How to kill insider trading in the crypto-world?

(The following is still a WIP and is meant to evolve based on your feedback)

After finishing Black Edge by Sheelah Kolhatkar, I eventually realized how fucked up the average Joe was on the traditional stock market.

This book describes how the largest hedge funds (SAC Capital specifically) are manipulating the market by collecting “black edges” — non-publicly disclosed information about a company — and using them to short sell stocks. Getting these private pieces of information and using them to trade is called “insider trading” and is theoretically forbidden by the law.

However, finding someone guilty of insider trading has proven to be extremely difficult and the new era of deregulations under the Trump administration is pointing towards an even darker future.

In a nutshell, your potential profits on the stock market will always be drastically squeezed out by the big players because they are not playing by the rules.

Now you wonder: “Why should we care, we — the lucky few — who started investing in crypto-currencies after selling out our stock portfolio*?” We live in a much better world, fully decentralized and transparent. No one can lie to no one and all the information is available for the average Joe to make a rational decision about which crypto-currencies he needs to invest in. Are we sure? Really?

1. The cold hard truth about crypto-currencies and the free access to information

It should be granted I’m not challenging that the crypto-world has everything to be better than the traditional stock market, however when it comes to getting full access to the information, we have progress to make in order to leave this semi-public/semi-private current state and reach the fully transparent stage we are claiming.

So why are we in a semi-public state?

A. Communities are not for the greater good

For those of you who have followed the ICO madness, you must have noticed the need to register to Slack, Telegram, Discord or whatever other group management platform in order to get the latest information and find about the exact process to register for any ICO.

While this is a great way to build and engage a community in the first place, this trend also makes it very difficult to get the latest news about how a given project is doing. Below is a screenshot of my telegram account,

as you can see, buzzing through all these different threads doesn’t make it easy to extract the most valuable information and make the right decision. Just imagine that all my fellow IBBC.io members are going through the same hassle on the cryptos they are monitoring…

One of the key features we can recognize to the traditional stock markets is its mandatory disclosure of key informations for the market (eg: SEC). This leads to the ability for the average Joe to simply go to website like Nasdaq.com to get the latest news about the companies he wants to look after.

B. Unregulated private markets are not for the greater good

Unregulated markets like Poloniex, Kraken, Binance, GDX, etc. have greatly helped democratize the crypto-currencies and make the overall market grow, however they are managed in a very private and centralized kind of way. Given the huge impact they can have on the coin prices — coins often see+20% on the day they are introduced on the largest platforms — we should have more transparency on how they decide which coins to list/delist (see Poloniex possible Insider Trading**).

Additionally, recent DDOS attacks on Poloniex & Kraken have also raised some flags regarding the ability of these platforms to properly protect their customers. More transparency on how exactly these security issues are mitigated would be more than welcome in order to let the average Joe decide on which platform he wants to put its savings.

2. How can we structure our crypto-world to be more transparent and safe for the average Joe?

We need to build a one-stop shop for information we will all agree to share on. Let’s call it crypto-for-joe for the sake of this article . If we were to make the analogy with the traditional stock exchange world, any crypto-news from the different tradable crypto-currencies should lead to a crypto-“press release” that would be posted on crypto-for-joe.com. Question is: what should be the features of such a media?

• Decentralized (what else could it be…): You don’t want any centralized entity to be able to control what is being posted/displayed on the website
• Real-time: Any update from any crypto should not be disclosed without being posted on crypto-for-joe.com at the same time
• Standardized: Every “press release” should follow a given format — the least would be: {Date, Token_name, Type_of_update: [Business (eg: new partnership signed with X), Tech (new release with feature X and Y) eg, Team (eg: New member joining the team), Other (eg: Event next Tuesday)), Title, Description]
• Multi-channel: All users should be able to access the information from crypto-for-joe.com using their favorite channel whether it is web, app or API call

3. How could it be implemented?

My limited technical knowledge will definitely prevent me from giving an exhaustive view of all possible solutions but here is a few ideas I have in mind:

• Bot, bot, bot: Develop a cfj_bot available on every platform (Telegram, Slack, Discord etc…) that will be able to interpret every message being posted by the moderators of such a platform as it will be formatted according to the cfj.com standards
• Integration with all VCS tool: Whenever a new version is pushed to master, commit should respect the cfj standards and a notification should be pushed to cfj.com

Conclusion:

One of the main challenge we are facing in the crypto-world right now is extending our audience and shifting from a geek-oriented product to a mainstream one. To do so, we need to promote ease-of-use and trust in the new world we’re building. Transparency will be key here and we need not to repeat the mistakes that were made in the “old” centralized world.

The recent Nobel Prize Richard Thaler encompasses these thoughts in a much better fashion with the following tweet:

Bonus: What does Dilbert says?

*Not completely true here, I must admit I still have some NVidia & AMD stocks because they’re selling GPUs and GPUs are used for, well, crypto mining.

*I’m not a daily user of coinidol.com and don’t know how legit they are but the facts brought in the article look legit

About us

IBBC is a community of crypto-enthusiasts looking for the next big thing. If you want to follow us and get access to more reviews, feel free to visit our space https://medium.com/ibbc-io

Important: Never invest money you can’t afford to lose. Always do your own research and due diligence before placing a trade. Read our Terms & Conditions here.