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A week or so ago, one of the largest Bitcoin traders on the planet — the man I work with — decided to drop everything to go find out the truth about what happened to the Bitcoin Cash, or BU, currency.
He had a hard time finding the information, but when he did, he ended up on Reddit, where users had discovered a few more details.
While I’m hardly a scientist, I could tell a lot of information from what I read.
Here are a few observations, which also led to some new discoveries for the market…
Here’s What Happened
On Dec. 1, the Bitcoin exchange Bter suspended the trade of BCH for one day to avoid a “fraudster” hijacking the account. The hacker then took over the order book.
Within the first hour, it appears that the hacker used some kind of botnet attack and launched a massive buy attack on the exchange.
Within two hours, BCH prices had fallen 20% from the highs of the week before.
The exchange announced that they were suspending trading of BCH until further notice — but that’s apparently not where all the damage ended up.
I’m not going to go into too much detail here just yet. But I think the most important observation I made from this information was that it’s possible to manipulate Bitcoin prices.
How it Works
For Bitcoin exchanges, the easiest way to get a significant increase in price is to “fraud”.
The best way to fake a large price increase is through the use of “bots.”
When people buy bitcoins via a broker, they put their bitcoin to buy them from the exchange — like selling a stock. Because the exchange has some way of checking the accuracy of their orders, it
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