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Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

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Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#161

Post by bunderbunder »

mathgenius wrote: post #102
d--b wrote: post #80

Earlier quoted context omitted.

As others pointed out, when you buy/sell futures, you risk counterparty risk. But it's not that bad because that exchange is really good and people entering the market pay margin calls every day. There is also a financing cost (ie. the cash you use to pay for your margins, transaction costs, and to buy the bitcoins will not pay you any interests over the time of the position). But again, the effect is not very large.…

The bitcoin exchanges have plenty of liquidity, and executions happen in less than one second. The real risk for arbitrage is with the crypto exchange itself: these can go bust, or disappear overnight. You wanna keep $1M sitting on one of these exchanges?

Wrong kind of liquidity. Trading firms, hedge funds, etc. care care about liquidity of the "Can I convert this into the kind of money I use to pay taxes and employees and investors?" kind. BTC has basically zero of that, as evidenced for the fact that there isn't a deliverable version of this contract.

I'm not sure a sensible institution would even consider BTC held at exchanges to be real BTC, just a kind of IOU. There may even be regulations preventing them from doing so. So they will probably want to hold the BTC themselves. Or with a clearer, which is likely to think about these things even more conservatively. And 20 minutes (the last figure I heard for how long it takes to execute a bitcoin transaction) is an eternity to an industry that is starting to think in nanoseconds.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#162

Post by gruez »

sliverstorm wrote: post #5
gchokov wrote: post #2

Can’t really wrap my head around the rise of BTC in futures trading, as they are all cash settled. In other words, pure betting and gambling with the futures, as they really do not touch the underlying BTC. I guess, just a regular day in the massively manipulated crypto currency world...

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

>the Lightning network looks a lot like the old Gold Standard

There's no fractional reserve with LN.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#163

Post by nscalf »

etr-strike wrote: post #156
jacobr wrote: post #105

Earlier quoted context omitted.

It's not very good as a medium of exchange due to the high transaction time and costs. There is a theory that a recent bump in Litecoin prices was due to traders wanting to move Bitcoin between exchanges and Bitcoin is too slow.

I hate to break it to you but none of the existing cryptocurrencies know how to scale transactions yet. There are, however, many proposed solutions. Bitcoin is aggressively pursuing those solutions. The worst proposal, increasing blocksize, is not currently being considered because of its impact on centralization.

Have you heard of bitcoin's lightning network? There is a layer they're working on that, as I've heard it, allows 1 million transactions a second for a fraction of the transaction cost. It's not VISA, but it's a huge improvement, and makes Bitcoin much more viable. They've been showcasing successful tests, but are open about it not being 100% ready. Still exciting.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#164

Post by uncoder0 »

Kiro wrote: post #21
JanSt wrote: post #8

Earlier quoted context omitted.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

> It achieves nothing that an increased blocksize would not have done on-chain Regardless of blocksize the block times are still 10 minutes which means you need one hour for the transaction to settle, per the 6 block standard. You can't compare that with LN.

With the current difficulty level isn't the '6 block standard' a bit dated unless we're talking about a transaction that is extremely valuable.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#165

Post by [deleted] »

d--b wrote: post #80
LrnByTeach wrote: post #40

I am trying to understand risks with arbitrage for professional traders with BTC spot (at Coinbase gdax) and CBOE Futures contract. Let us say, some professional trader "Short sell CBOE Future contract & Buy BTC Spot at Coinbase simultaneously" At the time of this writing, Futures contract short sell @ $18700 and BTC Spot buy @ $16700 simultaneously. http://cfe.cboe.com/cfe-products/xbt-cboe-bitcoin-futures you wait…

As others pointed out, when you buy/sell futures, you risk counterparty risk. But it's not that bad because that exchange is really good and people entering the market pay margin calls every day. There is also a financing cost (ie. the cash you use to pay for your margins, transaction costs, and to buy the bitcoins will not pay you any interests over the time of the position). But again, the effect is not very large.…

[deleted]

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#166

Post by hknecht »

jacobr wrote: post #105
hknecht wrote: post #74

I think Bitcoin will become the principal store of crypto value. There will be other cryptos for different uses and Bitcoin will serve as a medium of exchange among them and as a long term store of value, it probably won’t become the everyday currency we all want to use. Hopefully these futures will reduce its volatility and help stabilize the price

It's not very good as a medium of exchange due to the high transaction time and costs. There is a theory that a recent bump in Litecoin prices was due to traders wanting to move Bitcoin between exchanges and Bitcoin is too slow.

I myself use Litecoin when moving between exchanges but Bitcoin is in my opinion to other cryptos what USD is to stocks. You can compare AAPL and GOOG, but you usually compare AAPL USD and GOOG USD

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#167

Post by sliverstorm »

gruez wrote: post #162
sliverstorm wrote: post #5

Earlier quoted context omitted.

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

>the Lightning network looks a lot like the old Gold Standard There's no fractional reserve with LN.

Not yet, but Bitcoin is fixed in supply & deflationary, just like gold was, and there have been non-fractional reserve gold standards.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#168

Post by uncoder0 »

em3rgent0rdr wrote: post #46
generalizethis wrote: post #32

It's ironic that wall street spent so many years saying Bitcoin is worthless, but is buying-in when it's lost its use case to competitors within cryptocurrency, and really is useless (except as a speculative vehicle or "store of value"). I guess BTC can fork infinitely, so there's that.

Actually, Lightning Network will significantly increase Bitcoin's transactions per second and reduce transaction cost.

If Segwit adoption (~12% after launching toward the end of August) by 3rd parties is any indicator even if lightning released today we wouldn't be seeing huge benefits for months if not years.

There is a certain elegance to increasing the block size as it allows you to continue using the chain as you've been using it for years (on-chain transactions). As a bitcoin community member for nearly its entire history myself and others have worked hard to get the level of merchant adoption we enjoyed in early 2016. Today bitcoin is accepted in less places than it was 2 years ago and transacting with is is a luxury only reserved for us privileged early adopters. It was never supposed to be this way.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#169

Post by mattm »

pbhjpbhj wrote: post #130
moduspol wrote: post #118

Earlier quoted context omitted.

From my experience, the way you find out there's an issue with the exchange is when you see people posting on /r/bitcoin about having waited weeks for their withdrawal to be processed. Meanwhile the exchange continues to accept deposits.

Presumably you can watch the exchange's wallets and see anomalous behaviour relatively easily?

Do exchanges publicize their main wallets? Is there a listing somewhere?

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#170

Post by stef25 »

tehlike wrote: post #15
flatline wrote: post #9

Earlier quoted context omitted.

I agree, and I'm skeptical of Bitcoin on many levels. The vision it offers is very attractive, but each so-called feature comes with so many caveats that it's never clear there is a real advantage. Still, I think people hold onto the vision. As digital cash, I can buy something online more or less anonymously, without a middle man. Well, except for the miners. And my anonymity is blown if the person from whom I purch…

IF you want privacy, there are alternative coins that are fairly active with development: Monero, zcash, etc. I am not endorsing anything, but i believe the privacy & fungibility are important in a digital currency. On the sad side, people who put money in bitcoin are thinking it's a great investment. This is not to devalue your comment, but for the past 10 years, almost every years, the low lows have been increasing…

Maybe this isn't the right place to ask this question, but how is Monero any different than the Bitcoin example you respond to, when the vendor you sent your crypto currency to to exposes your identity?
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