51–60 of 79 posts
I heard something about the popularity of perpetual futures being owed to "insane leverage possible." Can anyone confirm/explain this?
perpetual futures, first used by Chinese gold miners in Hong Kong, took off at bitmex with 100x leverage.
Earlier quoted context omitted.
You can think of currency as a negative coupon bond, even - if you hold onto cash you generally expect it to lose value. In order to function properly as a currency, an asset needs to be the least volatile liquid asset available in the economy (or at least to be competitive along this axis). The expectation the asset will slowly depreciate is compatible with this requirement. The expectation that your currency is a h…
I don't understand claims like this, if the net present value is zero, why is the price not zero? You have to convince yourself that everybody trading or holding the cryptocurrency is deluded and just playing a ponzi scheme with each other, but even if you believe this, those participants itself believe it has value. Who is value set by, if not the market?
NPV, price, and value are each distinct [1]. Individuals judge value according to their own idiosyncratic needs and views, the market determines price, and a valuation model determines NPV - market forces will tend to align these, but there's no guarantee they will and no contradiction if they don't. (Note that NPV might be better termed "net present cash flow," it's more like a price than a value.) The S&P can go to zero on Monday and a million the next day - it's not likely (presumably the exchanges would halt trading long before that happened) but there's nothing to stop it. It's not like a physical system which is constrained by the universe to behave a certain way, it's closer to a series of independent dice rolls.
It seems to me like many people engage with this market for ideological reasons. I don't mean to say that's an illegitimate choice. But it can surely push the price past the NPV, if there's a contingent that's insensitive to the NPV. (This is why it's important to separate price from value. People investing for ideological reasons have a view about the value of Bitcoin, not the price.)
And then there's stuff like this.
https://youtube.com/watch?v=wIhTGB3wqV0
(Apologies that this is a meme, it was the first instance of the clip I found & I didn't feel like looking for a non meme version.)
Tl;Dw this is Saylor encouraging people to mortgage their house to buy Bitcoin. I think Saylor is some mixture of con artist and true believer, but I would call that close to unhinged. So yeah, some participants might be delusional (not a doctor). But I assume it's a minority.
[1] If you'd like me to define these terms, please see these previous comments of mine.
https://news.ycombinator.com/item?id=32857769
There's some debate in this thread about whether price and value are actually equivalent.
Earlier quoted context omitted.
From OP link: The value of cryptocurrencies, in spite of a collapse in value, is stopped from falling to their natural value, i.e. zero, by a combination of market manipulation, investor ignorance and a tsunami of lies on social media from those paid to promote these worthless frauds. Which isn't how the US government backing the USD works at all.
It's not a Ponzi scheme if you have aircraft carriers (people think I'm joking but that difference is real and important).
> “The only question is: Which exotic derivative will be the next? At Everstrike, we think it will be the everlasting option.” Wasn’t expecting that promo at the end, but who am I kidding, no one writes seriously about crypto without promoting something.
If you are an American and want to experiment with perps and aren’t confident with defi, you can become a Palauan resident and trade on Bybit (Dubai) and some other offshore exchanges legally. https://rns.id/
I was reminded of the characterization of cryptocurrencies as "Perpetual Zero Coupon Bonds": https://martincwwalker.medium.com/impossible-finance-the-per...
First time hearing about Zero coupon bonds and Perpetual bonds... Nonetheless, wouldn't author's description of perpetual zero coupon bond apply to many (most? all?) fiat currencies as well, since these are not really backed by anything anymore?
So yes, paper bill currency is just as speculative as cryptocurrency. The difference is that nowadays most money is created with a contractual obligation to get rid of it eventually, which means its value is stable(=opposite of volatile) over time.
Earlier quoted context omitted.
You can think of currency as a negative coupon bond, even - if you hold onto cash you generally expect it to lose value. In order to function properly as a currency, an asset needs to be the least volatile liquid asset available in the economy (or at least to be competitive along this axis). The expectation the asset will slowly depreciate is compatible with this requirement. The expectation that your currency is a h…
Cash does not have a negative coupon. Cash has no coupon. I feel introducing quasi terminology helps confuse rather than help. Index linked bonds, I think you're getting at the concept by talking about inflation, are linked to price changes. Check the actual price index (CPI, RPI, etc) of linkage for what price changes. Most bonds are not index linked, not hedged against inflation, and have a fixed coupon. Whether or…
People who expect money to store value directly must be insane. I mean think about Roman empire currency being valid today. That is impossible. Money is only valuable within an economy that accepts it. Money from the past is no longer in the economy that is used to be accepted in. Every time period could be considered its own economy. Storing value or carrying value into the future can only happen in the real world, not with money itself, which is just a managerial system.
In the real world, objects degrade, expire, require maintenance or constant energy inputs. Once humans are gone, nature will simply take over.
The disconnect between money and the real world must manifest itself as inflation.
I was reminded of the characterization of cryptocurrencies as "Perpetual Zero Coupon Bonds": https://martincwwalker.medium.com/impossible-finance-the-per...
All non-dividend paying stocks are zero-coupon perpetual bonds anyway. Nothing new about it
Earlier quoted context omitted.
From OP link: The value of cryptocurrencies, in spite of a collapse in value, is stopped from falling to their natural value, i.e. zero, by a combination of market manipulation, investor ignorance and a tsunami of lies on social media from those paid to promote these worthless frauds. Which isn't how the US government backing the USD works at all.
It's not a Ponzi scheme if you have aircraft carriers (people think I'm joking but that difference is real and important).
Earlier quoted context omitted.
First time hearing about Zero coupon bonds and Perpetual bonds... Nonetheless, wouldn't author's description of perpetual zero coupon bond apply to many (most? all?) fiat currencies as well, since these are not really backed by anything anymore?
From OP link: The value of cryptocurrencies, in spite of a collapse in value, is stopped from falling to their natural value, i.e. zero, by a combination of market manipulation, investor ignorance and a tsunami of lies on social media from those paid to promote these worthless frauds. Which isn't how the US government backing the USD works at all.