Yeah if you were paying attention to the short vs long interest for BTC on Bitfinex right before the hard fork, BTC shorts went up like crazy and everyone thought ppl were hyper bearish on BCH. It was actually because ppl were pulling this funny business to get free BCH from Bitfinex.
Bitcoin Exchange Had Too Many Bitcoins
31–40 of 241 posts
Re: Bitcoin Exchange Had Too Many Bitcoins
#32Here's what people tried to pull off: 1. Set up an account, borrow one bitcoin, sell it short, collect $2,700. 2. Set up another account, buy a bitcoin, spend $2,700. 3. When the fork happens, your long account ends up with +1 BTC and +0.8 BCH. 4. Your short account ends up with -1 BTC and -0 BCH (because Bitfinex doesn't require you to come up with the BCH). 5. Net, you have $0, 0 BTC and 0.8 BCH. 6. The 0.8 BCH wer…
This is the most clear and concise explanation I've seen. Bravo Mr Levine[1]. It's worth noting that some people tried to pull this off because Bitfinex's official communications seemed to clearly state that this is how Things Would Work, at least until after the fact when they realized what a mistake that would be.
[1] Ninja edit to specify to whom credit is due.
Re: Bitcoin Exchange Had Too Many Bitcoins
#33Great writeup. Almost anything written by Matt Levine is worth reading. This is a concise and accurate description of the fun that occurred with Bitfinex's handling of the BCH fork. At least, it's fun if you weren't involved. If you naively held BTC on Bitfinex and were hoping to receive an equal amount of BCH you probably didn't think it was fun. If you carefully read Bitfinex's statements and decided to take advant…
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 mining
it, or using it, or treating it as a store of value -- I have
magically created demand for it, just because BTC short-sellers
will be forced to buy it in to cover their shorts.
And if no one else is using it, then it will trade very thinly,
and it will be very expensive to cover. (And anyone who does sell
it will make a lot of free money.) Nothing stops me from just
announcing that I've cloned a copy of the bitcoin blockchain
for BCM; the only way to avoid this abuse is for people to ignore
it -- and that means not forcing short sellers to cover it.Re: Bitcoin Exchange Had Too Many Bitcoins
#34Here's what people tried to pull off: 1. Set up an account, borrow one bitcoin, sell it short, collect $2,700. 2. Set up another account, buy a bitcoin, spend $2,700. 3. When the fork happens, your long account ends up with +1 BTC and +0.8 BCH. 4. Your short account ends up with -1 BTC and -0 BCH (because Bitfinex doesn't require you to come up with the BCH). 5. Net, you have $0, 0 BTC and 0.8 BCH. 6. The 0.8 BCH wer…
This is the most clear and concise explanation I've seen. Bravo Mr Levine[1]. It's worth noting that some people tried to pull this off because Bitfinex's official communications seemed to clearly state that this is how Things Would Work, at least until after the fact when they realized what a mistake that would be. [1] Ninja edit to specify to whom credit is due.
You might consider reading the article, it's actually Matt Levine's words copy+pasted.
Re: Bitcoin Exchange Had Too Many Bitcoins
#35Great writeup. Almost anything written by Matt Levine is worth reading. This is a concise and accurate description of the fun that occurred with Bitfinex's handling of the BCH fork. At least, it's fun if you weren't involved. If you naively held BTC on Bitfinex and were hoping to receive an equal amount of BCH you probably didn't think it was fun. If you carefully read Bitfinex's statements and decided to take advant…
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 hate to be That Guy [tm] but can you please not indent quotes like that? It's a PITA to read on mobile.
Re: Bitcoin Exchange Had Too Many Bitcoins
#36I really don't see how this fork is going to go down as anything other than a boondoggle. Right now the value of BCC is being propped up by having almost no way to actually sell it, but once an actual market opens I fully expect its price to crash hard.
You can say the value of BTC was propped yesterday by that logic too since many exchanges froze transactions.
BCC is far from pointless since it serves those who have a different ideology. Whether it remains as valuable is uncertain. Whether it is already valuable to some, is clear.
Re: Bitcoin Exchange Had Too Many Bitcoins
#37I always really enjoy Matt Levine's columns in Bloomberg. Very detailed and technical but always very carefully explained and readable.
You're probably subscribed to his newsletter then, it's the only newsletter in my inbox.
Good call. I've only ever read this and, interestingly, the semi-related Dole article, but they were both superb. Subscribed.
Re: Bitcoin Exchange Had Too Many Bitcoins
#38Earlier quoted context omitted.
So I'm not a bitcoin nor market expert but jandrese laid down his opinion, which sounded like it made sense to me. I was hoping for a well informed response but your comment just reads like you wanted to call names versus explain your reasoning why you think jandrese's argument doesn't make sense. Perhaps's that's not what you intended but if you had an explanation for why parent's response doesn't work I'd love to r…
My point is that there is no driver for the price to crash. There will not suddenly be a surprise supply of BCH found that will flood the market. Everyone knows that there is 1 BCH for every BTC out there, and that almost none of that is currently able to be exchanged on a market. That includes every single person who is driving up the price of BCH by purchasing it in the limited markets where it is available.
People trading BTC for USD seem to think otherwise. The BCH fork had no serious impact on the value of BTC. Holders of BTC are not confident that BCH will be successful.
Yet, if we were to take BCH's $400/coin at face value, then splitting BTC into BCH just created $340 of value, per coin in existence.
If I gave everyone who currently had a US dollar a 'Vkou-dollar', would I have created even a penny of value? What if there was one exchange, where Vkou-dollars were trading at 20 cents (With no liquidity)? Would you accept that valuation uncritically?
If so, I'm looking for a co-founder.
Re: Bitcoin Exchange Had Too Many Bitcoins
#39So what's the explanation for the combined coins shooting up in value (if only for a little bit)?
It's a mixture of things - it was very difficult yesterday to trade either. There could also been an influx of fiat into BCC. Also the supply of BCC is constrained by the exchanges which don't want to "interact" with it. There could be more to it.
Re: Bitcoin Exchange Had Too Many Bitcoins
#40It is hilarious watching people try to reinvent financial institutions without any knowledge of or respect for history.