OT: Ray, how's your Bitcoin investment going?

[cfox]

Originally Posted by fuzzalow

Heck, don't take an ad hominen dig at me, instead why don't you counter the points of my arguments. Anything I could possibly bring up as downside risk and variables in the Bitcoin landscape should have already been vetted as part of the diligence and strategy formation in how Bitcoin was to be used. Because unless the plan is flying blind with no instruments, none of what I said should have come across as news. Finance is a cruel profession, what rigor isn't self imposed will, with harsh surety, be exposed and exploited by others.

None of this is personal. The conversations are civil and interesting and I don't wish to spoil the conversation so I will stand down my comments.

I apologize; that wasn't meant as an attack at you at all. You always engage in civilized dialogue and I appreciate that. It's a phenomenon that has a scope much greater than this forum; many, many articles have been written decrying bitcoin where the author freely admits to not really understanding it at all.

[verticaldoug]

Originally Posted by cfox

Thanks Happy, that's a great paper, but he is incorrect on a major point: there is a growing bitcoin derivatives market. It, like everything regarding bitcoin, is young, but it does provide a way to hedge, or get outright short, bitcoin.
.

One of the ironies of the derivatives market is that much growth was to increase leverage, avoid taxes or other holding rules. Derivatives will not make the market safer beyond the point that counter parties correctly monitor the risk. We all know how well that worked out in 2008.

Presently, the value of bitcoin is anchored by it's convertibility into other recognized currencies. If people were unwilling to hand over dollars/euro/yen for bitcoins, the currency would fall over night.

It is naive to think bitcoin will exist without a more robust regulatory environment. This will come with costs.

The current regulatory market for the U.S. has been built over decades in response to crisis- prevent bank runs, prevent fraud, etc etc.

Even though you can change the medium of exchange, you are not changing HUMAN NATURE. That's the fundamental flaw with bitcoin, people are involved. It will have the same problems as other currencies because people are involved.

[cfox]

Originally Posted by verticaldoug

One of the ironies of the derivatives market is that much growth was to increase leverage, avoid taxes or other holding rules. Derivatives will not make the market safer beyond the point that counter parties correctly monitor the risk. We all know how well that worked out in 2008.

Presently, the value of bitcoin is anchored by it's convertibility into other recognized currencies. If people were unwilling to hand over dollars/euro/yen for bitcoins, the currency would fall over night.

It is naive to think bitcoin will exist without a more robust regulatory environment. This will come with costs.

The current regulatory market for the U.S. has been built over decades in response to crisis- prevent bank runs, prevent fraud, etc etc.

Even though you can change the medium of exchange, you are not changing HUMAN NATURE. That's the fundamental flaw with bitcoin, people are involved. It will have the same problems as other currencies because people are involved.

All true, I was just pointing out the author's assertion that there was no way to short bitcoin.

[1centaur]

Originally Posted by verticaldoug

One of the ironies of the derivatives market is that much growth was to increase leverage, avoid taxes or other holding rules. Derivatives will not make the market safer beyond the point that counter parties correctly monitor the risk. We all know how well that worked out in 2008.

Presently, the value of bitcoin is anchored by it's convertibility into other recognized currencies. If people were unwilling to hand over dollars/euro/yen for bitcoins, the currency would fall over night.

It is naive to think bitcoin will exist without a more robust regulatory environment. This will come with costs.

The current regulatory market for the U.S. has been built over decades in response to crisis- prevent bank runs, prevent fraud, etc etc.

Even though you can change the medium of exchange, you are not changing HUMAN NATURE. That's the fundamental flaw with bitcoin, people are involved. It will have the same problems as other currencies because people are involved.

You'll always get my attention with a reference to human nature, one of the great anchoring elements of most large scale speculative arguments, so I really enjoyed this post.

One of the things that stood out to me was the reference to counterparties correctly monitoring risk. I view derivative counterparties as being in Lloyd Blankfein mode - trading the spread and indifferent to risk. Let the customers price the risk as they wish (prop desks aside). So a good question is whether customers price risk well. I'm going to say no. The conventions around credit default swaps, for example, sound like a joke to somebody who lives and breathes credit every day. Multi-variable pricing models with several of the variables assumed and unlikely to be correct. Like Black-Scholes, pricing is a convention, not a genuinely thoughtful assessment.

As for Bitcoin, I finally read the Wiki last night to get up to speed. It strikes me as a cool idea with some decent but presumably not unbreakable safeguards that works today because it's not one of many, people feel like using it, and it has not been thrashed by some computer driven technique the believers have not figured out yet. Of course, regulators could kill it too, at any time (one wonders whether the US tolerates it because they want the NSA to see who uses it). When there are too many crypto currencies so it's more problematical to exchange for real currency, or too many people think there's a problem, they will become niche "off the books" exchange media. Just like Apple computers were not hacked like PCs because there were too few to bother with, so a Paceline Forum crypto currency might be pretty reliable because it's not worth hacking microcells. Relative and total computing power available to all sides will be factors.

The US dollar is a human nature-controlled currency too, but there's public accountability on how those FRNs are created and counted. Bitcoin feels like the accountability is related to an idea and its execution. That's very different.

[akelman]

Originally Posted by 1centaur

a Paceline Forum crypto currency

Might I suggest silver alloy Chorus 10-speed shifters? (Kidding aside, that was a thoughtful post, 1centaur.)

[Germany_chris]

The appeal of bit coin is two fold it anonymous and finite, the same with all the others; doge, lite et.al.

Sent from my newest gadget I'm either on the bike or in the Jeep

[Rada]

Thought I heard another Bitcoin trading site shut down because it was hacked into similarly to Mt Gox.

[ultraman6970]

Time to jump off the boat before is too late.

[Pete Mckeon]

did not mean to take it the way I did

[Louis]

No one that I know of is attacking Ray. He's the opposite of a Bitcoin type of guy, which is why I thought it would be amusing to have his name in the title.

It's a joke.

[oldpotatoe]

Donno

http://www.dailymail.co.uk/news/arti...de-age-28.html

[Anarchist]

Originally Posted by oldpotatoe

Donno

http://www.dailymail.co.uk/news/arti...de-age-28.html

That is a really interesting article, mainly in how much it differs from one I read yesterday (can't remember where).But it points up the differences between US and UK media. This points out the ties to Virgin and Branson, sings her "business smarts", etc. The article I read yesterday really had her as a silicon valley product whose only experience before becoming CEO of this organization was with companies doing "crypto-currency" deals (i.e. people playing online games and having "money" wanting to buy it, sell it, exchange for another game, etc).

We live in a weird world. I had no idea there was a "business" in banking electronic games phoney money.

[Tony T]

Creator Unmasked?

"Far from leading to a Tokyo-based whiz kid using the name "Satoshi Nakamoto" as a cipher or pseudonym (a story repeated by everyone from Bitcoin's rabid fans to The New Yorker), the trail followed by Newsweek led to a 64-year-old Japanese-American man whose name really is Satoshi Nakamoto. He is someone with a penchant for collecting model trains and a career shrouded in secrecy, having done classified work for major corporations and the U.S. military."

and: MAN SAID TO CREATE BITCOIN DENIES IT

LOS ANGELES (AP) — Dorian Prentice Satoshi Nakamoto said Thursday that he is not the creator of bitcoin, adding further mystery to the story of how the world's most popular digital currency came to be.

[Tony T]

Don't follow bitcoin, but this caught my eye tonight:
WSJ: Bitcoin’s Plunge Bites ‘Miners’

Bitcoin’s value fell 21% to $179.37 late Wednesday, according to news service Coindesk.

The virtual currency, which proponents hail as a potential alternative to mainstream money and critics dismiss as a fad or a haven for money-laundering, has fallen 44% since the start of the year and 85% from the record high of $1,165 it hit in early December 2013. In total, almost $11.3 billion in value has been lost since that peak.

[Louis]

About 15 minutes ago I almost looked for this thread to bump it (because of this news) but decided against it...