The bitcoin market cap is still only ~1.5 billion? Good thing there aren't any eccentric billionaires out there with spare change and a good reason to want to mess with "the Winkelvii"
Winklevoss twins to offer Bitcoin ETF
71–80 of 100 posts
Re: Winklevoss twins to offer Bitcoin ETF
#72It's clear that many folks don't understand how the price dynamics of ETFs with underlying securities operate.
A share in an ETF is a fixed basket of securities. If the price of the ETF differs from the basket, the ETF share creation/redemption mechanism drives the price back to the fair-market value of the basket.
If the price of the ETF share is too high: Market participants will short the ETF and buy the underlying. They will then take the underlying to the ETF admin, who will then create shares thus closing out the short.
If the price of the ETF share is too low: Market participants will buy the ETF and short the underlying. They will then take the shares to the ETF admin, who will then redeem the ETF share for the underlying, thus closing out the short.
Without the ability to short the underlying, there is no mechanism to maintain equilibrium in the share price of the ETF.
Re: Winklevoss twins to offer Bitcoin ETF
#73Earlier quoted context omitted.
> Following that, liquidity. There needs to be an effective method of shorting in order for the ETF to be effective. I think it will take much more than a year.
I don't follow that logic, could you explain it?
Re: Winklevoss twins to offer Bitcoin ETF
#74This creates an interesting point of failure. What happens when the private key is stolen or hacked? Because the ETF holders are holding cash with the expectations of assurances and insurances that cash comes with. But uh, that's not how Bitcoins work.
Re: Winklevoss twins to offer Bitcoin ETF
#75This creates an interesting point of failure. What happens when the private key is stolen or hacked? Because the ETF holders are holding cash with the expectations of assurances and insurances that cash comes with. But uh, that's not how Bitcoins work.
If the Winklevii own "1% of all Bitcoins," I would hope that they know how to do split key sharing and store their Bitcoins on paper.
I would hope.
Re: Winklevoss twins to offer Bitcoin ETF
#76Earlier quoted context omitted.
Does the order book show all the "dark pool" trades? It surely cannot show all those who sit and wait (or have bots) for the price to change so they can move their ask price up.
The order book would show people who are sitting on either side of the market, so if they have a bot that's adjusting their quote it would still show it - unless I'm misunderstanding your question?
I think we're talking about parties who don't actually have an order in. Rather they have automated a process to enter orders in response to certain conditions. Depending on what those conditions are, you won't be able to rely on a continuous price trajectory.
Admittedly, I don't see how this is different for BTC than it would be for any other asset.
Re: Winklevoss twins to offer Bitcoin ETF
#77Seems like this would flood the market, and perhaps do good things for the values of the Bitcoins in the Winkelvii personal account, no?
Re: Winklevoss twins to offer Bitcoin ETF
#78A few interesting things to note: 1. The trust sponsor is wholly-owned by Winklevoss Capital Management LLC. 2. The sponsor is licensing intellectual property from Winklevoss IP LLC. 3. The fee has not yet been determined. Fees are often waived for a period of time with new issues but according to the prospectus, "Presently, the Sponsor does not intend to waive any of its fee." 4. The fee is paid via a transfer of bi…
The thing that really jumped out at me was the proprietary "Security System" for holding keys developed by Winklevoss IP LLC and licensed to the Sponsor. ...and the fact that the Sponsor is not liable for security-related losses except in the case of gross negligence, which I don't imagine would cover advanced theft/hacking. (I am not a lawyer.) Something close to 10% of all bitcoin currently in circulation have been…
Nothing says "future hack victim" like "proprietary security system". These are the guys so notorious for their failure to supervise subcontractors that Hollywood made a movie about it, and now we trust a high-value high-visibility system they just developed?
Re: Winklevoss twins to offer Bitcoin ETF
#79This creates an interesting point of failure. What happens when the private key is stolen or hacked? Because the ETF holders are holding cash with the expectations of assurances and insurances that cash comes with. But uh, that's not how Bitcoins work.
If the Winklevii own "1% of all Bitcoins," I would hope that they know how to do split key sharing and store their Bitcoins on paper. I would hope.
If they've owned this sum for any amount of time, that is actually some argument for their having the proper security skills to run something like this.
Re: Winklevoss twins to offer Bitcoin ETF
#80Earlier quoted context omitted.
"the whole public BTC order book on MtGox can be had right now for under $2mm USD" No it cannot. Some people have placed sell orders at $1000, $10k, $100k, etc. To the point it would take trillion and trillion of dollars to buy up all BTC. But you can be sure that if you tried to do this, a lot of other sell orders would pop up, making it effectively impossible to buy up all bitcoins.
> But you can be sure that if you tried to do this, a lot of other sell orders would pop up, making it effectively impossible to buy up all bitcoins. Yes, at entirely reasonable prices, right? :D A substantially higher cost basis starts to cut into fund profits... Also, a minor correction to your comment: the depth of the MtGox order book is public, and it was accurate at the time of my comment. It's up to $2.2mm USD…
So... if I put a sell order for 1BTC at $10 million, their number would go up to $12.2M?