Anatomy Of A Crypto-Nightmare: Ripple CEO Is Now Richer Than Zuckerberg

Having soared 36,000% last year and continuing its crazy run in 2018...

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Ripple has surged ahead of Ethereum as the second-largest cryptocurrency by market cap...

  • Bitcoin $246BN
  • Ripple $143BN
  • Ethereum $97BN

 

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image courtesy of CoinTelegraph

Leaving Mike Novogratz breathlessly berating the craziness..as Ripple's CEO is now the 5th richest man in the world...

But  it is Tom Luongo that is most-concerned at this "crypto-nightmare" and for good reason...

Amidst all of the bullish talk about cryptocurrencies we know that a strike back from the banking system and its owners is coming.  In fact, the attack as I see it is well underway.

And it began with the attack on the credibility of Bitcoin Cash and it’s continuing with the insane pump of Ripple and any coin which has direct ties to old money.  What I want to posit today is how the next crash in the cryptocurrency markets can, and likely will, play out.

To lay this out you have to believe a few things are true.

  1. The major money center banks have all been trading Bitcoin and other alt-coins for a long time. They have substantial books to push and pull the price.
  2. The futures market is used to control the price during daytime hours in the U.S. and Europe.
  3. Bitcoin’s failure to implement ‘Segwit 2x’ and its current dysfunction was intentional in order for Blockstream to offer a ‘solution’ to a ‘problem’ that needn’t have existed.
  4. Lightning Network is simply a backup control plan in case Ripple isn’t adopted by the marketplace as the crypto-settlement and exchange layer. It creates a second layer of centralization off-chain.
  5. Legislation and regulation to date has been designed to allow money to flow into the crypto-markets but not back out again.

Ripple, otherwise known as ‘BanksterCoin’ among we crypto-enthusiasts is the stalking horse of the cryptocurrency industry.  It’s meteoric rise in price coincides with Bitcoin’s peak and subsequent meandering.  It was done, timing-wise, to see articles like these (here, here and here) written as we ring in the new year.

The Bitcoin Trap

Look at the situation in Bitcoin.  After the failure to implement the New York Agreement, something that didn’t have to be an all-or-nothing proposition, Bitcoin spiked from $5000 to a high near $20,000 in less than a month.  Transaction fees soared, exchanges became illiquid, getting alt-coins off some exchanges was difficult as many were revealed (at least in the short term) to not have supply of the underlying assets people were ‘trading’ in their pools.

Services like Changelly and Shapeshift have much smaller lists of coins available for easy exchange than they did a month ago.  Try buying tokens like WAVES, STEEM, Golem, NEO or Komodo on these services.  You can’t.  They can’t source actual tokens or the gateways to exchange them are down.

The best way to kill a market is to get retail investors buying the peak and selling into it. Such is the stuff bear markets are made of.  It’s imperative to break retail investor sentiment down.  That’s how markets are brought to heel.  Then rotating out of that market into the next market you want to promote.  This is what the banking industry does with its sell-side ‘analysis’ all the time.

I have a rule, when Goldman-Sachs says “Buy” I sell and vice versa.  In my Universe, rightly or wrongly, Goldman and their ilk are still trading against its recommendations and its clients.  And if it’s not allowed to do so anymore *wink* *wink* because of Dodd-Frank then in the unregulated crypto-markets you should bet that they, J.P. Morgan and the rest of them are.

So, it’s easy to believe in an irrational pump of Bitcoin to $20,000 and the subsequent rotation out and into Ripple, boosting its price and profile, while leaving ‘teh newbz’ hanging at the top.  Add in Bitcoin futures trading to help the tail wag the dog, insane transaction fees that have everyone wondering what’s so great about this Bitcoin if it costs $30 to move $100 and you have a set-up for carnage.

The spike to $20,000, in my opinion, was created by the very hinckey roll-out of rival Bitcoin Cash by Coinbase last month.  The goal there was to sow confusion and undermine Bitcoin Cash as an alternative to Bitcoin.  Again, if you want control over the entire market, you do so by killing off real competition.

See, folks, all of this confusion and carnage comes from not having any kind of centralized control. But, hey, there’s this new cool thing called Ripple which solves all of that and the price is going bonkers!

Trap Set.

To Ethereum and Beyond

That’s the past.  That’s where we are as we enter 2018.  Now what?

In response to this, Ethereum begins another push towards $1000.  Now, Ethereum has its own problems that are technology-based.  Ultimately, its blockchain is only as secure as the code of the tokens issued on it.

We’ve seen this in reality a couple of times, including the hack because of bad code that forced a fork of the Etherum blockchain which created Ethereum Classic (ETC) and Ethereum (ETH).

While I fully believe that one (or many) of these Ethereum-based projects is likely to create another event like that one, the pure cynic in me says, “Why wait?”

If you were the bad guys wouldn’t that be your plan in the first place?  Create a crypto-project using ERC-20 tokens that resolve and clear on the Ethereum blockchain with the intention of breaking it.  Invite investor money in, say fifty million dollars.  A reasonable, but not insane amount of money.

Then let the code run until such time that it will cause maximal damage to Ethereum and the whole crypto-community.  The token goes up four or five times because that’s simply what is happening across the space.

At that point you’ve created a $200+ million meltdown and negative headlines galore.

At this point Bitcoin is neutralized and controlled, Ethereum is discredited and something like that would cause a major panic which is exploited by the same prop trading desks that blew the bubble up in the first place.

If you time that with a spike in Ripple, the banker-acceptable coin, and crash it too, you’ll take down most of the industry in almost no time.  The psychological damage from a scenario like this will create bear market not unlike the one created post Dot-Com bubble.

And like that bust, only those companies that are willing to play ball with Wall St. and Washington D.C. will be promoted and allowed to thrive.

Trap Sprung.

If you don’t think Wall St. isn’t thinking in these terms then you aren’t a serious crypto-investor.  This is the nightmare scenario, or one like it.

The Slipstream Solution

This is why I continue to bang on about the need for decentralized exchanges where the kind of manipulation described above is harder, if not impossible, to pull off.  I fundamentally do not believe most of the ‘liquidity’ that exists on exchanges like HitBTC, Bittrex, GDAX, etc. exists.

Between the false liquidity created by Tether and the potential for running fractional reserves it’s not hard to posit. It doesn’t take the weight of the entire Bitcoin market to raise the price.  It just takes one guy willing to buy the ask.  Once sellers lift their offers in response to a wave of buying things go up quick, especially with programmatic, algo-driven trading.

These exchanges who are not holding all deposits as smart contracts off-exchange with 100%+ reserves like BitShares are vulnerable to major price rises creating liquidity problems, which only adds to the perception that the industry is amateur-hour.

Another solution aside from Bitshares is Komodo’s BarterDEX, which exclusively trades through cross-chain atomic swaps and has no need for a third party intermediary.   Both of these, to me, represent where the industry needs to go to avoid us ending up with Ripple and Goldman still running the show.

Remember, no one is operating BitShares’ exchange.  It’s completely blockchain-based.  It has a fully-tradeable profit-token, OBITS, which distributes monthly profits from the exchange back to the token holders (current yield is around 4%). There is no central pool of liquidity that requires ever-growing ties to credit-providers.  The network only manages assets that have been deposited onto it.

Projects like AriseBank (full disclosure I bought into its ICO), I think, deserve a look.  AriseBank partnered with BitShares to provide the back-end technology to facilitate currency-swaps and brokerage services.  This is billing itself as the world’s first truly decentralized bank, designed to compete directly with the major banks and provide a new business model for banking altogether.

So, as 2018 plays out we as traders and investors need to be aware of the dangers of centralized liquidity and move our liquidity off of them, supporting projects that will build the kind of infrastructure Bitcoin’s initial design was supposed to support.

So many people who have gotten into cryptocurrencies in 2017 will not have an exit strategy in 2018 when the fan gets hit.  As we saw in the peak in December getting your money into or off of Coinbase was a nightmare.

Viewing the market structure through this lens provides a way to siphon off some of the energy the banks are propelling cryptos with to not only fatten your wallets but bring validity and stability to the markets and businesses that will carry on the fight before it’s yet another case of “Meet the new boss, same as the old boss.”

Comments

Gap Admirer Occident Mortal Thu, 01/04/2018 - 10:04 Permalink

Total bullshit story.  Bitcoin (BTC) is still god.  We have been pumping bitcoin like mad for a long time now, insisting that it is perfect blockchain MONEY that will take over the world due to rare, valuable, maff. And that we are super smart geniuses for getting in to this disruptive technology that the oldbugs are too stooopid to get in to.  We can't just dump bitcoin for Ripple because it will make us out to be cheap speculators, pump-n-dumpers, and liars.

Bitcoin is GOD, damn it!!!  The anti-bitcoiners are still WRONG!!!

In reply to by Occident Mortal

fairmontobsever shitshitshit Thu, 01/04/2018 - 17:39 Permalink

    Your username is extremely offensive, especially when deliberately placed next to the most precious symbol of the Russian Orthodox Church.  The Russian Orthodox Church lost 40,000 clergy, more than 100,000 monastics, and 40,000 churches to Communist massacres. It is a miracle that it still exists, and you are showing cultural-religious hatred by using our sacred symbol with your offensive username.

    It is very offensive for you to use the Russian Orthodox Christian cross, no matter what you think of yourself call yourself and your moral standing (reflected in your username). You have nothing to do with Christianity in Russia. Otherwise, I and others will consider that usage(symbol + offensive wording) an actual example of Nazi-like propaganda. Are you going to use other religions' most beloved symbols in your demonic hatred of all things good?

In reply to by shitshitshit

decon GoingBig Thu, 01/04/2018 - 21:02 Permalink

"Projects like AriseBank (full disclosure I bought into its ICO), I think, deserve a look.  AriseBank partnered with BitShares to provide the back-end technology to facilitate currency-swaps and brokerage services.  This is billing itself as the world’s first truly decentralized bank, designed to compete directly with the major banks and provide a new business model for banking altogether."

Tom you may have gotten scammed by AriseBank.  Lots of people saying it's a scam.

In reply to by GoingBig

HeadintheGame fairmontobsever Thu, 01/04/2018 - 22:23 Permalink

Though I up-voted you, I think you should give your God much more credit than what is reflected in your post.  I doubt HE is nearly as offended (like not at all) by some turkey who misuses the Russian Orthodox Cross in conjunction with a childish user name.  HE expected it.  HE's not intimidated by it. 

Just a suggestion:  Maybe lighten up and see it with God's Huma.  Peace be With You!

In reply to by fairmontobsever

caconhma fairmontobsever Fri, 01/05/2018 - 00:09 Permalink

What do you know about NAZI? You know shit.

As for the Russian Orthodox Christianity, it always was utterly corrupt. No wonder that during the Zio-Bolshevik invasion and occupation of Russia too many Russian Orthodox priests prostituted their Russia/Slave believes, traditions, culture, morality, etc., Just remember that no Nation can legitimately exist without common culture and respect & preservation of the common traditions.

PS

As soon as I bring a new dog to my house, the first thing this dog does is marking the territory around as his new home he intends to fight & protect by all means. He also accepts all rules of his new home. 

 

In reply to by fairmontobsever

zebra77a JibjeResearch Thu, 01/04/2018 - 19:08 Permalink

The article is spot on .. this is exactly what I see transpiring.

Bitcoin has too much financial momentum to be stopped it will always have some momentum. The exchanges are fractional rehypothecating their coin inventories and will close before they ever admit they counter-party played their client pool. Of course this will explain the constant stream of 'we got hacked' all your cryptos are gone.   Then they close up shop.  Their the next Wolf of Wall Street. The next con job.. the next offshore forex scam, another bucket shop.. This will eventually kill off the cryptos and the decentralized direct p2p cryptos will replace most of them.  Ripple will explode in value the bankers fully control it.. They like that they never have to share profits wth the miners.. Highly regulated exchanges will keep Bitcoin going (Japan) Then the real fight is on to try to stop the next wave of wild cryptos ones that use direct P2P and bypass exchanges..  With no centralized exchange tracking and control is geometrically more difficult. There will be the legal camp with full regulation, tracking and the wild cryptos will be outlawed.. Both with thrive and market forces will force their creation. The banks have already lost. . Tokens and knock offs will still bubble at bitcointalk.org as nobody will care to monitor them..

In reply to by JibjeResearch

JibjeResearch HenryHall Thu, 01/04/2018 - 20:31 Permalink

It's a war on cash (the American public and foreigners using the USD) and the Gold (Metal) Standard (East: SCO/BRICS/E7 nations)

 

I'm just a little powerless person that can't do anything about it, but to witness what will happen and to hedge accordingly so that I can make money and be safe in the long run...

 

I know you can see it too..., best wishes 2 you :)

In reply to by HenryHall

???ö? JibjeResearch Thu, 01/04/2018 - 20:18 Permalink

This week in Ripple is brought to you by Matsuyoshi Son and his old executives at Softbank (now re-invented VCs) who invested in the original pump-and-dump of Web 1.0 which led to the dot-com bust.  It is these kind of ass-holes who ruin every party and will ruin the promise of true blockchain currencies with their fake Ripple central bank model, Swift parody nonsense.  

This time they are fleecing the sheeple in Japan who cannot even bother to read the Crunchbase synopsis (Michael Arrington Techcrunch creation) to discover the connection between the Softbank / Wall Street pump-and-dumpers and the friendly zions connection between Arrington and "peanut memo" writer Brad Garlinghouse who along with his PR wife who worked at Yahoo during the lost decade, palled up with Arrington to try to make themselves the King and Queen of Yahoo before Hollywood Melissa got installed by incompetent ignoramus and all around snowflake manager Jerry Yang and his merry group of stupid board directors.

Of course Korean's like Matsuyoshi Son love to seek out Japanese deep-pockets and any ignorant Watanabe investors for their most profitable fleecings while they are simultanously ripping them off with excessive mobile data services under Ministry of Government Moron approval and the blessing of the Emperor.  And you know for certain, there is going to be some zion disintermediation somehow, somewhere, some way, to fuck up this organic cryptocurrency boom and turn it into RC / BIS 3.0 with cooperation from Deep State. They can't let it continue to make billionaires out of just anyone, particularly those smelly little techies. My opinion of course.  None of this is really true.

 

In reply to by JibjeResearch