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Bitcoin Exchange Had Too Many Bitcoins

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Re: Bitcoin Exchange Had Too Many Bitcoins

#171

Post by filmackay »

sowbug wrote: post #108
matt_wulfeck wrote: post #88

> But BTC hasn't really lost any value since the spinoff, still trading at about $2,700. So just before the spinoff, if you had a bitcoin, you had a bitcoin worth about $2,700. Now, you have a BTC worth about $2,700, and also a BCH worth as much as $700. It's weird free money, if you owned bitcoins yesterday. Doesn't this throw up any red-flags to the btc/crypto apologist? This type of behavior is not how healthy mar…

If you're thinking of this event as a split, dividend, or spinoff, then it doesn't make sense. But it's more like a company cloning itself but adopting a different vision/mission, and awarding shares to all existing shareholders. They could have started fresh like the zillion other cryptocurrencies that have started up since 2009, some of which appear to have real value. You wouldn't look askance at those, at least f…

A spin-off (or more correctly, demerger) is almost exactly what you describe: a company cloning itself but adopting a different vision/mission, and awarding shares to all existing shareholders.

With companies it is usually done with a particular division, or business area - but in the case of an anti-trust settlement (go and compete with yourself) it would be exactly what you describe and be implemented as a demerger.

Re: Bitcoin Exchange Had Too Many Bitcoins

#172

Post by Sholmesy »

homero wrote: post #141
pishpash wrote: post #24

So what's the explanation for the combined coins shooting up in value (if only for a little bit)?

There's thousands of people like me checking every minute if we can deposit bch to sell. There's millions waiting and I'm hoping to be the first...

You've commented this on like 4 other replies. I'm largely uninvolved in cryptocurrency-politics, but do you have an agenda? It seems absurd that you want your voice to be heard so much that you would literally copy paste your reply into a myriad of comment trees...

Re: Bitcoin Exchange Had Too Many Bitcoins

#173

Post by qznc »

Buge wrote: post #115
bduerst wrote: post #107

Earlier quoted context omitted.

What about Bitcoin Classic and Bitcoin XT? Also isn't that splitting hairs about requiring the blockchain history? I don't think Matt said that.

If you don't share blockchain history, then you don't automatically get some of the new coin by holding some of the previous coin. So there are no issues with exchanges and shorts. Also if you do share history, it is much much harder to start, because you start off with the previous difficulty which is very hard to mine on. If you start a new altcoin with a clean history, the difficulty starts off very low. Bitcoin C…

> Also if you do share history, it is much much harder to start, because you start off with the previous difficulty which is very hard to mine on.

You need to fork the code (with your changed rules) anyways and you can adapt the difficulty then. Bitcoin Cash did exactly that. They lowered the difficulty to something like 10% of Bitcoin anticipating 10% of the hashing power. They only got 1% and there was a gap of 9 hours without any new block. They seem to be at ~1h per block now. [0]

[0] http://blockdozer.com/insight/blocks

Re: Bitcoin Exchange Had Too Many Bitcoins

#174

Post by the_mitsuhiko »

filmackay wrote: post #171
sowbug wrote: post #108

Earlier quoted context omitted.

If you're thinking of this event as a split, dividend, or spinoff, then it doesn't make sense. But it's more like a company cloning itself but adopting a different vision/mission, and awarding shares to all existing shareholders. They could have started fresh like the zillion other cryptocurrencies that have started up since 2009, some of which appear to have real value. You wouldn't look askance at those, at least f…

A spin-off (or more correctly, demerger) is almost exactly what you describe: a company cloning itself but adopting a different vision/mission, and awarding shares to all existing shareholders. With companies it is usually done with a particular division, or business area - but in the case of an anti-trust settlement (go and compete with yourself) it would be exactly what you describe and be implemented as a demerger…

Except even people not owning shares in the company can split it.

Re: Bitcoin Exchange Had Too Many Bitcoins

#175

Post by makomk »

filmackay wrote: post #170
panarky wrote: post #33

Earlier quoted context omitted.

Matt sums it up well in a footnote: Imagine if I announced tomorrow that I had created a new blockchain, called Bitcoin Matt, and that everyone who owned a BTC today will tomorrow own both a BTC and a BCM. Fine, great, you all own BCMs, congratulations. But also anyone short a BTC today will be short a BCM tomorrow, and will be forced to go buy in those BCM shorts. Even with no economic support for BCM -- with nobody…

I think this is a bit one-sided, that you've created "forced buy in". You've also created a LOT of supply as well, which goes a long way to counter-balance the demand. Besides, the exchanges do not seem to have implemented this as a demerger spin-off (you were short BTC, but you do not need to return BCH - just bTC), and as a consequence NOT created "forced buy in".

Except that you haven't created a lot of supply, because people may not be able to sell theirs and if the coin's useless it may not be worth it even if they can. For example, I don't think either of the major exchanges offering shorts (Bitfinex and Kraken) are accepting BCH deposits yet, and they certainly weren't initially after the fork. Even if they were there isn't enough mining power on the chain to make transfers possible in a reasonable amount of time at the current difficulty. So any shorts could only be closed by buying BCH already on the exchanges, which only existed in the same number as there were BTC on the exchange at the time of the fork. This small supply drove up BCH prices squeezing short sellers. There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges.

Re: Bitcoin Exchange Had Too Many Bitcoins

#176

Post by the_mitsuhiko »

gnaritas wrote: post #104
Twisell wrote: post #96

Earlier quoted context omitted.

Maybe I'm too "left wing", but if you ask me short selling, complex products and high frequency trading are among technological "improvements" that have led actual stock exchange to an ugly mess where biggest profits are made by "scamming" efficiently other users. Should regulators forbid (or tax more) some (or all) of this mechanisms markets will quickly resume to what they should be, places for people to invest mon…

I'd say you don't really understand what you're critiquing; you think those things are bad because you heard they were, from someone else who likely doesn't understand it either. There's absolutely nothing wrong with short selling or high frequency trading. Short sellers help keep prices fair and companies honest, HFT makes trading cheaper for everyone. The markets are worse without them, the market was worse before…

There are plenty of people that have legitimate concerns about HFT or rather the mechanics they promote (frontrunning trades in particular).

Re: Bitcoin Exchange Had Too Many Bitcoins

#177

Post by eternauta3k »

makomk wrote: post #175
filmackay wrote: post #170

Earlier quoted context omitted.

I think this is a bit one-sided, that you've created "forced buy in". You've also created a LOT of supply as well, which goes a long way to counter-balance the demand. Besides, the exchanges do not seem to have implemented this as a demerger spin-off (you were short BTC, but you do not need to return BCH - just bTC), and as a consequence NOT created "forced buy in".

Except that you haven't created a lot of supply, because people may not be able to sell theirs and if the coin's useless it may not be worth it even if they can. For example, I don't think either of the major exchanges offering shorts (Bitfinex and Kraken) are accepting BCH deposits yet, and they certainly weren't initially after the fork. Even if they were there isn't enough mining power on the chain to make transfe…

> There's also been quite a lot of price divergence between exchanges because people can't transfer their BCH between exchanges.

Sounds like an opportunity for exchanges to do off-chain transfers using legal contracts.

Re: Bitcoin Exchange Had Too Many Bitcoins

#178

Post by Legogris »

Excuse my ignorance, but this seems like the obvious solution to me: Distribute 1 BCH to each (actual) BTC holder on the exchange, completely ignore margin orders. So shorts don't owe and also longs aren't credited BCH.

Fair and no way to game. Why aren't exchanges doing this?

Re: Bitcoin Exchange Had Too Many Bitcoins

#179

Post by [deleted] »

perfunctory wrote: post #166
perfunctory wrote: post #155

> The way short selling works is that X borrows a share from Y and sells it to Z. So Y owns one share, and Z owns one share, and X owes one share, and everything balances out and there's only one share outstanding. Is that really true? That would mean that both Y and Z should get dividend payment, which doesn't make sense. I always assumed that when X borrows one share from Y, the Y does not own that share any more.

@kgwgk well, the company obviously doesn't want to pay the dividend twice. So indeed they will only pay to Z. If X pays Y I presume that's just the terms of the lending agreement. > What doesn't make sense is for both Y and Z to vote, for example. Very good point. But it just confirms that it makes no sense to say that Y still owns a share.

[deleted]

Re: Bitcoin Exchange Had Too Many Bitcoins

#180

Post by pdkl95 »

gnaritas wrote: post #104
Twisell wrote: post #96

Earlier quoted context omitted.

Maybe I'm too "left wing", but if you ask me short selling, complex products and high frequency trading are among technological "improvements" that have led actual stock exchange to an ugly mess where biggest profits are made by "scamming" efficiently other users. Should regulators forbid (or tax more) some (or all) of this mechanisms markets will quickly resume to what they should be, places for people to invest mon…

I'd say you don't really understand what you're critiquing; you think those things are bad because you heard they were, from someone else who likely doesn't understand it either. There's absolutely nothing wrong with short selling or high frequency trading. Short sellers help keep prices fair and companies honest, HFT makes trading cheaper for everyone. The markets are worse without them, the market was worse before…

> I'd say you don't really understand what you're critiquing

I'd say that you are assuming that optimizing for price is good, and presupposing how a market should be judged. Cheaper is good when it represents new innovation, less energy waste, and similar improvements. Cheaper can also mean cuts to wages and jobs, or a reduction in quality.

> There's absolutely nothing wrong with short selling

Leverage can be used for good, and sometimes it's used irresponsibly. As this thread's article demonstrates, short selling also creates systemic risk.

> trades used to cost way more due to wall street middle men taking a big cut of every trade

Eliminating middlemen and/or reducing transaction overhead costs do not require high frequency. You're seeing effects of technological improvements and better regulations. The same improvements also benefit "slow" trading.

> chart patterns

> getting rich with strategies as stupid simple as buy the 10 day high and sell the 10 day low

"Buy low, sell high." is the foundation of any successful trading strategy. HFT (when successful) is literally the same thing at much shorter time scales and improved heuristics. Machine learning can probably provide more detailed at a much finer-grain than a simple 10 day sliding window. Again, this does not require high speed.

> HFT is a sign of a healthy free market

It tells you little about the health of the market; HFT is a sign of a market uses short-term transaction ordering heavily when reconciling trades. It's entirely possible to have a healthy market batched trades that all execute at the same unified price.

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