Bitcoin Flash Crash Causes $200m Liquidation on BitMEX

Just as the mood across cryptocurrency markets was striking an upbeat tone, a sharp turnaround last night flipped a switch. A flash crash in the price of Bitcoin allegedly starting with a big sell order transacted via the Bitstamp exchange crashed any positive sentiment that had built up before.

The most-popular cryptocurrency shed over $1000 in 15 minutes from $7,700 to around $6,600 before stabilizing just above $7,000 as of writing. The news comes amid increasing pressure on Cryptocurrencies Cryptocurrencies By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. By using cryptography, virtual currencies, known as cryptocurrencies, are nearly counterfeit-proof digital currencies that are built on blockchain technology. Comprised of decentralized networks, blockchain technology is not overseen by a central authority.Therefore, cryptocurrencies function in a decentralized nature which theoretically makes them immune to government interference. The term, cryptocurrency derives from the origin of the encryption techniques that are employed to secure the networks which are used to authenticate blockchain technology. Cryptocurrencies can be thought of as systems that accept online payments which are denoted as “tokens.” Tokens are represented as internal ledger entries in blockchain technology while the term crypto is used to depict cryptographic methods and encryption algorithms such as public-private key pairs, various hashing functions, and an elliptical curve. Every cryptocurrency transaction that occurs is logged in a web-based ledger with blockchain technology.These then must be approved by a disparate network of individual nodes (computers that maintain a copy of the ledger). For every new block generated, the block must first be authenticated and confirmed ‘approved’ by each node, which makes forging the transactional history of cryptocurrencies nearly impossible. The World’s First CryptoBitcoin became the first blockchain-based cryptocurrency and to this day is still the most demanded cryptocurrency and the most valued. Bitcoin still contributes the majority of the overall cryptocurrency market volume, though several other cryptos have grown in popularity in recent years.Indeed, out of the wake of Bitcoin, iterations of Bitcoin became prevalent which resulted in a multitude of newly created or cloned cryptocurrencies. Contending cryptocurrencies that emerged after Bitcoin’s success is referred to as ‘altcoins’ and they refer to cryptocurrencies such as Bitcoin, Peercoin, Namecoin, Ethereum, Ripple, Stellar, and Dash. Cryptocurrencies promise a wide range of technological innovations that have yet to be structured into being. Simplified payments between two parties without the need for a middle man is one aspect while leveraging blockchain technology to minimize transaction and processing fees for banks is another. Of course, cryptocurrencies have their disadvantages too. This includes issues of tax evasion, money laundering, and other illicit online activities where anonymity is a dire ingredient in solicitous and fraudulent activities. Read this Term markets following the entanglement of Bitfinex and its sister company Tether into an investigation by the NY Attorney General.

Flash Crash Market Making Challenge

The selloff started at Bitstamp with over 5,000 bitcoin being exchanged between 03:45 and 04:15 London time. The lowest print on the exchange was at $6,178. Speculation that the main reason for the crash of prices on Bitstamp is the 50% share of the price formation on BitMEX.

The high leverage used by traders on BitMEX is prompting sharp market moves that are wiping out holders of derivatives contracts purchased using leverage as high as 1:100. While regulated retail brokers are less exposed, the events show that despite the development of the crypto market over the past several years, risks of sharp and unexpected moves remain ample.

Bitfinex and Tether Saga Continues

Last night The Supreme Court of New York ordered Tether to stop loaning money to Bitfinex. The embattled cryptocurrency trading venue has been experiencing financial difficulties after its partnership with a Panama-based firm called Crypto Capital went south.

Bitfinex has been attempting to get its finances on track, with the latest batch of news focused on launching its own Initial Exchange Offering (IEO) Initial Exchange Offering (IEO) An Initial Exchange Offering, or IEO, is a method of fundraising in which a cryptocurrency company issues and sells tokens through a cryptocurrency exchange. Unlike Initial Coin Offerings (ICOs), an IEO is instead administered by a crypto exchange on behalf of the startup that is looking to raise funds with its newly issued tokens.As such, an investor must make an account on the exchange that is holding the token sale and send cryptocurrency into that account. Therefore, the Know-Your-Customer (KYC) checks that occur when a user makes an account on an exchange also apply to the token sale.Since a token sale is conducted on the exchange’s platform, token issuers also are responsible for paying a listing fee along with a percentage of the tokens sold during the IEO. In return, the tokens of the crypto startups are sold on the exchange’s platforms, while their coins are listed after the IEO is over. As the crypto exchange takes a percentage of the tokens sold by the startup, the exchange is incentivized to help with the token issuer’s marketing operations. Overall, IEO participants do not send contributions to a smart contract, as is the case with an ICO. Rather, they have to create an account on the exchange’s platform where the IEO is conducted. The contributors then fund their exchange wallets with coins and use those funds to buy the fundraising company’s tokens.Are IEOs the Future?IEOs are generally considered to be a safer method of investing than ICOs because of the fact that cryptocurrency exchanges take care of due diligence for investors. Projects are thoroughly vetted before they can be eligible for an IEO. Because an exchange’s reputation hinges on the fact that the token sales that they facilitate are legitimate, investors in IEOs can enjoy a higher level of confidence in the tokens that are bought through IEOs than ICOs. However, investors are highly recommended to do their own thorough research. An Initial Exchange Offering, or IEO, is a method of fundraising in which a cryptocurrency company issues and sells tokens through a cryptocurrency exchange. Unlike Initial Coin Offerings (ICOs), an IEO is instead administered by a crypto exchange on behalf of the startup that is looking to raise funds with its newly issued tokens.As such, an investor must make an account on the exchange that is holding the token sale and send cryptocurrency into that account. Therefore, the Know-Your-Customer (KYC) checks that occur when a user makes an account on an exchange also apply to the token sale.Since a token sale is conducted on the exchange’s platform, token issuers also are responsible for paying a listing fee along with a percentage of the tokens sold during the IEO. In return, the tokens of the crypto startups are sold on the exchange’s platforms, while their coins are listed after the IEO is over. As the crypto exchange takes a percentage of the tokens sold by the startup, the exchange is incentivized to help with the token issuer’s marketing operations. Overall, IEO participants do not send contributions to a smart contract, as is the case with an ICO. Rather, they have to create an account on the exchange’s platform where the IEO is conducted. The contributors then fund their exchange wallets with coins and use those funds to buy the fundraising company’s tokens.Are IEOs the Future?IEOs are generally considered to be a safer method of investing than ICOs because of the fact that cryptocurrency exchanges take care of due diligence for investors. Projects are thoroughly vetted before they can be eligible for an IEO. Because an exchange’s reputation hinges on the fact that the token sales that they facilitate are legitimate, investors in IEOs can enjoy a higher level of confidence in the tokens that are bought through IEOs than ICOs. However, investors are highly recommended to do their own thorough research. Read this Term). Those plans, however, have been scrapped in light of the investigations against the firm.