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The Power of One: Do Whales Have the Power to Rock Bitcoin’s Boat?

  • Darryn Pollock
    ⭐ Features

    Cryptocurrency market may be growing, but it is still small enough that individual players can make a big splash in the way the price moves

The Power of One: Do Whales Have the Power to Rock Bitcoin’s Boat?
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In most major markets today, the price fluctuation has a lot to do with news or group sentiment, it is not very often that an individual can affect the price of gold, for example. However, the cryptocurrency market, while being worth billions, still is prone to the odd splash from a big whale.

Whales are big money players within a market, and because of Bitcoin’s humble beginnings, where they were worth a few cents at a stage not too long ago, there are a lot of people out there who have quite a big haul from holding onto their coins.

But then, there are also people who have made their fortunes in Bitcoin that have enough to rock the boat, such as those tied to the infamous Silk Road, as well as people involved in Mt.Gox and its subsequent hack.

So, with Bitcoin suddenly plunging in price a week ago, with no real catalyst being offered, was it one individual flexing their weighty wallet? And if so, what are the dangers of having individuals with so much power in what is supposedly a decentralized system?

Latest Whale theories

The sudden drop that saw the cryptocurrency market plunge a few billion in terms of market capitalization in the last few weeks has been questioned relentlessly with a catalyst yet to be found. Goldman Sachs was lined up as a reason for the sudden fall, yet they denied it when they decided to delay their trading desk.

This made the speculators start revving up a few conspiracy theories, and those on Reddit delved deep into the working of the transparent Bitcoin address system.

50 transactions involving a total of 50 500 Bitcoin originating from one whale’s wallet were moved between Aug. 23 and 30. Based on Aug. 22nd’s closing price, they would be worth about $320 mln.

Some speculated that the money being moved was from a wallet tied to Mt. Gox, especially ahead of claims being allowed to open against the former exchange for corporations to recoup their money. There was also the belief that the move could have been from the Tokyo Whale, Nobuaki Kobayashi, the lawyer for the Mt. Gox trust, who has in the past made big money moves.

Even Silk Road and Ross Ulbricht, who went by the alias “ Dread Pirate Roberts, was hauled up in debate while he sits behind bars. Much of Robert’s funds were seized, but because of the anonymous nature of cryptocurrency, it is impossible to tell if he is totally devoid of all his Bitcoin fortune.

The power of one

The potential that one individual, moving a lot of money, that is not that hard to have come by in certain circumstances, affecting the market as it did is quite disconcerting. Bitcoin’s decentralized nature is supposed to be offering power back to the people and allowing a democratic system of finance.

However, in terms of its market, and as a commodity, there is already a lot of evidence that it is not as decentralized as many would like to believe. Banks and financial institutions have a lot of say in how the market moves with their own speculation of joining in or slating publically the cryptocurrency market.

If it is also true that individuals have as much sway as they do to manipulate the market, and bend it for their own personal gains, then it proves that the cryptocurrency market is still very small, and it has a long way to go before it can be considered truly matured.

But it is nothing new, there was, in 2017, an instance where an individual labeled Spoofy, was credited with affecting the market. It came down that this trader, or small group of traders, was purposely manipulating the market with a big bank balance.

Not only about manipulation

However, in the case of the latest conspiracy theories about the 50,500 Bitcoins that were moved, they might also have nothing to do with the cryptocurrency market crashing, even if it was a Mt.Gox move or something to do with Silk Road.

This is actually really interesting because of the Reddit detective work that’s been happening and just people making these assumptions that this whale is cashing out,” said Kim Grauer, senior economist at Chainalysis. “It leads to conspiracy theories that someone’s trying to sabotage Bitcoin- just from someone doing an administrative move of their funds for security purposes, or we don’t even know why they have done it.”

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Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?

  • Yuri Molchan
    ⭐ Features

    Stablecoins show hardly any volatility compared to Bitcoin and altcoins, many are hoping that they will be able to bridge new crypto economy and regular fiat money

Question of the Day: Can Stablecoins Accelerate Cryptocurrency Adoption?
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Bitcoin, the father cryptocurrency, emerged in hope that it will remove all intermediaries in electronic commerce that cut off their share of payments. BTC was perceived as a P2P way to replace fiat cash in an electronic format, which would enable one party to pay another without any financial institution or payment platform which would demand its share of a transaction as a reward for its services.

What is wrong with Bitcoin

For quite a while Bitcoin was performing the way the crypto community expected. But the situation changed later – BTC rate became weaker, thus bringing down its financial and economic reliability, when it gets to be used as a regular means of payment.

You cannot have a currency that would cost like a British castle today, a gram of gold – tomorrow and a pack of French fries the day after.

At that point practical fintech minds came up with an idea of creating something which would become a breakthrough in the universe of crypto – a so-called stablecoin.

Will stablecoins solve the volatility problem?

Technically, stablecoins are protected from the volatility roller-coaster that Bitcoin and other cryptos love to ride. They are programmed to keep their prices stable and investors now are largely attracted to this new type of digital assets.

Stablecoin does not show any volatility in its monetary value, since it has a fixed connection to an asset it is pegged to. The major goal of using stablecoins is taking the best from decentralized crypto coins and combining it with a constant value. Thanks to it, stablecoins can be used as a reliable means of trade.

Asset-pegged stablecoins

Asset-backed ones get their value from an asset as can be understood from the name. An asset provides the necessary value to a coin, as well as the necessary legitimacy.

A great example of an asset-pegged stablecoin is Tether (USDT). In spite of a series of scandals at the end of last year, it remains the most popular stablecoin in the crypto market.

Recently, it has partnered with the Tron Foundation to launch a Tron-based stablecoin.

Other examples are TrueUSD (TUSD), USD Coin (USDC), the Gemini Dollar (GUSD), and the Paxos Standard (PAX). They are all pegged to the USD.

Crypto-backed stablecoins

Some digital coins work in a similar way to fiat-backed ones, however, they are pegged to collateral crypto. That means that crypto assets that ensure the value of such stablecoins are stored in a wallet similar to escrow.

A good example of a crypto-pegged token is Maker, which is ranked 16 on CMC.

Algorithmic stablecoins

Even though, stablecoin can be interesting at first thought but the way they are built goes against the principle of decentralization that crypto coins have as a foundation. Thus, many crypto fans and evangelists are positive that stablecoins must be linked towards not a centralized asset but a computer algorithm which takes value from a balance between supply and demand.

Basis is now considered the most promising algorithmic stablecoin of all.

👉MUST READ John McAfee Says Exactly When Bitcoin Will Hit $1 Mln, IBM’s Jesse Lund Goes for More Modest Forecast

Can stablecoin ensure smooth future for the crypto industry?

The primary goal of all crypto assets was and remains to come up with virtual asset that would be liquid enough and not vulnerable to market volatility. From this point of view, stablecoins are a dream of all crypto fans and evangelists of a decentralized economy.

Apart from the potential to conduct crypto transactions smoothly, experts believe it can bridge the two worlds – fiat and crypto, bringing them a mutually beneficial coexistence. However, that may take time.

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