191–200 of 241 posts
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?
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…
Could a similar trick be used by a company to screw over short sellers? Say by issuing a class of shares which are essentially worthless, forcing short sellers to buy it to cover their shorts? Or would a short seller simply "borrow" those shares as well?
What the real scenario is when there is a spin off where Stock A becomes Stock A + Stock B. In that case short sellers are responsible for the value of stock B. Though no one will try going this route just to screw some short sellers. If the spun off division (or company) is worthless, the stock prices will come around to reflect that and even Stock A's price will suffer from this "trick" used by management.
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?
In a sense, what you suggest is exactly what the exchange did: They calculated the number of "actual" BTCs in the exchange, and split the appropriate number of BCHs evenly among everyone.
It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.
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…
Short selling is what keeps the cheerleaders in check.
Earlier quoted context omitted.
Short selling is an incredibly important piece of any reasonable stock exchange. It also dates back to 1609 so it's not exactly a new technological innovation. https://en.wikipedia.org/wiki/Short_(finance)
From the very article you reffered to me : Short sellers were blamed for the Wall Street Crash of 1929.[15] Regulations governing short selling were implemented in the United States in 1929 and in 1940.[citation needed] Political fallout from the 1929 crash led Congress to enact a law banning short sellers from selling shares during a downtick; this was known as the uptick rule, and this was in effect until 3 July 20…
It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.
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…
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'm not knowledgeable about BTC; this is the part that confused me. If you short a stock, and it distributes dividends or stock or ponies, as Levine says, you have to return that to the borrower. I'm not sure if this is law or just the overwhelming common practice of the markets, but either way we agree on this. You _could_ devise a short agreement where you say "no distributions are owed," but that's not the standar…
As for the other part. The whole BTC/BCH thing is like a spinoff. And yes the short sellers are on the hook if Stock A tomorrow becomes Stock A + Stock B. Can they say no, well Stock B is more than I paid for A+B combined so I am not paying? Not really because if that was the case it leaves open the door for someone saying - well stock A has appreciated more than I expected so no payout.
Now in case of forks and whether people can be on the hook for the other fork? Well, depends on how famous the fork is really. If it is as famous as BTC cash, well then that is a risk you have to take as a speculator. If not, then why was someone betting on bitcoin going down the drain after the fork? Were they not clear of the implication of the fork taking off? If not, then that's a lesson learned.
To paraphrase Matt Levine - "The basic appeal of the cryptocurrency revolution, to people like me who are not making any money off of it, is that it is fun to watch people rediscover all of the lessons of financial economics, one at a time, in public. "
https://www.bloomberg.com/view/articles/2017-06-23/buffett-d...
It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.
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…
that's why, to protect the pensions and savings of its citizens from a catastrophic collapse in equity markets a couple of years ago, the chinese government decided to ban short selling. up and up and up, baby!
i think the government should go one step further, and prevent anyone from selling stock lower than the price they paid for it. guaranteed profit for everyone!
Earlier quoted context omitted.
I wouldn't call your views "left wing", just a bit ignorant of market theory, history, and practice. I mean, the Dutch Tulip Bubble was driven by derivatives (and in particular, a law change forced by the politically connected that retroactively changed some future contracts into option contracts), so if you're looking for some halcyon age prior to "complex products", bailouts, and people using lobbying to reap outsi…
Ok so how on earth does the fact that derivatives permitted the tulip Bubble is an argument in favor of derivatives? It might a question of point of view. Maybe you focus more on tulip frenzy financial opportunities while I focus more on people that have been burned by it... And yeah if you want to trace it back to 1500 no problem with that, old does not always equal good. It like copyright laws written prior to wide…
Observe that I can replicate the payoff of a call option by borrowing money to buy the stock [1] or replicate a put by shorting a stock and lending money.
[1] http://people.stern.nyu.edu/adamodar/pdfiles/eqnotes/optionb...
It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.
It makes perfect ironical sense too, we should have seen this coming. Developers are some of the best armchair economists, or like to think they are. Add in the libertarian political strain with some VC/startup evaluations and you've got what we have now: an inflated decentralized currency with a market run by a centralized tech company with infighting of developers (miners) over very shaky economics who have formed…
Then, me and my intellectualism lost big to the australopitheconomists-with-crypto.