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Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

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Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#21

Post by Kiro »

JanSt wrote: post #8
sliverstorm wrote: post #5

Earlier quoted context omitted.

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

> It achieves nothing that an increased blocksize would not have done on-chain

Regardless of blocksize the block times are still 10 minutes which means you need one hour for the transaction to settle, per the 6 block standard. You can't compare that with LN.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#22

Post by nlperguiy »

JanSt wrote: post #8
sliverstorm wrote: post #5

Earlier quoted context omitted.

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

These successful tests are research-level developments, just like lightning network.

Bitcoin is extremely early stage technology. It'll take years for a bunch of scaling developments and blocksize is just a temporary measure.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#24

Post by pash »

gibybo wrote: post #6
gchokov wrote: post #2

Can’t really wrap my head around the rise of BTC in futures trading, as they are all cash settled. In other words, pure betting and gambling with the futures, as they really do not touch the underlying BTC. I guess, just a regular day in the massively manipulated crypto currency world...

The markets are not as independent as they might seem. If the futures market gets ahead or behind of the other BTC markets, it creates opportunities for arbitragers to profit from the difference which has the effect of reducing the gap. It doesn't matter that they are cash-settled. For example, if lots of money start pouring into Bitcoin futures, the futures price will rise above the price on BTC exchanges. It will t…

More precisely, it is possible to replicate the final value of a futures contract (on Bitcoin or any other asset) up front, by trading in the spot market, even though a futures contract’s payoff is uncertain until it expires. Whatever the future’s value ends up being at its expiry, you can put together in advance a portfolio of holdings that will have the same value simply by borrowing a certain amount of cash and using it to buy in the spot market a corresponding amount of the asset on which the futures contract is written; if you do this, the value of your holdings in cash (after paying interest on your borrowings) and in the asset are guaranteed exactly to equal the value of the futures contract at expiry, no matter what price the underlying asset ends up trading at then. So if there is any deviation in the value of the futures contract (at any point in its lifetime) from the aggregate value of the cash and assets in the portfolio that replicates its final value, then there is an opportunity for a pure arbitrage. Consequently trading by arbitrageurs bounds futures prices in a tight range determined by the variables that set the cost of putting together this replicating portfolio: the price of the underlying asset, the interest rate on cash and the yield on the asset (if any), the time until the maturity of the futures contract, and cost of transacting in these markets.

This arbitrage relationship is about as hard they get, so trading futures is tantamount to trading the underlying asset itself, since changes in price in the futures market will be translated directly via arbitrage into changes in price in the spot market for the underlying asset, and vice versa.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#26

Post by erdbeerkuchen »

basicplus2 wrote: post #23

So what happens when the entire earth's energy production is required to produce the next bitcoin and there is therefore no further bitcoin mining?

My understanding is that if enough people stop mining the difficulty will be lowered so that the energy costs fall. Also there are transaction fees.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#27

Post by homakov »

JanSt wrote: post #8
sliverstorm wrote: post #5

Earlier quoted context omitted.

Just the next step from the Bitcoin economy, to the Bitcoin Standard economy, to the eventual Bitcoin Fiat economy. Seriously, the Lightning network looks a lot like the old Gold Standard, and the arc of Bitcoin seems to be reinventing modern currency, so I'm trying to figure out what's next.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

> There have been successful tests of blocksizes of up to 1 GB or 1000x the current size

no need to be genius to just increase blocksize 1000x and "assume" gigabit connection which no one has.

Lightning network is a great idea, in theory, in practice however it will just not work for the problem you mentioned - no one is interested in providing this kind of liquidity.

As of why need blockchain at all - is because 1st layer is the court and guarantees you to own money from the channel. You just don't have to ask court for every coffee payment (i.e. broadcast to every single laptop in the world).

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#28

Post by sametmax »

basicplus2 wrote: post #23

So what happens when the entire earth's energy production is required to produce the next bitcoin and there is therefore no further bitcoin mining?

Bitcoin is limited at 21 million coins. After that, no more btc, and people will trade in btc divisions such as satoshis. But there are hundrerds of bitcoin alternatives now, some very interesting.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#29

Post by homakov »

Kiro wrote: post #21
JanSt wrote: post #8

Earlier quoted context omitted.

To me, the Lightning network looks like a terrible idea. It achieves nothing that an increased blocksize would not have done on-chain yet wraps a faster-layer around the slower, deliberately crippled (1MB) blockchain and does require multi-hop liquidity that must be provided by interested parties. My understanding would be that the slower layer (like TCP) would be stacked on the faster layer (like IP). The lightning…

> It achieves nothing that an increased blocksize would not have done on-chain Regardless of blocksize the block times are still 10 minutes which means you need one hour for the transaction to settle, per the 6 block standard. You can't compare that with LN.

Also good point - no matter how much you scale "onchain" you still end up with settlement periods, a few min at least. Impractical for offline payments.

Re: Bitcoin Futures Start with a Bang as Rally Trips Circuit Breaker

#30

Post by tudorconstantin »

basicplus2 wrote: post #23

So what happens when the entire earth's energy production is required to produce the next bitcoin and there is therefore no further bitcoin mining?

The price of energy would gradually increase, to the point is no longer feasible to mine bitcoin with it. That's how markets work: the higher the demand, the higher the price, to the point where demand meets availability*cost.
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