Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional • Hacker News Board

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#131

Post by g09980 » Mon, Dec 18, 2017, 8:31 AM UTC

omarforgotpwd wrote: post #128

josephagoss wrote: post #102

You can cash out Bitcoin and the price is actually very accurate. The money I see in my bank account is real I can assure you of that. Also I know friends that cash out six figures at a time and the price they get is within less than 1% difference to the last sell price. The number is accurate enough for most orders under $10,000,000. Has this person actually traded Bitcoin? You might not be able to sell a large orde…

I think the point he’s making is that everybody could not cash out at the listed price at once if something were to happen that made holding bitcoin undesirable (such as say, a possible crack for their elliptic curve crypto implementation). However, the same is true for banks which only keep 10% of deposits. Bank deposits are FDIC insured up to $250,000 though.

But the same would happen for any similar-functioning market. If every AAPL shareholder tried to simultaneously sell for $173.97 (current price), many would end up disappointed.

Instead, the article seems like FUD that would confuse non-tech users into thinking they couldn't cash out their 0.5 BTC at the price they're seeing on their exchange (they can.)

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#132

Post by PeterisP » Mon, Dec 18, 2017, 8:32 AM UTC

twelve40 wrote: post #17

davidgerard wrote: post #10

Earlier quoted context omitted.

(author here) This is targeted to the general public, who do actually need Finance 101, because they really don't know what they're getting lured into by the mindlessly positive articles and headlines in the mainstream press. Mostly written by people who don't understand either. I actually consider it seriously unethical to market cryptos as an investment to retail investors - they just do not understand the insane l…

But at the end of the day, how is it different from the current equities market? (aside from immature tools and imperfect infrastructure that is just shaping up). Stock market can tank 50% like it did in 2009 (together with the real estate market) and your average investor will be screwed just the same. Even tech and fundamental analysis gurus cannot explain the endless bull market we're on, how is getting lured into…

The major difference from the current equities market, as described in the fine article (the latter half of it), is that in the Bitcoin market you see common manipulative practices that are illegal and also mostly eliminated from the current equities market.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#133

Post by davidgerard » Mon, Dec 18, 2017, 8:35 AM UTC

scott00 wrote: post #40

davidgerard wrote: post #10

Earlier quoted context omitted.

(author here) This is targeted to the general public, who do actually need Finance 101, because they really don't know what they're getting lured into by the mindlessly positive articles and headlines in the mainstream press. Mostly written by people who don't understand either. I actually consider it seriously unethical to market cryptos as an investment to retail investors - they just do not understand the insane l…

Crypto market cap doesn't mean the same thing as the market cap of a stock, but that doesn't mean it's meaningless. It approximates the total amount of wealth currently held in the form of a particular crypto, which is interesting to know in comparison to more traditional asset classes (stocks, bonds, gold, etc) as well as to other cryptos. If you also have some knowledge or an assumption about the velocity of money…

> It approximates the total amount of wealth currently held in the form of a particular crypto,

I don't see how it does anything of the sort.

* It's not the amount that was put in to it

* It's not the amount you could get out of it

It's a number that's easy to calculate and gets headlines, but I can't see what else it's good for in practical terms.

Perhaps with a tiny altcoin it would be worth 51%ing it. But for anything larger, or for an ICO token? What does this number actually do?

Say there's a crypto asset that isn't getting headlines. Its market cap is $100 million. Just knowing that, what do you know about the crypto?

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#134

Post by davidgerard » Mon, Dec 18, 2017, 8:37 AM UTC

StanislavPetrov wrote: post #104

fernly wrote: post #96

For all those posting variants of "It's no different from stocks", this is answered in TFA but even more clearly in the Paulo Santos article linked from it[1]. Editing it down a bit, > ...overwhelmingly, bitcoin is traded on bitcoin exchanges... So here's the thing: Each of these markets does not communicate with the others. [That] ... means that buyers/sellers on each exchange are reliant on bids/asks exclusively fr…

>So with stocks, if you want to buy or sell shares of AAPL, the price will be essentially the same whether you talk to Schwab or to eTrade, and if it isn't the same to within a penny, a script somewhere will take advantage of the difference to make money by buying from one and selling at the other _in seconds_ -- arbitrage which is not possible with bitcoin exchanges owing to the transaction delay and fee. Partially…

> Anyone who doesn't understand the basics of how markets work (the people this article is aimed at) shouldn't be trading anything.

(author here) I'll second that. Unfortunately, they are ...

I've never personally felt so comfortable with "accredited investor" rules, they feel too much like "only the rich can get richer" - but junk-quality assets like this being marketed to normal people, I can appreciate why this sort of rule exists.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#135

Post by sah2ed » Mon, Dec 18, 2017, 8:46 AM UTC

omarforgotpwd wrote: post #128

josephagoss wrote: post #102

You can cash out Bitcoin and the price is actually very accurate. The money I see in my bank account is real I can assure you of that. Also I know friends that cash out six figures at a time and the price they get is within less than 1% difference to the last sell price. The number is accurate enough for most orders under $10,000,000. Has this person actually traded Bitcoin? You might not be able to sell a large orde…

I think the point he’s making is that everybody could not cash out at the listed price at once if something were to happen that made holding bitcoin undesirable (such as say, a possible crack for their elliptic curve crypto implementation). However, the same is true for banks which only keep 10% of deposits. Bank deposits are FDIC insured up to $250,000 though.

> if something were to happen that made holding bitcoin undesirable (such as say, a possible crack for their elliptic curve crypto implementation).

A much more realistic scenario that could make bitcoin undesirable to hold would be something like all major central banks collectively viewing bitcoin as a threat then working in concert to target the weakest link of the cryptocurrency: exchanges that facilitate conversions to fiat.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#136

Post by pjc50 » Mon, Dec 18, 2017, 8:53 AM UTC

josephagoss wrote: post #102

You can cash out Bitcoin and the price is actually very accurate. The money I see in my bank account is real I can assure you of that. Also I know friends that cash out six figures at a time and the price they get is within less than 1% difference to the last sell price. The number is accurate enough for most orders under $10,000,000. Has this person actually traded Bitcoin? You might not be able to sell a large orde…

So which exchange are you using? How viable is it to cash out smaller amounts, few hundred or thousands?

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#137

Post by kensey » Mon, Dec 18, 2017, 9:02 AM UTC

DennisP wrote: post #39

davidgerard wrote: post #12

Earlier quoted context omitted.

They're not being pitched to suburban mums and dads in the tabloids.

Then it sounds like your argument should just be "this is too risky for more than a tiny investment unless you're very secure," which I agree with. Where I part ways is in your claim that the price is somehow illusory and it's impossible to cash out. Until recently I worked for a company that was mostly paid in crypto, and had no trouble selling it off, moving the money into a bank, and meeting payroll. Crypto is new…

How recently is “recently”? It seems (to me as an outside observer) that it’s gotten notably harder to get national-currency money out of exchanges in the last, say, 6 months, because (I’m guessing) as the price goes on an upward run, more people who bought low are trying to sell to realize those gains, which triggers higher transaction volume, which suddenly prompts correspondent banks to look at exactly what all this money moving around is — at which point AML/KYC processes kick in and some banks decide the relationship with the exchange is too risky.

Didn’t one of the major crypto exchanges recently lose all its correspondents for awhile and then picked up a single one again?

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#138

Post by runeks » Mon, Dec 18, 2017, 9:04 AM UTC

sytelus wrote: post #122

josephagoss wrote: post #102

You can cash out Bitcoin and the price is actually very accurate. The money I see in my bank account is real I can assure you of that. Also I know friends that cash out six figures at a time and the price they get is within less than 1% difference to the last sell price. The number is accurate enough for most orders under $10,000,000. Has this person actually traded Bitcoin? You might not be able to sell a large orde…

Article author actually makes a great point and it stands regardless of your ability to cash out within 1%. Big investors on current markets can whip out huge profits for themselves by using techniques such as front running, wash trades, willybot, spoofing etc. Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players. If you are…

> Exchanges are not even prohibited from doing their own secret trades and using their own internal database and full knowledge of all other players.

Are we sure about this? The two largest USD-exchanges are Coinbase/GDAX and Bitstamp, which operate out of California and London, respectively.

If someone were to reveal that these exchanges were trading against their customers, are we sure that the authorities would be unwilling to press charges?

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#139

Post by omarforgotpwd » Mon, Dec 18, 2017, 9:05 AM UTC

sah2ed wrote: post #135

omarforgotpwd wrote: post #128

Earlier quoted context omitted.

I think the point he’s making is that everybody could not cash out at the listed price at once if something were to happen that made holding bitcoin undesirable (such as say, a possible crack for their elliptic curve crypto implementation). However, the same is true for banks which only keep 10% of deposits. Bank deposits are FDIC insured up to $250,000 though.

> if something were to happen that made holding bitcoin undesirable (such as say, a possible crack for their elliptic curve crypto implementation). A much more realistic scenario that could make bitcoin undesirable to hold would be something like all major central banks collectively viewing bitcoin as a threat then working in concert to target the weakest link of the cryptocurrency: exchanges that facilitate conversi…

Sure, definitely. There are many possible scenarios, like a major exchange like Coinbase, Bitfinex, or some chinese exchange going down / getting hacked. Wouldn’t even have to be all the worlds central banks: could just be one new regulation or rule in China.

Re: Why you can’t cash out part 1: Bitcoin’s “price” is largely fictional

#140

Post by JohnJamesRambo » Mon, Dec 18, 2017, 9:10 AM UTC

SALT Lending has an interesting take on this that is actually healthy for crypto. They say never cash out and lose your crypto. It's hard to argue with that point. Remember there were people that cashed out Bitcoin at $100.