Professional Traders Show Interest in Bitcoin

Post by DanBC » Mon, Apr 02, 2012, 10:45 AM UTC

jerguismi wrote: post #58

jarek wrote: post #52

Earlier quoted context omitted.

It's possible to print notes not easily detected as counterfeit in the field with a lot of today's currencies. It's not very practical on a large scale in the long term because the government is intent on preventing introduction of meaningfully large amounts of fakes and has teams tracking these bills. So bitcoin can't be devalued by "printing" fake "bills." That's a good prerequisite, but it's not a practical improv…

> So bitcoin can't be devalued by "printing" fake "bills." That's a good prerequisite, but it's not a practical improvement for me over the current currencies. Well, the value in bitcoin is that it can't be printed by anyone, even the goverments, uncontrollably - there will be only specific amount at max in circulation at specific time. This might not be valuable to you, but it certainly will be for many else. Many p…

Post by icebraining » Mon, Apr 02, 2012, 11:13 AM UTC

jarek wrote: post #52

qixxiq wrote: post #50

Earlier quoted context omitted.

Counterfeit currency is only low on your list because the governments are working hard to prevent it. If it was possible to print notes that could not be easily detected as counterfeit -- millions would be printed and it would devalue the entire currency.

It's possible to print notes not easily detected as counterfeit in the field with a lot of today's currencies. It's not very practical on a large scale in the long term because the government is intent on preventing introduction of meaningfully large amounts of fakes and has teams tracking these bills. So bitcoin can't be devalued by "printing" fake "bills." That's a good prerequisite, but it's not a practical improv…

Post by jerguismi » Mon, Apr 02, 2012, 12:30 PM UTC

morsch wrote: post #57

jerguismi wrote: post #55

Earlier quoted context omitted.

> even though these currencies are much more likely than bitcoin to be around in 5 years. How so? As bitcoin is a p2p network, it is likely to be around whatever happens. The only thing that could happen would be that internet breaks down - pretty unlikely, I think. Even when internet breaks in several pieces, each "local internet" will just use their own bitcoin - the block chain will be split in to several. After t…

BTC will be around but a fluid market for BTCUSD or BTCEUR -- ie. a plentiful amount of people interested in buying or selling bitcoin for other currencies -- won't necessarily be.

Post by politician » Mon, Apr 02, 2012, 12:52 PM UTC

stevenwagner wrote: post #39

politician wrote: post #32

Earlier quoted context omitted.

You'll admit, though, that a bitcoin lost is lost forever, and that at some point the rate of lost bitcoins will exceed the rate of newly minted bitcoins. Even if it attains 100% adoption, the current system will simply dissipate. In that sense, if not insecure, it certainly isn't resilient.

There is no requirement for any number of coins to be in the system. The amounts are infinitely divisible. You could start the economy with 1 bitcoin, and break it into 7 billion fractions for everyone to share..and if all those are lost, you could do the same with the last 1 bitcoin again.

Post by _k » Mon, Apr 02, 2012, 1:25 PM UTC

JumpCrisscross wrote: post #59

gfodor wrote: post #5

It would be interesting to hear a real quants take on the utility of having bitcoin as a (small) asset class in your portfolio. How much correlation does bitcoin have to any other asset class? I'd wager very, very little, making it a strong candidate for diversification. That said, it's overall volatility might offset the reduced expected volatility you'd see in your portfolio by holding some.

I was a quant prop derivatives trader at an investment bank. The correlation between MtGox/USD [1] and GLD daily returns over 12 April 2011 - 30 March 2012 is 0.02; a linear regression produces a 0.151 beta (GLD daily returns independent) with a coefficient of determination of 0.0004. GLD had a period return of 14% with an average daily return (standard deviation) of 1.4% (0.1 percentage points); MtGox/USD had 531% w…