BFX COIN (BFX) - Coinlim Listing - Cryptocurrency Calendar

Staking in Compendia and how its approach differs from other (D)PoS networks

In this article, we'll be discussing staking and how it works in Compendia.
There are several misconceptions out there that arise due to the way staking is utilized across different networks. Compendia use a novel way of staking, by combining the way it locks funds to earn more coins in recent proof-of-stake (PoS) networks - with the aspect of vote power traditionally seen in delegated proof-of-stake (DPoS) networks.
Staking in (D)PoS networks vs. Compendia
Staking (commonly misspelt as 'stacking' or 'steaking') is the process of leveraging an acquired amount of coins/tokens from a certain blockchain to contribute to the network, by holding them in an address and using an (either online or offline) wallet client to earn revenue based on the amount of coins/tokens held.
PoS (proof-of-stake) networks
In traditional proof-of-stake networks such as Stratis or Cardano requires users to purchase a certain amount of coins, place those in an online wallet and letting the wallet client emulate a certain amount of computing power - which is in turn used to mine/forge new blocks to the blockchain. In more recent proof-of-stake networks such as Cosmos, users are required to lock their funds in an address - with a cooldown period added when wanting to unlock those funds. This way, coins are taken out of circulation rather than just being held (but still immediately spendable) as with Stratis/Cardano. In both situations, anyone can contribute to the network by staking and the more coins staked, the higher likelihood of mining/forging a new block and earning the block reward. You can earn individually from staking, or join a pool.
DPoS (delegated proof-of-stake) networks
In delegated proof-of-stake networks, such as ARK or EOS, there are only a set number of nodes (known as validators, block producers or delegates) that are allowed to forge new blocks. In ARK, there are 51 forging delegates and we will use this amount as an example. Contributors have to gain votes from other network participants, who pledge their account balance as votes, and once they have a total amount of votes that put them into the top 51, they will be able to forge blocks and earn rewards. The account balance of participants who vote for a forging validator remain unlocked and therefore it is possible to immediately spend funds held in an address. The amount of votes per address varies across different DPoS networks, but the principle is the same: one coin means one vote power. You can only earn individually if you are one of the top validators; otherwise, you have to vote and receive a portion of rewards from a forging validator.
Compendia
In Compendia, the above two methods are combined into a new dynamic: staking your BIND locks up your funds for a set period (3 - 6 - 12 months) as in proof-of-stake networks, but it does NOT grant the ability to earn. You will still need to vote for a sharing validator, like in delegated proof-of-stake networks. What does staking do then, if it does not let you earn on its own?
Staking your BIND for a set period applies a multiple (5x - 7.5x - 10x) to the voting power of your staked balance. This means that one staked BIND is no longer counted as one vote, but as 5 votes (or 7.5 votes, or 10 votes - depending on the lock period). This way it increases your potential earnings when you vote for a sharing validator. So, by pledging to lock your funds for a certain amount of time and thereby decreasing the circulating amount of BIND, you will be able to earn more with the same amount of coins than if you would not stake, and only vote.
When staking, your BIND will go through 5 different phases:
Securing the Network
DPoS delegates/validators secure the blockchain through forging blocks, and in the case of Compendia, there are 47 validators (rather than the 51 in ARK) and each active validator forges one block every 6 seconds. Therefore 47 new blocks are forged every 4.7 minutes (6 * 47 = 282 seconds = 4.7 minutes). In a similar way to proof-of-work networks such as Bitcoin, a block contains transactions and the validator that forges them receives a proportion of the transaction fee (described in the Fee Removal Model further below).
Supply Inflation
DPoS chains typically have fixed inflation based over several years, this is to help control the coin supply in circulation. Inflation comes from Delegate/Validators forging new blocks as described above. The effect of validators forging new blocks increases the supply by either ß3.9 per block (if ranked 6th to 47th), or ß4.84 per block (if ranked 1st to 5th).
The Compendia blockchain produces around ß1,753,200 - Per month
Block rewards are controlled through an annual milestone which is fixed in the current networks config. This can only be updated if the 47 validators reach consensus and accept the potential change.
The milestones for BIND are as follows:
Years Rewards (6-47) Rewards (Top 5) Average
1-3 3.9 4.84 4
4-6 1.95 2.42 2
7-9 0.975 1.21 1
Deflationary Effects
In general DPoS blockchains allow voters to vote, allocating their wallet weight to a specific delegate/validator and receiving rewards commensurate to weight. This helps control inflation as the coins are out of supply when being used to vote, but the coins are not locked for a fixed time, a voter can move some or all funds at any time.
What differentiates Compendia?
The key difference is that staked coins are locked for a fixed period, either 3, 6, or 12 months (as described above). The coins are effectively locked out of supply, by incentivising voters to lock their coins for the maximum period of 12 months. This helps offset the increase in supply through forging rewards.
At the time of writing, ß11,816,021 is currently locked into staking, given the current BIND supply (i.e nOS to BIND) ß112,894,676, around 10% of all BIND in circulation is locked out of supply for the staking periods highlighted earlier. With the current staked coins, it would take just over 6 months for inflation to offset the monthly forging reward increase.
Fee removal model.
Compendia also offer another deflationary measure through a sophisticated fee removal model.
The Fee Collection and Removal Model works as follows:
- 100% of collected fees up to the amount equal to the block reward in a block are permanently removed from circulation.
- 50% of any remaining collected fees are also removed from circulation.
- The other 50% is awarded to the forging validator.
This fee system helps with combating possible shifts in Vote Power going from voters towards validators during times of increased transaction activity on the network.
Summary
The Compendia Team has a clear understanding of the tokenomics of a blockchain, lessons have been learned from earlier DPoS implementations and new strategies have been deployed to ensure a fairer, more balanced approach to DPoS tokenomics.
If you have enjoyed reading this blog please consider voting for validators BFX & Cryptomanic. Thank you
submitted by c_ryptomaniac to Compendia [link] [comments]

[Daily Discussion] Wednesday, May 08, 2019

Thread topics include, but are not limited to:
Thread guidelines:
Other ways to interact:
submitted by AutoModerator to BitcoinMarkets [link] [comments]

Understanding Tether: Why it accounts for a substantial part of the crypto market cap and why its the #1 outstanding issue in crypto markets today

In this post I will go in-depth on:
  1. How Tether got to be what it is today
  2. Why Tether's market cap is a lot more than 0.5% of the total market cap for crypto you see on CoinMarketCap
  3. Tether printing timing
  4. Tether reserves
  5. What could happen to the market if Tether is found to not be backed by reserves
Tether is incredibly important to the cryptocurrency market ecosystem and I've noticed far too few people understand what is going on.
Very little actual discussion of the 2nd biggest crypto by volume happens here and whenever someone starts a discussion they most often got slapped for "FUD". Tether themselves recently hired the major New York based PR firm 5W to spread positive information online and take down critics, I'm sure some of their operatives are probably on Reddit.
But its absolutely critical you understand the risks behind Tether and especially now with the explosion in reserve liability, breakdown in relationship with banks and their auditor and recently announced subpoena.

What exactly is Tether and what happened so far?

Tether is a cryptocurrency asset issued by Tether Limited (incorporated in the British Virgin Islands and a sister company of Bitfinex), on top of the Bitcoin blockchain through the Omni Protocol Layer. It is meant to give people a "stablecoin", for example a merchant who accepts bitcoin but fears its volatility could shift bitcoin into tether, which can be easier to do than exchanging bitcoin for dollars. Recently they've also added an Ethereum-based ERC20 token. Tether Ltd claims that each one of the tokens issued is backed by actual US dollar (and more recently Euro) reserves. The idea is that when a business partner deposits US dollars in Tether’s bank account, Tether creates a matching amount of tokens and transfers them to that partner, it is NOT a fractional reserve system.
Tether makes the two following key promises in its whitepaper on which the entire premise is build:
Each tether issued will be backed by the equivalent amount of currency unit (one USDTether equals one dollar).
Professional auditors will regularly verify, sign, and publish our underlying bank balance and financial transfer statement.
Tether is centralized and dependent on your trust of Bitfinex/Tether Limited, and that the people behind it are honest people. For the new entrants to this market it will be greatly beneficial understand the timeline of Tether and their connection to Bitfinex.
A brief timeline:

Most common misconception: Tether is only a small part of the total market cap

One of the most common misconception people have about cryptocurrencies is that the "market cap" amount they see on CoinMarketCap.com is actually the amount of money that is invested in each coin.
I often hear people online dismiss any issue with tether by simply claiming its not big enough to cause any effect, saying "Well Tether is only $2.2 billion on CoinMarketCap and the market is 400 billion, its only 0.5% of the market".
But this misunderstands what market capitalization for cryptocurrency is, and just how different the market cap for Tether is to every other token. The market cap is simply the last trade price times the circulating supply. It doesn't take into account the order book depth at all. The majority of Bitcoin (and most coins) are held by those who either mined or purchased for a very low price early on and simply held on as very small portions of the total supply was rapidly bid up to their current price.
An increase in market cap of X does NOT represent an inflow of X dollars invested, not even close. A 400 billion dollar market cap for crypto does NOT mean that there is 400 billion dollars underwriting the assets. Meanwhile a 2 billion dollar Tether market cap means there should be exactly $2 billion backing up the asset.
Nobody can tell for sure exactly how much money has been invested in cryptocurrency market, but analysts from JPMorgan found that there was only net inflow of $6 billion fiat that resulted in $300 billion market cap at the time. This gives us a roughly 50:1 ratio of market cap to fiat inflow. Prominent crypto evangelist Julian Hosp gives the following estimate: "For a cryptocurrency to have a market cap of $1 billion, maybe only $50 million actually moved into the cryptocurrency."
For Tether however the market cap is simply the outstanding supply, 2.2 billion USDT is actually equal to 2.2 billion USD. In order to get $50 USDT you have to deposit $50 real U.S. dollars and then 50 completely new tokens will be issued, which never existed before on the market.
What is also often ignored is that Bitfinex allows margin trading, at a 3.3x leverage. Bitfinexed did an excellent analysis on how tether is entering Bitfinex to fund margin positions
There are $2.2 billion in Tether outstanding and the current market cap of the entire market is $400 billion according to CoinMarketCap. You can actually calculate Tether as a % of total fiat invested in the market according to the JP Morgan estimate, the following table outlines for a scenario of no margin lending and 15/25% of tether being on a 3.3x leverage margin account:
Fiat Inflow/Market Cap Ratio Tether as % of total market (no margin) Tether as % of total market (15% on margin) Tether as % of total market (25% on margin)
JP Morgan estimate (50:1) 27.5 % 36.9 % 43.3 %
Even without any margin lending Tether is underwriting the worth of about 27.5% of the cryptocurrency market, and if we assume only 25% was leveraged out at 3.3x on margin we have a whole 43% of the market cap being driven by Tether inflow.
A much better indicator on CoinMarketCap of just how influential Tether is actually the volume, its currently the 2nd biggest cryptocurrency by volume and there are even days where its volume exceeds its market cap.
What this all means is that not only is the market cap for cryptocurrencies drastically overestimating the amount of actual fiat capital that is underwriting those assets, but a substantial portion of the entire market cap is being derived from the value of Tether's market cap rather than real money.
Its incredibly important that more new investors realize that Tether isn't a side issue or a minor cog in the machine, but one of the core underlying mechanisms on which the entire market worth is built. Ensuring that whoever controls this stablecoin is honest and transparent is absolutely critical to the health of the market.

Two main concerns with Tether

The primary concerns with Tether can be split into two categories:
  1. Tether issuance timing - Does Tether Ltd issue USDT organically or is it timed to stop downward selling pressure?
  2. Reserves - Does Tether Ltd actually have the fiat reserves at a 1:1 ratio, and why is there still no audit or third party guarantee of this?

Does Tether print USDT to prop up Bitcoin and other cryptocurrencies?

In the last 3 months the amount of USDT has nearly quadrupled, with nearly a billion being printed in January alone. Some people have found the timing of the most recent batch of Tether as highly suspect because it seemed to coincide with Bitcoin's price being propped up.
https://www.nytimes.com/2018/01/31/technology/bitfinex-bitcoin-price.html
This was recently analyzed statistically:
Author’s opinion - it is highly unlikely that Tether is growing through any organic business process, rather that they are printing in response to market conditions.
Tether printing moves the market appreciably; 48.8% of BTC’s price rise in the period studied occurred in the two-hour periods following the arrival of 91 different Tether grants to the Bitfinex wallet.
Bitfinex withdrawal/deposit statistics are unusual and would give rise to further scrutiny in a typical accounting environment.
https://www.tetherreport.com
I'm still undecided on this and I would love to see more statistical analysis done, because the price of Bitcoin is so volatile while Tether printing only happens in large batches. Simply looking at the Bitcoin price graph over the last 3 months and then the Tether printing its pretty clear there is a relationship but it doesn't seem to hold over longer periods.
Ultimately to me this timing isn't that much of an issue, as long Tether is backed by US dollars. If Bitfinex was timing the prints then it accounts to not much more than an organized pumping scheme, which isn't a fundamental problem. The much more serious concern is whether those buy order are being conducted on the faith of fictitious dollars that don't exist, regardless of when those buy orders occur.

Didn't Tether release an audit in September?

Some online posters have recently tried to spread the notion that Tether has actually been audited by Friedman LLP and that a report was released in September 2017. That was actually just a consulting engagement, which you can read here:
https://tether.to/wp-content/uploads/2017/09/Final-Tether-Consulting-Report-9-15-17_Redacted.pdf
They clearly state that:
This engagement does not contemplate tests of accounting records or the performance of other procedures performed in an audit or attest engagement. Our procedures performed are not for the purpose of providing assurance...In addition, our services do not include determination of compliance with laws and regulations in any jurisdiction.
They state right from the beginning that this is a consultancy job (not an audit), and that its not meant to be assurance to third parties. Doing a consultancy job is just doing a task asked by your customer. In a consultancy job you take information as true from the client, and you have no mandate to verify whether your customer's claims are true or not. The way they checked is simply asking Tether to provide them the information:
All inquiries made through the consulting process have been directed towards, and the data obtained from, the Client and personnel responsible for maintaining such information.
Tether provided a screenshots of twp bank balances. One of these is in the name of Tether Limited, and while the other is a personal account of an individual who Tether Limited claims has a trust agreement with them:
As of September 15, 2017, the bank held $60,919,810 in an account in the name of an in individual for the benefit of Tether Limited. FLPP obtained an engagement letter for an interim settlement plan between that individual and Tether Limited and that according to Tether Limited, is the relevant agreement with the trustee. FLLP did not evaluate the substance of the letter and makes no representation about its legality.
Even worse is that later on in Note 1, they clearly claim that there is no actual evidence that this engagement letter or trust has any legal merit:
Note 1: FLLP makes no representations about sufficiency or enforceability of any trust agreement between the trustee and the Client
Essentially what this is saying is that the trust agreement may not even be worth the paper it’s printed on.
And most importantly… Note 2:
FLLP did not evaluate the terms of the above bank accounts and makes no representations about the clients ability to access funds from the accounts or whether the funds are committed for purposes other than Tether token redemptions
Basically Tether gave them a name of an individual with $60 million in their account according to a screenshot, Tether then gave them a letter saying that there is a trust agreement between this individual and Tether Limited. They also have account with $382 million but no guarantee that this account holds to any lien or other commitments, or that it can be accessed.
Currently Tether has 2.2 billion USDT outstanding and we have absolutely no idea whether this is actually backed by anything, and the long promised audit is still outstanding.

What happens if its revealed that Tether doesn't have its US dollar reserves?

According to Thomas Glucksmann, head of business development at Gatecoin: "If a tether debacle unfolds, it will likely cause quite a devastating ripple effect across many of the exchanges that see most of their volumes traded against the supposedly USD-backed cryptocurrency."
According to Nicholas Weaver, a senior researcher at the International Computer Science Institute at Berkeley: "You could see a spike in prices in tether-only bitcoin exchanges. So, on those exchanges only you will see a run up in price compared to the bitcoin exchanges that actually work with actually money. So you would see a huge price diverge as people see that only way they can turn tether into real money is to buy other cryptocurrency then move to another exchange. That is a bank run."
I definitely see the crypto equivalent of a bank run, as people actually try to secure their gains an realize that this money doesn't actually exist within the system:
If traders lose confidence in it and its value starts to drop, “people will run for the door,” says Carlson, the former Wall Street trader. If Tether can’t meet all its customers’ demand for dollars (and its Terms of Service suggest that in many cases it won’t even try), tether holders will try to snap up other cryptocurrencies instead, temporarily causing prices for those currencies to soar. With tether’s role as an inter-exchange facilitator compromised, investors might lose faith in cryptocurrencies more generally. “At the end of the day, people would be losing substantial sums, and in the long term this would be very bad for cryptocurrencies,” says Emin Gun Sirer, a Cornell professor and co-director of its Initiative for Cryptocurrencies and Smart Contracts.
Another concern is that Bitfinex might simply shut down, pocketing the bitcoins it has allegedly been stockpiling. Because people who trade on Bitfinex allow the exchange to hold their money while they speculate, these traders could face substantial losses. “The exchanges are like unregulated banks and could run off with everyone’s money,” says Tony Arcieri, a former Square employee turned entrepreneur trying to build a legally regulated exchange.
https://www.wired.com/story/why-tethers-collapse-would-be-bad-for-cryptocurrencies/
The way I see it, this would be how it plays out if Tether collapses:
  1. Tether-enabled exchanges will see a massive spike in Bitcoin and cryptocurrency prices as everyone leaves Tether. Noobs in these exchanges will think they are now millionaires until they realize they are rich in tethers but poor in dollars.
  2. Exchanges that have not integrated Tether will experienced large drops in Bitcoin and alts as experienced investors flee crypto into USD.
  3. There will be a flight of Bitcoin from Tether-integrated exchanges to non-Tether exchanges with fiat off-ramps. Exchanges running small fractional reserves will be exposed, further increasing calls for greater reserves requirements.
  4. The exchanges might slam the doors shut on withdrawals.
  5. Many exchanges that own large balances of Tether, especially Bitfinex, will likely become insolvent.
  6. There will be lawsuits flying everywhere and with Tether Limited being incorporated on a Carribean Island whose solvency and bankruptcy laws will likely ensure they don't ever get much back. This could take years and potentially push away new investors from entering the space.

Conclusion

We can't be 100% completely sure that Tether is a scam, but its so laiden with red flags that at this point I would call it the biggest systematic risk in the crypto space. Its bigger than any nation's potential regulatory steps because it cuts right into the issue of trust across the entire ecosystem.
Ultimately Tether is centralizing one of the very core mechanics of the cryptocurrency markets and asking you to trust one party to be the safekeeper, and I really see very little reason to trust Bitfinex given their history of lying and screwing over their own customers. I think that Tether initially started as a legit business to facilitate the ease of moving money and avoiding regulations, but somewhere along the lines greed and/or incompetence took over (something that seems common with Bitfinex's previous actions). Right now we're playing proverbial hot potato, and as long as people believe that Tether is worth a dollar everything is fine, but as some point the Emperor will have to step out from hiding and somebody will point out they have no clothes.
In the long term I really hope once Tether collapses we can move on and get the following two implemented which would greatly improve the market for all investors:
  1. Actual USD fiat pairings on the major exchanges for the major currencies
  2. Regulatory rules on exchange reserve requirements
I had watched the Bitconnect people insist for the last 2 years that everything about Bitconnect made perfect sense because they were getting paid daily. The scam works until one day it suddenly doesn't.
Tether could still come clean and avoid all of this "FUD" by simply getting a simple review of their banking, they don't even need a full audit. If everything was legit with Tether, it would be incredibly easy to have a segregated bank account with the funds used solely to back up Tether, then have an third party accounting firm simply review the account and a bank reconciliation statement then spend a few hours in contact with the bank to ensure no outstanding liabilities are held on that balance. This is extremely basic stuff, it would take a few hours to set up and wouldn't take a lot of man-hours for a qualified account to do, and yet they don’t do it. Why? Why hire a major PR firm and spend god knows how much money to pay professional PR representatives to attack "FUD" online instead?
I think I know why.
submitted by arsonbunny to CryptoCurrency [link] [comments]

Does Bitfinex/Tether/... have a plan B if the wire transfer issue is getting worse?

From what I have read on reddit so far, it is not really only that the wire outgoing Bitfinex is having an issue. I at least saw someone claimed that his/her wire incoming to Bitfinex was also blocked. It seems to me that the blocking comes from something higher than Wells Fargo. You can guess who is really behind this. My concern is whether Bitfinex will get into big trouble if the price of Bitcoin fluctuate a lot and suddenly people ended up with a lot of money that Bitfinex cannot pay back. Would it be safer if Bifinex stop any USD leverage until things are settled? I really hope someone from Bitfinex can discuss their strategy with us on reddit like when they had the hack. We came up with the BFX token and it did help Bitfinex survive.
It seems Coinbase is the only place not affected by the banking cartel.
EDIT: bfx_brandon I have been permanently banned by the moderator so I can only ask you a question by editing this subreddit. I have some questions for Bitfinex. Please answer these honestly.
  1. After this WF issue was exposed by the subredditors here, does Bitfinex continue process the withdrawal for US customers whose wire transfer will go through WF?
  2. Have other US banks besides WF been blocking the wire transfer withdrawal since filing the lawsuit?
submitted by h3Larvw9 to BitcoinMarkets [link] [comments]

What's going on on Bitfinex (and Bitstamp)

Another flash crash?
submitted by Sherlockcoin to BitcoinMarkets [link] [comments]

My suggestion to Bitfinex on what to do next

First off, before I get into some specific recommendations, I'd like to state my OPINION that the situtation IS manageable. Right now BFX has lost 119k coins worth roughly ~60m. Due to how they handled open positions for non-affected accounts, many users were likely rekt in the volatility swing. At last count BFX had ~40m in USD margin funding outstanding... they may have benefitted to the tune of millions from forced liquidations. BFX may also hold a non-negligible sum (millions $) of Ethereum Classic, which has dramatically soared in price over the past 48 hours on insanely high volume. As one of the worlds largest, and likely profitable, Bitcoin companies, BFX is likely valued north of $200m if they can salvage their brand (feel free to disagree with me on that, but I'm not off by far).
Given these strengths I think there's a path forward for BFX where they can make customers whole over time, in a completely transparent way, and survive as a company.
  1. Maintain the level of transparency Zane is demonstrating, it's relieving a lot of the fear and uncertainty. Sure it sucks, but at least we know exactly how much is sucks and conspiracy theories are not flying (yet).
  2. Keep withdrawals/deposits closed for now, but allow trading to resume and users to access their accounts and survey damage. This high volatility represents precious fees you need to be collecting.
  3. Figure out what happened security wise and be working to get deposits/withdrawals ready as soon as can be done safely. Allow non effected currencies (ETH, ETHC, LTC, USD etc...) to be deposited/withdrawal.
  4. Release information on the % of Bitcoin holdings that were lost, there needs to be a decision made quickly on how to handle customer losses... do you silo losses to hacked addresses or do you socialize losses? I (personally) think if hacked bitcoin represent less than 20% of deposits, you consider socializing losses until full repayment is possible. If 50%+, I think you consider silo'ing losses to the compromised addresses until they can be repaid in whole.
  5. Issue an IOU coin with a fixed btc or usd "face" value. Allocate some % of trading fees, or margin lending fees, as regular dividends to the IOU coin, allow the IOU coin to be traded freely amongst users and a market price to form on BFX. BFX can purchase the IOU back at any time at its Face value (say 1 IOU for 1 BTC) Effectively this IOU will be treated like a bond, as confidence grows in your ability to payout for IOU holders, the value of the IOU will approach its face value... users who need liquidity most will be able to sell NOW at a steeper discount to those who are willing to speculate on seeing full face value. Be 100% transparent with the entire accounting process behind this...
  6. Get creative with revenue streams, depending on how many people owned that 120k btc, you now have a built in customer base of 10's of thousands (my guess) who will evangelize your products if it means more fees generated and faster repayment for them. This means add new crypto and fiat currency pairs, allow users higher leverage trading products, trade high fee products like mining derivatives or legal crypto-equity (Overstock's T0 financial products for example).
If executed well I think this starts to narrow that gap fairly quickly and users could be repaid in less than two years. Bitfinex would have an amazing reputation as the exchange that did what ever it took to make their customers whole while maintaining their integrity.
It's late and I've been up all night so this might read partially incoherent, but I think there is a path forward. Thoughts on this? Suggestions of you own?
submitted by davidbaileybtcmedia to Bitcoin [link] [comments]

Bitfinex chapter, quick preview: an attempt to explain WTF. Doesn't include latest developments. Please nitpick.

Currently trying to do a non-shit cover for the book, which is actually a huge amount of work given I have no artistic talent whatsoever (though I'm OK at graphic design).
So instead of doing that, here's what I have so far on a current rich seam of comedy gold!
Please look over this and flag any inaccuracies or unclear bits. What they did is convoluted and confusing, and a good example of why bankruptcy laws exist, so we need to maximise clarity.
The latest developments are not included, except the redemption. But OH BOY WILL SAID DETAILS BE FUN!
Bitfinex: software competence turns out not to be optional
If you’re not interested in mining or selling something to get bitcoins, exchanges unfortunately haven’t improved much since Mt. Gox.
Bitfinex is one of the closer things Bitcoin has, or had, to a reputable exchange. Advocates liked and trusted it and enjoyed using it – it has margin trading and other fancy features – and recommended it to others.
Its software turned out to be made entirely of copy-and-pasted cheese and string that nobody at all knew how to fix. This is quite typical of Bitcoin-related code and systems, as if financial software and systems had never happened.
Bitfinex was based on the codebase from defunct exchange Bitcoinica, which was founded by sixteen-year-old Bitcointalk user “Zhoutong” and shut down after being hacked in 2012. One of Bitfinex's early developers described what the system was like when he had been working on it:[1]
It has proved impossible to cleanly modularize and upgrade zhoutong’s spaghetti code. (Or if it is possible, Bitfinex technical team doesn’t know how to proceed.) In the current system, everything is entangled. There is no clean separation of concerns. They inherited this steaming shitpile of a codebase and they're stuck with it.
Their legacy data model, as implemented in their current system is insane. The system was designed by a 16 year old FFS! Everything is ad hoc, there is no specification, there was zero documentation, there is minimal accounting for edge cases, exception handling was tacked on as an afterthought. There was no thinking things through. Everything is ad-hoc! Therefore it kinda works except when it doesn’t!
A Bitfinex representative responded stating that “a grand total of 0 lines from Bitcoinica's code exist on Bitfinex” (the site moved at least partially to the AlphaPoint platform in 2015), but the poster asked him to explain, if Bitfinex had an all-new codebase, how they had accurately reproduced bugs that dated back to Bitcoinica.
The software problems were glossed over for years, because day traders are otherwise known as compulsive gamblers, and cryptocurrency day traders are the worst. I don’t often use the word “degenerate,” but if I did, they’re who I’d apply it to: reduced to a lizard brain, typing and clicking obsessively and watching for a number to change and provide a hit to the pleasure centre, all other mental and bodily functions atrophied. They make foreign exchange day traders look sober, considered and balanced.
On 12 August 2016, nearly 120,000 BTC (then around US$60 million) was stolen from Bitfinex customer accounts. The accounts were secured with multiple signatures, including from third party agency Bitgo, but the hacker seemed to know Bitfinex’s systems and even overrode Bitfinex’s transaction limits. On many accounts, two of the three signatures were Bitfinex, and Bitgo routinely allowed all requests from Bitfinex because there were so many.
Usually a theft of this magnitude heralds an exchange disappearing or shutting up shop with apologies, or the regulators noticing their existence and swooping in. In this case, as the supplier of gambling trading facilities not available elsewhere, Bitfinex felt there was sufficient demand for their services that a drastic action would be considered acceptable to their users. To wit: a 36% “haircut” for all customers. Depositors who had been hacked would be compensated with money from depositors who hadn’t.
You might think that compensating your customers using money from other customers, while the managers or owners don’t take a hit in any way, would be grossly illegal in any reasonable financial system. Particularly as bankruptcies usually go creditors, then depositors, and equity holders last. But welcome to Bitcoin.
Why on earth did the users put up with this? Secondly, because this was claimed to be the haircut they’d take if Bitfinex were to liquidate. (No, Bitfinex didn't show their working.) But firstly, because they were obsessive gamblers, desperate for more access to their strip mall casino. Bitfinex promptly went back up to No. 1 on the Bitcoin exchange volume charts, because Bitcoiners never learn.
Bitfinex didn’t want its users to feel they’d been left high and dry. So it offered them Bitfinex tokens (BFX) for their losses, saying (though not guaranteeing) that they’d totally come through at some later date on these IOUs and reimburse the holders with their face value:[2]
The token is a notional credit, is dependent on the Bitfinex Group’s recovery of Losses, and is subordinated to any claims against the Bitfinex Group not related to the Losses.
Meanwhile, you could trade these tokens – trading away your right to reimbursement if the stolen coins were recovered – and use them as collateral for financed trades! Only on Bitfinex, of course:
The token and your rights pursuant thereto may not be assigned except with notice to, and the prior consent of, the Bitfinex Group, on terms to be determined by the Bitfinex Group.
You might think this would constitute offering an unregistered security, but welcome to Bitcoin. The price for BFX dropped below its $1 face value even before release, opening at $0.80 and ending the day at $0.32.
Bitfinex redeemed about 1% of the BFX in early September. As it happened, they had enabled margin trading on BFX one day before, and the price went up from $0.40 to $0.56 just before the announcement. Speculation was that they had paid for the 1% redemption using insider margin trading on the BFX itself, thus looking good for free,[3] but I’m sure it was all just pure coincidence.
Bitfinex was getting their customers coming and going, and keeping them coming and going. Around the time of the 1% redemption, 30% of trading on Bitfinex was BFX, which they collected trading fees on. Furthermore, the BFX tokens kept their customers on Bitfinex in the hope of a payout, rather than just cashing out and never coming back.
In October, they came up with another layer on the scheme: the Recovery Right Token (RRT), for everyone who had converted their BFX for further gambling. Should any of the stolen coins ever be recovered, Bitfinex would first pay back the BFX holders who had not converted their BFX to something else, then pay back RRT holders with the remainder. That’s a made-up token on a made-up token on money they would normally have had to pay back.
Convoluted arrangements like this are part of why bankruptcy laws, let alone financial trading regulations, exist: so that creditors and depositors get paid first and fairly in a clear and open manner, rather than having what they are owed obscured in fast-talking flimflam.
In the meantime, Bitfinex set a financial and security audit in motion. Not by any such tawdry profession as actual accountants; they used “Ledger Labs Inc., a top blockchain forensics and technology firm,” which happens to be run by Vitalik Buterin, creator of altcoin Ethereum (of which more later).[4]
They also posted an open letter to the hacker, seeking “a mutually agreeable arrangement in exchange for an enormous bug bounty”, i.e., if only they would explain how they’d hacked Bitfinex: “Our interest here is not to accuse, blame or make demands, but rather to discuss an arrangement that we think you will find interesting.”[5]
It was entirely unclear to any observer what possible arrangement would be more interesting to the thief than “I have all your bitcoins now.” The stolen bitcoins are slowly being sold off through other exchanges.[6] This is very like a bank accepting dye-marked notes known to have been stolen from another bank and deciding they don’t care. At least Bitfinex will never have to cash in those RRTs.
In April 2017, Bitfinex announced they would finally redeem 100% of the BFX tokens for their $1.00 face value![7] This involves paying back the dollar value of the stolen bitcoins at the time of the theft – i.e., about half what it was by April. They also shut down all margin positions on BFX, putting users with insufficient collateral into debt to them (on a margin position on their own debt).
The founder of Bitfinex, Raphael Nicolle, has never seemed to appreciate the problem financial regulators tend to have with schemes that pay early investors using money from later investors. He enthusiastically backed the Pirateat40 Ponzi – though at least he later apologised for that one[8] – and came up with a high-yield scheme of his own:
So I'm thinking of the following plan: when I need more coins than I have to fill an order, I will ask everyone that previously “registered” with me to lend me some btc. After 7 days, I will return all of it, principal + 2% interests. For you to be contacted, you would have to post here or in PM to say you might lend me bitcoins, and approx. how many you'd be willing to lend me.[9]
Nicolle has not been seen online since the 120,000 BTC hack.[10]
The Bitfinex hack does answer one common question about Bitcoin:
“If you're so down on Bitcoin, why don't you short it?”
“Well ...”
1 elux. Comment on “[Daily Discussion] Sunday, October 04, 2015”. Reddit /bitcoinmarkets, 4 October 2015.
2 Bitfinex. “BFX Token Terms”. August 2016.
3 e.g., 7a11l409b1d3c65. "Buttfinex pays back 1% of their debt - Butters cheer, not realizing that they have been scammed again". Reddit /buttcoin, September 2016.
4 Zane Tackett. “Bitfinex: Update Regarding Security Audit, Financial Audit, And More”. Reddit /bitcoinmarkets, 17 August 2016.
5 Giancarlo Devasini. “Message to the individual responsible for the Bitfinex security incident of August 2, 2016”. Bitfinex blog, 21 October 2016.
6 Andrew Quentson. “Bitfinex’s Hacked Bitcoins Are on the Move; 5% Recovery Bounty Offered”. CryptoCoinsNews, 27 January 2017.
7 “100% Redemption of Outstanding BFX Tokens”. Bitfinex, 3 April 2017.
8 unclescrooge. “[shame thread]The sorry and thank you Pirateat40 thread”. Bitcointalk.org Bitcoin Forum > Economy > Marketplace > Lending > Long-term offers, 17 August 2012.
9 unclescrooge. "Unclescrooge 1-week deposit program at 2%/week". Bitcointalk.org Bitcoin Forum > Economy > Marketplace > Lending > Long-term offers, 13 September 2012.
10 Andrew Quentson. “Bitfinex’s Founder Seemingly Tried to Start a Ponzi Scheme”. Cryptocoins News, 8 June 2016. hai
submitted by dgerard to Buttcoin [link] [comments]

How to arbitrage the Bitfinex BTC/USD premium

As of now, all fiat deposits to Finex are indefinitely suspended, but they are processing fiat withdrawals in HKD and CHF (which can then be converted on FX market to USD when sent to your bank). This is apparently a 7 business day manual process by Bitfinex.
The premium for BTC/USD on Bitfinex is about $65 to BitStamp-- $1205 vs $1270 -- about 5%.
To exploit this price differential is quite simple. Some people have been talking about it, but seem confused about the details.
What follows is a basic model for how you can profit off this. The fees are not exact and may vary depending on application/setup.
This is assuming you're already verified on the exchanges. Let's use BitStamp as the example, and of course BitFinex.
(note: 1bp = 0.01%)
Step 1) Wire USD to Bitstamp (1-2 days) (5bp fee on stamp)
Step 2) Buy BTC w/USD on Bitstamp (25bp fee on stamp)
Step 3) Withdraw BTC from BitStamp to Bitfinex (a few hours) - $5 mining fee to confirm next block (You can also use funds on Bitfinex to short and lock in BFX price while waiting for the withdrawal to hit)
Step 4) Sell BTC on Bitfinex at 500bp premium for USD, (20bp fee on finex)
Step 5) Withdraw "USD" as HKD/CHF to your own bank, paying 40bp FX spread, 10bp (currently about 10 calendar days -- thanks jenya_ for correction)
All total, 500bp gain minus ~100bp bank/exchange fees, 11-12 calendar days estimated roundtrip.
If you start with, say, $100,000, at current prices you're moving 80-85 BTC which is not too big to destroy the spread. Even if you end up paying 100bp in spread you're still making 300bp net gain, or $3,000 after fixed costs, fees, and slippage.
Note: Yes, there are multiple risks involved in this. For example, if Bitfinex HKD and CHF withdrawals are also delayed, that's a big problem, the whole play relies on fiat-out being smooth on Bitfinex. Additionally, if the price volatility starts swinging around right after you buy the BTC, that narrows your profit margin as well (you can hedge risk either in futures or shorting on Bitfinex with other capital).
Disclaimer: This is not investment advice, it is merely a theoretical description of an arbitrage model in action for current price imbalances in bitcoin spot markets.
submitted by theswapman to BitcoinMarkets [link] [comments]

Bitcoin's Virginity, Benjamin's Big Short & the DRW Connection

Bitcoin -- The Virgin Sacrifice
TLDR: http://i.imgur.com/6pJyV3I.jpg
Up until now the Bitcoin markets & trading-sphere have largely been an outworld where legacy HFT firms could not dare enter -- they were instead left sidelined to peer through the murky ether at an untapped virgin goddess with her large bid/ask spreads and fragmentation. These aligning characteristics has caused a growing restlessness and salivating for the potential profits of "tapping that".
Enter the recent AlphaPoint integration into BitFinex's backend and one of the final pieces for institutional order flow to enter the Bitcoin trading ecosystem is near complete -- although this may not be in the form of hopium bitcoin believers perceive as "Wall Street getting in" -- more on that later
Here is the latest release:
http://globenewswire.com/news-release/2015/04/28/729278/0/en/Bitfinex-Completes-AlphaPoint-Integration.html
TLDR: The most significant point I took away from this is the ability to interact with BFX through the FIX protocol -- "FIX has become the de facto messaging standard for pre-trade and trade communication in the global equity markets, and is expanding into the post-trade space to support straight through as well as continuing to expand into FX, fixed income and derivatives markets." FIX is essentially the backbone of modern financial interactions between broker-dealer and hedge fund communications to the exchanges. OKCoin has had FIX enabled for some time now and it was announced on our very own Google Hangout that a EURO based hedge fund was utilizing their platform -- enter the well known 20x OKC "woodchipper" and I will allow you to draw your own conclusions on that matter. (http://www.reddit.com/Bitcoin/comments/2m04s4/okcoin_rep_says_a_new_hedge_fund_controlling_3/)
It has also become public that the specific HFT firms DRW Trading Group and Citadel have taken steps to enter the crypto space(http://www.wsj.com/articles/big-investor-involvement-could-boost-bitcoin-1428259814). This is not only apparent in DRW's presence at the latest Inside Bitcoins NYC conference speaking privately to both OKCoin and BFX but also their large winning of the DPR coins at the last auction via their subsidiary Cumberland Mining -- all signs pointing toward a large and active presence for DRW in the BTC markets.
Benjamin's Big Short & the DRW Connection
Another page out of the BTC trading folklore is the larger than life character known by the handle Benjamin(http://tradingview.comBenjamin%20/ ) on TradingView and sporting his Uncle Ben's Rice avatar -- many await his appearance like a Lock Ness Monster sighting in TradingView Chat or TeamSpeak. In early January his 3 person team borrowed 50,000 BTC to short bitcoin sub $200 -- he announced on TeamSpeak that his team was originally planning on borrowing these coins from a chinese connection but ended up going through a London hedge fund -- I give you DRW Trading Group's London office.
Many of the myoptic minded bitcoiners quibbled that why would a hedge fund allow someone to borrow coins for the purpose of shorting -- only to return them with significantly less value at a future date. Regardless if DRW was hedging off the risk before hand they would be charging a fair amount of interest fees on that amount of borrowed coins but the MOST interesting "coincidence" was the backdrop of the looming DPR auction. An auction in which Cumberland Mining scooped up an additional 27,000 BTC adding to their inventory and reducing their cost basis. The question remains if they are still looking to acquire in the next auction and I will stop short of speculating whether they are.
[I was actually debating whether to exclude this portion entirely as I thought it would distract from the real substance of what I was getting at knowing well that /bitcoinmarkets likes to devolve into /conspiracytheory very quickly. It is just really something to ponder of all the pieces involving DRW/Cumberland Mining]
The Changing Retail Trader Landscape
I do not want to go into the minutia of the Auction details itself and the Cumberland Mining mystery as I think the Coindesk article(http://www.coindesk.com/secretive-mining-firm-revealed-as-possible-us-marshals-auction-winne) does a great job of divining into topic for those interested. What I do want to focus on is the consequences to bitcoin retail trading going forward with these new players stepping in.
What these funds are doing is engaging in is mainly market making and advanced algorithmic trading where they simply see BTC as part of their asset inventory to feed off of the supple virgin order flow that has been inaccessible until now. BTC is a new speculative asset class and they see the price of BTC only as a cost basis and are not necessarily interested in its direct appreciation as an investment vehicle. With that said active retail traders may find that their strategies stop working and can & will be used against them. As Sang Lucci says pertaining to the listed space any retail strategy that can be algorithm-itised has been and will be soon enough into Bitcoin as well.
Largely, I believe that this is a necessarily step towards seeing the institutional (portfolio style) money come in that the bitcoin believers have been ranting about for so long. But to be perfectly clear these HFT/algo hedge funds make their money on the order flow not the fundamental appreciation of the underlying security -- however -- they may not be mutually exclusive but it is important to make this distinction as I believe it is often conflated and misrepresented as overtly bullish.
submitted by BTCVIX to BitcoinMarkets [link] [comments]

Auction coins have been distributed

The 50k of bitcoins have finally been distributed to the auction winners. It is believed that we have 3 winners.
Here's a nice visualization by @Numisight
The 27k winner is the only one that can be currently identified because they reused an address. It is believed that Cumberland Mining & Materials LLC organized the syndicate that won the 27k coins. It'd be great if any press could contact the syndicate at [email protected] so we can get some statements and articles (though they might decline to comment).
Source: https://twitter.com/Cumberland_BTC/status/553343416839725056
So how did the syndicate distribute the coins? It seems its been distributed to 4 entities, 2k, 14k, 5k, and ~6k. With the 6k being the administrator.
Here's a nice visualization of the syndicate distribution.
Syndicate Entities:
The 2K address looks like it might be associated with Bitfinex. (walletexplorer.com) Not exactly sure how reliable walletexplorer is.
So out of the 50k auction coins it seems 2k has been sent to BFX to be dumped. Though a more probable answer would be for lending, speculating, or mixing.

Auction News

submitted by chriswen to Bitcoin [link] [comments]

First the BFX hack, now my own account got compromised!

Tuesdaynight when it all went down!
After the BFX hack i received 1245 BFX tokens. I've waited patiently for the price to rise to $1 so that i could redeem my coins.
Sadly i needed to do some payments and decided to exchange them for BTC. The minute my BFX tokens got exchanged for 1.13 BTC @ around 55% value, somebody made a withdraw and stole my Bitcoins. Apparantly my PC was compromised by a virus/malware. After some digging on my PC. I found the culprit. There was a virus hidden in a Minergate.exe and somebody had taken over my PC. I had downloaded "Minergate" from a thread here on "REDDIT". I can't seem to find it again, but it was a "Mining Monero XMR instantly" thread or something. So just a warning to be VERY carefull guys.
After the BFX/BTC trade was made, he had enabled "SMS 2FA" on my computer and made the withdraw. He also had accesss to my Outlook. When i made a "recover deleted emails" on Outlook request. I found the emails regarding : "Enabling SMS 2FA" & "Verify Withdraw" etc.... He was deleting them one by one. This wouldn't have happened ofcource if my Phone battery wasn't dead. Otherwise i would have seen them popping up on my phone, and could have cancelled the requests. So this is truly a series of unfortunate events. That could be easily prevented.
Sadly, after one hour when i went to my PC to check if the trade was made, i came to a conclusion that my Bitcoins were stolen and sent to a unknown adress. And i was to late to cancel the transaction.
This is very upsetting to me, not only did i loose +$600 due to the BFX hack, i then again lost my remaining BTC +$600 to another hack. So in a couple months of using BFX service, i'm out around $1245. 45% of my life savings.
I don't understand however why BFX isn't flagging a "SMS 2FA" request for a phone number from "Isreal" , when the request is made from the same "Belgian" IP adress i always use.
Yesterday i made a clean OS install and changed all my passwords but......
I'm at my ends rope at the moment and don't know what to do. This is a massive blow to me. Is there any chance i can recover my stolen bitcoins.
Thank you for listening and hearing me out.
submitted by Gannicus1987 to Bitcoin [link] [comments]

Guide: How to redeem and sell bitcoin diamond (bcd) from ledger nano s (Segwit)

I spent two days to figure this out but I think I know how to solve this, just currently stuck and need your help! I had btc stored on a nano s segwit wallet before the fork.
Bitcoin diamond was forked from bitcoin on block #495866 (nov 24 2017) and launched the mainnet Jan 5 2018 (I think). There is currently very little information about this project and very little support on exchanges, wallets and mining. http://btcd.io
The only light wallet currently have a splitting tool is Bither for Android but they do not support Segwit. If you had your btc in a segwit wallet before the fork you can't use this method.
Otherwise follow this: https://steemit.com/bitcoin/@tiberiu/how-i-claimed-sbtc-super-bitcoin-from-my-paper-wallet Or this: https://www.reddit.com/BitcoinMarkets/comments/7oekie/guide_how_to_redeem_and_sell_all_bitcoin_fork/
You get 10 bcd for every btc and current price is 0.001 btc. That means you get $160/ forked btc which is 1% free money. Is it worth it? For me it is. You can use same method for both SBTC and BCD. Other methods can be used for BTX, BCX and BFX but have to wait for me. Need segwit support in Coinomi and/or Bither.
In my BCD case it was a bit more complicated but hopefully possible.
  1. Move btc from ledger nano to somewhere save
  2. Download the BIP39 converter (standalone version). Unplug your internet and run the html: https://github.com/iancoleman/bip39
  3. Enter your ledger 24 word mnemonic. Select BIP49 derivation path. Find your btc address that contained btc right before block 495866, copy private key. Use a block explorer: https://blockchain.info
  4. Find the tx ID that sent those btc and verify in bcd explorer if you have any bcd before you continue (click on the actual address will not work for some reason, shows empty). My tx had 3000 confirmations. http://explorer.btcd.io
  5. Now the complicated part =) You have to build bitcoin diamond core app from source because it doesn't exist yet: https://github.com/eveybcd/BitcoinDiamond
  6. I built it for windows x64 using this guide (by cloning bitcoin diamond from github instead of bitcoin when you come to that step). Took 1h.: https://github.com/bitcoin/bitcoin/blob/mastedoc/build-windows.md
  7. Actually quite cool you can run Ubuntu on Windows 10! You can build for 32 bit as well but not when you have installed dependencies for x64. The last step will copy the binaries to your windows folder: "make install DESTDIR=/mnt/c/workspace/bitcoindiamond"
  8. Run bitcoindiamond-qt in windows and let it sync with network. Took me 12h with fiber connection.
  9. Go to help and open console. If your wallet is encrypted, decrypt for 10min using: "walletpassphrase your-wallet-passphrase 600".
  10. Import old btc address as watch-only to check bcd balance. True means it will rescan the blockchain. Rescan took 1h with a decent PC (no SSD):
  11. If you see your BCD balance, now Import your btc private key into the watch-only address. No need to rescan again, thus "false".:
Ok here is where I'm stuck. I can see my balance but it's not spendable. I also tried to import private key directly (with sync) with empty core wallet but balance is still zero. It does not pick up the transaction! Anyone know how to solve this?
Rest of the guide when this is solved:
submitted by Joohansson to CryptoCurrency [link] [comments]

Bitcoin's Virginity, Benjamin's Big Short & the DRW Connection

Bitcoin -- The Virgin Sacrifice
TLDR: http://i.imgur.com/6pJyV3I.jpg
Up until now the Bitcoin markets & trading-sphere have largely been an outworld where legacy HFT firms could not dare enter -- they were instead left sidelined to peer through the murky ether at an untapped virgin goddess with her large bid/ask spreads and fragmentation. These aligning characteristics has caused a growing restlessness and salivating for the potential profits of "tapping that".
Enter the recent AlphaPoint integration into BitFinex's backend and one of the final pieces for institutional order flow to enter the Bitcoin trading ecosystem is near complete -- although this may not be in the form of hopium bitcoin believers perceive as "Wall Street getting in" -- more on that later
Here is the latest release:
http://globenewswire.com/news-release/2015/04/28/729278/0/en/Bitfinex-Completes-AlphaPoint-Integration.html
TLDR: The most significant point I took away from this is the ability to interact with BFX through the FIX protocol -- "FIX has become the de facto messaging standard for pre-trade and trade communication in the global equity markets, and is expanding into the post-trade space to support straight through as well as continuing to expand into FX, fixed income and derivatives markets." FIX is essentially the backbone of modern financial interactions between broker-dealer and hedge fund communications to the exchanges. OKCoin has had FIX enabled for some time now and it was announced on our very own Google Hangout that a EURO based hedge fund was utilizing their platform -- enter the well known 20x OKC "woodchipper" and I will allow you to draw your own conclusions on that matter. (http://www.reddit.com/Bitcoin/comments/2m04s4/okcoin_rep_says_a_new_hedge_fund_controlling_3/)
It has also become public that the specific HFT firms DRW Trading Group and Citadel have taken steps to enter the crypto space(http://www.wsj.com/articles/big-investor-involvement-could-boost-bitcoin-1428259814). This is not only apparent in DRW's presence at the latest Inside Bitcoins NYC conference speaking privately to both OKCoin and BFX but also their large winning of the DPR coins at the last auction via their subsidiary Cumberland Mining -- all signs pointing toward a large and active presence for DRW in the BTC markets.
Benjamin's Big Short & the DRW Connection
Another page out of the BTC trading folklore is the larger than life character known by the handle Benjamin(http://tradingview.comBenjamin%20/ ) on TradingView and sporting his Uncle Ben's Rice avatar -- many await his appearance like a Lock Ness Monster sighting in TradingView Chat or TeamSpeak. In early January his 3 person team borrowed 50,000 BTC to short bitcoin sub $200 -- he announced on TeamSpeak that his team was originally planning on borrowing these coins from a chinese connection but ended up going through a London hedge fund -- I give you DRW Trading Group's London office.
Many of the myoptic minded bitcoiners quibbled that why would a hedge fund allow someone to borrow coins for the purpose of shorting -- only to return them with significantly less value at a future date. Regardless if DRW was hedging off the risk before hand they would be charging a fair amount of interest fees on that amount of borrowed coins but the MOST interesting "coincidence" was the backdrop of the looming DPR auction. An auction in which Cumberland Mining scooped up an additional 27,000 BTC adding to their inventory and reducing their cost basis. The question remains if they are still looking to acquire in the next auction and I will stop short of speculating whether they are.
[I was actually debating whether to exclude this portion entirely as I thought it would distract from the real substance of what I was getting at knowing well that /bitcoinmarkets likes to devolve into /conspiracytheory very quickly. It is just really something to ponder of all the pieces involving DRW/Cumberland Mining]
The Changing Retail Trader Landscape
I do not want to go into the minutia of the Auction details itself and the Cumberland Mining mystery as I think the Coindesk article(http://www.coindesk.com/secretive-mining-firm-revealed-as-possible-us-marshals-auction-winne) does a great job of divining into topic for those interested. What I do want to focus on is the consequences to bitcoin retail trading going forward with these new players stepping in.
What these funds are doing is engaging in is mainly market making and advanced algorithmic trading where they simply see BTC as part of their asset inventory to feed off of the supple virgin order flow that has been inaccessible until now. BTC is a new speculative asset class and they see the price of BTC only as a cost basis and are not necessarily interested in its direct appreciation as an investment vehicle. With that said active retail traders may find that their strategies stop working and can & will be used against them. As Sang Lucci says pertaining to the listed space any retail strategy that can be algorithm-itised has been and will be soon enough into Bitcoin as well.
Largely, I believe that this is a necessarily step towards seeing the institutional (portfolio style) money come in that the bitcoin believers have been ranting about for so long. But to be perfectly clear these HFT/algo hedge funds make their money on the order flow not the fundamental appreciation of the underlying security -- however -- they may not be mutually exclusive but it is important to make this distinction as I believe it is often conflated and misrepresented as overtly bullish.
submitted by BTCVIX to BitcoinMarkets [link] [comments]

Analysis of BFX USD swaps; bullish. Bubblish?

Under the auspices of Investors' relentless reach for yield in ZIRP/NIRP environment: it seems the savvy among them have struck upon a way to get decent income on savings. (Zero/Negative Interest Rate Policy) Loan it out to the Bitcoin Bulls on BFX.
Given that there are way more dollars than BTC, and a whole range of people who prefer income, albeit a derivative play on a dubious digital unit, as opposed to speculating on the underlying issue; AND given the lack of change in short interest; we can only deduce sellers are actually selling their holdings in a stealth accume regime from weak to strong Bitcoin Bulls on BFX.
The trend we all are witnessing, achieves its logical conclusion upon the expiration of either BTC sellers or yield searchers. I think the outcome is evident under Gresham's Law.
http://en.wikipedia.org/wiki/Greshams_law
TL;DR When fiat is the overvalued and BTC the undervalued, BTC gets hoarded by rational people.
Hence, Sellers will loose. After all sellers cannot compete with Citibank. The Citibank who just loaned me 10k on super easy terms. The same bank like so many other banks making loans like these to thousands upon thousands of people everyday.
I just happen to put my 10k in the swaps for hire. What I make in two weeks covers my carry all year. I am not alone.
Or maybe I just took the 10k and went full retard BTC. Bought 10 and then pledged it to purchase 25 more. That bull is not alone.
And then there are miners and early adopters selling the real coin daily. Whats that? 3600 coins, $2.32M. Pfft.
In the last 30days the USD swaps went to $30M from $24, an increase of $6M or $200k/day on average. The trend appears to take a parabolic shape with yesterday's increase $764k, and yet the Avg CFD rate is in decline on the same timeframe. Indicative of the hotness of Citibank money flowing in.

In the next month, I project we go to $42M USD swaps, an increase of $12M. Daily spikes in the $1.5M range. That's enough to satisfy over half the daily mining supply at today's market price.
Markets move on the margin, and while a $1.5M daily increase in swaps is not enough to absorb daily mining supply, I do think its enough to convince the strongest weak hands to maybe hodl a few days longer instead of sell. And that sort of thing leads to a virtuous cycle of psychological support. And that translates into support for higher prices. And in Bitcoin land that can only mean one thing. Im not saying bubble.
Tl;DR. The hot money replacing hot China money belongs to raphael_bitfinex :-)
e: username. Spelling. Grammar
submitted by mudduckk to BitcoinMarkets [link] [comments]

[uncensored-r/CryptoCurrency] Understanding Tether: Why it accounts for a substantial part of the crypto market cap and why its...

The following post by arsonbunny is being replicated because some comments within the post(but not the post itself) have been openly removed.
The original post can be found(in censored form) at this link:
np.reddit.com/ CryptoCurrency/comments/7xae98
The original post's content was as follows:
In this post I will go in-depth on:
  1. How Tether got to be what it is today
  2. Why Tether's market cap is a lot more than 0.5% of the total market cap for crypto you see on CoinMarketCap
  3. Tether printing timing
  4. Tether reserves
  5. What could happen to the market if Tether is found to not be backed by reserves
Tether is incredibly important to the cryptocurrency market ecosystem and I've noticed far too few people understand what is going on.
Very little actual discussion of the 2nd biggest crypto by volume happens here and whenever someone starts a discussion they most often got slapped for "FUD". Tether themselves recently hired the major New York based PR firm 5W to spread positive information online and take down critics, I'm sure some of their operatives are probably on Reddit.
But its absolutely critical you understand the risks behind Tether and especially now with the explosion in reserve liability, breakdown in relationship with banks and their auditor and recently announced subpoena.

What exactly is Tether and what happened so far?

Tether is a cryptocurrency asset issued by Tether Limited (incorporated in the British Virgin Islands and a sister company of Bitfinex), on top of the Bitcoin blockchain through the Omni Protocol Layer. It is meant to give people a "stablecoin", for example a merchant who accepts bitcoin but fears its volatility could shift bitcoin into tether, which can be easier to do than exchanging bitcoin for dollars. Recently they've also added an Ethereum-based ERC20 token. Tether Ltd claims that each one of the tokens issued is backed by actual US dollar (and more recently Euro) reserves. The idea is that when a business partner deposits US dollars in Tether’s bank account, Tether creates a matching amount of tokens and transfers them to that partner, it is NOT a fractional reserve system.
Tether makes the two following key promises in its whitepaper on which the entire premise is build:
Each tether issued will be backed by the equivalent amount of currency unit (one USDTether equals one dollar).
Professional auditors will regularly verify, sign, and publish our underlying bank balance and financial transfer statement.
Tether is centralized and dependent on your trust of Bitfinex/Tether Limited, and that the people behind it are honest people. For the new entrants to this market it will be greatly beneficial understand the timeline of Tether and their connection to Bitfinex.
A brief timeline:
  • Bitfinex operators Phil Potter and CFO Giancarlo Devasini set up Tether Limited in the British Virgin Islands, but told the public that Bitfinex and Tether are completely separate. Throughout 2015 and 2016, the amount of Tether stays relatively flat.
  • In August 2nd, 2016, the second-largest digital currency exchange heist in history happened, when Bitfinex lost nearly 120,000 bitcoin. Bitfinex never revealed full details of the hack, but BitGo (the security company that had to sign off on the transactions) claims its servers were not breached.
  • Just 4 days after the hack Bitfinex “socializes” its losses from the theft by announcing a 36 percent haircut for almost all of its customers. In return, customers receive BFX tokens, initially valued at $1 each.
  • Two weeks after the hack Bitfinex announces it has hired Ledger Labs, to investigate the theft and perform a financial audit of its cryptocurrency and fiat assets. The public nevers sees the results of the investigation, and months later, Bitfinex admits it never actually hired Ledger Labs to perform an audit to begin with.
  • In May 2017, after long standing calls for an actual audit, Bitfinex hires Friedman LLP to "complete a comprehensive balance sheet audit."
  • November 7, 2017: Leaked documents dubbed “Paradise Papers” reveal Bitfinex and Tether are run by the same individuals.
  • November 19, 2017: Tether is hacked, with 31 million USDT suddenly disappearing. Tether Limited reacts to this by creating a hard fork.
  • December 4, 2017: Right after hiring the PR firm 5W to help improve their image, Bitfinex hires law firm Steptoe & Johnson and threatens legal action against critics.
  • December 6, 2017 - CFTC issues a subpoena to Tether and Bitfinex. This news isn't made public until the end of January.
  • December 21, 2017 : Without making any formal announcement, Bitfinex appears to suddenly close all new account registrations. Those trying to register for a new account are asked for a mysterious referral code, but no referral code seems to exist.
  • After a month of being closed to new registrations, Bitfinex announces it is reopening its doors, but now requires new customers to deposit $10,000 before they can begin trading.
  • Friedman LLP completely cut ties with Tether on January 27, 2017.

Most common misconception: Tether is only a small part of the total market cap

One of the most common misconception people have about cryptocurrencies is that the "market cap" amount they see on CoinMarketCap.com is actually the amount of money that is invested in each coin.
I often hear people online dismiss any issue with tether by simply claiming its not big enough to cause any effect, saying "Well Tether is only $2.2 billion on CoinMarketCap and the market is 400 billion, its only 0.5% of the market".
But this misunderstands what market capitalization for cryptocurrency is, and just how different the market cap for Tether is to every other token. The market cap is simply the last trade price times the circulating supply. It doesn't take into account the order book depth at all. The majority of Bitcoin (and most coins) are held by those who either mined or purchased for a very low price early on and simply held on as very small portions of the total supply was rapidly bid up to their current price.
An increase in market cap of X does NOT represent an inflow of X dollars invested, not even close. A 400 billion dollar market cap for crypto does NOT mean that there is 400 billion dollars underwriting the assets. Meanwhile a 2 billion dollar Tether market cap means there should be exactly $2 billion backing up the asset.
Nobody can tell for sure exactly how much money has been invested in cryptocurrency market, but analysts from JPMorgan found that there was only net inflow of $6 billion fiat that resulted in $300 billion market cap at the time. This gives us a roughly 50:1 ratio of market cap to fiat inflow. Prominent crypto evangelist Julian Hosp gives the following estimate: "For a cryptocurrency to have a market cap of $1 billion, maybe only $50 million actually moved into the cryptocurrency."
For Tether however the market cap is simply the outstanding supply, 2.2 billion USDT is actually equal to 2.2 billion USD. In order to get $50 USDT you have to deposit $50 real U.S. dollars and then 50 completely new tokens will be issued, which never existed before on the market.
What is also often ignored is that Bitfinex allows margin trading, at a 3.3x leverage. Bitfinexed did an excellent analysis on how tether is entering Bitfinex to fund margin positions
There are $2.2 billion in Tether outstanding and the current market cap of the entire market is $400 billion according to CoinMarketCap. You can actually calculate Tether as a % of total fiat invested in the market according to the JP Morgan estimate, the following table outlines for a scenario of no margin lending and 15/25% of tether being on a 3.3x leverage margin account:
Fiat Inflow/Market Cap Ratio Tether as % of total market (no margin) Tether as % of total market (15% on margin) Tether as % of total market (25% on margin)
JP Morgan estimate (50:1) 27.5 % 36.9 % 43.3 %
Even without any margin lending Tether is underwriting the worth of about 27.5% of the cryptocurrency market, and if we assume only 25% was leveraged out at 3.3x on margin we have a whole 43% of the market cap being driven by Tether inflow.
A much better indicator on CoinMarketCap of just how influential Tether is actually the volume, its currently the 2nd biggest cryptocurrency by volume and there are even days where its volume exceeds its market cap.
What this all means is that not only is the market cap for cryptocurrencies drastically overestimating the amount of actual fiat capital that is underwriting those assets, but a substantial portion of the entire market cap is being derived from the value of Tether's market cap rather than real money.
Its incredibly important that more new investors realize that Tether isn't a side issue or a minor cog in the machine, but one of the core underlying mechanisms on which the entire market worth is built. Ensuring that whoever controls this stablecoin is honest and transparent is absolutely critical to the health of the market.

Two main concerns with Tether

The primary concerns with Tether can be split into two categories:
  1. Tether issuance timing - Does Tether Ltd issue USDT organically or is it timed to stop downward selling pressure?
  2. Reserves - Does Tether Ltd actually have the fiat reserves at a 1:1...
submitted by censorship_notifier to noncensored_bitcoin [link] [comments]

First the BFX hack, now my own account got compromised!

Tuesdaynight when it all went down! After the BFX hack i received 1245 BFX tokens. I've waited patiently for the price to rise to $1 so that i could redeem my coins. Sadly i needed to do some payments and decided to exchange them for BTC. The minute my BFX tokens got exchanged for 1.13 BTC @ around 55% value, somebody made a withdraw and stole my Bitcoins. Apparantly my PC was compromised by a virus/malware. After some digging on my PC. I found the culprit. There was a virus hidden in a Minergate.exe and somebody had taken over my PC. I had downloaded "Minergate" from a thread here on "REDDIT". I can't seem to find it again, but it was a "Mining Monero XMR instantly" thread or something. So just a warning to be VERY carefull guys. After the BFX/BTC trade was made, he had enabled "SMS 2FA" on my computer and made the withdraw. He also had accesss to my Outlook. When i made a "recover deleted emails" on Outlook request. I found the emails regarding : "Enabling SMS 2FA" & "Verify Withdraw" etc.... He was deleting them one by one. This wouldn't have happened ofcource if my Phone battery wasn't dead. Otherwise i would have seen them popping up on my phone, and could have cancelled the requests. So this is truly a series of unfortunate events. That could be easily prevented. Sadly, after one hour when i went to my PC to check if the trade was made, i came to a conclusion that my Bitcoins were stolen and sent to a unknown adress. And i was to late to cancel the transaction. This is very upsetting to me, not only did i loose +$600 due to the BFX hack, i then again lost my remaining BTC +$600 to another hack. So in a couple months of using BFX service, i'm out around $1245. 45% of my life savings. I don't understand however why BFX isn't flagging a "SMS 2FA" request for a phone number from "Isreal" , when the request is made from the same "Belgian" IP adress i always use. Yesterday i made a clean OS install and changed all my passwords but...... I'm at my ends rope at the moment and don't know what to do. This is a massive blow to me. Is there any chance i can recover my stolen bitcoins. Thank you for listening and hearing me out.
submitted by Gannicus1987 to bitfinex [link] [comments]

PSA: Watch the Price of BTC over the holiday. 2nd Flippening attempt going to happen

Difficulty adjustment is coming for BTC, going to be much less profitable to mine.
Long banking weekend in the west
Bitcoincash already pumping in anticipation. Korean exchanges have higher BCH volume than BTC (this is why thanksgiving matters)
TetheBFX fears stoking belief that BTC is in a bubble
BTC hasn't had a substantive pullback since the first attempt at the flippening a couple weeks ago.
Historically Bitcoin tends to dump into the holiday season
Good luck everyone and happy holidays (even you adam you whiny bastard)
submitted by BelligerentBenny to inthemorning [link] [comments]

12-21 18:57 - 'Don't forget the counterparty risk! Don't keep your coins in exchanges and e-wallets! Store your bitcoins somewhere safe!!!' (self.Bitcoin) by /u/shadowboyah removed from /r/Bitcoin within 0-5min

'''
Now that the price is going to the moon, I'd like to bring back the topic of counterparty risk. Because I see new people coming in, I'd like to inform them that leaving your money to someone else, be it a bank, an exchange, a darknet market, a borrower etc etc, you face the risk of never getting your money back!
In Bitcoin there have been many hacks, ponzis, scams which have affected it price very negatively. Some of the most famous ones where : Bitcoinica, Mt. Gox, BTCe, Poloniex, BitStamp, Cryptsy, Shapeshift, Gatecoin, Bitfinex, BTER, Vircurex, Mintpal, Bitpay, Cavirtex, Bitquick, the DAO, Bittrex, cloud mining scams, p2p lending, Darknet markets exit scamming/getting bust etc. The way they were hacked varied, some didn't lose customer funds, others refunded them, others lost altcoins etc, but the danger of losing everything is still there.
Coinbase has had problems with the IRS demanding customer info, Cryptsy lawsuit because they helped Cryptsy's CEO steal and cash out customer funds, freezing accounts for gambling etc, not giving customer's Ethereum Classic after the Fork and so on.
Some of the 'old guys' know about all that and prefer to stay safe. Others keep risking it. Just be the smart guy! Very few people profit from trading or arbitrage! Do you think you are in the 10-20% of people that constantly make money trading? Chances are you aren't... In a year you could have made more than 2-3x just by holding your coins in a private wallet!
Some people were lending money at Bitfinex to earn interest (more than 10% per year). Guess what happened to them... They initially lost 36% and then it went down to 18% due to BFX's clever trick. And some people just kept USD in that exchange thinking nobody could take it from them.
Don't get distracted by high yields by any altcoin like Dash, Nubits, Lending Club or Cloud mining scheme. 90-100% of all those are scams or just unable to keep their promises. Some people might have profited, but on the expense of others, and in total, more people lost than gained.
And you are going to ask me: What if I want to sell or buy some coins? How do I do it? Well, nowadays there are many ways where you can do that safely. Might not very cheap, but these are probably some of the best ways to do it:
Localbitcoin, Bitcoin.de, Paxful, Wallofcoins, BitBargain, Bitsquare, Tether (Omni Dex), Mycelium local trader, Purse.io, itBit, Gemini or Glidera, are some ways where you can buy coins with very little counterparty risk and OTC. If you still insisted in trading, BTCC and Kraken are currently the best exchanges in my opinion!
The best way to buy coins would be to buy them with your debit/credit card and get them sent to your private wallet instantly! Some exchanges/services that I know are Glidera, Bitstamp, Coinbase, Bitx, Coinsbank and CEX.io. There might be others, but I don't know how good they are (I never buy with credit cards btw). I mainly use Kraken. I once deposited coins and sold them on Kraken and within 1 day I had my Euros in my SEPA account. Selling coins is riskier and the only 100% safe way, is to exchange BTC with cash with someone that you trust. I used to sell coins via Localbitcoin a few years ago. I would buy from an exchange and sell it for more there. After some time, I stopped using Localbitcoins. I had a small customer base, which I trusted and they trusted me. I'd work simply with bank deposits. At some point I trusted them and they trusted me so much, that I would send them the coins even the day before they'd make the deposit. I never had a single problem.
But, I had problems when I started... On my first trade someone tricked me on my first trade and I released the coins without ever getting the payment. I also had a problem when I sold coins with Paypal as he did a chargeback. I was young and naive, but luckily I didn't lose more than 200£ in total. Do some KYC to make sure they aren’t sending money from a hacked account or use services like Moneypolo, OkPay and Perfect money. These services are great for sellers, but as a buyer you might lose your money if you get hacked. Avoid services where someone can reverse a transaction like PayPal and Skrill. It isn't just about the exchanges getting hacked. What if you get hacked? Someone could easily steal all your details and even if you had 2FA on, they could steal your funds (something extremely hard to do, maybe impossible, if you had a hardware wallet. Finally, arbitrage isn't that profitable. The probability of one exchange getting hacked is lower than the probability of one out of five exchange being hacked. So you have to expect losses from at least one exchange... Bitstamp, BTCe and Poloniex made their customers whole again and that's very honorable, but how many more blows can they take? What if they lose altcoins and they take the route of socialised losses?
'''
Don't forget the counterparty risk! Don't keep your coins in exchanges and e-wallets! Store your bitcoins somewhere safe!!!
Go1dfish undelete link
unreddit undelete link
Author: shadowboyah
submitted by removalbot to removalbot [link] [comments]

How to transfer BFx Coin  blufox coin  BFx coin update 5122017 Bfx coin Our mining setup @Chattisgarh Is BFX Coin Scam ? & Should You Invest in it?  क्या BFX Coin Scam है? क्या निवेश करना चाहिए? Best Bitcoin Mining Software That Work in 2020 🍓 - YouTube Bfx coin withdraw update

BFX Trades offers forex and CFD exchanging with honor winning exchanging stages, tight spreads, quality executions, and 24-hour live help. BFX Trades is one of the leaders in the Forex showcase that joins dealers everywhere throughout the world. BFX Trades gives its customers an excellent administration and security, so significant nowadays. On this page You will find detailed informations about BFX COIN (BFX) - Coinlim Listing. This page show event date and source of information. New to bitcoin, maybe you guys can give me some advice; Newbie question on joining a mining pool; Since SegWit activated, AntPool mined 24 blocks. 1 of those blocks was full, 4 were > 900kb, 6 were empty. Bitfury has mined a block > 1MB; BTC fees WTF Definitely. My guess is BFX is using P2Pool, or another cheaper pool and just pocketing the extra. Profit from the mining contracts (their initial starting price was high), profit from the trading fees, profit from the margin fees, profit from the extra pool fees. Pretty ingenious. The most widely used proof-of-work scheme is based on SHA-256 and was introduced as a part of Bitcoin. Some other hashing algorithms that are used for proof-of-work include Scrypt, Blake-256, CryptoNight, HEFTY1, Quark, SHA-3, scrypt-jane, scrypt-n, and combinations thereof.

[index] [1767] [1590] [2903] [2747] [5098] [1648] [1088] [5351] [3429] [3407]

How to transfer BFx Coin blufox coin BFx coin update 5122017

Is BFX Coin Scam ? & Should You Invest in it? क्या BFX Coin Scam है? क्या निवेश करना चाहिए? Get free POW Token: https://goo.gl/aP8AYH Binance ... Bfx coin Our mining setup @Chattisgarh ... Asus B250 Mining Expert Motherboard With 19 PCI-E Slots for GPU Mining ... Noob's Guide To Bitcoin Mining - Super Easy & Simple - Duration: ... For more information: https://www.bitcoinmining.com and https://www.weusecoins.com What is Bitcoin Mining? Have you ever wondered how Bitcoin is generated? T... I'm going to talking about top free best bitcoin mining website, and I'm gonna tell you every steps to get bitcoin mining! In this video I'm showing how to m... ️ Download for free from http://bitsoftmachine.com/?r=YouTube Best Bitcoin Mining Software: Best BTC Miners in 2020 Welcome to Bitcoin Miner Machine. #Bitco...

http://forex-indonesia.fortkerepoba.ml