Understanding Bitcoin’s Fixed Supply
Bitcoin is often hailed for its unique value proposition: a capped supply of 21 million coins, making it the darling of digital assets. The idea that no one can simply create more of it adds a layer of trust for investors. But what if we told you that’s not quite the whole story?
Market Manipulation: A Shocking Claim
Recently, in an interview with Cointelegraph, Serhii Zhdanov, the CEO of crypto exchange Exmo, raised eyebrows by claiming that market manipulation, in fact, runs rampant within the cryptocurrency landscape. According to Zhdanov, it’s possible for exchanges, particularly those operating offshore, to create artificial BTC that exist only within their systems.
The Mysterious Creation of ‘Phantom’ Bitcoin
Imagine a scenario where one could approach an unregulated exchange with just $10 million worth of Tether (USDT) as collateral and request $100 million worth of BTC. According to Zhdanov, such an exchange could just create that Bitcoin within its internal system. Here’s a step-by-step breakdown:
- Step 1: The exchange adds the funds to the user’s account.
- Step 2: These Bitcoins are then sold off, starting a chain reaction that impacts prices across the board.
- Step 3: Market manipulators buy up real BTC after the price has plummeted, pocketing the difference.
The Case for Better Regulation
Zhdanov isn’t just lamenting on the sidelines; he believes proactive measures can be taken. His solution? Implement regulatory practices akin to those in traditional finance to combat this manipulation. Stronger controls on offshore exchanges are essential to ensure that there are checks in place that inhibit such fraudulent behavior.
The Link Between Regulation and Adoption
One significant barrier to mainstream crypto adoption lies in the fear of money laundering and bad actors. Zhdanov argues that comprehensive compliance frameworks would ease investor concerns and promote wider market acceptance. “Crypto is a rapidly evolving field and very similar to traditional investment vehicles, hence we can learn from the regulations that govern them,” he said, giving hope to those wary of diving into the world of cryptocurrencies.
Shoring Up Security to Attract Investors
It’s no secret that hackers find crypto a more enticing target than conventional banking systems, primarily due to glaring security loopholes. For Zhdanov, security is paramount in bolstering trust and, consequently, wider adoption of digital assets. Without improved security measures, the allure of crypto may wane as investors look for safer ground.
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