Hacker News Reader

Comment by jstanley | Hacker News Reader

1.) Transacting on the blockchain costs fees. It would be very expensive to fake bitcoin transaction volume. Even if you're a miner, your fake volume would be displacing real volume that would be paying real fees.

2.) Transactions on exchanges never hit the blockchain, so exchange volume and blockchain volume are unrelated. Furthermore, keeping the price high would not be "quite straightforward". What method do you have in mind? The only way to artificially keep the price high long-term is to place infinitely-large buy orders at the minimum price you want. This will obviously cost you unbounded amounts of money and would be financial suicide.

View on HN

For your question in (2)... Wash trading?

Some of the exchanges have zero fees for high enough volume on some trading pairs... and if an exchange themselves are running wash trades it's not like they'd be paying their own fees anyways.

And how does that increase the price?

I was going to be smarmy and post a lmgtfy link with the contents "Wash trading price increase" but decided against it.

There's a reason why wash trading is regulated against.

> It would be very expensive

Even for early miners?

Edit: I should have written early buyers, since those wouldn't mind paying extra after their asset appreciating 10000x

> Even if you're a miner, your fake volume would be displacing real volume that would be paying real fees.

You'd be missing out on mining revenue. And given that the marginal cost of mining tends towards the marginal reward for mining, missing out on revenue is almost as bad as making a loss.

There would have to be a substantial incentive to fake transaction volume in order to make it worth it.

Additionally, given that blocks are full these days, there's not very much scope for increasing the apparent transaction volume anyway. The best you could do is replace large "real" transactions with a larger number of smaller "fake" transactions.

I just don't think it's likely to be happening.

> Even for early miners?

What does "early miners" mean? Nobody has any inherent advantage in mining bitcoins. The costs are the same for everyone

Some people may have an advantage by having cheaper electricity costs or better mining hardware, but they would still be missing out on significant amounts of fees by not mining legit transactions

Reply on news.ycombinator.com