It will recover, and as a result will be more robust than it was before. Regulatory prohibitions centralise the job of risk assessment and management leading in the long run to a more fragile economy, that's more dependent on a Single Point of Failure (the regulatory authority).
I'd rather have a choice. I might prefer the non-government-cerifird beef of the local rancher, and regulatory prohibitions deny me the option to choose.
The theory of networks like Ethereum is that they don't require trust and thus don't need any authorities second-guessing bad behavior. If these opportunities for market manipulation arise, it's supposed to be 100% buyer beware. Of course, as stakeholders have an increasing interest in promoting the credibility of the market, this theory is eroded by the impulse to take corrective actions. Indeed, since forking is always an option, there will seemingly always be a temptation to use a democratic mechanism to enforce a correction. Afterward, the validity of the correction is determined by the remnant value of the two forks respectively.
That's sort of what happened with the DAO scandal. As I understand it[1], some Ethereum company screwed up something they wrote on the platform, which allowed an attacker to exploit it and suck out a lot of money, so some influential players convinced the entire network (minus some splinter faction) to retroactively void the attack and restore the funds to the company it was stolen from.
The crash happened off-chain—most exchanges do not process transactions on chain as it would take several minutes for confirmations to go through—and thus is probably not connected to the Status ICO and network clogging.
What happened was a massive sell-off resulted in a significant price drop, causing margin orders to liquidate and successive drops in price. This previously happened last month with Kraken.
1. This only happened on GDAX, an exchange owned by Coinbase. This dip didn't occur anywhere else. Coinbase/GDAX has suspended all ETH/USD trading until further notice and are investigating.
2. According to some on Reddit, it crashed to even lower than $13, some reporting even $0.10. Some were even able to purchase for a double digit USD price on Coinbase, not just GDAX.
3. The market sell order appears to have been for $32 MM.
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[ 2.7 ms ] story [ 52.3 ms ] threadA bit more colour on the issue from reddit via zerohedge.
If they are correct it looks like a badly designed ICO and a badly behaved miner are the causes of the crash.
A couple of points....
If this was a mature market, like say the US equity markets,
- mostly likely some trades would be busted and
- if this was indeed caused by a market participant behaving badly, they would be punished and possibly have their access pulled.
Assuming the above is correct, how do you police miners in a distributed market with no central authority?
Let's regulate the meat industry 2 ways. One through the UDSA. One through customer due diligence and market forces.
I am buying USDA meat for my family. Are you buying the free market "we promise it's really beef" meat?
[1] https://www.reddit.com/r/ethereumfraud/comments/6bgvqv/faq_w...
What happened was a massive sell-off resulted in a significant price drop, causing margin orders to liquidate and successive drops in price. This previously happened last month with Kraken.
2. According to some on Reddit, it crashed to even lower than $13, some reporting even $0.10. Some were even able to purchase for a double digit USD price on Coinbase, not just GDAX.
3. The market sell order appears to have been for $32 MM.
Some people who were over or under, supposedly didn't get called, or position filled.
Everyones hoping for a reversal. It isn't new, and does happen.
Let's see what's in store.
My position wasn't to strong, only $5300 lost. But still. Ouch.