The Real Cryptocurrency Market

The crypto market is not that big as it has been shown in CoinMarketCap, and several suspicious frauds has been detected, how this frauds are possible and how Bizanc DEXFI solve it?

The goal of this article is just to get the main points explained by Bitwise report and provide Bizanc only technical perspective based on DEXFI — Decentralized Exchange Finance, and how it could be avoided on the market. If you want to check out the full Bitwise report, please click here.

Let`s get started.

Agenda:

  • What makes cryptocurrencies Unique and What that`s mean?
  • How frauds can be ?
  • The Incorrect Data Reported and Suspected behavior.
  • How Bizanc DEXFI solve it and Expand Bitcoin Blockchain Features ?
  • How and why bitcoin is resistant to manipulation?
  • Conclusion
  • [EXTRA]

What Makes Cryptocurrencies Unique?

Bitcoin is a globally fungible commodity with low transaction costs, near-zero transportation costs and low-to-zero storage costs. Page 15.
  • Globally fungible: In case of Bitcoin, Ethereum or Biz, all of then are the same everywhere in the world. That is possible because of blockchain protocol, the peer-2-peer network based on Proof-of-Work consensus algorithm, solves the Generals Byzantine math problem. It makes every peer to receive the same information making possible bitcoin or any other cryptocurrency or token to be the same in everywhere.
  • Low transactions costs: Bitcoin could be traded with $0.01 spread as mention in Bitwise report.
  • Near-zero Transportation costs: Blockchain algorithm are capable to sign the transaction to everyone in the network, without any transportation physical costs, the miners will be in charge to validate and propagate this transaction in the network.
  • Low-to-zero storage costs: In peers perspective, if you want to get full node in bitcoin, it needs to storage around 250GB which means 80 dollars per month depending on the servers. In custodian perspective you are able to save funds in mobile wallets, hardwallets or even in a third-party custodian mention by Bitwise.

What does that mean?

As a result, you would expect the bitcoin market to be uniquely orderly and efficient, with tight spreads and nearly perfect arbitrage. Page 19.
Bitcoin fits the textbook definition of an arbitrable good to a degree unmatched in history, which would suggest a uniquely efficient market. Page 19.

According with CoinMarketCap, the situation is not expected as mention above, the market is disorderly and inefficient and the information available to people is not trustful.

How frauds can be ?

Based on Bitwise report, the volume reported is around 6 Billion/day U$D, but those volumes are unrecognizable, according with then the vast majority of reported volume is fake and/or non-economic wash trading.

CoinMarketCap Top Exchanges

Screeshot: Bitwise Report — Source Coinmarketcap on March 9, 2019 — Page 22.

Exchange break down

Screeshot: Bitwise Report — Source Coinmarketcap on March 9, 2019 — Page 22.

The Incorrect Data Reported and Suspected behavior.

Despite its widespread use, the CoinMarketCap.com data is wrong. It includes a large amount of fake and/or non-economic trading volume, thereby giving a fundamentally mistaken impression of the true size and nature of the bitcoin market. We will demonstrate in multiple different ways that approximately 95% of this volume is fake and/or non-economic in nature, and that the real market for bitcoin is significantly smaller, more orderly, and more regulated than commonly understood. Page 23.

To check deep the information about how Bitwise have checked the exchange has been faked, please check the page 24–28 for Real Exchange behavior and 29–38 for Suspicious Exchange behavior.

In spot market, also is necessary to check some spike behaviors, Bitwise have checked 81 Exchanges, so take a look into some of Trade Size Histograms

Trade Size Histograms Well-Known Exchanges

According with Bitwise, They reveal consistent and intuitive patterns, also each bucket declines as trade size increases, beside that there are peaks in bitcoin sizes.

Source — Bitwise report — *Average Daily Volume. Source: Kaiko. March 4–8, 2019. Graph Source: Bitwise. March 4–8, 2019.

Trade Size Histograms for Suspect Exchanges

Trade Size Histograms, are consider suspicious because they look completely different without any pattern.

Source — Bitwise report — *Average Daily Volume. Source: Kaiko. March 4–8, 2019. Graph Source: Bitwise. March 4–8, 2019.

For further charts and explanations, please check the pages 41 to 57.

Total Volume Is Considerably Less Than Reported

According with Bitwise, the chart below show the reported Volume by Exchanges vs Actual Volume reported by Kaiko.

Source: Bitwise — Kaiko and CoinMarketcap — March 4–8.2019

How Bizanc DEXFI — Decentralized Exchange Finance solve it ?

Based on Bizanc Decentralized Blockchain protocol, DEXFI register every single trade on chain, so it can be Ask/Bid and some of status should be shown:

  • Pending — Ask/Bid to be mined
  • New — New offer mined
  • Cancelled — Cancelled offer mined
  • PartillyFilled — PartillyFilled mined
  • Filled — Filled mined

Once the orders has been generated and signed by private key storage on user browser, mobile wallet or hard wallet. The order must have validated signature and then sent to mining pool around peers, the balances will be checked and the Bid/Ask orders will be match based on price. After that, mining process will start.

The decentralized process is ensured by miners, which has energy cost to do it. Instead of Centralized Exchanges where you need to trust then, in terms of custody of your digital assets, wash trade or market manipulation.

In DEXFI — Decentralized Exchange Finance, there is no need to trust anyone besides the cryptography and network protocol, assuming there is no 50%+1 attack. The process of block production is completely random, where no one are able to generate it easily, without spend money to do it not even us from Bizanc. Its ensure no one will be able to do wash trade or fake volumes once it will be really expensive to do it.

Also, Bizanc DEXFI allows interoperability with 2 others blockchains as such Bitcoin and Ethereum, so the transaction hash of deposits and withdrawals are registered on Bizanc, Ethereum and Bitcoin blockchains. Ensure there is no fraud or fake volumes in the process.

Beside all of this, the Decentralized Protocol provides an open information to everyone check and validate, it do not depends on Exchange Reports or even thirty-party source, everything has been shown on Bizanc explorer.

Bizanc DEXFI — Expand Bitcoin Blockchain features.

For deep further technical information, please check our whitepaper.
https://bizanc.io/documentos/Bizanc-whitepaper-draft.pdf

Bizanc has created a cryptocurrency called BIZ. BIZ is the native cryptocurrency inside of Bizanc Blockchain, this currency provides liquidity between assets inside of DEXFI as such Bitcoin, Ethereum, Bizanc Native Tokens and Ethereum ERC-20 Tokens.

Every currency or token inside of Bizanc DEXFI has OrderBook, it means all of those digital assets are able to be trade, transfer (payments), P2P (OTC) or arbitrage and everything is registered inside of blockchain.

How and why bitcoin is resistant to manipulation?

In Bitwise vision, there are 3 ways that help Bitcoin become resistant to manipulation.

1 — Bitcoin price has setup on the open market

2 — The fact bitcoin is fungible and transportable, it provides a effective arbitrage environment by global market participants. Also to manipulating the market and profiting is uniquely difficult.

3 — The spot bitcoin market is fractured among ten exchanges. No exchange has majority share, so it gives a resistance to market manipulation and any kind of attempt to manipulate will be easily find out.

Conclusion

DEXFI, provides the open market for BIZ, Bitcoin, Ethereum and several other assets. With a open orderbook, miners behind, open market, fungible assets, arbitrage and decentralized protocol, DEXFI mitigates the risk of any player in the world manipulates the market, frauds and hack the system. That all being said, we aim to provide the superior new fully decentralized financial ecosystem in the world.

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