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Coinsetter raises $500k to bring leverage, shorting to Bitcoins

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Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#41

Post by michaelochurch »

andrewljohnson wrote: post #32
michaelochurch wrote: post #15

This is a big deal. With leverage and shorting, the only people who will have use for BitCoins (as opposed to a long position in a margin account) will be the small set who need the specific type of liquidity that BitCoin offers... and that will prove to be a small set. (People who need regular anonymous liquidity have other means.) I will also remark that, even when a bubble is underway, shorting is dangerous. If yo…

You miss the big picture. Digital currencies will exist as an instrument to hedge against currency fluctuations, commodity manipulation, and to let you deploy liquid money into assets with calculable appreciation/depreciation rates. It won't take much more than a large industry coalition to settle the price fluctuation around bitcoins, which will follow the basic organic market coalition... i.e. vendors accepting bit…

Digital currencies will exist as an instrument to hedge against currency fluctuations, commodity manipulation, and to let you deploy liquid money into assets with calculable appreciation/depreciation rates.

National currencies are much less volatile than Bitcoins have shown themselves to be.

In the future, we may not be using bitcoins, but you can bet we're going to be using coins made of bits.

I think we can agree there. "Bits" have nothing to do with it. It's this:

Money pre-1800: metal (usually gold or silver) that can be used to pay taxes and hire killers to defend land.

Money 1800-2075[?]: debt of large institutions, with equity a small player.

Money post-2075: access to talent (the new limiting factor on getting ideas into implementation). We're starting to see that. I put that at 2075 because people are very conservative when it comes to money, so even though that will be the definition of wealth decades before that, I think it will take a long time before we can come up with a reasonable talent-based currency. What would the proof-of-work model be? It's hard to say.

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#42

Post by jacoblyles »

waterlesscloud wrote: post #16
michaelochurch wrote: post #15

This is a big deal. With leverage and shorting, the only people who will have use for BitCoins (as opposed to a long position in a margin account) will be the small set who need the specific type of liquidity that BitCoin offers... and that will prove to be a small set. (People who need regular anonymous liquidity have other means.) I will also remark that, even when a bubble is underway, shorting is dangerous. If yo…

The real value in bitcoin is that it provides settlement from anywhere in the world to anywhere in the world in at most a couple of hours. Very few other options exist for such rapid settlement. Whatever happens with bitcoin, that pace of commerce exists in the world now. To me, the interesting thing to be doing at this point is figuring out how to take advantage of that speed with new business models.

No, the real value in bitcoin is the blockchain. It shows us a method to use to create and mutate an agreed-upon public state history using a p2p network. Namecoin shows that this can be used for other purposes than merely currency.

Blockchain based coordination and provision of public goods is the future.

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#46

Post by nevster »

wmf wrote: post #45
nevster wrote: post #44

With the price soaring to new heights, how do you pay for things in bitcoins when a single bitcoin is worth so much? Can you pay in fractions of a bitcoin?

Yes, just like you can pay in fractions of a dollar or Euro.

Thanks - should have checked wikipedia first - "In trade, one bitcoin is subdivided into 100 million smaller units called satoshis, defined by eight decimal places."

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#47

Post by Permit »

minimax wrote: post #20

The people here talking about shorting bitcoin to moderate the bubble have no idea what they're talking about. Shorting a bubble is about the stupidest thing you can do. Here's how that math works: 1) You open a margin account with $10,000. 2) You borrow 25 BTC from your broker and sell them on the market at $200. You hope that the price crashes to $0 and your net profit will be $5,000. 3) What actually happens is th…

You've got the right idea, but I think your numbers are off. If you shorted 25 BTC at $200.00 would you not be credited with $5,000?

So when the price rises to $400 you would have to buy back the equivalent amount with $5,000 of your own dollars and $5000 from the original short.

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#48

Post by mattm »

michaelochurch wrote: post #40
andrewljohnson wrote: post #32

Earlier quoted context omitted.

You miss the big picture. Digital currencies will exist as an instrument to hedge against currency fluctuations, commodity manipulation, and to let you deploy liquid money into assets with calculable appreciation/depreciation rates. It won't take much more than a large industry coalition to settle the price fluctuation around bitcoins, which will follow the basic organic market coalition... i.e. vendors accepting bit…

Digital currencies will exist as an instrument to hedge against currency fluctuations, commodity manipulation, and to let you deploy liquid money into assets with calculable appreciation/depreciation rates. National currencies are much less volatile than Bitcoins have shown themselves to be. In the future, we may not be using bitcoins, but you can bet we're going to be using coins made of bits. I think we can agree t…

> National currencies are much less volatile than Bitcoins have shown themselves to be.

I think Zimbabweans, Argentinians, Russians, Mexicans, Romanians and a handful of other nationalities would disagree with you.

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#49

Post by unclebucknasty »

mtgx wrote: post #19

Wouldn't this, ironically, stabilize Bitcoin, if others try to take advantage of its growth and try to bring it down again?

That's an interesting question and I think it's hard to say.

If by "stabilize", you mean reduce volatility, I would bet no. I would say we could possibly see even more volatility once leverage and shorting enter the picture.

But, if by "stabilize", you mean put some downward pressure on the price, then I would guess maybe or even likely.

Under the traditional rules I would have more confidence in the latter than just maybe, but with bitcoin, it seems like we've long ago tossed the traditional rules.

Re: Coinsetter raises $500k to bring leverage, shorting to Bitcoins

#50

Post by [deleted] »

gwern wrote: post #23
patio11 wrote: post #6

Earlier quoted context omitted.

On the Bitcoin Software Maturity Scale, where hundreds of thousands of dollars routinely gets entrusted to 17 year olds coding bucket shops in Ruby on Rails and 80% of the global transaction volume is run through a company in Tokyo set up to trade Magic: The Gathering cards, a guy with financial industry and experience and enough money to pay for a single professional security audit is practically IBM.

> and 80% of the global transaction volume is run through a company in Tokyo set up to trade Magic: The Gathering cards Gasp ! You're right! What other companies have I foolishly entrusted parts of my life to? /looks at his video game console, run by a company in Kyoto set up to sell handmade hanafuda cards Not you too, Nintendo! ;_; I don't know what to believe in now.

[deleted]
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