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Fake Tesla, Apple stocks have started trading on blockchains

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Re: Fake Tesla, Apple stocks have started trading on blockchains

#151
post #70

Earlier quoted context omitted.

>> Users can trade the tokens anonymously 24 hours a day, seven days a week, from anywhere, unhindered by capital controls, “know your client” rules imposed on broker-dealers, and other frictions of the traditional financial system. > These are certainly new innovations and features, be they good or bad. That's saying a car with its seat belts removed has an "innovative new feature." The usual word for that situation…

There's no benefit to the user to having no seatbelts. There's a huge benefit to having open markets at all times. The usual phrase for your argument is "false analogy."

> There's no benefit to the user to having no seatbelts.

No seatbelts means it's easier to get out of the vehicle (if you planned to or not). Some seatbelts are uncomfortable. Seatbelts add to the materials and assembly cost of the vehicle, and add weight to the vehicle which increases fuel usage and wear on the tires and suspension and road. Maybe they wrinkle your clothes? Installing retrofit seatbelts on a vehicle without them can be difficult and the result may be really uncomfortable. Very ocassionally, it might be preferable to be flung from a vehicle rather than retained in a vehicle during a colission, although that would have to be a pretty specific set of circumstances, because being flung from a vehicle results in a lot of undesirable injury.

Not having seatbelts has minor benefits. All of them are outweighed by the benefits of seatbelts in my opinion (and I think there's broad consensus) but claiming there's no benefit to not having them or that there's no cost to having them is silly.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#152

Earlier quoted context omitted.

> We don't call corn futures fake corn /ZC is physically settled[0], so that’s not a great example. /ES (S&P 500) or other index futures that are cash-settled is a better analogy. They’re also, yknow, regulated[1]. [0] https://www.cmegroup.com/markets/agriculture/oilseeds/corn.c... [1] https://www.cftc.gov/

Yeah, I would like to emphasize the fact that they're settled once individual contracts expire, be it cash or delivery. I am yet to find a useful derivative that lacks a settling mechanism. How would you even price such a contract that lacks settling? Like why should it be worth anything at all?

Things like BTC swaps don't really have settlement periods: every so and so numbers of often (often 1 or 8), longs pay shorts using some premium formula is swap > index, and vice verse if swap I suppose you could construe that as some periodic partial settlement mechanism, though.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#153

Earlier quoted context omitted.

Yeah, I would like to emphasize the fact that they're settled once individual contracts expire, be it cash or delivery. I am yet to find a useful derivative that lacks a settling mechanism. How would you even price such a contract that lacks settling? Like why should it be worth anything at all?

Because there's some mechanism for arbitrage that allows you to effectively settle it. If the spot price is too low you can make a profit.

Well that mechanism for arbtrage usually occurs through settlement. ie at contract settlement, you trade one for the other.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#154
post #60

Earlier quoted context omitted.

From TFA: > Users can trade the tokens anonymously 24 hours a day, seven days a week, from anywhere, unhindered by capital controls, “know your client” rules imposed on broker-dealers, and other frictions of the traditional financial system. These are certainly new innovations and features, be they good or bad.

Oh my, they cal KYC "friction", that is indeed creative writing.

I've both implemented, and been impacted by, KYC workflows. It is definitely friction. "Required by law," sure. "Prevents money laundering," on occasion. But friction, most definitely.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#155

Earlier quoted context omitted.

Yep. It's burdening 99% of legitimate users with a very minor inconvenience, to stop the 1% of bad actors who would otherwise end up doing a lot of really bad things that would harm the 99% in ways that go far outside the scope we think of as covered by the financial system. So yes, I understand where you're coming from, but my libertarian instincts to reflexively think of KYC/AML as excessive and annoying regulation…

I'm not sure I would categorize it as "minor inconvenience". In terms of financial numbers, it's estimated to cost 180B$ [1]. You also have to consider all the opportunity costs of what we could achieve with a faster and smoother financial system. And you have to consider financial inclusion and all that, there are lots of really interesting financial instruments that I can't access because there's some retail that d…

Agreed that this isn't just a "minor inconvenience" and as a resident alien in another country for a while (the UK), I found KYC regulations to be really quite obnoxious — and I was a pretty good position to handle them, at that.

The question of whether it's worth it is a real one, and more honestly answered (whether positive or negative) if we admit these substantial costs.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#156

Earlier quoted context omitted.

> We don't call corn futures fake corn /ZC is physically settled[0], so that’s not a great example. /ES (S&P 500) or other index futures that are cash-settled is a better analogy. They’re also, yknow, regulated[1]. [0] https://www.cmegroup.com/markets/agriculture/oilseeds/corn.c... [1] https://www.cftc.gov/

Yeah, I would like to emphasize the fact that they're settled once individual contracts expire, be it cash or delivery. I am yet to find a useful derivative that lacks a settling mechanism. How would you even price such a contract that lacks settling? Like why should it be worth anything at all?

You could technically buy real shares and sell synthetic shares on the blockchain, harvesting the price difference.

This would generally have the same effect as the blockchain user buying the stock directly, but through an intermediary collecting premium.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#157

Earlier quoted context omitted.

It's not really. They're transparent, auditable, and typically they're designed to use over-collateralization to prevent liquidity problems, but they're not 100% immune to them and still count as bucket shops IMO. But they're absolutely not fraud or "fake stocks".

According to the Wikipedia link, bucket shops are illegal gambling. So if what this is doing isn't any different than a bucket shop... I think we'll see the same outcome.

Yes I think that's very likely. The closer DeFi gets to traditional markets the more likely enforcement is coming.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#158
This isn't the same thing but I do think companies issuing stock for crypto is the next logical step and it will happen at some point. Not derivatives or any sort, just company stock directly listed on a crypto stock exchange. I imagine it's a long road to that point, but certain companies like Tesla just might be willing to do such a thing since they own a decent portion of crypto as is.

Re: Fake Tesla, Apple stocks have started trading on blockchains

#159
> the idea is to keep prices of the synthetic -- or “mirrored” -- equities in the ballpark of the real thing by offering incentives for traders to arbitrage price discrepancies and manage the actual supply of tokens. Users can create, or “mint,” new tokens when prices are too high by posting collateral, and destroy, or “burn,” tokens when prices are too low, driving the price up or down.

How does that work? What prevents me from "minting" tokens and running away?

Re: Fake Tesla, Apple stocks have started trading on blockchains

#160
post #103
post #97

So we now have synthetic stocks on blockchains. I expect in short order we will see synthetic asset-backed securities that track the prices of real ones, synthetic macroeconomic indicators that track the real ones, and a full suite of other financial derivatives -- maybe even "synthetic NFTs" that track the prices of "real NFTs." The number and variety of synthetic securities, AKA derivatives, that could be created o…

If I understand Godel's theorem (which only 6 people do), the natural conclusion of this is an asset which is a derivative security of itself. Which could be the ultimate stablecoin, or equally a disproof of the self-consistency of the blockchain itself. Maybe both at the same time.

Or tear a hole in the fabric of spacetime.
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