Researchers Bare Bitcoin Price Manipulation

Bitcoin EcosystemFour researchers have revealed price manipulation in the Bitcoin (BTC) ecosystem.

The revelation, along with other findings, were disclosed by researchers Neil Gandal, JT Hamrick, Tyler Moore, and Tali Oberman in a paper titled “Price Manipulation in the Bitcoin Ecosystem.”

The paper appeared in the latest edition of the Journal of Monetary Economics.

Controlled by Bad Actors

The report described “to what degree the Bitcoin ecosystem is controlled by bad actors,” according to a TechCrunch article.

TechCrunch pointed out that it had been clear to many observers that the Bitcoin markets are manipulated either by an individual or two at the most.

(Read: As Bitcoin Prices Plunge, Overstock, Square Shareholders Also Hurt)

The research paper’s abstract stated that Bitcoin “has the potential to disrupt payment systems and traditional currencies.”

The researchers said Bitcoin had suffered security breaches (hacking) and wild price fluctuations.

Suspicious Trading

They said their study looked into the effect of suspicious trading activity on the Mt. Gox Bitcoin currency exchange, in which approximately 600,000 bitcoins worth $188 million were illegally acquired.

They also said the US dollar-BTC exchange rate went up by an average of four percent “on days when suspicious trades took place, compared to a slight decline on days without suspicious activity.”

Through the researchers’ “rigorous analysis with extensive robustness checks,” it was found out that the suspicious trading activity likely caused the unprecedented rise in the US dollar-exchange rate in late 2013.

During that period, the exchange rate between the American currency and the cryptocurrency “jumped from around $150 to more than $1,000 in two months.”

What’s Next?

Bitcoin is prone to price manipulation, according to researchers.

But on the other hand, it has made billionaires out of some individuals like the Winklevoss twins.

(Read: The Winklevoss Twins Are Worth About $1.3 Billion in Bitcoin Alone)

What can you say about the results of the research on the Bitcoin ecosystem? Share your thoughts below.

About Jimmy Rodela

Jimmy Rodela is a Freelance Writer and a Content Marketer. He is the Founder of the Guild of Bloggers. He is a contributor on websites with millions of monthly traffic like Yahoo.com, Business.com, Monster.com, Business2Community and SocialMediaToday.com. Follow him on: LinkedinTwitterFacebookGoogle +,Read more about me

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