Shorting Bitcoin

False. Tesla has never used pouch celles in the Chinese market.

That’s a very bad thesis to trade options on. The author believes that BTC is overvalued, but if you look at their reasons for believing it’s overvalued, some of them could have applied to BTC at any point in time over the past several years, and the rest could have applied to BTC and any point in time since it’s creation.

By buying puts on bitcoin (derivatives), they’re not only betting that they’re correct, but also that something will happen in the next 5-6 months that will catalyze the market to correct that valuation. They don’t have any thesis at all for what’s going to catalyze this correction over the next 5-6 months. Their entire investment thesis is that “[they’d] be astonished if we get through 2021 without an explosion”. The investment described in this blog post is just a crypto-bear yolo play, with less thought put into it than your average r/WSB post.

Edit: looking at the options chain for the BTC ETF they’re shorting, NTM puts are trading at $2, so the underlying has to lose about 1/3rd of its value for that trade to break even. If it goes to $0, their maximum profit is ~$400 per ~$200 contract. That’s certainly not a cheap contract.

So many things wrong with this article. Taking a bet against bitcoin it totally legit but please don’t over simplify things or make false claims.

“No real world use” for bitcoin and other crypto currencies: ok so the goods I bought for years with bitcoin do not exist? And the trading market you are playing on are not a real world use case?

“ These practices have run rampant on every financial market in human history that hasn’t regulated against them fiercely. Why should Bitcoin be any different?”. That’s the ultimate authoritative argument. “Everybody knows”, “obviously”, etc. Please back up with facts and don’t make general claims like that.

USDT: totally agree. But then don’t trade with usdt. Bitcoin not easily convertible to cash ? Maybe you should pickup a more serious trading desk. On boarding is much more restrictive than mainstream platforms like binance but nothing is more untrue that bitcoin is not liquid. You can settle trades in USD (not USDT) instantly with a serious regulated broker.

Limitations of bitcoin: mining, fees, other. Agree, but nothing of these problems makes bitcoin an insider scam. Is there is a problem there is a solution. Who says that these shortcomings can’t be solved ?

“the markets can remain irrational longer than you can remain solvent.”

The threat model of proof-of-stake (PoS) is weaker than that of proof-of-work (PoW). For example, "initial sync" (a new node joining the network, needing to find the sequence of blocks that everyone agrees is the right sequence of blocks) is much simpler with PoW compared to PoS. And, furthermore, with PoS it's possible to compromise this process by stealing private keys from a group that comprises a majority. An attacker can do this silently, and at some later date start publishing alternative chains, thus breaking initial sync by offering multiple, valid chains to new nodes, thus making them unable to decide.

In contrast, it's not possible to steal a majority of PoW mining power, and sit on it for an extended period, without (a) foregoing a large profit, and (b) risking that others acquire more mining power than you have.

One of the Cardano whitepapers [1] contains a good summary of the advantages of PoW over PoS in Section 5.1.1 under "Consequences of PoS vs PoW":

A crucial difference exists between PoS and PoW at the network layer, with significant design consequences: in PoW-based systems, proof-of-work itself gives honest nodes an advantage over adversarial nodes (as listed below), and this enables system designs that are simpler and more modular. There is no such advantage for honest nodes in PoS-based systems such as Ouroboros.

In PoW systems:

• The number of different block headers with a valid PoW that can be constructed (over any given period of time) is bounded by the total available hashing power in the world. In Bitcoin for example this is one header every ten minutes on average.

• The header PoW can be checked with little computational cost. This does not require any significant or recent state, only a vaguely-recent lower bound on the hashing difficulty value is needed.

• Such a cheap and simple test can be easily integrated into existing distributed algorithms such as broadcast algorithms.

By contrast, with PoS in Ouroboros:

• There is no equivalent of the PoW check that is expensive for the adversaries and cheap for the honest nodes: adversaries can create many apparently valid or actually valid candidate headers or whole chains.

• Block headers can only be fully validated with access to a very recent copy of the full ledger state, and the other preceding headers – which is not a simple stateless check.

• Having the full ledger state relies on the other two pieces of Ouroboros functionality: chain validation and chain selection

[1] https://hydra.iohk.io/build/6684352/download/1/network-desig...