subgraph which contains these large transactions along with their neighborhood has many strange looking structures which could be an attempt to conceal the existence and relationship between these transactions, but such an attempt can be foiled by following the money trail in a sufficiently persistent way."

  Here is another research paper from the same authors just recently released and fiercely rebuffed by Bitcoin community:

  Maybe it is too much for the even the Gold 2.0? At some point the price of Bitcoin will be just too high to justify any Network Effect and Infrastructure argument, particularly when nobody really knows what is happening with it.

US Dollar is Down Now And Gold Goes Vertical GLD, MUX, TNR.v, GDX

  Something interesting is happening with Gold today. After all the positive news about the economy Gold was not sold off, but was crawling up with much higher US Dollar. Now US Dollar is Down for the day and Gold is sharply Up in vertical reversal to $1245 from day's low of $1211.
  Is somebody getting Short Squeezed already? Number of mainstream banks were calling for Gold going down to $1180, $1150 or $1000. Maybe somebody doesn't like to push his luck this time? We will monitor the situation and Interest Rates now.
  As we have discussed, the collapse in Bitcoin will ignite the next Gold Bull Leg Up, according to Business Insider clever people are cashing out Bitcoin into Gold and Silver already!

People Are Buying A Lot Of Silver And Gold With Their Bitcoins

"Amagi Metals chief Stephen McAskill told BI in a separate interview that his site processed $900,000 worth of bitcoin between Thanksgiving and Sunday. The biggest selling items? Silver and gold coins and bars." 

Ultimate Bitcoin Showdown: Schiff vs. Voorhees

"Peter Schiff is digging up Bitcoin phenomenon with Voorhees and its claims for being "Gold 2.0" Markets are not very happy pricing Taper now and people suddenly remember that Equity prices can go down as well. Peter is raising the very important point of "Bitcoin limited supply" - even if Bitcoin number is limited by algorithm to 22 million total there are another 100 crypto-currences to chose from even now. Voorhees is arguing that Bitcoin has already the Network Effect, which brings its value, but he warns that Bitcoin is very risky investment proposition as well. As we have mentioned before, crypto-currency backed by Gold will be the next logical step in this development.
  Gold is holding up today so far after the recent sell off even with rising US Dollar today - which is interesting."

FED "Operation Twist": Bitcoin Crashed To $820 from $1120 on BitStamp

  "Welcome to the adult world of the alternatives to FIAT currencies and "End The FED" fighters. Please never mix again the religion and Investment Valuation. 
  In a thin Sunday trade - before the Chinese market opens - Bitcoin has collapsed from $1120 to $820 at the BitStamp today. You still can buy with Bitcoin a few copies of the very important book for all Bitcoin "investors": "Extraordinary Popular Delusions and the Madness of Crowds."
  We congratulate all traders, who has sold it higher than their purchase price. You are welcome to follow us with other 100 Crypto-Currencies now, but better watch Gold and Silver in the next few days."

Bubbles Chronicles: Bill Still Is Pumping Quark vs Bitcoin - Collapse Is Near

All world has gone mad: Bill Still is pumping Quark! Just watch this video and remember how the Bubble stage looks like and what are the arguments presented to buy something "which definitely will go up." We must be very close to the Bitcoin final parabolic rise before the Crash. If Bill Still can not withstand the plot to get fast rich scheme, what can we tell about the other people?

  It is very interesting that Bill talks about another 30 crypto-currencies and there are at least 100 else are in existence. Why on Earth to buy Bitcoin at $1200 if you can buy "the better" Quark, which was pumped by Bill Still only to 4.5 cents by now (more then 2000% as Bill proudly has noted!?). Just Sell you Bitcoin now and move down the food chain - "it will be a sure thing: all crypto-currencies will go up once Chinese will be able to buy it, particularly after the Bitcoin will be Crashed." 
  It looks like we have found finally our own youth portion and will spread our bets evenly among all 100 crypto-currencies, with this kind of sure gains how can we lose anyway? Can you imaging if India will join this crazy feast, what about Malaysia? You can monitor some of those Crypto-Currencies here: Crypto-Currency Market Capitalisation. Junkcoin is not doing well - must be something with its name ... all others are "solid investments".
  Can somebody tell Obama to put NSA to proper work finally? Just make the super duper NSAcoin with triple encryption, warranted from Spying and accepted for Tax payments and let Obama to Pump it a little bit ... 17 Trillion in Debt will be repaid very soon - at least we will have better roads and bridges. Can we get into this one as well at the start of Pumping?
  And yes, who needs Gold and Silver any more, particularly, when it goes nowhere in price or even down compare to Quark as Bill is reporting? All that dirt, billions of investments - who are those silly people buying all that Gold any more

China, India, Turkey and Thailand Buying Record Amount of Gold - What Do They Know The Others Don't? GLD, MUX, TNR.v, GDX

Gary North: Bitcoins - The Second Biggest Ponzi Scheme in History

  "Gary North presents a very good explanation of the Bitcoin Bubble from the Austrian Economics point of view on the Money. We decided to present this RT video as well so that you can hear Bitcoin advocates as well. Unfortunately Bitcoin's parabolic rise is the most dangerous event for its future. It supposed to challenge the System - at least the FED power in the U.S. How serious is it for the System? It is Everything. All markets are at the mercy of the Fed now. Can we be certain that after 100 Year War Against Gold, FED will find resources to Crash Bitcoin and any idea about viable Currency Alternatives with it?
  We have a feeling that this recent exorbitant rise in Bitcoin is purely manipulated. One thing if it is the Insiders - holders of largest number of Bitcoin amounts are gaming the rest of the market with OTC Pump and Dump style. They are trading "the restricted" amount of Bitcoin by driving the price up and will start the distribution to the crowd once liquidity will allow it.
  Quite another thing if the System is already defending itself. With Bitcoin's "market cap" of 13 Billion even after recent parabolic rise to $1200, FED can easily accumulate enough amount of Bitcoin to drive the price up and then Crash it into the ground. 
  We do hope that it is not the case and Bitcoin will be able to stabilise somehow to preserve the brilliant idea, but with every parabolic move up in the price we are getting closer to the crash now."

Bitcoin still high risk, not yet ready for mainstream - Bitcoin Foundation General Counsel

 "It is very important video to watch for everybody chasing Bitcoin right now. Bitcoin Foundation general counsel warns: "Everybody who buys Bitcoin right now should expect to lose everything". It does not mean that Bitcoin goes to zero tomorrow, but he is very honest with the presentation of Bitcoin, its potential and its risks. 
  The more we study it - the more we like the idea behind Bitcoin. The problem is not with Bitcoin - as we have wrote before, we consider it as one of the major developments in the financial industry - the problem is with the speculators driving this Bubble. Will Bitcoin survive its astronomic rise and collapse at some point to become the real alternative Currency? What will happen when 100 top holders will start cashing out? Nobody knows how high speculators can chase the Bubble, but the higher it goes the harder it will get down. For Bitcoin future it will be very important whether it can stabilise now and grow gradually presenting the real Currency alternative, otherwise its crash will expose its weakness - that it was gamed by few as usual - and crowd will chase other 60 crypto-currencies available now.
  We will monitor the situation further, but already now the chart below will be the chart of the year for us here and shows the potential for the real FIAT alternatives like Gold and Silver."

Enhanced by Zemanta
Post a Comment