How Ethereum Crashed from $319 to Ten Cents ter Seconds, News and views from a different angle
UPDATE 12:27: Crypto Crash Victim Explains Problem after Wipe-Out
Blockchain blockchain blockchain.
The price of ethereum crashed spil low spil Ten cents from around $319 te about a 2nd on the GDAX cryptocurrency exchange on Wednesday, a budge that is being blamed on a “multimillion dollar market sell” order.
Ethereum is an alternative digital currency to bitcoin and had bot trading spil high spil $352 on Wednesday. It has since rebounded from its flash-crash lows to trade to about $325 on the GDAX exchange. According to industry and price tracking webstek Coinmarketcap, which takes into account the price on several exchanges, ethereum wasgoed trading around $338.
Adam White, the vice voorzitter of GDAX which is run by U.S. hard Coinbase, posted on the exchange’s blog, outlining what took place at around 12:30 p.m. PT on Wednesday. According to White, the multimillion dollar market sell order resulted ter a number of orders being packed from $317.81 to $224.48.
On Wednesday, the price of ether — the cryptocurrency of the Ethereum blockchain — on the GDAX exchange shortly crashed from $328 to $0.Ten. The story seems to be that there wasgoed a big market sell order that blew through a lotsbestemming of the buy orders on the book, pushing the price down. This triggered coerced selling by margin accounts, deep throating through the surplus of the buy orders until the price succesnummer Ten cents. “Wij understand this event can be frustrating for our customers,” said GDAX, but everything is fine: “Our matching engine operated spil intended across this event and trading with advanced features like margin always carries inherent risk.”
IS IT SAFE? (2nd Candle from the End)
Current Crypto Prices HERE
The basic appeal of the cryptocurrency revolution, to people like mij who are not making any money off of it, is that it is joy to witness people rediscover all of the lessons of financial economics, one at a time, ter public. This week’s lesson wasgoed: “Don’t use market orders for big trades ter an electronic market!” It’s an significant lesson, and not an evident one — people get it wrong ter the stock market all the time — but also pretty niche. “If you want to avoid flash crashes, stick to limit orders,” is a useful peak, but not, like, an significant organizing principle for a society.
There’s another lesson here however. A Reddit postbode from a margin trader highlighted that, ter ether, unlike te stocks or bonds, there no margin calls: If you fall below the margin trigger, the broker or exchange doesn’t ask you to waterput up more money, it just liquidates your position. “An area of thought to think about is whether or not GDAX could have suggested margin calls on their margin product,” writes the redditor, but.
However, doing so shifts liability overheen to GDAX, and it’s simply not mature enough to belly that kleintje of risk. For example, if the crash wasgoed from a critical flaw ter Ethereum’s code and GDAX waited to liquidate to give traders time to add more funds, it opens itself up to defaults on those funds. Someone could say “the check is ter the mail” and then just walk away.
The basic idea of blockchain innovation is that it substitutes longstanding human institutions of trust and tradition with immutable efficient code. No one needs to trust anyone te the blockchain, everything operates automatically and ter public. And bitcoin/blockchain/smart-contract developers indeed have done outstanding work te, spil it were, automating trust, substituting trust te humans and institutions with with trust ter code. But I suspect there are fundamental boundaries to that treatment. A market te which people trust each other a little bit — they collateralize loans, sure, and trade electronically, but they sometimes pick up the phone and attempt to work things out like reasonable humans — seems likely to be more efficient than a purely trust-free one.
Elsewhere, here is Civil, “an Ethereum-based, ad-free marketplace for journalism that leverages cryptoeconomics and community governance to enable a radically open treatment to fact-based, responsible journalism.” “Fact-checking-as-a-service enables journalists to pay for valuable crowdediting while ensuring Newsrooms and Stations publish accurate content,” says a diagram te the associated whitepaper. Sure! Good! What I said above: Sure you can write a whitepaper about substituting trust te venerable human institutions by some sort of blockchain-based proof-of-crowdediting mechanism. But I suspect something will be lost te actually implementing this thinner notion of trust. Ter any case, on current trends wij are about two months away from Money Stuff’s multimillion-dollar initial coin suggesting, to be followed te very brief order by my retirement.