Doesn’t Tether have a clean slate? A study relieves the publishers of the alleged US dollar-covered stable coin of the accusation of Bitcoin market manipulation. Does the report manage to refute the allegations of manipulation?
The anonymous Bitcoin formula critic
The Stable Coin Tether has been confronted with allegations of manipulation of the Bitcoin formula course since the publication of an anonymously published Bitcoin formula report in January of this year. The report, entitled “Quantifying the Effect of Tether”, suspects that the stable coin was responsible for almost half of Bitcoin’s price gains in the period under review. The report concluded that new units were “printed” depending on the cryptographic market situation and that their growth was not the result of “organic” demand.
Doubts about the cover of the stable coin
The author also doubts that the stable coin is really 100 percent covered by US dollar deposits. Tether Limited, the publisher of the stable coin, insists on this – but has so far failed to provide any watertight evidence. A report published on 20 June by the law firm Freeh Sporkin & Sullivan confirmed on the basis of random checks that the stable coin was covered by US dollars. However, the expert opinion lacks credibility, as Sullivan is also part of the advisory board of one of the two (anonymous) tether banks.
Persistent suspicion of manipulation
In addition, the report highlights some unusual features in the relationship between the stable coin and Bitcoin. For example, 48.8 percent of Bitcoin’s share price growth in 2017 occurred within the first two hours after the release of new USDT tokens on the Bitfinex crypto exchange. In addition, the author described the deposit/payment movements at Bitfinex as “unusual” and in need of further investigation. The report from the beginning of the year also assumes a price slump of 30 to 80 percent if the manipulation rumours about the stable coin are confirmed.
Who had written the report for the private think tank “1000x Group” was not known. However, the group revealed that the author was an ex-Google employee specializing in machine learning and statistics.
In the night from 24 to 25 November, the Bitcoin exchange rate fell below 4,000 US dollars. It has thus broken another long-term support. An analysis of the ongoing bear market.
Cryptosoft did it again
He fell, and he did it dramatically. Meanwhile, its price is moving below the 4,000 US dollar mark. The cryptosoft rate thus fell back to levels last reached in September 2017. At that time, these prices were already a result of the cryptosoft market induced by China.
This time, however, the situation is much more dramatic as a fundamental long-term support has been breached: To emphasize the significance, once again in words: With the current dump a support valid since October 2015 was breached. Talking out the fact that such prices could not even have been dreamed of at the beginning of January 2017 would misjudge the drama of the current situation. We are in another level of the bear market.
But not only Bitcoin has fallen, the entire crypto market has crashed further
So far, so well known. But that XRP, Ripple’s crypto currency, which is increasingly decoupled from Bitcoin, shares this downward trend is new. While XRP could hold itself in the past weeks over the moving average value of the last 20 weeks, the current Abverkauf brought also the XRP course again on the soil of the facts:
This was demonstrated by the trench warfare over Bitcoin Cash. Some of them were undoubtedly led at a questionable level. Nevertheless, the war is (for the time being) over and we have a new old crypto currency in the top 10: Bitcoin ABC. Whether Bitcoin Cash ABC will prevail or turn out to be a Shitcoin, remains to be seen: Every further development of the ecosystem has its part to play in the progress of the technological revolution.
On a positive note, however, the price continues to be higher than the support level pursued since mid-2017, which currently stands at 0.32 US dollars.
Peter Schiff is a well-known investor in gold and CEO of Euro Pacific Capital. He has been criticized by many analysts and experts, including Brian Kelly of CNBC. The reason: he calls Bitcoin a “digital fool’s gold”.
In general, Schiff’s ignorance of Bitcoin seems to stem more from his responsibility to protect Euro Pacific Capital. Euro Pacific Capital’s business model is based entirely on gold. Schiff has traded most of his career only in gold and so it seems only natural that he wants to defend gold against Bitcoin.
But some innovative and successful investors know that you only make profit in a market by beating yourself. An investment or currency that has been beating the market for three years is Bitcoin, which beats all fiat currencies, stocks and investments – even gold.
Rarity, the news spy and decentralisation
The current general basis of criticism against Bitcoin is the lack of network moderators and the news spy origin of its value. Conventional economists in particular have a problem understanding Bitcoin as a rigid supply, as the news spy could theoretically lead to economic problems in the future.
Rarity, scarcity and decentralisation are the three main characteristics of Bitcoin that conventional economists like Schiff warn against, but in fact these three aspects are the strengths of Bitcoin. These characteristics of Bitcoin are the reason mainstream analyst Brian Kelly provides fair and balanced reporting on Bitcoin.
In a debate with Schiff, Kelly explained:
“For me, it’s just Bitcoin. Bitcoin is not just digital gold. It’s a technology platform for FinTech companies. It’s a unique investment opportunity, similar to the Internet, and may even grow faster. It is the Internet of money. Everyone is affected by it. The Federal Reserve published a paper on the subject. The Bank of England is on board. 14 of the top 30 banks have active projects running.”
Kelly’s statement is factually correct because Bitcoin is a technology platform and the open source protocol allows anyone to build on it. Bitcoin as a basic protocol is a payment tool. It simplifies payment between two parties without the need for a middleman.
On the top layer of the technology there are two-layer solutions that allow Bitcoin to be transformed into a settlement system or a financial product.
Bitcoin’s structure is not an imitation of gold
Schiff, however, argues that Bitcoin’s structure is an imitation of gold, an alternative to fiat currencies. As mentioned above, Bitcoin is not a gold replica, or a replica of the financial system of governments worldwide. It may behave like gold or a currency, but it was not created with the structure of the two.
When Schiff declares that gold is the more efficient version of Bitcoin, he means the commodity aspect of gold. Gold is a commodity and an investment. But it is not a payment unit and not a settlement network. Its value depends on an infinite supply, which could increase exponentially if large deposits of gold are found in the future.
If Bitcoin had a bug that would lead to the creation of Bitcoins from scratch, the value of Bitcoin would not be where it is now.
The second Silk-Road BTC auction, launched by the US government and weighing 50,000 Bitcoins, also attracts old acquaintances again. At that time, 30,000 Bitcoins confiscated from the online black market Silk-Road were already being auctioned.
This time the Bitcoin news probably originate from the mastermind Ross Ulbricht himself
Many of the top-class bidders, including Binary Financial, Bitcoin Investment Trust, Bitcoins Reserve, Mirror (Vaurum), Pantera Capital and Angel investor Tim Draper, will participate in the Bitcoin news on 4 December.
While most participants expect that this auction will not attract as much media attention as the previous one, some Bitcoin news companies are still trying to gain strategic benefit from participating. Development has shown that investing in Bitcoin can be very rewarding, even if the Bitcoin market continues to mature.
Harry Yeh, a partner at Bitcoin-focused investment firm Biary Financial, said in an interview that customer interest was not as strong as last summer:
“I think a lot of people have lost interest since the announcement. I think people will bid, but people also know that there will be more blocks for sale”.
As mentioned by Yeh, the 50,000 BTC are only part of the 144,000 Bitcoins seized by Ulbricht. The USMS had confirmed that the remaining 94,000 BTC would also be auctioned in the coming months. Exact dates were not mentioned.
The money jumping around at the auction is currently still part of an ongoing legal dispute, as Ulbricht wants to sue for his share.
Yeh further explained that it is always possible for wealthy investors to collect blocks of 5,000-20,000 BTC over time in order to avoid a potential premium that could be generated in a hot auction.
Both factors have dampened investor interest:
“No one wants to pay a high premium just to get Bitcoins,” Yeh explained. “Some may be willing, but we’ll wait and see and buy at a fair price.”
Mirror CEO Avish Bhama, whose company is using the 30,000 Bitcoins previously acquired by Tim Draper for its clients’ liquidity purposes, said that the company is participating in the current auction on behalf of its clients.
“With the upcoming auction, we want to make it easy for our institutional clients to buy Bitcoins in a secure manner,” Nhama said.
A small number of participants have already openly announced their intention to participate in the second auction. Venture capitalist and Bitcoin investor Tim Draper told Bloomberg that he intends to participate in the auction. As motivation he mentioned the potential of the groundbreaking technology in Bitcoin and the currently low Bitcoin price.
Bitcoin-focused investment firm Pantera Capital and Bitcoin Investment Trust have both announced that they will now accept bidders who wish to participate in their bids.
Interested parties can contact Pantera by 26 November and provide the necessary information such as volume and price, an anti-money laundering and Know Your Customer (KYC) document and a valid Bitcoin address.
Other potential bidders were reluctant to comment on their participation in the auction and referred to the discretion required at such an auction.
“Due to commercial confidence, we would like to forego a comment,” said the Australian Bitcoin mining company digitalBTC.
Only one of the former bidders, Bitcoin Shop, clearly said the company would not participate in this auction.
“We won’t be participating in the Bitcoin auction because we’re currently looking to do more important things,” the company said.
It has long been assumed that the assets of Bitcoin creator Satoshi Nakamoto amount to one million Bitcoin and a corresponding number of forged coins such as Bitcoin Cash (BCH). Investigations by the BitMEX crypto exchange have now called this into question. But even according to the figures from BitMEX, the nucleus of Bitcoin remains a rich man, a rich woman or a rich collective.
One million Bitcoin for a crypto trader
This figure has been circulating since Sergio Lerner’s review of the first crypto trader of Bitcoin mining activities as Satoshi Nakamoto’s alleged BTC asset at the latest. Lerner came to this conclusion by investigating the extra noncents of the mined blocks in the first year since the birth of Bitcoin. Between January 3, 2009 (Genesis Day) and January 25, 2010 (block number 36288), a total of 1,814,400 BTCs were “mined” – 63 percent of which were never spent. Lerner assumed that they belonged to one and the same crypto trader entity and that it was most likely Satoshi Nakomoto. The logic behind this claim was that the hashrate in 2009 was at a low level of about seven million hashes per second, which could be linked to the high dominance of a single miner.
“I can’t be 100% sure that all black dots are owned by Satoshi, but almost all belong to a single entity, and that entity began mining directly from Block 1 and with the same performance as the Genesis block.
BitMEX continues analysis
The crypto exchange BitMEX has based its investigation on the analysis results of Lerner. BitMEX also notes the existence of a dominant miner.
“Although there are strong indications of a dominant miner in 2009, we think the evidence is far less robust than many have assumed. Even if one is sure, the evidence only supports the claim that, in our view, the dominant miner could have produced significantly less than one million bitcoins.”
So is Nakomoto not a Bitcoin millionaire after all? Yes.
“600,000 to 700,000 Bitcoins are perhaps a better estimate”, it continues in the BitMEX analysis. If the estimate is correct, Nakamoto would “only” hodl “Bitcoin” worth 3.4 to 4 billion euros at the current Bitcoin rate.
One thing is certain: Whether 600,000 or one million BTC – should the owner of the coins decide to put them into circulation, this could well mess up the Bitcoin market. Of the 21 million Bitcoin that there can be at most, about four million are already considered irretrievably lost. Because if you lose your private key, you lose access to your coins. Also the alleged million Bitcoins, which are supposed to be in Nakamoto’s possession, belong to it. Estimates of the BTCs in circulation deduct these four million. It is unlikely that Nakomoto “burned” his coins. So he said at his active time: “You should never delete a wallet”.
We were there for you at the re:publica in Berlin and took a look at the latest developments in media and digitization. Our focus was of course the blockchain technology, so that we can tell you about two exciting lectures.
Lecture No.1: Blockchange: The first one was given by Thomas Wagenknecht, scientist at the FZI Forschungszentrum Informatik. Under the title “Blockchange – How Science Revolutionizes Democracy, Work and Nature Using Blockchain” he presented various blockchain application cases that go far beyond financial transactions.
Bitcoin secret on the Blockchain
Wagenknecht talked about a research project that tries to record forest areas (e.g. with the help of drones) and evaluate them economically like this: https://www.onlinebetrug.net/en/bitcoin-secret/. Wagenknecht emphasized that everything has a value, including forests. A blockchain solution could be used to record the monetary value of the forest. The concept even goes so far that the forest itself could gain value through automated smart contracts, i.e. it could accumulate capital itself and buy back shares (tokens). Very abstract and theoretical the concept, but exciting for Bitcoin secret visionaries.
The Liquid Holocracy concept was also not commonplace, which, to put it simply, involves a transparent, consensus-based way of making decisions. This new organisational structure could, for example, be implemented in a company via its own set of rules, manifested by smart contracts. Following the “blockchain consensus”, maximum participatory decisions could be made and the project distribution in a company could be controlled via smart contracts. In addition, it would also be conceivable to manage each employee’s shares via a blockchain solution.
Lecture No.2: Disrupting Organizations
Directly after Thomas Wagenknecht, the lecture “Disrupting Organizations: Decentralized Autonomous Organizations on the Blockchain” by Shermin Voshmgir continued. The Viennese computer scientist is a consultant for the Estonian E-Residency Programme and involved in The DAO.
In a very understandable way, she explained the concept behind a Decentralised Autonomous Organisation (DAO). Voshmigr argues that the blockchain is a further development of Web 2.0 to Web 3.0. Web 3.0 can be understood as the transformation of a re-decentralized Web 2.0. Finally, Web 2.0 has lost the decentralized character of the Internet, as middlemen and Internet giants now control data and transactions and store them on central servers.
This is where the blockchain or DAO comes into play, which can reverse this development. In this context, three core questions determine the added value of the blockchain infrastructure Web 3.0 compared to the Internet infrastructure Web 2.0:
What about the security of the data?
To whom does this data belong?
Who verifies this data?
At present, it is primarily companies that ensure the security of the data, which they own accordingly and decide on its verification. These three control or ownership fields can be transferred back to the user / consumer with the help of a blockchain.
The DAO is to be understood as the most complex form of Smart Contracts at present. As a form of organisation and ownership, it could be applied to practically all areas. Bitcoin, too, is ultimately nothing more than the first DAO. As a result, institutions and companies can be reorganised, with participatory elements that at the same time contribute to reducing bureaucracy.
First résumé of the re:publica
Even though blockchain technology is not the main focus of re:publica, the two speakers impressively demonstrated the dimension of blockchain technology on the first day of re:publica. Thomas Wagenknecht and Shermin Voshmgi will certainly be heard from time to time in the Blockchain community. We are looking forward to further “Blockchain impulses” from re:publica and the two speakers.
The topic of ‘digital currencies’ and ‘blockchain technologies’ has long ceased to be a niche topic. More and more companies, institutions and governments are dealing with this topic.
For increased acceptance, it is also important to deal intensively with the topic and generate new knowledge. However, only a few universities are currently pursuing such a goal. One of them is the University of Nicosia in Cyprus. The private university offers free online courses on Digital Currencies. Based on this course, an advanced Master’s course is possible. Interested parties and students can thus specialize specifically in the topic.
Who can participate in such a course about Bitcoin loophole?
The free online course ‘Introduction to Bitcoin loophole‘ takes place twice a year (spring and autumn) and is basically free for everyone to register for. This course is particularly suitable to gain a deeper insight into Bitcoin loophole and to further educate oneself in this direction. This applies equally to students and professionals.
What are the course components?
The course consists of a total of twelve lectures (one lecture per week) over a period of approximately three months. Each lecture has several components: A presentation (pdf) of the respective topic, recommendations for additional literature and multiple choice quizzes. These are to be worked on in individual studies.
A further component are the group discussions with live question and answer sessions, led by the two course leaders Antonis Polemitis and Andreas Antonopoulos. They are two experts in the field of digital currencies. All documents as well as the final test are in English.
How is the course completed?
At the end of the twelve weeks there is a final test. This test lasts two hours and includes 50 MC questions related to the lectures and MC quizzes. At least 75 percent of the quizzes must be answered in order to be admitted to the test. The individual quizzes can be repeated as often as desired for practice. However, there is only one attempt for the final test. If the participant reaches at least 60 percent, the course is considered passed. The test result will be announced a few weeks later.
If the course is passed, the participant receives an ‘Academic Certificates on the Blockchain’. The authenticity of each certificate is thus represented by the blockchain. This makes the university one of the most innovative in the world.
Building on the course, there is the opportunity to complete a Master of Science in Digital Currency. This Master’s programme is unique to date and plays a pioneering role. There is the possibility of receiving a scholarship for the course (e.g. if the result of the previous course was very good).
On 01 May, a hearing on blockchain and crypto currencies took place before the British Parliament. Martin Walker, Financial Software Product Manager at the Center for Evidence-Based Management, had little to say about blockchain technology in the financial sector. He described it as a fashionable phenomenon without much added value. Time to take a closer look at the blockchain and its areas of application.
One of Martin Walker’s tasks is to optimize decision-making processes at the Center for Evidence-Based Management. It seems that he has already made all the decisions regarding the assessment of blockchain technology in the financial sector.
His hard verdict: blockchain is a fashion
“As far as presentable benefits are concerned,” Walker said at the hearing, “there is little to nothing. Another problem of the blockchain scene is that there is a lot going on in the area of conjecture and theory:
“There’s a big problem in the blockchain world because you like to confuse the word ‘could’ with ‘is’. […] All it takes to turn a credible idea into a fashion is for people to turn off their brains and stop thinking.”
The main problem, Walker continues, is that innovative ideas are already enough to be successful. In this respect, it is not necessary to offer actual solutions – the main thing is to convince the idea. In order to be successful in the “innovation theatre”, it is sufficient to combine proof of concept with the blockchain: “It doesn’t matter whether it leads somewhere”.
Here Walker probably refers primarily to the world of ICOs. Sometimes he may not be wrong; so the use case is often a means to an end. The motto actually often seems to be: first collect money, then see if and how it goes on. It is clear that a well-founded analysis is necessary before any investment. But is the blockchain really as useless as Martin Walker thinks? We don’t think so.
Blockchain applications wrong Martin Walker
Of course, Walker comes from the financial sector and has mainly based his statements on this. But even there, there are solutions that can optimize the infrastructure. As we recently reported, the Spanish BBVA is issuing its loans via the blockchain. But it is above all the view over the finance plate edge that can make the blockchain technology so valuable.
For example, UNICEF Australia is already using Blockchain technology to collect donations for the children’s charity. One simply visits the homepage and makes one’s computing power available for mining – the donations are transferred directly. The United Nations has found a similar area of operation – with the help of the Blockchain they distribute aid money to Syrian refugees via “Building Blocks”. The United Nations also relies on blockchain technology in the fight against child trafficking. If this is really a fad, it is probably one that can be confidently taken part in.
Blockchain technology is also already being used in the education sector. In future, the University of Basel will store course certificates for “Bitcoin, Blockchain and Cryptoassets” on the Ethereum Blockchain. This not only saves the university costs and effort, but also guarantees protection against counterfeiting. The Swedish government has also discovered this advantage of blockchain. Since 2017, the blockchain has been used there to manage entries in the land registry.
With a little research, a few rings could be found in the “innovation theatre” on which the blockchain dances sensibly. If you don’t simply “switch off your brain” with all the little hat players, you can also find out whether the theatre “leads somewhere”.