You may have witnessed feedback in a concert or when your speaker output in a live chat feeds back into your microphone input. A high pitched noise slowly gets louder, then raises exponentially until someone pulls the plug and suddenly a breakdown of signal strength occurs.

You have experienced a bubble.

Being a designer of digital filters, I want to raise awareness of how destructive these bubbles may be to democracy and diversity of opinions - contributing to instability and irrationality.

Stockmarkets, search ranking algos, facebook likes, reddit/mastodon upvoting, opinion polls, “news” in general - all have their respective feedback channels built in.

Feedback is established when past voting results (or price feeds) are visible to those voting in the future.

This may seem benign. It is not. It creates a exponential response. It risks getting chaotic and tends toward bifurcations/splitting. The complexity of not one but many such feedback channels will be explored next.

  • hfondOPMEnglish
    2·
    8 months ago

    Short selling attacks

    To create a negative feedback loop, two things are needed:

    1. a dominant market position and
    2. access to news outlets.

    Binance has both - and the almost risk-free profits from (leveraged) short selling and then announcing negative news has been called monetary terrorism by the best informed analysts in the space, referring to Asian and Latin American currencies attacked a while ago with exactly the same setup.

    Rest assured the price of an attacked currency (XMR in this case) will not go up once a dominant market player has launched an attack.

    This is due the bandwagon effect mentioned earlier. Once the word spreads two things happen simultaneously:

    1. XMR is withdrawn. Selling pressure causes the price to drop a little. This is augmented by the fact that large sums are more likely blocked, so are sold first
    2. Blood hounds want to get in on the deal and start short selling, too

    The news gets picked up, panicky as well as sadistic news outlets shouting “AML” with an occasional voice mumbling “bought the dip”. The 34% market share of Binance is key in this game - otherwise the short position may backfire, resulting in huge losses.

    This is clearly immoral insider trading. Note that Monero futures (short bets) will still be available on Binance. See you next time?

    • hfondOPMEnglish
      1·
      8 months ago

      Pump 'n Dump

      Of course, it works the other way round, called Pump 'n Dump.

      Example: The great btc God-Candle-FOMO

      Some clever guy tweeted on the account of a well known fishface he’d approve the long awaited btc etf. Prices went parabolic, Grayscale dumped and the bad-bad hacker COUGH COUGH was awarded the golden cross for the best crypto bro pump since the invention of Tether.