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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

#201

Post by Klathmon »

FireBeyond wrote: post #191
Klathmon wrote: post #149

Earlier quoted context omitted.

To be fair, Lightning works, and it works now on the Bitcoin mainnet. The idea is sound, the code is written and somewhat tested, and it has been used in a very controlled fashion on the real bitcoin network already. At this point it's just a matter of further testing and validation that the logic is sound and there isn't anything everyone is missing, and getting vendors on board and adoption started. Still no guaran…

I'm struggling to find references, so apply salt as needed, but I'm fairly sure I've read multiple references to the fact that the LN developers themselves describe it as pre-alpha and still a few years away. Which, to be clear, isn't necessarily vaporware - I think most people are in agreement that the concepts are sound, but that integration of the execution into the mainstream are quite a ways off.

It is still "early alpha" but bitcoin developers use that term as it was meant to be used.

"early alpha" is just that, early access to a fully working product with all the features that are needed, and it needs a LOT of testing and validation. And because of the "network" nature of it, it needs people or vendors that are willing to try it out before it can even be tested outside of controlled areas.

I agree that we are probably a few years (probably more than a "few") from Lightning being the "default" way to use bitcoin, but I fully expect by Q3 of next year there to be a few vendors which accept lightning natively, and a few "consumer friendly" wallets that have some integration.

In my opinion, I wouldn't want to call it "beta" until there are a few implementations with "user friendly" UI that abstract away the dirty details, and until there are at least enough people on the "network" that it would be feasible to actually use it.

If you want, [0] is a video from last week that shows lightning network running on mainnet. It's a bit of a "fluff video" with nothing really substantial in it, but it at least shows that it's working, and if you compile the tools he used in the video yourself (to target them at mainnet) then you could do it right now too, but without anyone to "network" with, it's kind of pointless right now...

[0] https://www.youtube.com/watch?v=a73Gz3Tvx3k

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

#202

Post by ihaveahadron »

Digital currency seems to need a lot of electrical power. I guess whoever builds a fusion power generator will end up mining trillions^999...? worth of Bitcoin.? Just create a controllable sun here on Earth, why can't you do that "scientists" you can't even do what nature has already fucking done.

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

#203

Post by LrnByTeach »

Tepix wrote: post #144
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…

What happens if the price remains near the current price?

Same thing, the trader profit in this CASE mentioned is still same $2000

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

#204

Post by LrnByTeach »

gibybo wrote: post #187
nostrademons wrote: post #35

Earlier quoted context omitted.

I do wonder how counterparty risk will be priced into the futures contracts. There've been a number of cases - Mt. Gox, Bitfinex, any Chinese/Korean/Zimbabwean exchange if you're not a resident of that country - where you can sell a Bitcoin for a nominal price on the exchange but not be able to withdraw that money into the fiat financial system. That's led to structural differences in prices between exchanges which d…

Right now 1 BTC on Gemini (the reference exchange for CBOE Bitcoin futures) is $16,600 and the futures price is $17,800 for a 1 or 2 month contract. Since the risk free rate is about 0.125% monthly and this spread is 7.2%, it looks like the market is pricing the counter-party risk at about 7% for one or two month durations. That seems pretty high to me though, you can arbitrage on Coinbase and Gemini which are both U…

good points, the market is pricing the counter-party risk at about 7%

> Right now 1 BTC on Gemini (the reference exchange for CBOE Bitcoin futures) is $16,600 and the futures price is $17,800 for a 1 or 2 month contract.

> Since the risk free rate is about 0.125% monthly and this spread is 7.2%,

> it looks like the market is pricing the counter-party risk at about 7% for one or two month durations.

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

#205

Post by CoryG89 »

jstanley wrote: post #132
Cthulhu_ wrote: post #49

Earlier quoted context omitted.

I can imagine bitcoin will one day become tightly regulated and only available to sophisticated traders; the network only supports 15 transactions per second, limiting who can do trades is one way to deal with it. NYSE can do about 11K a second (based on https://www.quora.com/What-is-the-average-total-number-of-tr... )

The amount of transactions the bitcoin network can handle is totally unrelated to the amount of trades that can be performed on exchanges.

Correct, however, the number of transactions that can be handled does matter when it comes to moving BTC out of or between exchanges.

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

#206

Post by nawtacawp »

knowThySelfx wrote: post #183
nawtacawp wrote: post #125

Earlier quoted context omitted.

Just want to add for those new to btc, these are not far fetched scenarios — they have all happened in the past.

Does this remind us of some glorified Ponzi scheme? How does Bitcoin get hacked? It certainly isn't easy unless you are an insider. And perhaps NSA, since they created SHA-256. https://bitcointalk.org/index.php?topic=291217.0 The bubble will burst - some people will make money out of this and a whole lot of others will lose.

I believe the hacks OP was referencing doesn’t have to do with SHA, but more to do with bitcoin exchange security and not protecting their btc correctly.

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

#207

Post by ithinkinstereo »

devit wrote: post #12
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...

As far as I can tell it's just a way to outsource holding the BTC. A BTC future can be perfectly hedged by taking a loan until the settlement date and using it to buy 1 BTC, holding it until settlement and then selling, so that's probably what the counterpart selling the future is doing.

As others have mentioned, contracts are marked-to-market on a daily basis, which impacts the margin needed to hold the contract. With wide price swings, this can force you to close your position before it settles in order to meet margin, especially if you're trading with leverage. CBOE also has a really high margin requirement (I think 40%+), so the capital costs to play are quite high here.

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

#208

Post by zodiac »

awemany wrote: post #66
zodiac wrote: post #36

Earlier quoted context omitted.

> It achieves nothing that an increased blocksize would not have done on-chain It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain.

> It lets one party in a channel send arbitrarily large numbers of payments ("arbitrary" subject to the total payment value being capped to the channel capacity, as well as to the Bitcoin divisibility) to another without increasing the UTXO set as you would on-chain. No that is not true. Each Lightning Channel needs UTXOs to be created before it can be used at all. Its goal is rather to do trustless multi-hop off-cha…

I mean without creating a new UTXO for each micropayment. Of course you need new UTXOs to open the channel

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

#209

Post by Frogolocalypse »

pointsphere wrote: post #110
Frogolocalypse wrote: post #86

Earlier quoted context omitted.

They don't verify transactions actually. That is what nodes do. They retrieve valid transactions from nodes, order them, and then hash them according to the consensus proof-of-work algorithm, which in this case, is SHA-256, until it produces a block that will satisfy the node consensus requirements.

Miners are nodes and therefore verifying transactions, and they're the only nodes writing transactions to the blockchain. Non-mining nodes can only verify transactions for themselves , which helps them stay on the chain of their choice but does not extend any chain.

Miners require nodes, so they have them too, because without nodes they can't source transactions. Every node, applying consensus rules, extends the blockchain by accepting valid blocks that meet consensus rules.

We have had a year long education in the limited power of miners with many people incorrectly attributing responsibility for maintaining the protocol. Miners were rightly shown to be powerless to force consensus changes on the nodes. When push came to shove they did what they were told, at the threat of being crushed with a pow change.

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

#210

Post by em3rgent0rdr »

uncoder0 wrote: post #168
em3rgent0rdr wrote: post #46

Earlier quoted context omitted.

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…

Lightning Network has already proven themselves using real bitcoins in test videos. Don't want to deploy too fast at risk of making major screwup, so patience is necessary. Trying to modify bitcoin core such as with a blocksize increase has proven to be impracticably. So Lightning Network has a much greater chance than modifying bitcoin itself.
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