High Frequency Bitcoins: HFT Firms Now Accepting BTC Payment

Tyler Durden's picture

While Bitcoin has been relatively more stable than high-frequency-traded US equity markets in the last few weeks, the news that HFT tool provider Perseus Telecom will be accepting Bitcoin for its services. As The FT reports, move highlights high-frequency traders’ increasing interest in trading Bitcoin as global regulators indicate a growing acceptance of fast-emerging digital currencies - despite several high-profile arrests.Perseus CEO, Jock Mr Percy said the extension of high-frequency trading into virtual currencies would change the nature of the Bitcoin market over time.

 


Via The FT,


A company that develops the tools used by high-frequency traders has become the first market infrastructure provider to accept payment for services in Bitcoins.

 

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Perseus Telecom, a US trading technology group, said on Thursday it would accept the controversial digital currency for its services worldwide and process transactions with GoCoin, the payment platform.

 

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High-frequency traders use complex algorithms and superfast computers to trade in and out of assets in fractions of seconds. Bitcoin is of interest in part because of its electronic nature and because its high daily volatility potentially offers lucrative returns. Many superfast traders have found profitability tougher in recent years in mature and competitive markets such as equities and foreign exchange.

 

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Mr Percy said the extension of high-frequency trading into virtual currencies would change the nature of the Bitcoin market over time. “At the moment, [HFT] is still a small part of the market as there are a lot of retail investors trading Bitcoin. In time the spreads will narrow.”

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SafelyGraze's picture

what exactly is "liquidity" anyway

 

Charles Nelson Reilly's picture

My toilet after eating cookie dough & drinking warm coke on a 90+ degree day.

erg's picture

Bitcoin. It's bold, it's brash, it's counter-culture and it's accepted everywhere. Woohoo!

DoChenRollingBearing's picture

fonestar

Just got some today, eh, mate!

 

(Gold later)

Debtonation's picture

Fonestar, I am concerned about an event that occurred several weeks ago.  A 51% attack was nearly feasable on the Bitcoin network.
http://www.heavy.com/tech/2014/01/ghash-io-51-percent-attack-bitcoin/
http://learncryptography.com/51-attack/
Ghash.io did released a press statement notifying users they had no intention of conducting an attack even if they achieved 51% control.
https://ghash.io/ghashio_press_release.pdf
However, if a 51% attack occurred, it would be worse for Bitcoin than Bernanke/Yellen was/is for the dollar.  Several alt-coins have already been destroyed by 51% attacks.  I don't know how to mine, just a Bitcoin speculator, but my understanding is this is a mining pool thing and requires deliberate malicious intent, and miner withdraw from the pool is ultamitely what prevented 51% network control.
At the moment crisis seems to have been averted, at least according to Blockchain Info now that hashing distribution is spread more evenly. Although, 4 pools still control 3/4 of the network.
https://blockchain.info/pools
Since you seem to be the expert, is this a potentially fatal flaw with Bitcoin, a single point of failure?  If someone were to hack into multiple pools to the point they could control over 51% of the network, they could attack the network. Does a new cryptocurrency or one that already exists need to be designed to take its place?  From my understanding, Litecoin uses scrypt and is less suseptible to this since ASIC miners can't dominate the network, not sure if that's true.

wintermute's picture

SHA-256 ASICs used by Bitcoin have many manufacturers and spread out. Yes Ghash passed 40% for a while, but Cointerra and Hashfast and others are rolling out right now and thousands more high-power ASICs will be in different hands.

Litecoin is more susceptible to a 51% attack because Scrypt ASICs are a lot more work to design and make. Only one manufacturer has announced active development. If these are produced and concentrated then 51% hashing power in one place is very possible.

But a 51% attack is losing loads of money. Ghash is making $20k every 30 mins. This would be devastated if they got to 51% and tried any nonsense, plus their big holding would lose massive capital value. The high value of the currency encourages good behavior.

Debtonation's picture

I'm aware that there are a multitude of mining manufacturers.  What concerns me is the fact that they all come together in a centralized pool which makes them susceptible to hashing domination in a situation where a rogue individual could force a 51% attack.  I'll be honest, I like bitcoin, but the miners must break up into more pools to prevent such an event from even being possible.

wintermute's picture

I agree with you and understand the concerns. One significant point is that few mining pools are monolithic i.e. the hashing power is centrally controlled. If a pool was to worry the mining community then many of the individual miners would change pools, directing their ASICs elsewhere.

The pools to worry about are those which have their own ASIC farms, or offer hosted services where the customer can only buy or sell hashing power, not controlling the hardware.

It would be better if more effort was put into P2Pool, which is a decentralized pool and the best type.

HyBrasilian's picture

Put the WOPR on it [He's a sneaky little shit]

Meltdownman's picture

Winter are there any good companies that are worth investing in that have excellent software used for trading bitcoins (e.g. the Next Paypal)?  The only startup that I have been able to find is WPCS and they only have one guy writing the software to funnel the transactions.  Their CEO is a bit of a goof. Their stock price might get dragged upwards if they manage to come out with some announcement or on the tail end of some other firm making it big.  I would love to see a firm to become the next Paypal.

 

Thanks ahead of time,

The Meltdownman

TheHound73's picture

Coinbase and BitPay are the clear leaders in the Bitcoin payments space but they are not publicly traded.  Crypto Financial (CFIG) and Neo & Bee (NEOBEE) are interesting companies with possible bright futures.  Both are publicly traded on the UNREGULATED Havelocks Investments platform.  Monetas is a company attempting to take Bitcoin's decentralized model to the a Trading Exchanges level.

Meltdownman's picture

Thanks Hound for the insights. Very much appreciated?  You investing any in those suggestions that allow trading?

 

The Meltdownman

TheHound73's picture

I have tiny positions in CFIG and NEOBEE.  CFIG price has gone down might be a good buy now, they need to release their product soon.  NEOBEE has been stable.

Matt's picture

ASIC versus GPU is not too important. The problem is that some mining pools are better run, or have lower fees, or are otherwise more attractive, so more people choose to mine there.

Switching to an inferior pool as an act of charity to preserve the network integrity, in exchange for making less money, is an interesting conundrum.

In a free market system, a badly run business would go out of business, and superior models would rise to replace them. In Bitcoin land, people are forced to charitably use an inferior service, to avoid destroying the system. 

animalspirit's picture

GHash.io is mining publicly. Meaning they announce each block as they solve it. With 51% they can begin denying transactions from others. Essentially that's a denial of service attack. That's it. If they did that, miners would abandon them and that would be it for their 51%.

To perform malicious double spending thanks to 51% control, the attacker must be mining privately (not releasing blocks) and have more than what the entire Bitcoin network currently has (currently 19,100 Th/s). So if Ghash.io had 51% (let's say 10,000 Th/s), then the attacker needs to have twice that ... 20,0000 Th/s.

So Ghash.io (or any pool) doing a denial-of-service is not the 51% attack that would decimate bitcoin.

Incidentally, to get those 20,000 Th/s, an attacker would need to invest several hundred million dollars in mining hardware and pray that that purchase is delivered before the mining difficulty level rises before a billion dollars of hardware is the threshold. i.e., not gonna happen.

fonestar's picture

fonestar gots the crypto flowin'

fuu's picture

It's your song baby.

DumpsterFire's picture

Did Bob Costas get pink eye from one of those "borrowed" Russian pillows?  It sure looks like it.  I would shit on my pillow as well before handing it over to one of Putin's thugs.

ACP's picture

I would shit on my pillow before giving it to Bob Costass.

fonestar's picture

what exactly is "liquidity" anyway

 

That special creamy feeling in your pants watching your net worth rise thousands of percentile with the biannual 60% correction.

Charles Nelson Reilly's picture

You must have a glory hole cut into one of your Bronies!??

BLOTTO's picture

Can anyone point me to any ancient texts i.e., Bible, Quran, Torah,

Book of Enoch, Book of Ezekiel, Dead Sea Scrolls,

or perhaps writings scribed on walls, or Egyptian hieroglyphics, monoliths, anything - regarding the mention of bitcoins so i can do some research?

.

Because whatever is mentioned and valued back then - is very much valued and relevant now.

'Nothing New Under the Sun,

History is Repeating Itself'

-King Solomon

c.950 B.C.

 

Skateboarder's picture

You're not going back far enough; the Anunaki made us to mine bitcoin.

Prisoners_dilemna's picture

I don't think toilet paper was mentioned either.

Should we revert to the Ancient Way?!?     I'm kinda partial to clean hands.  :(

 

Maybe the market will select the technologies that allow us to escape having to wipe our asses with our hands... 

Are you sure you want to stick with "the old ways"?

 

BLOTTO's picture

P_d...it doesnt matter what you or I think, its what 'they' think and believe in that is important.

.

And whatever ruled us back then, is ruling us now. Nothing has changed.

BAck then...They used leaves to wipe their asses - now we use toilet paper.

They used twigs to eat - now we use a fork.

They used camels as a vehicle - now we use cars.

They used smoke signals to communicate - now we use cell phones.

etc...however, thats all trivial shit. Whats new? nothing.

We are not progressing with this new way - in fact, regressing. tell me different? Why are we not improving on this planet - it doesnt make sense.

See what skates said...

TheHound73's picture

If leaves, twigs, camels and smoke signals are progressive, what's stopping you from setting down that cellphone you are typing on and going for it?

I think of Bitcoin as a "different" way to manage contracts between individuals, the first example of which is as a currency.

HyBrasilian's picture

Should we revert to the Ancient Way?!?

 

Ancient Civilizations were able to erect massive megalithic structures [which included precise assembly of stones which weighed up to 80 tons & more]. MODERN engineers [& with the use of crude oil], still haven't figured out how it was done, or what exactly the structures, which still stand today, were for other than some sophomoric conclusions that they were kings tombs & observatories].

It is supposed that many more have yet to be unearthed [or lie at the bottom of seas in the present day and have yet to be discovered].

The first thing I'd be willing to part with in MODERN society is 'EXCEPTIONALISM' [& bitcoin, but probably MORE the cockiness of its freshly milled adopters, is a shining example of that].

IOW ~ Talk to me in 20,000 years. One thing I'm sure about is that gold will still be around, [& there will probably be some banker trying to steal it from you].

 

 

merizobeach's picture

Prisoners_dilemna: "Should we revert to the Ancient Way?!?"

Indeed, you are a prisoner of misspelled (false) dilemma.  If you had traveled a bit more, you might understand the superiority of the SE Asian ass-sprayer.

A guy I know once framed it like this: "if you got shit on your hand and I handed a you a paper towel to wipe it off, would you feel that's good enough?  No, you wouldn't--you would want to wash your hand.  So why would you feel that paper is good enough to wipe shit off of your ass?"

merizobeach's picture

Please enlighten me as to how you are able to short bitcoin because I am not aware of any method, and I would be truly impressed.  If you don't have a way of profiting on plummeting bitcoins, then I doubt your networth is rising today with btc touching $670.

The Dunce's picture

Bitcoin rocks.  I bought some groovy stuff with the currency--including sea-monkeys.  Word to your mother.

WayBehind's picture

Bitcoin is still around?

I don't know, but I prefer gold ...

Soul Glow's picture

Bitcoin could continue its run.  I would give it more room than equities and bonds - more room than fiat currency at least.  Gold, at the end of the day, is more reliable than any of them.  That because it is a finite resource, and that which you hold in your hand.

DoChenRollingBearing's picture

A safe place: 75% physical gold, 20% CA$H (physical) and 5% BTC.

BTC for travel, fishez...

Dr Benway's picture

But why would you hold as an investment something you purportedly only use for travel or transactional purposes? LOL. It's like buying travellers cheques (remember those?) and stashing them. No point whatsoever.

Truth is, BTC is almost exclusively used for speculation, and that's the reason the price has skyrocketed. It could perform its purported transactional and "travel" purposes just as well at $50, or at $1 for that matter, but to benefit the Winklevi and the banksters it had to be ramped. So it was ramped.

BLOTTO's picture

Anything of value you have to work hard for.

 

 

adr's picture

Try walking into a Manhattan restaurant and saying that.

TheHound73's picture

 "It could perform its purported transactional and "travel" purposes just as well at $50, or at $1 for that matter"

Quick question: at a value of $1 per unit and 12 million units in existence, how much economic activity can be taking place at any given time assuming ALL units are in constant motion?

Note: the vast majority of bitcoins do not move on any particular day.  Most of mine sit offline.

Dr Benway's picture

That would depend on BTC's velocity, which from what I've heard is extremely high.

Godisanhftbot's picture

Like the velocity of a very upset stomach?

TheHound73's picture

Negative.  It is very low.

Interestingly, yesterday and today is the highest number of "Days Destroyed", roughly analagous to velocity.  More specifically, large amounts of very old coins are on the move today.  The main exchange, Bitstamp, has dropped $65 to $740, or about 9%.

Dr Benway's picture

I don't consider "days destroyed" to be analogous to velocity.

 

What I mean by velocity, is that a large number of BTC relative to the total number of BTC in existence can be transacted in any given time period.

TheHound73's picture

Ok, this chart shows that 800k coins in total moved yesterday, compared with 12 million coins total yields a 24-hr velocity of 0.066

Technical point: the 800k figure includes change given back to the sender.  Given $800/coin a total of $640 million of activity might have taken place with the 6.6% of bitcoins that moved yesterday.

Dr Benway's picture

Which is exactly my point.

RideTheWalrus's picture

Can you find out where they moved and in what context? 
Is it 800k coins that have facilitated finacial transactions in exchange for goods or services OR is it more like 5 mining consortiums shifting coins around their various wallets to give the illusion there's a vibrant market out there?