Source
____________________________
How vulnerable is Bitcoin payment processor BitPay?
By Max Keiser:
Although the bitcoin design is very good and descentralized, the exchanges are all virtually dependent of one single one: MtGox.What this piece refers to is ‘market making’ activity on the bitcoin exchanges (like MtGox). There are a few large moving parts involved in the bitcoin ecosystem; including the ‘exchange mechanism’ piece or market making when considering the Bitcoin protocol as a whole. Throughout my entire observation of bitcoin’s history I have reached out many times to key players, pointing them to my 4 ‘Virtual Specialist’patents (US pat. no. 5950176) I invented for the purpose of making markets in virtual currencies to help establish ‘price discovery’ of bitcoin prices in this nascent market to avoid price manipulation. As many readers know, the idea of ‘true’ price discovery is something exchange operators are not necessarily keen on promoting. In my own case, my technology – as many know – ended up in the hands of a Wall St. bank who uses it to trash prices on the NYSE and other exchanges around the world. My technology made things like ‘front running’ and HFT impossible; and that’s why it is not being used in the best-interests of markets but for the private interests of an extremely corrupt Wall St. bank. Ultimately, the distributed nature of Bitcoin will – IMO – overcome the issues relating to virtual market making and the fact that it is, currently, a bit too concentrated.
Any other exchange are all shadows reflecting MtGox prices.
All payment processors such as bitpay depend on MtGox.
This is a single point of failure that would initiate a chain reaction towards an economic catastrophe.
MtGox didn’t prove to be reliable at all, the DDoSes are an embarrassment and the MtGox mobile application is becoming abandonware.
I am very worried about this deal with coinlabs. They claim that they will be able to seduce institutional investors and yadda yadda.
Really? Will they really be able to handle all that extra traffic and be invulnerable to another DoS?
It is embarrassing how a single DDoS made bitcoins from being praised in the media to “bitcoin hacked” overnight.
Fuck that shit. But bad press is not really the point. The point is that currently MtGox has too much protagonism and that is a tremendous risk.
I just wish tradehill was still here. Fucking Dwolla.
In any case, I think we need way more exchanges with more power out there.
To give you an idea of how ‘market making’ comes into play when virtual markets meet the analog world; here’s a story from 1999 covering what happens when my invention the Virtual Specialist market making technology was generating price discovery that went at odds with the industry desires of Hollywood who uses their might to move prices in ways that favor them. (I remember a conversation with Jeffrey Katzenberg back in ’98 for example, who begged me to move prices of movies that he was attached to for example as a way to free up more marketing dollars).
Another example of what happens when virtual market making meets analog assholes would be the sudden disappearance of InTrade. I spoke at length with founder/CEO John Delaney about these issues. Unfortunately John is no longer with us, but his comment to me at the time was that my standard for market making was impractically high. Well, in the context of BTC and its rise to a $1.5 bn. market cap I would argue that price discovery integrity is of the utmost importance especially for the payment processors like Bitpay that rely on this info within the BTC ecosystem.
‘Access’ Denied
Studios seethe over HSX predictions
My feeling is that a virtually flawless virtual technology is available to make price discovery of BTC as useful as possible. Because the best version of this technology so far, my VST, is being held hostage by a Wall St., something new and improved will have to be developed since whatever does come along will end up competing with the VST; which is very robust.
In this video, our friends over at TruthNeverTold get into this topic. I do not share their negative opinion of Bitcoin overall. I’ve know for 15 years that such a currency would emerge and do what it’s doing by challenging the outdated, and dangerous central bank model but that’s not so say a few issues remain.
Source
No comments:
Post a Comment