Ever wonder how Bitcoin (and other cryptocurrencies) actually work?
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At the same time, Bitfinex, the world's biggest bitcoin exchange by trading volume, said it was under a heavy denial-of-service DDoS attack, meaning its servers had been intentionally flooded with junk online requests, taking down its website and crippling its services.
The latest outages show how the market infrastructure for an immature and volatile instrument that millions of investors have piled into may be ill-equipped to cope with sudden shifts in demand, which is worrying some investors. During a particularly volatile period of trading on Dec. As trading volume surged, Bitcoin rush limbaugh and Coinbase went down at least 10 times because of "record-high traffic", Coinbase said.
At the same time, bitcoin rush limbaugh does create extreme volatility and stress on our systems," bitcoin rush limbaugh company's director of business operations, David Farmer, said. All we know right now is that there is a large amount of traffic," he told Reuters. Daniel Masters, founder of Global Advisors Bitcoin Investment Fund, worries the exchanges would struggle to cope if there were a sudden rush for the exit.
The liquidity itself could be an issue. Charles Cascarilla, chief executive of New York-based company Paxos, which operates cryptocurrency exchange itBit, told Reuters that dealing with spikes in volume was a problem faced by all exchanges, not just cryptocurrency platforms. Cameron Winklevoss, co-founder of the Gemini exchange, an early bitcoin investor and an outspoken supporter of the cryptocurrency, said the risk the wider market would suffer badly if one exchange went down no longer existed, as trading volume had become more evenly spread.
Gox accounted for 95 percent of volume. Gox, the world's biggest bitcoin exchange at the time, collapsed in after hackers stolebitcoins, bitcoin rush limbaugh a collapse in the bitcoin price. The demise of Mt. Gox bitcoin rush limbaugh more than 24, customers unable to access hundreds of bitcoin rush limbaugh of dollars of cryptocurrency and cash. More than three years later none has recouped a cent.
Some investors had said they were worried the launch of bitcoin futures by the world's biggest derivative exchanges could exacerbate volatility by prompting some traders to take out large positions betting on a price fall in the future. So far this week, the launch of futures by Cboe does not appear to have created any additional volatility, with price moves less violent than last week's wild trading.
But Tim Swanson, a bitcoin expert and founder of Post Oak Labs, a technology advisory firm, said he was concerned bitcoin rush limbaugh if the futures liquidity increases there could be an incentive for someone with bitcoin rush limbaugh large bet against bitcoin to disrupt or attack the network to make money from the ensuing price fall.
Flooding the bitcoin network with tiny transactions could potentially send the price down sharply, said Swanson, as could sending many sell-signals to the market that are not honored - so-called spoofing, which is illegal in regulated markets. A surge in bitcoin trades in recent weeks has also left the blockchain network that the cryptocurrency relies on to process and verify transactions struggling to keep up.
In the past week, more than bitcoin rush limbaugh a million new users have opened wallets with retail-focused bitcoin wallet provider Blockchain, the firm said, taking the total number of users to more than 20 million, from 10 million last year. The London-based company has also been struggling to keep up, citing "record traffic levels" last week. Created inbitcoin uses encryption and a shared blockchain database that enables the anonymous transfer of funds outside of a conventional centralized payment system.
But there is little evidence to suggest buyers are using bitcoin as a means of bitcoin rush limbaugh and payment. On the whole, they buy the cryptocurrency as a speculative investment, attracted by massive price gains, said Bitcoin rush limbaugh Hileman, a bitcoin rush limbaugh fellow at the University of Cambridge's Judge Business School.
As a result, some banks say they are bitcoin rush limbaugh that a collapse in bitcoin would have a knock-on effect on investments by individual investors in other asset classes. Deutsche Bank said in a report on Dec. Periods of high volatility are not uncommon in other currencies and asset classes, bitcoin rush limbaugh in commodities and emerging bitcoin rush limbaugh.
But bitcoin's volatility is extreme, and frequent: Moves of a similar magnitude for the U. S dollar, for example, are extremely rare. Its biggest one-day move against a major currency was in January when the Swiss central bank abandoned a cap on the franc, sending the dollar down 18 percent.
Some bitcoin watchers, such as Swanson, also worry about the risk of one of the big exchanges being suddenly shut by authorities. The top three exchanges out of more than - Bitfinex, GDAX and bitFlyer - are home to more than 60 percent of all trading, according to data provider Bitcoinity. Another issue specific to the market is the risk of hacking and theft. More thanbitcoins have been stolen from exchanges, Reuters has found, with the Mt.
Gox heist accounting for the majority. For graphic on bitcoin's blistering ascent, click: Submit Search Magnifiying glass search icon. Search Submit Search Magnifiying glass search icon. News World Bitcoin fever exposes crypto-market frailties Bitcoin fever exposes crypto-market frailties Wednesday, December 13, 9: Bitfinex said it had been under a sustained DDoS attack since last week.
BITCOIN FUTURES Some investors had bitcoin rush limbaugh they were worried the launch of bitcoin futures by the world's biggest derivative exchanges could exacerbate volatility by prompting some traders to take out large positions betting bitcoin rush limbaugh a price fall in the future. CME Group and Cboe declined to comment.
As of Wednesday at GMT, more thanbitcoin transactions remained unconfirmed. BTC-e, which is no longer operating, could not be reached for comment.
