Rumours of a hack as Binance users are suddenly having their coins converted to Bitcoin.Update-All withdrawals suspended

Bitcoin went down  7% Wednesday morning, hitting below $US10,000 for the first time in over a week, after rumours began to swirl on Social media that major cryptocurrency exchange Binance had been hacked.

Numerous concerned users have taken to Reddit to complain that popular cryptocurrency exchange desk Binance has suddenly begun to sell their altcoins at market rate – without their consent and without any notification whatsoever.
“WTF is happening,” one user cried out. “Binance just sold all my [altcoins] at market rate,” the customer continued, adding that all of his coins were now converted to Bitcoin.
“It is true,” another user wrote. “It happened to my account. All my [altcoins] were sold and all I have is Bitcoin now.” The user went on to clarify that his two-factor authentication was enabled and there were no signs his account was compromised. 
A spokesperson for the company has since confirmed it is investigating the issue on Reddit. “We are investigating reports of some users having issues with their funds,” the Binance support rep wrote. “Our team is aware and investigating the issue as we speak. Please remain patient and we will provide an update as quickly as possible.”
The exchange desk hasn’t yet mentioned anything about this investigation on its official Twitter account, but numerous users are already chattering about it.
It remains unclear what is causing the bug for the time being.
This marks a second big mishap for Binance over the last month. Back in February, the exchange desk abruptly halted all trading for maintenance. The website ultimately resumed functionality almost a day after its promised timeframe. It did, however, make it up to users with some trading discounts.
We’ve contacted Binance for comment and will update this piece accordingly should we hear back.
Update: It appears that hours prior to the avalanche of complaints about wrongly sold altcoins, Binance was struggling with server downtime in the UK and several other areas.
A Binance rep confirmed its team is working on the issue, adding that it “is only affecting some users and we are investigating the root cause.” Please note that there is no evidence to suggest the two issues are related.
Update 2: The customer support rep has since told users that there is no need to change their passwords, hinting the exchange desk is struggling with a technical malfunction rather than a hack.
Update 3: Binance customer support reps on Telegram are now saying that “[t]here is no evidence of our exchange being compromised.”
The company has since reportedly suspended withdrawals, according to numerous reports from users.

Update 4: Binance has posted the following statement on Reddit:

We are investigating reports of some users having issues with their funds. Our team is aware and investigating the issue as we speak.
As of this moment, the only confirmed victims have registered API keys (to use with trading bots or otherwise). There is no evidence of the Binance platform being compromised.
Please remain patient and we will provide an update as quickly as possible.
Withdrawals are temporarily disabled at this time.

The exchange desk seems to suggest that the issue is exclusively affecting users who had registered API keys for trading bot applications.
However, a swath of victims on both Reddit and Telegram insist their coins were converted even though they never used the Binance API.

Why are people still so optimistic about Bitcoin?Run a Bitcoin Lightning Network test yourself.It is the real deal.

Bitcoin Lightning Network Node Easy Setup Tutorial for Windows Desktop Users — A how to guide

I’ve noticed recently plenty of excitement for layer 2 scaling solutions, like Lightning Network (LN), but a lack of simple documentation for setting things up. While it may seem that using LN on the testnet is for programmers and Linux users only, it’s actually not that difficult. Getting setup with the current LN desktop clients for Windows is actually not too hard, and can be accomplished in about 30 minutes. I was pleasantly surprised.

Keep in mind, this is currently for testnet BTC ONLY right now. I will update the guide when you can use real BTC :)

What these desktop clients are doing are creating an easy GUI for you to interact with the LND daemon, similar to how Bitcoin Core and Bitcoin Knots help you to interact with bitcoind, the bitcoin daemon. You’ll see later on that both Zap and Lightning-App will display the exact same information albeit with different interfaces.

The goals of this tutorial are:

• Installation of Lightning-App or Zap Desktop (leading desktop LN applications)
• Open a payment channel
• Buy a virtual coffee from Starblocks (starblocks.acinq.co)
• Receive a lightning payment

For this tutorial, I will be using a Windows 7 desktop. If you’ve ever sent or received a Bitcoin transaction, you have all the pre-requisite knowledge required to walk through the tutorial.

---

Part 0: Setup (5-10 minutes, easy)

**EDIT**: If you do not want to use the Zap application, and only want to try the Lightning App desktop, you can download the Windows binaries here: https://github.com/lightninglabs/lightning-app/releases/download/v0.1.4-alpha/Lightning-win32-x64v0.1.4.zipSimply download, extract and run “lightning.exe” and it should work. You can then skip directly to Part 2.

We’re going to need a few programs to actually compile the LN apps for us, because they aren’t pre-compiled in a nice beautiful .exe yet. This isn’t too hard though!

Download Node.js for Windows and install: https://nodejs.org/en/download/

Download Git for Windows and install: https://git-scm.com/download/win

Download Yarn for Windows and run the installer: https://yarnpkg.com/lang/en/docs/install/#windows-tab

Download Windows Visual C++ Build Tools 2015 and install: http://landinghub.visualstudio.com/visual-cpp-build-tools

After installing, go ahead and restart your computer.

After rebooting, launch the command prompt (Start →CMD.exe). Type node -v, and hit enter. Then type git — version, and hit enter. Finally, type yarn -v, and hit enter. If you see any type of version output for all 3, then we’re good to go!

Read more

Be the first to beat our game,win 1 Bitcoin.Gaming company steps into Crypto.

A new video game where  you have to crack passwords has offered to reward the first successful person with one Bitcoin.
Bitcoin is currently valued at over $10 000.
All you have to do is buy the game on Steam for $1.99 and be the first to beat it.

MonteCrypto: The Bitcoin Enigma launches February 20 on Steam. There’s also a 40% discount if you buy it on the release date, bringing the price down to just $1.19.
We don’t know much about the game itself, but a handful of details have already been revealed. It uses a first-person perspective and features 24 puzzles you’ll need to solve as you make your way through a maze or rooms in what looks like a spooky mansion. You can play as a team or go it alone, and you’ll be able to leave clues (or red herrings) behind for other players to find.

The game seems pretty legit and doesn’t appear to break any of Steam’s official rules. The developers behind it do stand to make a pretty big profit, assuming they can sell enough copies. At $1.99, just 5,000 downloads would be enough to break even, though that doesn’t factor in the same-day discount or the fluctuating price of Bitcoin.
As an initial clue, MonteCrypto’s FAQ page links to to a bit of code on GitHub designed to help people crack their Bitcoin wallet password if they only remember some of it. The developers also suggest checking the FAQ page’s source code for more clues while you wait for the game to officially release.

Why is BTC rising today? Will it fall again?

 

 BITCOIN suffered a dramatic start to 2018 with huge price fluctuations as the cryptocurrency dropped to devastating lows again last week. BTC made slight recoveries this week - so why is Bitcoin rising today and will it fall again?

 The value of cryptocurrency bitcoin plunged last month, and again last week, amid fears trading could become illegal in a number of countries.

South Korea and India have both issued warnings to the market, threatening to pull the plug in a devastating blow to prices.
Already a volatile cryptocurrency, bitcoin hit a record high when it passed $20,000 in December to the delight of investors.
But BTC’s value has since shifted unpredictably, with wild drops and subsequent recoveries seeming to become a never-ending cycle of highs and lows.
Last week, the value plunged again from nearing £10,000 to $6,000 in just four days.
But after a little recover, the currency now appears stable at between $8,000 and $9,000.

BTC's price this morning stands at $8,895 a rise of $379 with a potential $10,000 return set to arrive before the weekend.
Most of the price volatility seems to be over, and a slow bullish rise to now continue for another half-month or so according to experts.

Why is bitcoin’s price rising and will BTC fall again?

Recent events in the cryptocurrency world have demonstrated just how quickly prices can change - rising to dizzying heights before crashing to catastrophic lows.
The cryptocurrency’s value plummeted ahead of Christmas, at one point dropping by almost $2,000 in just an hour in a terrifying 60-minutes for investors as BTC went into the red.
BTC soon bounced back but tumbled again in mid-January - then recovering again and plummeting at the start of February.
Bitcoin notorious volatility means BTC is expected to continue to shift unpredictably amid fears bitcoin has created a bubble that could burst at any moment.

The so-called real Wolf of Wall Street, Jordan Belfort, warned the bitcoin bubble will burst and hurt 'honest people' who invested in the cryptocurrency.
He said: “The ones who are getting there because they’ve been sold the bill of goods, they believe, and these are not stupid people, many of them are smart people, they’re not naive even.
“It’s just human nature to jump on the bandwagon, it’s what every great bubble is made of and they’ll call this the greatest bubble of all time.
“The ones at the end of the day that typically get slaughtered the most are the average mums and dads.”

 Source

Coincheck users are suing to get their money off the hacked cryptocurrency exchange

The fallout from the year’s biggest cryptocurrency hack to date continues. On Monday, Reuters reported that 10 traders who used the Tokyo-based exchange Coincheck are preparing to file a lawsuit with Tokyo’s District Court on Thursday. The plaintiffs will be represented by Hiromu Mochizuki, who has been tweeting some updates about the case.

During the aftermath of its recent $530 million hack of NEM tokens, Coincheck froze transactions on its platform, holding plenty of virtual wealth hostage in the process. The present suit demands that Coincheck let the plaintiffs withdraw their virtual currencies in order to remove them from the platform and relocate the coins to external wallets. Reuters reports that the group may pursue a follow-up lawsuit for damages related to the hack later in February.
Coincheck withdrawals in Japanese Yen were frozen on January 27. Last week, Coincheck indicated that it would resume withdrawals of JPY after “[completing] the technical safety confirmation with the cooperation of external experts.”

After announcing the loss of 500 million tokens of NEM in late January, Coincheck outlined its plans for “reparations” to affected customers.
Among those plans, Coincheck vowed to “discover the root cause of the breach, safeguard our customers, and [take] more effective measures for system risk management and prevention of similar events in the future.”

Source

What is bitcoin really worth? Skeptics and believers battle over the biggest technological divide since the Y2K bug.

Throughout history, technology has fostered differing opinions. Remember Y2K? According to some, a simple change in the date was going to disrupt the global computing system. Software developers were paid thousands of dollars to do, what in the end, was nothing.
However, maybe the most divisive debate of them all centers on a decentralized payment system that relies on the ‘trust’ of complicated software protocols and problem-solving techniques, which are purely reliant on the internet: Bitcoin.
At one end you have the combative Winklevoss twins who challenge the imaginations of cryptocurrency skeptics, claiming bitcoin is going to be worth over $300,000 and could eventually replace gold. Then you have your older traditional investors like F. William McNabb, chairman of Vanguard Group, who said bitcoin poses a systemic risk to the financial system, and it’s volatility undermines its adoption, adding that he sees a “decent probability that its price goes to zero.”
So how did we get here? That’s simple: Bitcoin’s price. Owners of the virtual currency have had a tough start to 2018, with the price of bitcoin losing about half its value since Jan. 1. However, had you purchased it five years ago, it’s a different story.

With every 10% swing in the price of bitcoin BTCUSD, -3.56% the bulls and bears are moving further apart. Often fueled by wildly inaccurate claims based on little research or understanding on what remains an enigmatic facet of the financial system.
“The current discussions are triggered largely by bitcoin’s spectacular price increases, and all too often, participants only repeat dogmatic claims, for example that ‘bitcoin will soon be dead anyway’ or ‘bitcoin will soon dominate the financial sector,’” Deutsche Bank said in a research note.

Bitcoin v Banks
At one end of the spectrum, proponents of bitcoin believe that one day digital currencies and blockchain technology will replace the entire banking system. As Deutsche Bank points out, it’s no coincidence that bitcoin was created during the financial crisis. Antiestablishment and libertarian at its core, those who believe in bitcoin argue it’s a more reliable and safer payment system, that doesn’t strip users of their personal information like the evil empires (i.e., banks) do.
However, at seven transactions per second, bitcoin pale in comparison with a credit card system that handles millions of transactions per second. And as bitcoin has become more popular, confirmation time has skyrocketed—a trend that doesn’t bode well should uptake increase.
In reality, there is a middle ground. But either side is willing to give in. It’s boom or bust.
“Ultimately, bitcoin is an alternative means of payment which has advantages and disadvantages in comparison to traditional banking. Bitcoin will probably fill a niche, at least in the short term. Traditional banking and bitcoin can coexist. At the same time, banks are massively investing in blockchain technologies in order to exploit the advantages of cryptocurrencies for themselves,” Deutsche Bank said.

What is bitcoin worth?
Current forecasts on the price of bitcoin range from zero to $500,000, underlining how divisive the debate has become.
Firstly, pricing an asset that is owned by so few people is challenging. According to Aaron Brown, former Managing Director and Head of Financial Market Research at AQR Capital Management, 40% of all bitcoin is owned by just 1000 people. Furthermore, there is no return or benchmark that bitcoin is priced against. Supply and demand is based on what many describe as gambling.
”If we consider residential property, we compare house prices to rent income, or if we consider equities, we compare market capitalization to the relevant company’s earnings. Once again, there is no benchmark to which the bitcoin price may be compared,” Deutsche Bank said.
So who’s right? If you bought bitcoin at $100 there’s a good chance you tell your friends you’re a genius when deep down you probably know you’re just lucky. And if you were a skeptic in 2015, you’re probably sick of the whole “do you know how much money you could have made?”
The real answer: no one knows, yet.

Source

The Richest People In Crypto.Prophets of Boom.

These men have cracked the code.They are CRYPTOFIED RICH.

In the world of cryptocurrency, fortunes can be made overnight, and the winners of this digital lottery differ from those in previous manias. The shadowy beginnings, at once anarchistic, utopian and libertarian, have drawn an odd lot of pioneers—from antiestablishment cypherpunks and electricity-guzzling “miners” to prescient Silicon Valley financiers and a larger-than-usual assortment of the just plain lucky “hodlers,” the typo-inspired crypto jargon for “buy-and-hold” investors.

Given this universe’s opaqueness and hyper-volatility, we’re presenting our first-ever list of the richest people in cryptocurrency in net-worth estimates in ranges. We based our numbers on estimated holdings of cryptocurrencies (a few provided proof), post-tax profits from trading crypto-assets and stakes in crypto-related businesses, and locked in our estimates using prices on Jan. 19, 2018.

It’s a near certainty that we’ve missed some people and that some of our estimates are wide of the mark. But this was equally true when we launched the first Forbes 400 list of the wealthiest Americans in 1982. At the time, many people said we couldn’t—or shouldn’t—publish. We did so anyway, firm in the belief that we made the world a better place by shining a light on the invisible rich. And we believe this report on crypto wealth accomplishes the same goal, as Forbes Editor Randall Lane explains in his editor’s letter. Fortunes of this magnitude should never be allowed to lurk in the shadows.

Source

Canada Banks To Continue Credit Card Crypto Transactions.

Canada’s biggest banks still allow customers to buy Bitcoin and other cryptocurrencies with debit and credit cards, even as some U.S. lenders move to block such transactions.
Toronto-Dominion Bank, Canada’s largest lender by assets, permits such purchases using a TD credit or debit card as long as the merchant is authorized to accept Visa, Mastercard, Interac or Visa debit and the transaction isn’t determined to be fraudulent, Julie Bellissimo, a spokeswoman, said Monday in a statement.
Royal Bank of Canada, the No. 2 lender, said it allows credit cards to be used for transactions involving cryptocurrency “in limited circumstances.”
“We recognize that regulatory, risk and other external environmental factors relating to cryptocurrency continues to evolve,” RBC spokesman AJ Goodman said in a statement. “As such, we continue to review our policies to consider how we can best support clients.”
In the U.S., JPMorgan Chase & Co., Bank of America Corp. and Citigroup Inc. have in the past four days halted purchases of Bitcoin and other cryptocurrencies on their credit cards. Canadian banks say they’re watching carefully -- especially with increasing regulatory scrutiny and the plunge in Bitcoin prices, which fell below $7,300 Monday to its lowest since mid-November.
“There is nothing that would generally block a transaction, however we are carefully reviewing our policy,” Rick Roth, a Bank of Nova Scotia spokesman, said in an emailed statement.
National Bank of Canada, the country’s sixth-largest lender, said it allows cryptocurrency transactions. Bank of Montreal and Canadian Imperial Bank of Commerce didn’t immediately provide comment on their cryptocurrency policies.

Source

China kicks all Crypto related advertising off its biggest search engine.

Cryptocurrency-related advertisements have stopped appearing on Chinese search engine Baidu and social media platform Weibo, amidst reports of China’s government tightening cryptocurrency and Initial Coin Offering regulations on Sunday, Feb. 4.

The Financial Times of the People’s Bank of China (PBOC) was told today, Feb. 4, that China will further increase regulatory pressure on cryptocurrency exchange sites and Initial Coin Offerings (ICOs), Chinese news site Sina reported.

In September 2017, China banned both ICOs and cryptocurrency exchanges. Some of those businesses responding by relocating off the mainland to Hong Kong. Now, Sina reports, Chinese government plans to mitigate that by banning domestic and foreign “virtual currency exchange websites.”

Meanwhile, the South China Morning Post news site reported that when the terms, in Chinese, “bitcoin,” “cryptocurrency,” and “ICO” were searched on Chinese search-engine Baidu and microblog Weibo, no obvious paid sponsored content came up alongside the expected organic results.

While Baidu had stopped advertising cryptocurrency-related searches back in August 2016, it is unclear when they started allowing them again, and they have not confirmed any new crypto-based advertising block. Weibo has confirmed that they have banned cryptocurrency-related advertising.

In a similar turn of events, Facebook banned ads of cryptocurrencies and ICOs last week, citing the large amount of fintech companies on Facebook’s platform that are “[not operating] in good faith.”

Facebook’s decision to ban these ads was received favorably on the /r/Bitcoin sub-Reddit page, where users commented on the many scams they have seen for crypto on social media.

In reference to scam Facebook ads, user erisiamk wrote,

“Anyone who would actually buy because they were convinced by a Facebook ad will probably not research crypto properly and end up making more bad decisions and spreading more FUD.”

Source

BITCOIN could be on the up again next week.

BITCOIN could be on the up again this week as a meeting of US government committee could provide clarity on regulations surrounding the cryptocurrency craze. Lack of oversight has made many institutional investors sceptical of the industry. 

Bitcoin has had a tough start to the year, plummeting to a two month low on Friday, falling as low as $7,700.
But the cryptocurrency could bounce back with a meeting this week of the US Senate Banking Committee on regulation of cryptocurrencies in the country, according to Brian Kelly, the CEO of an investment firm focused on digital currencies.
Speaking to CNBC, he said: “Next week we’ve got a big event here in the US, we’ve talked a lot about the regulatory pressures that have come from South Korea and from China and other places.
“But we’ve got something coming up in the US that I think could be a big event for us.”

“So on February 6th the Senate Banking Committee are having a meeting and they’re going to be talking about what the regulatory oversight role of the SEC and the CFTC should be when it comes to cryptocurrencies and virtual currencies.”
The Securities and Exchange Commission (SEC) is an independent agency of the US government which regulates the securities industry and stock and options exchanges. The Commodity Futures Trading Commission (CFTC) regulates futures and options markets.
Kelly said the meeting could provide clarity for institutional investors who have been sceptical about jumping on the bitcoin bandwagon.
He said: “The bullish part of this is it could give some regulatory clarity.

“One of the biggest problems we’ve had in this market is institutional investors don’t know where exactly they stand regulatory wise, what can they do, what can’t they do.
“Because no one agency has really said this is our domain and there’s not one overarching regulatory scheme.”
“So this could be a green light to institutional investors.
“Once you get that regulatory clarity and we can start to think about what’s going on here and in particular when you’ve seen the regulations trying to stamp out bitcoin in other places, here in the US could be a bitcoin up.”
Bitcoin climbed 4.68 percent to $9,240.72 at 16:43 in London, according to CoinDesk.com

 

Source

Russia’s top bank to TRADE cryptocurrencies using shock loophole to get around Moscow law

Sberbank revealed it will offer cryptocurrency trading to overseas customers, where the bank will be able to bypass Russian laws.
At a news briefing on Tuesday, Sperbank’s head of global markets Andrey Shemetov said the bank “plans to start trading cryptocurrencies outside Russia in order to avoid violating domestic rules”.
Mr Shemetov said: “In Russia, we cannot trade [cryptocurrency], but we want to satisfy the interests of clients, and we believe that we must have access to a wide range of products.”
In 2014, Sberbank – which is majority-owned by the Russian government – became the third largest bank in Europe.
The bank is aiming to open crypto trading in its Switzerland branch, which is headquartered in Zurich. Mr Shemetov detailed how Sberbank’s Swiss subsidiary will be taking on the crypto trading.
Mr Shemetov said: “Swiss laws allow cryptocurrency trading, and we are working on infrastructure to start offering these services through our Swiss subsidiary.”
The bank recognises the volatility of cryptocurrencies and so that is why they are only focusing on the most well known cryptos and the most liquid.
Liquidity describes the degree to which an asset or security can be quickly bought or sold in the market without affecting the asset's price.

Mr Shemetov said: “We are looking at all of the cryptocurrency pairs that are the most liquid, their names are known. We will see what’s interesting to the clients, where is some liquidity. Obviously, we will not go into a low-liquidity crypto.”
Earlier this month, Herman Gref, president and chairman of the board of Sberbank at the annual Gaidar forum said: “Cryptocurrencies cannot be banned, it’s a wonderful new technology which has not yet been fully captured and studied.”
Recently, the Russian finance ministry published the draft law on the regulation of digital assets in Russia which include cryptocurrencies. This bill is expected to start being enforced around September.
Vladimir Putin has mandated regulation around cryptocurrencies, which include cryptocurrencies, including registration requirements for miners and the application of securities laws to Initial Coin Offerings (ICO).
But he has commissioned a national cryptocurrency cryptoruble – which the Kremlin can monitor.
Sergei Glazev, an economic adviser to the president, told a government meeting that the cryptocurrency would serve as a "useful tool" to evade western economic sanctions.
Mr Glazev said: "This instrument suits us very well for sensitive activity on behalf of the state. We can settle accounts with our counter-parties all over the world with no regard for sanctions."

Source

Bitcoin price SHOCK: Crypto investor reveals how to buy bitcoin CHEAPER outside USA

Brian Kelly, of BK Capital Management Reveals How To Buy Bitcoins The Right Way.

Bitcoin has experienced a rocky month amid reports of tougher regulation leading to a mini market crash.
On Thursday, bitcoin fell below the symbolic $10,000 mark, shedding $975 of its worth as concern over tether – a unique digital coin bought and valued like-for-like with the US dollar – manipulation and negative noises coming from India, sending the price south.
However, Mr Kelly has revealed how tether can be used to buy bitcoin “at a lower price” in Hong Kong or Japan and then bring it back to the USA.
He told CNBC: “Tether is a big part of this ecosystem, and the real use case for tether is for global arbitrage.


“So what you’ll see happen, when bitcoin falls quite a bit – it falls 10 or 20 percent in a day – you’ll see the exchanges, the prices get disconnected.
“And then what will happen is people use tether to buy bitcoin at a lower price on an exchange, like BitFinex or somewhere in Hong Kong or Japan, and then they’ll bring it over here and sell it in the US.
“It’s a simple exchange arbitrage, so that’s the mechanics of what is going on.”
Mr Kelly added: “In Asia, you can buy it two or three percent cheaper, sometimes on big, wild days it can be a 10 percent spread.”
He said this is mostly done by multinational firms or persons with offices throughout the world, because they need a method of bringing it back into their home country.
The investor said some people hoping to take advantage of the exchange arbitrage may fall short because of regulatory friction.
He concluded: “South Korea, very difficult to get money out of the country, so sometimes South Korea has traded at a 30 percent spread to the rest of the world.”
However, Imran Wasim, a financial analyst at AMSYS Group, told News BTC he was far from downbeat about any recent slumps, predicting cryptocurrency will become “more mainstream” in 2018.
He added: “It has dropped in price, this is good.
“A lot more money is going to come into bitcoin, bitcoin will go up around $30,000-$35,000 this year – next couple of years? $100,000.”
While revealing he had “no idea” when the price could shoot up, Mr Wasim added: “It is going to happen, because it's a store of value.”

Source

How bots are manipulating cryptocurrency prices

The cryptocurrency market has grown exponentially this year, with a current market cap of $440 billion at time of writing. The largest cryptocurrency is, of course, Bitcoin, which has gone up 1,500 percent year to date and trades a daily notional value of over $10 billion. But how much of this trading is attributed to real, human buyers, and how much of it is automated?
As it turns out, bots may make account for a large part of short-term holdings. Worse, bot trading could be freely manipulating the market, artificially inflating prices and causing individual investors to overpay on their executed trades.

What is a bot?

A bot is an automated trader that buys and sells automatically, usually in the short-term market. Because bots are preprogrammed, buying and selling without emotion when certain triggers happen, they are historically responsible for dramatic market crashes. The famous 1987 Black Friday Wall Street crash, where equities dropped over 30 percent in one day, was caused by program trading — the first generation of bots, which sold stocks automatically when they fell below a certain price.
Today, bots have become ubiquitous and are certainly not limited to the equities market. In the equities world some bots (commonly known as high frequency traders) are in fact welcomed because they provide liquidity to normal buyers and sellers of equities. But in the cryptocurrency world, not all bots are created equal, and many are not there to help you.

Bots and cryptocurrency: A perfect pair

Bots — ones much more advanced than those that caused the 1987 equities crash — infiltrated cryptocurrency nearly as soon as it began picking up steam. They are now prevalent across all cryptocurrency exchanges as individuals with programming skills look to take advantage of an opportunistic situation: an exploding market, a rush of relatively inexperienced investors looking to capitalize on that market, and little government regulation.
Case in point: Neo. With Ethereum’s 5,800 percent rise in 2017, investors piled into Neo, which is touted as the Chinese equivalent of Ethereum. And Neo quickly became prime territory for a trading bot to operate and take advantage of overly optimistic and inexperienced investors. On November 29, advanced crypto trading platforms began detecting abnormal signals that indicated multiple bots trading on Neo. The extreme volatility of the market coupled with dozens of bots trading simultaneously caused the price to crash within minutes of the first detected signals. Neo went from $34 to $3.74 in a matter of seconds, before returning to $34. Investors who bet big lost almost everything within a few bats of an eye. This kind of flash-crash has happened more than once and will likely happen again.
In other cases, bots can manipulate crypto markets by artificially inflating the price. Their automated trading behavior leads new traders in cryptomarkets to overpay for the coins they are buying. The classic “pump-and-dump” scheme that was popular in the early nineties and made famous by the Wolf of Wall Street Jordan Belfort is still being run effectively — by bots — in today’s crypto markets. This scheme involves coordinated purchases of low-priced coin to “pump” the price and attract new investors who are easily excited by the increase. As investors unknowingly buy “the pump”, bots dump the asset in near perfect coordination. With no new buyers coming into the market, the coin quickly loses value and investors are left scratching their heads — and agonizing over their wallets.
Unfortunately, this scenario plays out all too often in cryptocurrency markets. As Business Insider has reported, there is no shortage of coordinated schemes where a group of traders use bots to simultaneously purchase coins to drive up price. Investors hear about the coin, get caught up in the euphoria, and buy in, hoping to make a quick profit. What they are left with is anything but.
With more and more “retail” investors joining the crypto space in recent weeks, chasing the Bitcoin boom, it’s likely even more people will be susceptible to pump-and-dump strategies.

How to spot a bot

It can be extremely hard to detect where bots are at work without advanced analysis tools. They’re easier to spot in hindsight. Take a look at this snapshot of Bitcoin trading from 13th Dec on Coinbase:

See those sudden steep drops in prices? Bots are clearly trading and manipulating prices in this instance. After matching up the price drops with their corresponding times and looking at the trading signals just before each flash crash, it’s clear that these dips are not normal, human trading behavior. (The dips aren’t purely the fault of bots, though. Coinbase predominantly consists of retail orders, so when the market is euphoric — as it is now — retail buyers get hit with FOMO, which causes more price volatility.)
Two of the biggest indicators of bot manipulation are price momentum and volume. If investors watch for these indicators to spot coordinated buy patterns early, they can avoid potential pump-and-dumps or flash crashes before they happen.
Here’s a quick look at a bot in action:

.

The future

Cryptocurrency markets are here to stay, and it’s likely the bots are as well — as long as the market remains unregulated. There is already a large volume of trading bots operating in the market that the vast majority of investors aren’t aware of. As investors become more savvy, so too will the bots. And so we’re likely headed down the path of an arms race. As detection tools get stronger, developers will look for ways around detection. As bots get more advanced, platforms will accelerate research and development to counterattack. With regulation seemingly right around the corner, only time will tell which side will win the fight until the government steps in to stabilize the market and put an end to predatory bots.
Source