(1) Someone apparently infiltrated a leading but unsecure exchange by using a virus/bot that created fraudulent data in MySQL and PHP so that they could pretend to have, say, over a hundred million dollars in fake fiat.
(2) They used this fake
hundred million dollars to buy real
bitcoins - spending, say, around 2 and half million fake
dollars every few days, in over 40 buying sprees, to eventually scoop up around 270,000 real
bitcoins over the course of a month.
(Note: As most traders know, buying a lot all at once like this usually isn't smart - because it causes a lot of "slippage" - ie, everyone sees the buyer starting to buy, and so the price rises before the buyer is finished buying. But in this case, since the "dollars" being spent are fake anyways, the buyer doesn't care
if they make the price rise due to "slippage". The dollars they're spending didn't come from their bank account, because with a few keystrokes, some knowledge of PHP and MySQL - and access to the servers in Tokyo hosting this unsecure exchange - they were able to "magically" invent over a hundred million fake dollars out of thin air. They don't even have to suffer the privacy invasions and indignity of KYC/AML either.)
(3) Speculators around the world (especially the Chinese, who are said to enjoy speculating) got fooled by this phony price rise, making them think a major rally was underway. When they saw all this fake
fiat being spent, they jumped on the bandwagon and spent their real
fiat due to FOMO (fear of missing out).
This made the so-called "price" on this unsecure exchange go sharply upward by a factor of 12x in just one month: from USD 100 to USD 1,200 in November 2013.
Actually (due to the "no-arbitrage" principle of economics) the price went up around 12x on all
markets around the world (including over-the-counter - OTC - and localbitcoins.com - LBC) because everyone (including the media) had fallen into the habit of using that leading but unsecure exchange (now secretly hosting a virus/bot) as their main pricing reference.
(4) Now the fake buyer disappears with 270,000 BTC, bought using fake fiat. The market peaks and eventually does a "mean reversion" (dropping from USD 1200 back down its more typical trend-line around USD 300). And the unsecure exchange which they infiltrated eventually declares bankruptcy and goes out of business due to fraud / incompetence / malfeasance.
(5) Now instead of everyone being excited and saying "Great, bitcoin went up
300% from USD 100 to USD 300 in just one year! Best
investment of 2014!!" ...
Instead, everyone's depressed and saying "Damn, bitcoin went down
75% from USD 1,200 to USD 300 in one year! Worst
investment of 2014!!"
Plus, a lot of people will be scared away by "volatility".
OK, we have no hard
evidence that anything like the above scenario actually did
take place in November 2013. But we do at least have circumstantial
evidence of the existence of such a virus/bot (called Willy Bot) on Mt Gox: https://willyreport.wordpress.com/2014/05/25/the-willy-report-proof-of-massive-fraudulent-trading-activity-at-mt-gox-and-how-it-has-affected-the-price-of-bitcoin/
So, what can we learn from this?
People need to realize that all the "good" news of 2014 regarding infrastructure and momentum (VCs, vendor acceptance, consumer awareness, remittance - plus the ongoing stability of the Bitcoin network itself, for over 5 years now) has been overshadowed by one very major piece of bad news: We apparently let a virus/bot create an exciting but fake one-month 12x price spike of USD 100 to USD 1200 in November 2013... And now after that virus/bot has gone away, we're seeing a long and painful one-year 75% price drop from USD 1200 to USD 300 during 2014.
Maybe people need to reject
the possibly fraudulent fantasy that the price ever legitimately was
USD 1200. Maybe the price never "really" was USD 1200. Maybe we just need to get over that fantasy.
Why do we continue to base the "narrative", the "story" of bitcoin's price on this USD 1200 figure from a shady exchange which collapsed in scandal? - How do we know that "price" of USD 1200 wasn't just a figure of our collective imagination?
hand over 270,000 Bitcoins - that we do
know for a fact.
But did they ever get USD 112 million in return?
(Ask the people who got screwed over by Mt Gox. Remember how Mt Gox was famous in 2013 because you couldn't get your fiat out
. Hmm... wonder why that was? Could it be... that the fiat you "had" was actually from the Willy Bot - so that fiat never existed?? Sounds pretty plausible.) Glass half-full or half-empty?
It's quite possible a virus/bot created the illusion that the price went from USD 100 to USD 1200 in one month. (And we do know that many people who tried to ride this wave upwards got screwed later when it crashed.)
Imagine if people had instead seen the price of bitcoin simply go up slowly but surely
from USD 100 to USD 300 over the last 12 or 13 months.
I bet a lot more Russians would be trying to move their devaluing rubles into bitcoin right now... if we were at 300 USD, up
from 100 USD last year, instead of being at 300 USD, down
from 1200 USD last year. The Willy Bot makes all the difference between saying "Bitcoin worse than Ruble in 2014" versus "Bitcoin better than Ruble in 2014". It all depends whether you think Bitcoin started from USD 100 - or from USD 1200 - around November and December of last year.
So if this Mt Gox Willy Bot did indeed exist, then it seems like it has seriously injured the image of Bitcoin - and people's preference for it as an investment.
It's going to take time - and honesty and education - to put this damaging delusion of the Bitcoin Phony Rally of November 2013 behind us. TL;DR - Someone apparently infected a major exchange with an "infinite fiat" virus to artificially pump the price up from USD 100 to USD 1200 in one month around November 2013. And then the price went back down from 1200 USD to USD 300 over the next year. Result: Instead of saying "the price went up 3x in 2014" (from USD 100 to USD 300) everyone has ben saying "the price went down 4x [ie, down 75%] in 2014" (from USD 1200 to USD 300). It's all relative. If you want a little more realism, maybe it's best to zoom out on the price chart - and ignore the Bitcoin Phony Rally of November 2013 - and focus on the steady rise from 100 to 300 USD, minus that totally fake-looking short-lived 12x blip.
Bitcoin Price fell 30% in a week, reaching a multi-month low of $750. 2-3 March 2017: $1,290+ Bitcoin Price broke above the November 2013 high of $1,242 and then traded above $1,290. April 2017: $1,210 — $1,250 May 2017: $2,000 Bitcoin Price reached a new high, reaching US$1,402.03 on 1 May 2017, and over US$1,800 on 11 May 2017. The first price hike occurred during 2013 when one bitcoin was trading at around 1,124 U.S. dollars in November. Four years later, bitcoin experienced a meteoric rise and reached record highs ... At the start of November, one Bitcoin was worth about $213 on Japan-based Mt. Gox, the world's second-largest Bitcoin exchange. Today (Monday) one Bitcoin traded as high as $675. Today (Monday ... May 2019 has been an incredible month for bitcoin price. And just a tiny extra push could see it being the best month since November 2013. Bitcoin made headlines on Nov. 29 as the price of a single coin hit an all-time high. Mt. Gox one of the original and biggest bitcoin exchanges, based in Tokyo, recorded the high at $1,242 per ...
Recorded at the Bitcoin 2013 conference in San Jose, CA. Conference sponsored by Bitcoin Foundation. Red Pill Recording recorded this talk. We volunteered our time to produce this video. Sponsored by Bittylicious - https://bittylicious.com/ November 5, 2013 -- Lisbon, Portugal -- Catch That MadBitcoins Spirit! Here are Today's MadBits: Bitcoin prices ... After the first Bitcoin Halving in November 2012 the price of Bitcoin crashed more than 80% a couple months later. How likely is such a Bitcoin dump after th... Bitcoin/USD historic price data from 2012 to 2017 on Bitstamp. Charted with tradingview. Vitalik Buterin explains what quantum computers are, what they can and cannot do, and the implications they may have to the future of Bitcoin. The lecture took place on November 3rd 2013. Slides ...