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Threes Ways to Generate Fake Transactions at Bitcoin Exchanges

The year of 2017 has witnessed a rise of 194% in bitcoin price, which has taken the lion’s share of the media. The daily transaction of big bitcoin exchanges could amount up to 30 billion RMB.

Fake transaction is an invisible hand behind this growth. Bitcoin industry insiders revealed that it is an open secret that exchanges would use a written software or a program to make fake transactions to increase their market share.

Fake Transactions at Bitcoin

“I offered a price much higher than the closing price, but I just never got the bitcoin. This is so weird,” complained by a bitcoin investor.

As bitcoin investors, especially bitcoin newbies see transaction volume as the metric for security, exchanges would use the following three means to generate fake transactions.

 Release a false number

Big China-based exchanges all release their bitcoin transactions over the past 24 hours. They can simply release a decent number to make themselves look better.

Transactions between shell addresses

Exchanges could just report a lot more trades with many accounts as they could claim to report internal netting trades as volume.

Bitcoin back and forth between two different IP address.

If you worry the first method is too lame, then the third one would be so undercover.

Exchanges could send Bitcoin back and forth through different IP addresses and wallets to make it look like there are lots and lots of transactions happening. Even an old hand can hardly recognize the trick.

Stakeholders of OkCoin and Huobi noted that their incomes are mainly from providing withdrawal services and lending bitcoin for leverage. And transaction volume is the key for them to make a profit.

With no relevant rules and regulations, exchanges have little scruples about falsifying transactions. But if regulators investigate transaction records, it would be practical for them to recognize fake transactions.

 

 

 

COMMENTS(26)

  • Cindy23
    2 months ago Cindy23

    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

  • mobnepal
    2 months ago mobnepal

    This is well known bitter fact about bitcoin trading platforms specially those based on china. This is one of the factor that causes too much volatility in bitcoin price and this have also triggered recent investigation of chinese bitcoin exchanges by PBOC.

  • pinkpanther03
    2 months ago pinkpanther03

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

    If that is true, it is really detrimental for a newbies to encounter that kind of transaction actually, in fact it shouldn’t be happen in each exchange like that. or else it might gonna be a threat to other exchange such a situation case like this.

  • aubert
    2 months ago aubert

    Exchangers are always competing with each other in order to gain as many users as they can and to make it succeed they need to have a good method of marketing and make up a good image for them, it’s actually a normal thing happened that it’s even existed in real life, just by seeing from this, you can distinguish that the exchangers which use this kind of method are not honest and rather not recommended. So, better to get out from these services I suppose.

  • topesis
    2 months ago topesis

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

    I doubt you are a newbie in the space, if you are you won’t understand the impact of fake transaction has on the Bitcoin price fundamentals.Concerning fake transaction, almost all these exchanges are guilty of this, most people will move there tokens to where there is liquid and faking it is a way to attract traders

  • mindrust
    2 months ago mindrust

    These recent pumps may have something to do with those exchange fake pumps. We may very well be in a Gox v2.0 phase at the moment.It is all the same. Bitcoin is rising, alt coins are rising… NMC rises first, then out of no where, PPC rises. And then NVC takes its turn. DSH and ETH are already reached the moon. It feels like exactly the same when it was in 2013.If Poloniex is behind those pumps… What do ya think may Polo be the…next Gox?

  • ImHash
    2 months ago ImHash

    Why do you care about inside exchange trades? what really matters is the main chain transactions with actually the recommended fees and also mined by more than 1 pool. and as it seems everyone after a few hours of inspecting the exchange’s activities could figure out that they’re making fake transactions. so the joke is on them.

  • Dimelord
    2 months ago Dimelord

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges
    Its quite familiar with chinese exchanges.They are always blamed for generating fake transactions to show their trade volume huge.

  • Red-Apple
    2 months ago Red-Apple

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so.
    why can it be devastating for bitcoin newbies!the fake volume is fake, it is not affecting the market or even the orderbook. as long as the exchange platform doesn’t show fake orders in the orderbook and prevent people from selling or buying from those you are good. and there is nothing to worry about.Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges
    if you have something to say, say it here. or if you found the article good then summarize the good part here in your post and tell us your thought. if we wanted to read articles we could have done it ourselves.

  • michkima
    2 months ago michkima

    Quote from: Red-Apple on March 15, 2017, 02:15:36 PM

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so.
    why can it be devastating for bitcoin newbies!the fake volume is fake, it is not affecting the market or even the orderbook. as long as the exchange platform doesn’t show fake orders in the orderbook and prevent people from selling or buying from those you are good. and there is nothing to worry about.Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges
    if you have something to say, say it here. or if you found the article good then summarize the good part here in your post and tell us your thought. if we wanted to read articles we could have done it ourselves.

    It actually affects the trading of bitcoins when there are fake volumes or any data that is manipulated it will have an adverse effect on the trading habits of traders and as well as affect their decision when they say those data. We cannot rule out that this fact, if we do people will really believe what they see and think that bitcoins is really going up or down based on the volume compared to prices.

  • audaciousbeing
    2 months ago audaciousbeing

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

    Hardly will one see any site that is entirely truthful. They will want to use one way or the other to entice cclients to patronise their services. Its even happening in the real world where companies will paint themselves as very solvent and standing firm whereas they are wallowing under bank debts. In other to be careful, one just needs to patronise those sites that have stand the test of time and have even proved themselves worthwhile over the years rather than those who came into existence just last month and have started claiming large volume of transactions.

  • bamboylee
    2 months ago bamboylee

    I wonder which exchanges practices this fraud. All I know is that Chinese exchanges are guilty of this and that is why PBOC are investigating them. And if other exchanges are doing this as well, how can we trust the price we are right now?

  • giveen
    2 months ago giveen

    Wow i never heard about this in exchanges before while if you see this still happens in those doubling sites as they show fake transaction. Best thing to do is google about the site and check it’s reviews and then only use it. Or i can suggest you a few if you are buying using bank then use bitfinex , if with credit card then coinmama , if buying with altcoins then shapeshift and if you want to buy using pm , ok pay then use changer.org

  • joshy23
    2 months ago joshy23

    Quote from: bamboylee on March 15, 2017, 03:06:59 PM
    I wonder which exchanges practices this fraud. All I know is that Chinese exchanges are guilty of this and that is why PBOC are investigating them. And if other exchanges are doing this as well, how can we trust the price we are right now?

    Yes, that’s why the PBOC investigated those Chinese exchanges and found out that they are doing fake transaction volumes and offering 0 fees before. This started an arms race between all the domestic exchanges, heralding in an era of zero fees from which China has never returned. I think BTCC and OKCoin is involved.

  • pooya87
    2 months ago pooya87

    fake transactions are different from fake volume and what exchanges do is reporting fake volume. it is just statistics that they are reporting to be higher in ranking among other counterparts. and the only effect this action of their can have is a higher rank among other exchanges and be for example number 1 or 2,… and also it may end up biting them in the ass when the tax guys came looking for their cut of the deal.

  • batang_bitcoin
    2 months ago batang_bitcoin

    What’s new about China? They are masters for everything, for reverse engineering, faking data’s, faking products and of course with bitcoin transactions. As long as it is going to get a lot of attraction and possibly can get people to invest and use them and put money to them. They will surely do everything for it, China’s god is famous, named money.

  • xypos
    2 months ago xypos

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

    The things that they listed were obvious.Like you could literally be a newbie at bitcoin and you could have written up the same article. I mean yeah these are the ways to fake volume but that article doesn’t mean anything because they haven’t got any proof that any of the no fee exchanges operating in china are actually faking their volume.The admins are ultimately in control here, as they own the site. If they post fake logs then nobody can really find out.Anyways, personally I don’t believe that Huobi or OKCoin actually fakes their volumes. I believe that there is no need to, even though much of the volume might be heavily inflated from users trading back and forth, as there is no fees involved.

  • iamTom123
    2 months ago iamTom123

    Quote from: mobnepal on March 15, 2017, 10:25:31 AM
    This is well known bitter fact about bitcoin trading platforms specially those based on china. This is one of the factor that causes too much volatility in bitcoin price and this have also triggered recent investigation of Chinese bitcoin exchanges by PBOC.

    This issue could have been minimized or even stopped had there been regulations imposed on matters related to Bitcoin and regulations of course call for regulators something which Bitcoin is an anathema of. Bitcoin and regulations could not see face to face because Bitcoin was born partly because in response to the cry against the regulations imposed by any government-created agencies. Having said that, the problem is that people will always be motivated by profits and self-interests as part of our weak human nature and Bitcoin as we see it now can even be magnifying our human nature’s greed pattern.

  • valta4065
    2 months ago valta4065

    That’s not… Really fake transactions aren’t just for the funIt’s a way for traders to impact the market.It’s there way to tell “hey, I think market should go this way” ^^

  • tyson187
    2 months ago tyson187

    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

  • Pursuer
    2 months ago Pursuer

    Quote from: tyson187 on March 20, 2017, 10:26:03 AM
    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

    you can show fake volume but you can not dump bitcoin price because that means you need to spend bitcoin and if you have ever looked at an orderbook on an exchange they are not small orders! the exchange has to dump at least 3000BTC or in their fake Chinese exchange orderbook they have to dump 10,000BTC to make the price go down only 10%what they do, or better say did, is just reporting fake volumes. for example the daily volume was 1000BTC but they reported it as 5000BTC and it is mostly because of competition and also a part of it came from their 0 fee policy.it is worth adding that all of this is over now since PBoC is monitoring their every move. so you can expect a much healthy market over in China.

  • aardvark15
    2 months ago aardvark15

    Quote from: tyson187 on March 20, 2017, 10:26:03 AM
    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

    Which exchanges are Chinese exchanges? I have used several different exchanges and I had never heard that they padded their volume, although I know some are dishonest.

  • BrewMaster
    2 months ago BrewMaster

    Quote from: aardvark15 on March 22, 2017, 03:05:32 PM

    Quote from: tyson187 on March 20, 2017, 10:26:03 AM
    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

    Which exchanges are Chinese exchanges? I have used several different exchanges and I had never heard that they padded their volume, although I know some are dishonest.

    since you don’t know then you probably have never used them ever before. the exchanges that have Yuan or CNY markets listed in their platform are Chinese.and the biggest one that i know of is OKCoin and according to bitcoinwisdom.com there is also BTCCChina and their volume used to be ridiculously high.if you search you will surely find topics about this from that time.

  • aardvark15
    2 months ago aardvark15

    Quote from: BrewMaster on March 22, 2017, 04:14:55 PM

    Quote from: aardvark15 on March 22, 2017, 03:05:32 PM

    Quote from: tyson187 on March 20, 2017, 10:26:03 AM
    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

    Which exchanges are Chinese exchanges? I have used several different exchanges and I had never heard that they padded their volume, although I know some are dishonest.

    since you don’t know then you probably have never used them ever before. the exchanges that have Yuan or CNY markets listed in their platform are Chinese.and the biggest one that i know of is OKCoin and according to bitcoinwisdom.com there is also BTCCChina and their volume used to be ridiculously high.if you search you will surely find topics about this from that time.

    I’ve never used those. I’ve used BTC-e which I think is Bulgarian, Poloniex, and Cryptsy. Of course Cryptsy was a scam and shut down with some of my coins.

  • user27
    2 months ago user27

    Quote from: tyson187 on March 20, 2017, 10:26:03 AM
    It occurs commonly in chinese exchanges.They generate fake buy and sell orders to show increased trade volume.Chinese exchanges always try to dump the bitcoin price whereas other exchanges try to show bitcoin price as increased.

    OKCoin and Huobi do have pretty exaggerated figures at times that they look artificial and faked. However there is no proof to back them up at this point in time.I doubt that we will ever find any proof of them either faking volumes or not faking volumes because they are the operators of the site and they are able to provide any information whether false or true to the public, meaning that we can’t accurate decide.But considering that the chinese government is putting on more restrictions, and keeping an eye actively on these trading places, i would say that there is less chance of volume faking happening.

  • xypos
    2 months ago xypos

    Quote from: Cindy23 on March 15, 2017, 07:48:28 AM
    you may be seeing transaction volume as a metric when choosing bitcoin exchanges. But bitcoin insiders reveal that it is an open secret that exchanges generate fake transactions to make themselves look better. this could be devastating for bitcoin newbies like me. Normally, there are three ways to do so. Read more about this story at:http://news.8btc.com/threes-ways-to-generate-fake-transactions-at-bitcoin-exchanges

    Interesting article, personally i do believe that at least one of these Chinese exchanges has been involved in the act of volume fixing in the past, simply because there is really no way that one single exchange is able to get 1 million + coins which is basically the entire amount of bitcoins satoshi has got.But right now the Chinese government is intervening.This means that the volumes will be down, and therefore there will probably be no volume fixing from now on.

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