Cryptocurriences are crashing, and wannabe investors worldwide are realising betting on risky stocks of virtual money isn’t actually a sure thing.
The crypto-crash comes as officials in South Korea consider imposing new regulations on the intangible currency which has been driving money-grabbers crazy.
Today, crypto-traders have witnessed their precious cryptocurrencies – now legal tender in Canada, don’t you know – fall amid a major selloff, with most dropping more than 10 per cent this morning (January 16).
The price of bitcoin, which is widely believed to be the strongest and most stable of all the made-up measurements of money, has dropped below $12,000.
Just days ago, bitcoin was a burgeoning pot of gold as tangible as the leprechauns who wait at the end of the rainbow, rising towards a $20,000 value per coin.
But today it has fallen more than 10 per cent, meaning its total drop in the past month equates to about 40 per cent.
The drop came amid suggestions from South Korean officials who want to look at imposing new regulations on the currency.
Finance minister Kim Dong-yeon said the country might ban trading in the currencies entirely, pending a government review.
The government has said that the plans are only a suggestion and that more talks are needed, reports The Independent. But another government minister said that trading could be banned last week, triggering another instant sell-off, and the plans have already led 200,000 people to petition the government asking to keep bitcoin trading legal.
Still, supporters of bitcoin will be happy to note the currency has risen more than 1,300 per cent over the course of the year, amid much online hype.
Amazingly, the Gods of Virtual Economies have decreed this astronomical rise is probably down to just one or two people – and it’s not Satoshi Nakamoto, the mythical bitcoin creator.
Economics experts Neil Gandal, Tyler Moore, JT Hamrick and Tali Oberman set out to discover what and who exactly is in control of the bitcoin ecosystem determining its price.
Although it’s long been rumoured bitcoin markets are manipulated by only one or two big players, their research paper entitled, Price Manipulation in the Bitcoin Ecosystem has confirmed this theory.
Published in the most recent issue of the Journal of Monetary Economics, the paper states it’s likely one person drove the US dollars to bitcoin exchange rate from being $150 to $1,000 in the space of only two months.
The paper also concluded how suspicious trading using bitcoin is linked to rises in the exchange rate with the trading volume increasing greatly on days where there was cagey activity.
It also reaffirmed how markets dealing with cryptocurrency, which are unregulated, are very vulnerable to being manipulated.
Explaining their findings, the team wrote:
This paper identifies and analyses the impact of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins (BTC) valued at $188 million were fraudulently acquired.
During both periods, the USD-BTC exchange rate rose by an average of four per cent on days when suspicious trades took place, compared to a slight decline on days without suspicious activity.
Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late 2013, when the rate jumped from around $150 to more than $1,000 in two months.
They also concluded how manipulation often happened for early Bitcoin and other cryptocurrencies, because the market was too thin to operate.
Two bots, named Markus and Wily, were primarily responsible for the price manipulation performing valid trades despite not actually having the bitcoin they were using.
Taking advantage of the system the bots could create these fake trades and made off with millions, while manipulating the price of the cryptocurrency.
If bitcoin wants to seriously progress, it really needs to assure customers it’s both safe and legal with no vulnerabilities.
Saying that, bricks and mortar themselves are looking pretty shaky on the ground for millennials, so perhaps a wish and a cryptocurrency prayer is our best bet.
Thanks, baby boomers. Brb, off to go fritter my money away on avocado sandwich meal deals.
A former emo kid who talks too much about 8Chan meme culture, the Kardashian Klan, and how her smartphone is probably killing her. Francesca is a Cardiff University Journalism Masters grad who has done words for BBC, ELLE, The Debrief, DAZED, an art magazine you’ve never heard of and a feminist zine which never went to print.