Daily Archives: May 14, 2020

As the Bitcoin (BTC) price abruptly dropped from $9,500 to $8,100, some traders on Binance claimed that their winning short trades were unfairly cut short.

A trader named AthenaBank wrote on May 10:

Deleverage? Binance close my short after I make 7 times my investment. What's going on? Where is my short? The BTC dropped to $8,000. Who pays the difference?

But, the closure of the shorts was systematic and the process is called auto-deleveraging.

In the futures market, traders use debt or leverage to trade with larger capital. Binance, as an example, allows a trader to use 125x of their initial capital. If a user has $1,000, the user can trade with up to $125,000.

The role of a cryptocurrency exchange is to match orders between buyers and sellers. Hence, if trader A wants to short Bitcoin at $9,500, the role of the exchange is to find trader B that wants to buy BTC at the same price.

A problem occurs when the Bitcoin price sees an abrupt increase or decrease in price. More traders rush to short BTC, and as the price declines rapidly, it creates an imbalance in the orderbook.

When there is a big orderbook disparity, it can potentially cause a cascade of liquidations and cause the price of Bitcoin to plunge to abnormal prices. Such a price trend was seen on March 12, when the price of BTC crashed to as low as $3,600 on BitMEX.

Major Bitcoin futures exchanges like BitMEX and Binance Futures use a system called auto-deleveraging to ensure their orderbook remains balanced. When the insurance fund is not enough to cover for liquidations, then other trades are cut short to cover for the remaining liquidations.

Example of an auto-deleverage Bitcoin trade. Source: AthenaBank

Binance Futures says:

When a traders account size goes below 0, the Insurance Fund is used to cover the losses. However, in some exceptionally volatile market environments, the Insurance Fund may be unable to handle the losses, and open positions have to be reduced to cover them.

In such a case, highly leveraged trades are likely to have their trades sized down first. Traders that use 75 to 125x are often in the top percentile and are first to have their trades cut in abnormally volatile market conditions.

One trader explained:

There is a light for the auto deleverage queue on the trading page when you're in a position. Deleverage is used as insurance for long liquidation in this case to help sustain cascading liquidations and resulting in mega dumps. High leveraged trades are usually first.

Auto-deleveraging happens quite frequently in the cryptocurrency market because Bitcoin is significantly more volatile than most traditional assets.

The tendency of the price of Bitcoin to sway in a direction rapidly within a short period of time makes it challenging for exchanges to maintain balance in the market.

Cointelegraph reached out to Binance for a comment but did not receive a response by press time.

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Traders Say Binance Cut Their Bitcoin Shorts: Here's Why It Happened - Cointelegraph

Ashish Agarwal

Ever since its launch in 2008, controversy has not left Bitcoin's side. It has fuelled hundreds of rags-to-riches stories, but at the same time, it has enabled scammers to earn millions from unsuspecting buyers and investors.

Bitcoin prices have been hovering around $9,000 for quite a few days making it a lucrative investment opportunity for thousands of Indians. If you are among the thousands looking forward to investing in the future of crypto, you must find out all about potential Bitcoin scams and the ways to steer clear of them

i. Fake crypto investment platforms

Fake bitcoin exchanges are a real threat! Back in 2017, a South Korean fake exchange was operating under the name of BitKRK. While it looked legit and presented itself as a part of the crypto trading community, it swindled investors and buyers out of millions of dollars before it was intercepted by the South Korean financial authorities.

You must avoid all fake cryptocurrency exchanges. Stick to the reputed and recognized bitcoin exchanges only. Check Bitcoin forums and subscribe to authentic RSS feeds or notifications so you receive the news of fake exchanges on time. or, stick to trustworthy Bitcoin platforms for genuine investment opportunities.

ii. Others less credible cryptocurrencies

After the success and skyrocketing demand of Bitcoin, several new cryptocurrencies have been mushrooming across the globe. It is indeed difficult to keep an eye on the authenticity and performance of each one.

New altcoins can be cheaper, which makes them more of a lucrative investment opportunity to most new investors. The selling idea behind these new currencies is that its already too late to invest in bitcoin and one must seize the opportunity to invest in one of the new and upcoming ones to make more money!

Well, thats not at all true. Always remember that My Big Coin was taken down after it sold fake alt currencies for $6 million to customers.

However, it is important to take a look at the basics of any altcoin including its maximum supply and circulation. For example,Bitcoin maximum supply is 21 million exactly and 18 million are in circulation. Bitcoin is one of the most valued, trusted and most accepted cryptocurrencies across the globe.

iii. Mining scams

Cloud mining allows regular investors without expensive hardware to mine cryptocurrencies. It can be indeed lucrative if you consider that you can mine altcoins like Bitcoin sitting at home without investing in exuberantly priced hardware.

There are a few cloud mining services that allow users to rent server space at a fixed rate for mining altcoins. However, if you are a first-time investor, how do you know which services are genuine, and which ones just want your hard-earned money?

One way to identify the fake ones is by their lofty promises. They promise implausible returns on your investment and never mention the hidden fee that applies on these returns. These servers are smart designs to take money from unsuspecting investors. No authentic companies should be able to guarantee a profit.

Always be vigilant while signing up for cloud mining servers. Think about the security of your data on your system before you go online on a shared server.

iv. Pump and Dump schemes

It is not uncommon for groups of scammers to buy a new altcoin en masse. That increases the market price of the cryptocurrency momentarily and triggers FOMO (fear-of-missing-out) among other investors.

As soon as the new investors begin investing in the new coin and the prices shoot up higher, the scammers sell their share of coins for a higher price.

It is illegal in the securities market, but pumping and dumping are more than common in the grey zone of cryptocurrencies. Avoid pump and dump schemes by choosing more popular and stable crypto options like Bitcoin only.

v. Malware

New investors dont always understand the ins-and-outs of cryptocurrency before and during investing. This has given several malware programs the chance to evolve. Malware programs now pose newer and bigger threats to people.

Modern malware that targets cryptocurrency users and investors can latch onto the user accounts to retrieve the users online wallet balance, drain their account and replace their authentic address with that of the scammer.

Apart from updating your antivirus and system firewall, you need to make sure that you are visiting a secure and trustworthy platform that does not prompt auto-download of .exe files or ask you to download suspicious attachments.

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Here's how can you save yourself from Bitcoin Crypto scams - Moneycontrol

Today, open-source software developer Luke Childs, published a concept of a trustless trust fund that can be established using only Bitcoins code.

Since Bitcoin is decentralized, it can be used to create financial transactions between people that dont rely on any third party. But in this case, its used to replicate a financial tool, known as a trust fund.

The idea is to allow an abstract grantor (in this case Mum and Dad) to set aside and lock up part of their funds for a beneficiary (child), which will unlock only when some specified conditions are met (when the child reaches the age of 18)using just Bitcoins code. Theres no need for assistance from any third parties.

The idea is that Mum and Dad lock up some funds in an address with the above spending condition. Mum, Dad and Child each have their own key. Once Mum and Dad have committed to the fund, they cannot withdraw. However they can make additional contributions in the future, Childs explained.

Within this framework, if the child wants to withdraw some funds before they are 18, they will be able to do this with the approval of one of the parents. Later on, once the child is 18, they will gain full control over the funds without needing a signature from the grantors.

The framework also allows the parents to set multiple dates for the trust fund to be unlocked instead of just one. They just need to repeat the steps and send different amounts to each address, effectively setting up a few funds instead of just one.

It's pretty cool that contracts like this can be implemented natively in Bitcoin! Childs added.

Bitcoins code even allows it to future-proof situations such as grantors dying or losing their keys, additionally acting as an inheritance mechanism (although funds still could be forfeit if both parties lose their private keys).

While traditional trust funds are an established and useful form of asset management, they usually also involve a lot of hurdles and disadvantages. One of the main drawbacks of using a trust is the cost of establishing it since the procedure often requires quite expensive legal assistance.

Additionally, managing the trust could also prove costly since many trusts are administered by banks and other financial institutions. And even if the trustee is some private party, they can still require reasonable compensation for their efforts.

Trusts are also often much more complex to draft since they may involve disbursements at certain intervals or give the trustee the ability to decide when funds could be taken by the beneficiary. The trustee may also have to register a trust checking account.

Moreover, despite a popular belief, trusts dont provide any particular tax advantages and can become a source of many inconveniences. For example, banks and financial institutions can create additional hurdles and require various administrative procedures if trust assets are used as collateral for a loan or other funding.

Not to mention the human factor that may lead to a lot of conflictslegal or personalbetween beneficiaries and trustees if they just dont like each other very much, for example.

And just think that all of these problems could be avoided with a few lines of Bitcoin codewith basically the same results.

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How to set up a trust fund on Bitcointhat's trustless - Decrypt

Bixin, one of the earliest bitcoin miner operators and wallet startups, is dedicating 6,600 bitcoin, worth $66 million, to a new fund of funds.

The company announced the fund of funds with its proprietary capital on Friday, and said it aims to invest in global quantitative trading funds whose strategies are based on arbitrage, bitcoin futures contracts and trend analysis.

By providing additional liquidity and market-making activities to these trading desks amid bitcoin's scheduled halving event, Bixin seeks to increase its holdings in bitcoin as part of its "unwavering commitment to bitcoin," the firm said in the announcement.

"We are strong believers in bitcoin and it's not what we want to see that the bitcoin ecosystem in China and elsewhere are in a silo," said Liu Fei, who joined Bixin from the Huobi exchange in late 2018 and now oversees Bixin's mining business and the fund of funds. "We hope the fund of funds can contribute to a better global liquidity structure for the bitcoin ecosystem."

Founded in 2014 by Wu Gang, who started mining bitcoin since as early as 2009, Bixin has become one of the most known bitcoin wallet and mining pool operators in China.

It scaled up the investment in bitcoin self-mining in the late 2018 and early 2019 bearish market and is currently operating bitcoin mining facilities of about 300 megawatt-hour, roughly 3,000 petahashes per second (PH/s) of computing power that accounts for 2.5% of the Bitcoin network's total.

Bixin established an investment and financial service arm around 2018 with its own capital and has invested in leading crypto startups in China including MicroBT, a serious contenders against mining giant Bitmain's dominance in bitcoin miner hardware business.

The leader in blockchain news, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups.

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One of Bitcoins Earliest Miners Is Dedicating $66M in Crypto to a Fund of Funds - CoinDesk - CoinDesk

Cryptopia: Bitcoin, Blockchains and the Future of the Internet is filmmaker Torsten Hoffmanns follow up to his award-winning 2015 documentary Bitcoin: The End of Money As We Know It.

His first film looked at the history (and failings) of money and the financial system, and how Bitcoin was poised to revolutionize and solve many of its problems. Now, Cryptopia brings us up to date with the current state of play in the world of cryptocurrency and blockchain.

The documentary is split into three acts.

First we get an introduction to the fundamentals of Bitcoin, recapping the problems with traditional finance from the earlier film and highlighting Bitcoins initial stated purpose as peer-to-peer digital cash.

Hoffmann talks about the benefits of Bitcoin with a veritable whos who of industry figures, from Wences Casares, to Andreas M Antonopoulos and Laura Shin. We also see how and why big banks and governments have kicked back against the top-ranked cryptocurrency.

We then move on to Bitcoins explosive growth in value since the first film, and repositioning from digital cash to digital gold.

Hoffmann revisits Roger Ver, who had previously espoused Bitcoin as a fast and cheap method of moving money around the world, to investigate the block-size debate and eventual fork of Bitcoin Cash.

He also speaks to Blockstreams Samson Mow, for his take on the split, along with Charlie Lee, founder of Litecoin.

The film then moves on to tackle the move from one blockchain to hundreds of blockchains. Hoffmann explains the concept of smart contracts and the Ethereum network, speaking to Vitalik Buterin, Vinny Lingham, and Tone Vays for their opinions, both positive and negative.

Hoffmann takes a look at the initial coin offering, or ICO, phenomenon, bringing blockchains and currencies for every conceivable purpose, along with a wave of scams and fraudsters into the space.

We see how big business and finance is co-opting blockchain technology, sometimes through the use of private centralized networks. We see the tokenization of traditional securities and totally new forms of assets.

Through looking at the examples of the development of the motor car and the early internet, Hoffmann highlights similarities with todays blockchain industry.

He notes the rise of internet censorship in certain jurisdictions, and discusses the potential of blockchain to overcome this. We also consider the hegemony of tech giants and their control of our information and identities, looking at the possibilities of decentralization to overcome this.

To round up, the film considers the possibilities of Decentralized Finance, or DeFi, although notes the controversy created following the DAO hack and subsequent rollback of the Ethereum blockchain.

Hoffmann finally talks to Craig Wright (who behaves exactly as expected), touching on the Bitcoin Cash/Bitcoin SV split, and finally coming full circle to Satoshis disappearance and how this has worked for Bitcoin.

The film has been professionally researched, shot, and put together. It assumes no prior knowledge of the subject, and follows a well structured story, making it accessible to all.

Hoffmanns style and delivery works well. He is authoritative yet friendly and open, being unafraid to challenge or poke fun at characters like Craig Wright, while always being even-handed and letting people speak.

Sure, for those who are already invested in the industry and technology, there is little new to learn here, but for the uninitiated it is an excellent primer into a world that they may have heard about, but not really understand.

For me personally, both this film and Hoffmanns previous documentary made me incredibly proud to be part of this movement that is literally changing the world.

My only criticism (and it is a minor one) is the song which plays out over the credits. Penned by Hoffmann himself and Malaysian singer, Prema Yin, it is a powerful, soulful number, rousing the spirits until you listen more closely and realise that it is about cryptocurrency.

To be fair, it is probably the least cringe-inducing cryptocurrency-related song that Ive ever happened across, with intelligent lyrics and a proper decent tune. However this is a bit like being the least cancerous case of sunburn; the end consequence still consists of a pair of bright red cheeks.

Sorry, and maybe this is just me, but the worlds of cryptocurrency and music (both of which I love individually) should never cross paths.

However, I have no hesitation in recommending this film, which is available to stream now at cryptopiafilm.com for a price of just under 9 Australian dollars ($5.88)... and you can always make a cup of tea when it gets to the credits.

Excerpt from:
Review Cryptopia: Bitcoin, Blockchains and the Future of the Internet - Cointelegraph

GLOBAL, May 14, 2020 (GLOBE NEWSWIRE) -- (via Blockchain Wire) -CoinAgenda (www.coinagenda.com), the premier global conference series connecting blockchain and cryptocurrency investors with startups since 2014, today announced its second virtual event, CoinAgenda Presents: After the Halving. Speakers will include Vinny Lingham, Co-Founder and CEO of Civic.com; Matt Roszak, Chairman & Co-Founder of Bloq; Catherine Coley, CEO of Binance.US; Tone Vays, Content Creator, Derivatives Trader & Consultant; and Michael Terpin, Founder and CEO of Transform Group.

Hosted online and open to anyone in the global crypto community, CoinAgendas Virtual Event Series aims to promote ongoing blockchain investment and adoption, adapting to the current public health crisis and the resulting travel and meeting restrictions.

With the highly anticipated third Bitcoin Halving now in the history books, we pulled together top leaders in the space to analyze the short- and long-term effects on the market, said Michael Terpin, founder of CoinAgenda. Were happy to welcome some of the most recognized leaders in the industry for whats sure to be an insightful discussion.

Following the successful CoinAgenda virtual event launch Crypto in a Time of Coronavirus last month, this event will explore the challenges and opportunities stemming from reduced rewards and base miner costs, mainstream adoption, bitcoin market price and the startup development and investment landscape. Following the discussion, attendees will have the opportunity to network and ask questions. After the Halving will take place May 20, 2020 at 10 am Pacific Time / 1 pm Eastern Time. Registration is free, and registrants will receive a link to participate via email prior to the start of the event.

Future CoinAgenda Virtual Events are scheduled each month through September, delving into topics ranging from the European crypto market to the DeFi revolution. Each CoinAgenda Virtual Event will be recorded and available to members of the BitAngels investor network. To become a member of the BitAngels investor network, please apply here.

CoinAgendas next in-person conference is scheduled for October 24-25, 2020 in Las Vegas.

ABOUT COINAGENDASince 2014, CoinAgenda is the leading global conference series connecting professional investors, traders, family offices and digital currency funds with top entrepreneurs in the blockchain and cryptocurrency sector.

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CoinAgenda After the Halving Virtual Event to Feature Fireside Chat with Oracle of Bitcoin Vinny Lingham - GlobeNewswire