regulations are about exchanges creating THEIR OWN policy for identifying their customers, to do KYC on them to look for AML and report suspicious activity.. that is like 90% of what regulations concentrate on..

you can easily separate the small 10% consumer protection stipulations of regulations. and instead do a full consumer protection scheme without the regulation.
put it this way.. Apple inc refund unsatisfied customers much faster then Goldman Sachs.. yet apple is not regulated, Goldman Sachs was.. the difference is apple inc concentrates on consumer protection. goldman sachs concentrates on their own creation policy to ward off customers

if you actually seen the difference between the two. and se how small the consumer protection requirement is in regulations you would laugh at how useless regulations are and how things like the financial crises was able to happen

if you think regulations are a saviour for consumers.. thats a lie.

the only reason wall street love regulations is because if they are transferring funds between other regulated exchanges.. the first exchange doesnt ask any questions simply because the mindset is. 'oh the other exchange is regulated, they can do their own checks and audits, so we are safe to just let the money roll"

by the way regulations are not about protecting customers funds from the exchange..
its about protecting the exchange from criminal customers..

there is, separate from regulations.. the consumer protection part. which is about insuring funds.. which.. bfx faked.. bitgo were not insuring bfx's losses.
even without regulations. consumer protection is still a thing. and a separate crime if the exchange exploits this.

in short you dont need regulation to protect users. just consumer protection.. which is still not perfect when a scammer defrauds users by faking their insurance and reserves.

to those wondering about BFX liquidity and the mindset of the spread 36% loss.. i wrote this elsewhere but orth repeating as most people seem to still not know what to expect

you are right.. its maths
imagine the exchange had (simplified numbers for demo only)
$400k held in bitcoin
$200k held in altcoins
$400k held in dollar
totals $1m combined holdings (simplified numbers for demo only)

now imagine 36% of $1m total (combining of funds to spread the loss) was lost.
yet we know it was not other funds just bitcoin lost.. so that means $360k of only bitcoins are gone!!

thats basically most of the real bitcoin reserves ($400k holdings, $360k loss = only $40k bitcoin (10%) left in reserves )

those bitcoin customers which initially counted up as $400k total holdings were told they had $400k with 36% loss.. meaning they are WRONGLY being told that there solvent balance of 64%, which logically accounts to $256k of bitcoin.. when actually there is only $40k of bitcoin in the pot.

in simple terms $360k bitcoins LOST of $400k. bfx is saying to bitcoin holders, that they are solvent of bitcoins to a tune of $256k, yet physically only have $40k(in this demo)

they cannot magic the other $212k of bitcoin into existence out of thin air.
and that missing $212k is not even part of the 36% theft.. but the missing bitcoin of the "solvent balance, that has been offset by alts and dollar..
and needs to have bitfinex buy bitcoins on other exchanges to cover just that 64% solvent balance

so ofcourse there will be a bank run while bitcoin holders owed $256k(the 64% in my demo), try to fight to withdrawal the $40k bitcoin left in a few days.
as it will take alot longer for bitfinex to try to get the other $212k(demo number) from other exchanges.

in short (my demo amounts)
$40k actual reserves= circle hole 1inch diameter
$256k solvent balance = square peg 6inch wide

even after this.. if bitfinex manages to sort out the solvent part by obtaining bitcoin from other exchanges.. they then have to work on the 36% loss

if you have not learned the lesson of never keeping funds in an exchange.. and have lost out due to bitfinex.
please take this advice

as soon as withdrawals are open.. WITHDRAW your 64% active balance..
only keep the 36% tokens in your balance.

if you think bitfinex is legit and will honour the debt
REMOVE THE 64%
do not presume that keeping the 64% with them will somehow guarantee you more chance of getting the 36% back too.
accept it psychologically as a 36% loss, forget it and dont stress over if/how/when you will get returns... then if the tokens later do become of value, accept it as a bonus, like a christmas present.
play around and trade only the tokens(36%) to try to maximize its potential

if you think bitfinex is risking bankruptcy or maybe entering into a ponzi to repay debt
REMOVE THE 64%
accept it psychologically as a 36% loss, forget it and dont stress over it... then if the tokens later do become of value, accept it as a bonus.
afterall if a government investigation/bankruptcy filing happens, ALL assets/holdings and funds are frozen for years, leaving only pennies on the dollar if lucky after a few years wait.

now things to watch out for.
1. somehow the exchange is offering discounted trade orders (EG like mtgox trading at $100 when other exchanges were at $300) dont put funds in hoping to grab large profits. as thats the ploy they want. if they were legit their trades should be the same as other exchanges.

2. equity swap. they try to talk you out of any funds recovery by offering you a stupidly low % share in a company ran from a basement with stipulations that you cannot sell for X month/years. companies like this does not have much physical assets (only a couple servers and some office chairs). its not like the company has a mortgage free skyscraper or anything large that can be sold off for millions.

3. profit shares. they try to talk you out of any funds recovery by offering you a stupidly low % share of their trade fee profits. do not expect to escape being a debtor with false promises of privately grabbing a portion of the 0.3% trade fee's. where the company obviously shouldnt be making any profits anyway due to all cashflow legitimately meant to go back to debtors.

4. affiliate program. they try to talk you into some commissions, bonuses or faster debt recovery by finding new customers. red flag ponzi.

in short. take out the 64% active balance you have remaining and then see how things play out

andytoshi,

the "paper" actually says
which is an act of pruning / removing the history..
so my premiss was that part of the paper was not just about mixing coins, not just about hiding values but also pruning/removing the transaction history.

which. has risks..

secondly even if pruning didnt happen, which you suggested the paper never suggests.. my premiss is that you can still analyze the transactions even without knowing the values just by tracking who pays who due to the history remaining.. meaning the only way to be "near complete" anonymity would be to remove the history.

which, has risks..

onto the main topic
although there are brand names like "coinjoin" and "OWAS" being thrown about.. proposes to solve the mixing and also the former need of a substantial 'userbase' to be affective(prior to OWAS)

i think what would actually happen in reality is people would just use lightning network hubs to do their mixing, where hubs by default are populated by many users where an end settlement transaction contains lots of aggregated payments to different people. no one will know if X bought 200 car tires or just one Porsche. did someone buy 500 cups of starbucks coffee or a 0.1% company stake in starbucks inc, where it wont easily show who bought what due to the aggregation while the channels were open.

thus separate scripts and services, softforks and data bloat wont be necessary compared to when lightning network does a similar mixing job by default. much like depositing funds into an exchange now. and withdrawing in 10 minutes.. you wont get the same coin-taint back. this method already does not require bloated transaction scripts or softforks or worries of popularity. because the service is usually populated and holding reserves anyway

even hiding the values. as i said before wont stop analysts finding info about someone if they wanted to.. just knowing who your got funds from is usually enough.. EG silkroad taint doesnt matter how much it is just the fact of having coins originating from there is enough

no bitcoin code would solve removing links of personal info to a bitcoin address. especially when people publicly hand out personal info freely
EG without any real work, no coercion, no begging or bribing of information, i found this.
1Andrew5Jgks6cziRiqgWShg1nr1igky1r
Andrew Sydney Poelstra
rasied in canada but then went to texas for a bit

and dont get me started on the concept of relay nodes tweaking the transaction to add in their own address to take a fee.. that in itself can send tx's looping through a collection of nodes owned by one person to add in many addresses to siphon off funds from the transaction itself, or spark a civil war of nodes fighting each other to be the last in line before a mining pool accepts it to ensure other relay nodes dont tweak one address out to replace it with their own..

again alot of science and lots of proposed changes to how bitcoin 'could' work in the paper.. but in reality i think LN will be what people use most as a second layer option and not much would change at bitcoins blockchain ledger layer

depends on the terms.. if loan based on fiat value.. then taking out a 10k btc loan one year you may only have to repay 5k btc the next year, for every negative their is an equal and opposite positive..

as for other people thinking that loans can only happen if fractional reserves occur, thats wrong. credit unions dont fractional reserve their loans, they use account holders funds to hand out loans.

however there would need to be a way to control debtors who do not repay.. because due to fractional reserves. banks can hand out hundreds of thousands of "credit" because the real cost is only pennies on the dollar. so they have spare profitability to chase debtors, even if they cant get it all back. or even sell the debt out to other agencies. banks will never lose out.

credit unions only hand out smaller amounts and do it locally to reduce the risk/cost of debtor collections.

without a fractional reserve, i do not see "mortgage" size loans being justified. but small daily/weekly expense loans with locals (reduce transport/admin costs) could possibly work, with the right administration and rules inplace to make it efficient and workable

interesting concept, but you are not picking the right numbers.. the price went upto over $1000 in 2013.. so you didnt choose the peak

secondly that high point of 2013 was a super-hype price and not a rational number to use for statistical historic price analysis, most people call it a blip or a out of pattern anomaly. and dont find it useful to include in any real analysis

but lets concentrate on the market cap question..
2009-2012, there was large coin creation = large market cap increase.
today there is less new coin creation.

meaning in 2009-2012 at 50coin a block, if we just called all bitcoins $1 each(fixed) thats $10.5mill cap
meaning in 2012-2016 at 25coin a block, if we just called all bitcoins $1 each(fixed) thats $5.25mill cap added
meaning in 2016-2020 at 12.5coin a block, if we just called all bitcoins $1 each(fixed) thats $2.625mill cap added

so if bitcoin prices were FIXED then the market cap would grow at a slower pace every 4 years.
so you wont see a cap of $31.5 after 12 years of fixed $1/btc but only $18.375, so yea the cap growth would slow down..

as for the bitcoins dollar valuation fluctuation..

well the price is not based on the buys and sells of all 15mill coins at the moment.. its based on only a few hundred thousand coins spread over only half a dozen exchanges(very small section of the whole economic transfer of bitcoin).

i see more patterns related to the lack of usage of exchanges more recently, than any other reason.

we are no longer in the wilds of fast pace day trading of thousands of coins a second with daily volumes of several hundred thousand coins.. where literally everyone was on an exchange daily..
we are now scared to use exchanges(hacks, unregistered businesses, or even KYC of registered exchanges) whatever the reason is, many people are now prefering private OTC trades which yield higher premiums, but do not account towards the publicized bitcoin valuation.
so price movements are less volatile.

here is 2 examples
bitpay got $30mill a couple years back. the investors didnt buy bitcoin on public exchanges but gave bitpay $20mill upfront and have been slowly paid back in bitcoin over time. this is a private deal that has no impact on public exchanges and also reduced bitpays reliance/need to use public exchanges now they have an external source of fiat.
another example is people in the scammy ponzi and multilevel markets "training" videos telling their subscribers to use things like changetip to buy bitcoin
https://youtu.be/k6Kj9SOy1S8?t=38m10s
in both cases these "investor" purchases of bitcoin do not have any effect on public exchanges

i think this will continue to be seen at the current overview of the bitcoin exchanges due to fears of public exchanges right now. . and would only change when big investors who love KYC use legit exchanges to buy large orders (yet to see wall street using public exchanges to make large orders)

in short dont expect 10,000% price increases over 2 years. but steadier movements both up and down with the occassional blip now and then

though hardware wallets are the most secure way to secure your funds compared to other digital methods. still be cautious about your usage.

when plugging it in on different devices and it loads the user interface (website/electrum) be skeptical if the website is saying 'something went wrong/device corrupt, please type in your seed'.
check the website is not a phishing tool trying to grab your seed. if your device is connecting to electrum, check that the "plugins" and versions of electrum have not be hijacked before typing in the seed.

nothing is perfect but hardware wallets are getting better and are a great way to store coins offline while remaining easier to manage than a paper wallet. but still be cautious

french guy moves to asia to set up a bitcoin exchange that accept dollars to become the main exchange of the bitcoin ecosystem... it gets "hacked"
not original storyline in everyway

seems the tale is getting a little longer..
https://www.cryptocoinsnews.com/bitfinexs-ceo-seemingly-tried-start-ponzi-scheme/

filing a complaint can lead to bankruptcy route.. that in itself has its own issues and headaches for those at loss, so here is some advice
1. when bitfinex opens.. withdraw your "available" bitcoins. (you dont want your "available" funds locked in for years, if they file bankruptcy)
2. treat it as a 36.067% total loss for now. and take a rest for a few days, chill out
3. look at how/why/when/if there will be any reimbursment via the tokens (i gave tips in previous posts about what to look out for).
4. decide if you trust a bankruptcy hearing which will give you pennies on the dollar in a couple years or bitfinex will give you pennies on the dollar.

usually if you start the litigation route. your access to 'supposed' funds are locked until a hearing is complete. meaning no one gets paid anything anytime soon even if they left real bitcoin balance on bitfinex.. its ALL frozen(remember to do point 1 first)

try not to think that you will be made whole again in months and do not make emotional decisions on the false belief of being able somehow to be made whole again in a few months. think long and hard about choices

treat it as a total loss for now(short term). as a possible payment of pennies on the dollar in the future(longterm). and anything else ontop is a bonus(dream but no promise)

they describe it as a "share" scheme but dont want to actually offer real shares in their company.. so.."tokens" is their chosen word.. still iffy.. lets wait and see how they implement it and what promises they give for reimbursement to people

well im "hoping" the tokens work like company shares. where the tokens are reimbursed as bitcoins using the trade fee's income that bitfinex gets.. not robbing new customers deposits to pay existing customers withdrawals (the cryptorush ponzi i described in last post).. but instead the tokens are valued on the cashflow of bitfinex's income/profits from their fees.
thats my hope from a moral and legal side.. however lets do the maths on timescales to get reimbursed morally and in a legit way

so say a trade fee is, maker: 0.1% taker: 0.2% that's 0.3% fee per trade bit finex gets. now then, knowing bitfinex needs to continue operating (paying server costs, staff, electric and offices, etc) i would presume that on the better and legit option of the share theory. only 0.1% or less of each trade would go into a reimbursement pot and the other 0.2% covers business costs to continue running..

lets say trade volume was 10,000btc a day... thats only 10btc a day into the reimbursment pot (0.1% of 10kvolume)
if the numbers are right that 100kbtc was stolen/hacked/insider job/whatever.. it would take 10,000 days to repay everyone (~30 years)

lets say trade volume was 100,000btc a day. thats only 100btc a day into the pot (0.1% of 100kvolume)
if the numbers are right that 100kbtc was stolen.. 1,000 days to repay everyone (~3 years)

and obviously if they manage to do 300k volume.. ~1 year reimbusement of 100k theft/hack..

but if i see they say everyone will be paid off in weeks/months.. then the reasons would be:
1. ponzi - using new deposits to reimburse existing customers withdrawals
2. reserves - bitfinex using their own funds from the last 3 years trade fee's (doubt it as that moneys normally already spent on running costs)

once bitfinex starts using new users funds to try covering old balances(in the form of tokens).. automatically its a ponzi and things get nasty

24-48 hours until bank run. everyone removing their bitcoin and only leaving the "tokens" in there to play with, in a hope they can eventually convert these "tokens" into real bitcoin too.

cryptorush done the exact same thing. tried to reopen using tokens but everyone was in a mad rush to get their coin out

funds are stored on the blockchain. not your computer.. a private key/public address is just like a username and password..

you are free to use it on multiple machines but remember because funds are on the blockchain when you move funds.. they move..

one thing to be aware of is that some software/services have custom "change addresses" so if one piece of software has randomly produced a second address for the change to be received on. that is then only linked to a private key stored on that single piece of software/service. so remember to back up your wallet you sent from AGAIN after you have sent funds because the change may not have gone back to the original address

yes its speculation, and people speculate. many people in trading know what are common speculations by people that watch the orders. and know how they characteristically react when they see certain patterns. the mtgox "wally whale" was good at this manipulation using walls. kind of entertaining to watch most of the time..

here is a lowdown of basic mindset people have based purely on what they see when they see the market order charts


if you know how people may think, you can control a bit of the speculation

firstly the term "wall" is a large single order/pricepoint that has such a large amount of coins most people psychologically think it wont be filled.
EG if average trades are 0.2btc and you see a wall of 1000btc. then instantly you will think this wall wont be filled any time soon so people do no try to push the price up because of the wall.



now there are a few types of walls..
a whale.. this is a genuine investor with real bitcoin balance that just wants to place an order
a whale wall is when the price the genuine order is at is far away from the spread, obviously their first thought is not to actually sell the coins any time soon but to do a bit of psychological manipulation.. usually putting a large wall at a distance is done to keep prices down to actually buy coins cheaper.. while not risking filling their sell order because there are many small orders before getting to the wall.

a ghost.. this is a fake order, usually done by the exchange itself to fill order lines.. small orders are just to take some profits or make exchange look more popular/active. large orders are usually done to control where its moving. but in both cases exchanges sometimes dont have the real funds to validate their orders..
ghost orders is a form of fractional reserve.. where they are not using real funds but creating orders backed by nothing.

its when an exchange is ghosting orders(fractional reserve orders) and they get filled(exchange didnt cancel order in time) and users want to withdraw funds. that exchange becomes less able to actually pay out to its customers. so this sparks a 'rob peter to pay paul' where they dip into others funds to pay out fresh withdrawals leaving users with balance left on their account less and less likely to be able to withdraw later..
the hope is new deposits cover the current users withdrawals later, and eventually trade fee's will cover the gap.
mtgox done this. cryptsy done this, mintpal done this. and look where they are now, they didnt refill the gap in the reserves to bing users accounts back into balance

as you can see by the image above the wall is alot larger then the average order and also its not near the spread. thus its not a genuine person wanting to sell coins soon. but far enough to cause some psychological manipulations of user speculation that the price wont gove over $600 any time soon and also far enough to cancel the fake wall if the price did try moving up fast..
worse case is when they dont cancel the order and it fills.

proof of location wont make the block creation encryption any stronger, which is more important then the distribution of rewards or nodes.(yes node distribution is important, but so is the difficulty)

if POL was used to limit ASIC farms from being in one location. then POL can be faked to spread out the asics in code while still being in same physical location.

also if POL was used to help split the rewards between close neighbors then people will fake it to a location with no neighbours so they dont have to share the reward..

but the important part is POL wont actually do anything to ensure strong encrypted blockdata, so it can be easily 51% attacked.