Based on rigorous analysis with extensive robustness checks, the paper demonstrates that the suspicious trading activity likely caused the unprecedented spike in the USD-BTC exchange rate in late , when the rate jumped from around $ to more than $1, in two 24crypto.de by: Bitcoin Links is a directory for the Bitcoin ecosystem. Hodl Hodl is a P2P cryptocurrency exchange that allows users to trade directly with each other and it doesn't hold user funds - locking it in multisig escrow instead - which minimizes the possibilities of cryptocurrency theft and reduces trading time. 2The Bitcoin ecosystem includes the core network for propagating transactions, the blockchain, and many intermediaries such as currency exchanges, mining pools and payment processors that facilitate trade. We use \Bitcoin" with a capital \B" to refer to the ecosystem and \bitcoin " with a small \b" or BTC to refer to the coin. 2.
Bitcoin ecosystem 2013Bitcoin Links | Mapping the Bitcoin ecosystem since
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Its success has inspired scores of competing cryptocurrencies that follow a similar design. Bitcoin and most other cryptocurrencies do not require a central authority to validate and settle transactions. Instead, these currencies use cryptography and an internal incentive system to control transactions, manage the supply, and prevent fraud. Payments are validated by a decentralised network. Users keep keys to their Bitcoins and make transactions with the help of wallets. Exchanges facilitate trade between Bitcoins and fiat currencies, and also allow for storing Bitcoins.
Bitcoins can be stolen through wallets or exchanges. The supply of most cryptocurrencies increases at a predetermined rate, and cannot be changed by any central authority. There are about 15 million Bitcoins currently in circulation, with the ultimate number eventually reaching 21 million. The fixed supply in the long run creates concerns about the deflationary aspect of the currency. While Bitcoin shows great promise to disrupt existing payment systems through innovations in its technical design, the Bitcoin ecosystem 1 has been the frequent target of attacks by financially motivated criminals.
Due to the unregulated, decentralised environment in which they operate, cryptocurrencies are under constant threat of attack. Bitcoin only recently became a subject of research in economics. However, the topic has been of interest for longer in computer science for early work by computer scientists on incentives, see Babaioff et al. Numerous researchers have conducted studies in order to document and combat threats such as Ponzi schemes, money laundering, mining botnets, and the theft of cryptocurrency wallets Moeser et al.
Ron and Shamir attempt to identify suspicious trading activity by building a graph of Bitcoin transactions found in the public ledger. None of these papers can associate individual transactions with specific users of the currency exchanges. We leverage a unique and very detailed dataset to examine suspicious trading activity that occurred over a ten-month period in on Mt.
Gox, the leading Bitcoin currency exchange at the time. We then show how this trading activity affected the exchange rates at Mt. Gox and other leading currency exchanges. Figure 1 Bitcoin—US dollar exchange rate, with periods of suspicious activity shaded. While it was the dominant currency exchange when Bitcoin first shot to prominence in early , behind the scenes, Tokyo-based Mt. Gox was in trouble. In addition to suffering from repeated denial-of-service attacks and Bitcoin thefts, two unauthorised traders were able to transact on the exchange without spending real money.
Figure 1 shows when these fraudulent traders were active, along with the Bitcoin—US dollar exchange rate.