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The Bitcoin Derivatives Market Has Arrived

Tyler Durden's picture





 

Having discussed the advantages and disadvantages of the crypto-currency and noted the extreme volatility of the last few weeks, it seemed only a matter of time before some ambitious entrepreneur tried to monetize the volatility. What better way to "manage the risk" of your virtual currency horde than buying (or selling) options (in a more levered way). Predictious, the Dublin-based prediction market, this week unveiled Bitcoin Option Spreads enabling both long- and short-positions to be constructed on the already extremely volatile 'asset'. Regulatory clamp-down in 3..2..1...

 

The basic mechanism is the same as every option spread market - a fixed payoff for getting the "bet" correct, in this case 10.

In the case below, the bet was that Bitcoin will (or will not) close at $1400 on Wednesday January 1st at 12:00am,

if you believe it will (close at or above $1400) you "buy" the contract at 3.49 (and should you be proven correct you are paid 10 - thus gaining 6.51, similar to buying a call option)...

if you believe it will not reach $1400, you "sell" the contract at 0.55 (and should you be proven correct you pocket the 0.55 and pay out 0.00 - just like writing a call option)

 

Quite a skew has developed already...

As Predictious notes,

Predictious is now bringing this to the next level by offering a new type of derivative contract: option spreads on the price of Bitcoin. In the past couple of weeks, Bitcoin has been extremely volatile, and it is important for traders to be able to reduce risk, and hedge their Bitcoin position. They can now do so in an easy and cost efficient way by using option spreads.

 

Option spreads are very versatile, while still offering limited risks. A bullish investor can use a vertical spread to benefit from Bitcoin gains, while limiting risks if the price crashes.

 

On the other hand, bearish investors can use them to short Bitcoin. Predictious is currently one of the most reliable way to do so. Since losses are limited with option spreads, investors are not exposed to counterparty risks, like they would be when trading futures on competing services.

 

Aside from Bitcoin traders, miners can also use spreads on the Bitcoin difficulty to reduce risks associated with investing in mining hardware.

 

...

 

To date, Predictious users have deposited over $300,000 in Bitcoin on the website.

 

Traders are obviously very interested in Bitcoin derivatives, but the number of businesses accepting payments in Bitcoin has surged in the past few months”, said Flavien Charlon, Founder of Pixode, “those businesses have expenses in US Dollar, or Euro, and need to hedge their Bitcoin position. The type of derivatives we are offering will be very useful to them as well”.

 

The bottom-line is that while we can see the 'use' of such a market to enabling some lower cost hedging of any wealth one might have gathered in Bitcoin, we suspect - just as in the case of many other assets - that the underlying asset will see its volatility rise as the derivative (and levered) markets becomes the tail that wags the dog.

 


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Sun, 12/08/2013 - 14:31 | Link to Comment Martel
Martel's picture

Right now, Fiat's on like Donkey Kong.

Sun, 12/08/2013 - 14:45 | Link to Comment Harlequin001
Harlequin001's picture

Here's one for the looneys..

Sun, 12/08/2013 - 14:53 | Link to Comment smlbizman
smlbizman's picture

can you write a naked short on something that doesnt exisit?

Sun, 12/08/2013 - 14:55 | Link to Comment Gief Gold Plox
Gief Gold Plox's picture

Short all the miners!!! It's tradition.

Sun, 12/08/2013 - 15:13 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Relax, fonestar has it all covered.

BTCers are in good hands...

Sun, 12/08/2013 - 15:25 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@Bay of Pigs

Can't help yourself, can you? All these articles would go away if nobody read them, gave zero votes and no pageviews.

Must be all that poor impulse control that keeps 'em coming. That, and the "quality narrative" that comes out of every barking seal-trolls mouth.

 

Sun, 12/08/2013 - 15:34 | Link to Comment Occident Mortal
Occident Mortal's picture

BTC derivatives?

Hahahhahahahaha.

A new entrant at the top of the "I would rather..." list.

1). I would rather own BTC derivatives.
2). I would rather put hot needles in my eyes.
...

Sun, 12/08/2013 - 15:36 | Link to Comment Stuck on Zero
Stuck on Zero's picture

I would be willing to bet you that someone will establish a margin account to play bitcoin derivatives.

 

Sun, 12/08/2013 - 15:53 | Link to Comment Trimmed Hedge
Trimmed Hedge's picture

Cash advances on my credit cards so I can trade short-dated out-of-the-money options on 3x-levered Bitcoin ETFs in my margin account, BITCHEZ!!

Sun, 12/08/2013 - 16:37 | Link to Comment fonestar
fonestar's picture

I've already sold and pawned everything I own for more physical Bitcoin.

Sun, 12/08/2013 - 16:55 | Link to Comment geminiRX
geminiRX's picture

For your family 's sake, I hope you get help for that gambling addiction

Sun, 12/08/2013 - 17:09 | Link to Comment fonestar
fonestar's picture

Nonsense.  When Bitcoin goes to seven figures I will be able to gamble much more often.

Sun, 12/08/2013 - 18:18 | Link to Comment Dear Infinity
Dear Infinity's picture

As a fellow gambler, I think we should band together and bail out some of those underwater 1% luxury mansion owners... you know, like they did in '08. Never know what the payoff might be, when you save people from the clutches of a burning 10 year.

Sun, 12/08/2013 - 23:05 | Link to Comment RaceToTheBottom
RaceToTheBottom's picture

Bullish trickle down!!!

Sun, 12/08/2013 - 20:29 | Link to Comment eclectic syncretist
eclectic syncretist's picture

Bullshit!  If bitchcoin went tp 10 figures you'd still ride it back down to zero.

Sun, 12/08/2013 - 20:46 | Link to Comment fonestar
fonestar's picture

Bitcoin will most likely be superceeded by a superior coin at some point in history.  But it's unlikely because of the massive number of nodes involved at that time that the change would be overnight.  Any feasible successor coin would need to prove itself in the wild and gain users first.

Mon, 12/09/2013 - 09:48 | Link to Comment aminorex
aminorex's picture

No, bitcoin will not be superceded unless the core devs are incompetent to manage change.  Bitcoin will assimilate any technological innovation.  The network value implies that anyone wishing to bootstrap a new idea will do it as a layered protocol, thus increasing the value of the underlying bitcoin.

Sun, 12/08/2013 - 16:57 | Link to Comment nmewn
nmewn's picture

lol...physical BitCoin.

At least you're getting a sense of humor.

Sun, 12/08/2013 - 17:02 | Link to Comment fonestar
fonestar's picture

If you have not figured out how to hold Bitcoin, you have not figured out the Dao of virtualization.

Sun, 12/08/2013 - 17:11 | Link to Comment nmewn
nmewn's picture

A lot of people at the aptly named "Sheep Marketplace" thought they had it figured out too.

Maybe you could give up your boiler room BitCoin pumping job and host some on-line courses for the good of the masses and ya know, make some real money the good old fashioned way.

By earning it ;-)

Sun, 12/08/2013 - 17:12 | Link to Comment fonestar
fonestar's picture

The way I see it, any time your coins are on a machine open to the internet they are vulnerable.  Cold, offline storage with an encrypted wallet is the only way to be safe and if you trust your coins with a 3rd party then you are trusting they won't steal them.

Sun, 12/08/2013 - 17:25 | Link to Comment nmewn
nmewn's picture

Well, thanks for the lesson.

So, like burying them in the ground then? ;-)

Sun, 12/08/2013 - 17:32 | Link to Comment Skateboarder
Skateboarder's picture

If you bury a flash drive full of bitcoins, and BTC went to 0 or infinity, what would you find when you dug it back up?

Sun, 12/08/2013 - 18:07 | Link to Comment nmewn
nmewn's picture

Its a good question and I'm not sure the BitArchaeologists have weighed in on this yet but...I'm assuming a non-working flash drive equals zero BitAccess...lol.

And in the ocean I guess it would be like BitTreasure hunting on the open sea at some point in the future, bring it up, scrape the barnacles off...and and and...uh oh ;-)

Sun, 12/08/2013 - 18:32 | Link to Comment fonestar
fonestar's picture

Why would you bury a USB flash key? 

Sun, 12/08/2013 - 19:48 | Link to Comment nmewn
nmewn's picture

I dunno...you'll have to ask the as yet unborn BitArchaeologist.

"Virtually" all answers to anything can be obtained on the web...just Gogggle it kid...lol.

Sun, 12/08/2013 - 20:40 | Link to Comment fonestar
fonestar's picture

There are already bitarchaeologists (or forensic investigators) that have spent a good deal of time and money trying to locate the first ever website.  Yes, in the future the blockchain will also be the subject of these specialist historians.

Sun, 12/08/2013 - 18:28 | Link to Comment TeamDepends
TeamDepends's picture

Tulips.  budumpshhhhh!!!

Sun, 12/08/2013 - 20:08 | Link to Comment fonestar
fonestar's picture

We've already explained why Bitcoin is not in a bubble and why Bitcoins are not a fad.  Our logic is based on simple observation, history and facts.  So far we have been proven correct.  So far you have been proven incorrect.  It is my assertion that we will continue to be correct and you will continue to be incorrect.  But rather than stop and re-examine your logic you will continue in parroting stupid memes about tulips and bubbles.  Basically, you are scared that if Bitcoin collapsed you would be left with egg on your face.

Sun, 12/08/2013 - 20:26 | Link to Comment TeamDepends
TeamDepends's picture

"Basically, you are scared that if Bitcoin collapsed you would be left with egg on your face."  No, that is what YOU are afraid of!!!!!  We will not respond to you again as you have clearly drunk the Kool-Aid and can not be helped, but we do wish you good luck.

Sun, 12/08/2013 - 20:37 | Link to Comment fonestar
fonestar's picture

Yeah, sure.  That's why I'm on here saying that it will not collapse right?  I'm here.  Still saying the same thing.  Bitcoin is going to seven figures and thankfully most of you people will not be on that bus.

Mon, 12/09/2013 - 07:22 | Link to Comment The Mist
The Mist's picture

I don't wanna hate on bitcoin, I like the idea of cryptocurrency, however something is bothering me. It appears most people investing in bitcoin do it to get  a good return, not to use it as money for trading. Most are FOMO HOMO's that wanna make a quick buck. 

The core of people believing bitcoin will still be big in a year is many times smaller. Surely bitcoin has value, but the current price is pumped up by the FOMO's.

Mon, 12/09/2013 - 09:51 | Link to Comment aminorex
aminorex's picture

That's called forward discounting.  Nothing wrong with that.

Sun, 12/08/2013 - 19:23 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@nmewn

"German Silver" or a copper-nickle-zinc alloy commonly used in jewelry, is easily available and can be inscribed or etched with data that refers to the private keys. It can then be sealed into a capsule or other container, and quite safely kept nearly anywhere, as it has anti-corrosion properties and is used in marine installations. Melting temperature is in the range of 1,060 - 1,110 C (1,940 - 2,046 F).

Melting temp of pure silver is ~961 C (1,763 F), as a comparison.

Sun, 12/08/2013 - 19:44 | Link to Comment Zero Point
Zero Point's picture

So.... Tally sticks? Fuck me, back to the future I guess.

Sun, 12/08/2013 - 20:04 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

G&A is what's backing up my cold wallet. Molon Labe (Molson Labia?), BITches!

Sun, 12/08/2013 - 18:14 | Link to Comment TeamDepends
TeamDepends's picture

When you can snatch the bitcoin from my virtual hand, Grasshopper....

Sun, 12/08/2013 - 18:31 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

Dear Mr. fonestar,

Please look up the definition of the word "oxymoron," you moron, and then read and re-read the post to which I am responding.

When you begin to understand your own ignorance, then you may take one of the following actions, at your prerogative:

a. bang head into wall until bleeding; b. stop masturbating so often; c. begin drinking heavily, like a real man; d. all of the above.

Warmest regards from the grave,

Ghost of William Safire

Sun, 12/08/2013 - 15:51 | Link to Comment SWRichmond
SWRichmond's picture
The Bitcoin Derivatives Market Has Arrived

Of course it has, because every Ponzi, when it begins collapsing, requires additional leverage to keep it going.  So the timely arrival of the derivative trade makes perfect sense.

Sun, 12/08/2013 - 16:29 | Link to Comment fonestar
fonestar's picture

Even the mere mention of the word Bitcoin is enough to induce panic.

 

http://www.youtube.com/watch?v=P7wvyqVCwdQ

Sun, 12/08/2013 - 16:34 | Link to Comment fonestar
fonestar's picture

I personally am not worried about a Bitcoin derivatives market because the price of an individual Bitcoin will ultimately dwarf the exchange in size and importance.

Sun, 12/08/2013 - 16:40 | Link to Comment CH1
CH1's picture

And bitcoins will still be priced... in bitcoins.

Sun, 12/08/2013 - 17:40 | Link to Comment TeamDepends
TeamDepends's picture

Keep smoking the bithopium boys, you'll get there!

Sun, 12/08/2013 - 20:09 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Bitcoin I get. It's a bet I can live with. But betting on a bet? WTF?

Is fiat so desperate to maintain VoM, that they have to create btc derivatives? No thanks.

Sun, 12/08/2013 - 22:28 | Link to Comment StillSilence
StillSilence's picture

Have a feeling we may see a few more (obscure) outlet options for people to plug their dollars wealth into as things continue to get more interesting. Anything to keep them out of real assets that actually preserve wealth.

Not only that but just the idea of bitcoin will further confuse many people on the incredibly simple idea of what money is and why. As they come to realize the debt facade, there's now the crypto idea to distract them awhile longer about reality.

I like the idea of bitcoin in dollar world, but it shouldn't be needed in the first place. In a criminal world it will be far too problematic (assuming it's genuine fiat competition). In an honest world I'd doubt a great deal of use.

Sun, 12/08/2013 - 21:13 | Link to Comment Tall Tom
Tall Tom's picture

I personally am not worried about a Gold derivatives market because the price of Physical Gold will ultimately dwarf the exchange' price in size and importance.

 

Damn...The arguments remain the same. Physical Bitcoin now available in PAPER.

 

The beauty of the Blockchain means anonymity. You can not ever be sure who owns what.

 

If I want to short Bitcoin all I have to do is CLAIM that I am selling them. Nobody can prove any different. If I am Goldman Sachs, JP Morgan-Chase, Citibank, Bank of America, etc. nobody will ever challenge my claim.

 

Bitcoin....THE PERFECT FRAUD.

 

I broke this story last week...in the Comments Section.

 

Why so late Tyler?

Sun, 12/08/2013 - 21:41 | Link to Comment TheHound73
TheHound73's picture

-1 for ignorance.

It is trivial to prove you own Bitcoins.  Digitally sign a message with the key to your bitcoin address.  The signature is verifiable and so is your balance.  Only a person in possession of the key can sign and prove possession of those coins.  This is one of the benefits of a public blockchain.  

Mon, 12/09/2013 - 07:33 | Link to Comment Tall Tom
Tall Tom's picture

What you do not understand is that the Gold Market has been manipulated by selling paper claims on non existent Gold. It is easy to prove that the Gold does not exist as we can look at the Comex and LBMA Inventories and the claims made against it.

 

It is a FRAUD to sell that which you do not have.

 

With the impossibility of proving ownership of any Bitcoin a Large Bank can sell Bitcoin that it does not have. Nobody can PROVE IT because of the BLOCKCHAIN. Thus it can be a PAPER FRAUD unlike anything that can be SEEN, ACCOUNTED.

 

A Derivatives (Futures) Market in Bitcoin provides the mechanism for committing the Perfect Fraud as NO ACCOUNTING can EVER be done. That is one of the BENEFITS of a Public Blockchain.

Mon, 12/09/2013 - 08:50 | Link to Comment TheHound73
TheHound73's picture

We'll have to wait and see.  Unlike gold, it is trivial to take possession of a bitcoin.  There's really no point of buying a claim to a coin when buying the actual coin is less complicated and, most likely, costs less.  Its kinda the whole point of bitcoin.  Anybody can claim they own a large stash but if challenged it is easy to prove that ownership.  Anybody can claim they are selling large amounts of coin but it would show up on the blockchain and the buyer "should" take immediate possession.

Mon, 12/09/2013 - 09:07 | Link to Comment Tall Tom
Tall Tom's picture

I foresee Manipulation and Fraud. It would be better if TPTB did not absorb it.

 

I will agree that there is really no point in buying a Future Claim to a Bitcoin when buying the actual coin is less complicated. That is a valid point.

 

Why even have a Futures Market unless it is to affectively manipulate the value?

 

Fraud is anathema to me. That a Futures Exchange is being set up just sounds way too many alarm bells.

 

I have a very bad gut feeling about this.

Sun, 12/08/2013 - 15:55 | Link to Comment tocointhephrase
tocointhephrase's picture

Is it time to switch back to goonstar?

Sun, 12/08/2013 - 16:41 | Link to Comment Bay of Pigs
Bay of Pigs's picture

I can't help myself? It was a slight poke at my fellow ZH poster fonestar . I asked him the other day why he isn't on a beach in Maui sucking back Mai Tais instead of wasting his time here at ZH. Sitting in Canada freezing his ass off when he's making hundreds of thousands of dollars on BTC? That makes little sense to me.

And have you bothered to see how many posts he has on these BTC threads? Hundreds. You're one to talk about the "quality narrative" pal.

 

Sun, 12/08/2013 - 17:19 | Link to Comment fonestar
fonestar's picture

I have taken up the sword and the gospel of Satoshi.  There is no time to party and visit beaches like some shiftless layabout.

Sun, 12/08/2013 - 18:56 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

Take your medicine bitch, you're halucinating!

Sun, 12/08/2013 - 19:45 | Link to Comment Bay of Pigs
Bay of Pigs's picture

The more he talks like that, the less I believe him.

Any rational person would be cashing some in and living large, instead of bullshitting on a blog all day long 24/7.

Mon, 12/09/2013 - 02:35 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

He never got me believing his crap to begin with. At first I thought phonystar was a useful idiot, but with every new post I'm more convinced he's just a sock puppet.

Putting so much faith in a system that TPTB have the ultimate handle on is so libertarian. Not. Especially in today's environment of .gov putting on a fascist shirt all 'round the place such zealotry can be detrimental to your health. 

Besides, the circle problem-reaction-solution has still not been completed on cryptocurrencies...

Long bagholders and retroactive IRS checks!

Mon, 12/09/2013 - 02:40 | Link to Comment Rock On Roger
Rock On Roger's picture

Fonestar has peered into the screen of make believe for all his life, his gods are avatars.

No reason his sense of value should be any different.

 

Stack On

 

 

 

Mon, 12/09/2013 - 04:34 | Link to Comment fonestar
fonestar's picture

TPTB have no authority over Bitcoin and little control of the internet outside their own countries.

Mon, 12/09/2013 - 09:08 | Link to Comment Tall Tom
Tall Tom's picture

A Future Market gives them, TPTB, the ability to NAKED SHORT Bitcoin. They sell Futures Contracts for Bitcoin that they do not have. Flooding the Market with the Naked Shorts drives Prices lower. Paper Bitcoin has arrived. It is just like Paper Gold, except...it has NO TRANSPARENCY as nobody can account for any Bitcoin the Futures Exchange own, or, DOES NOT OWN.

 

I have dealt with more than enough, just far too many, Multi Level Marketeers in my lifetime. You are one of those people. Why don't you go back to selling Amway or some other crap?

Mon, 12/09/2013 - 09:54 | Link to Comment aminorex
aminorex's picture

Binary options are not futures.

Sun, 12/08/2013 - 20:19 | Link to Comment silverserfer
silverserfer's picture

Fool! you have not collected up enough bitcoin-mon eggs to pick up the sword of Staoshi. You must defeat the evil metalgarumon before you can posses such power. 

Sun, 12/08/2013 - 20:14 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Fonestar, I have FAQs I'd rather not ask online.
Pls contact me at my handle, on hush mail. Thx.

Sun, 12/08/2013 - 16:36 | Link to Comment fonestar
fonestar's picture

"BTCers are in good hands..."

And thankfully the stackers here do not speak for stackers everywhere like myself.  Just the LCD doomsday prepper types.

Sun, 12/08/2013 - 20:34 | Link to Comment Kirk2NCC1701
Kirk2NCC1701's picture

Ditto. I too have a real and respectable stack, but I don't worship it or sleep with it. And I have NO qualms about changing its size (rebalance real and derived assets) as the situation demands or opportunity warrants.

I worry about the wing-dings who went overboard by allocating more than is wise, and then take a static position that they defend at all costs. They remind me of the pre-WW2 thinking, where the proud, vain French built their Maginot Line (of bunkers), which the German Wehrmacht then simply went around, by going into France via Holland and Belgium.

Sun, 12/08/2013 - 21:05 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Do you two even follow the gold market? You yap a lot about it but seem to understand very little. There are huge shifts developing in the PM sector (as in world changing events). Ignore it if you want to, I don't really give a fuck. But please, spare us your platitudes and financial wisdom on what others should do, or not do.

Sun, 12/08/2013 - 22:50 | Link to Comment fonestar
fonestar's picture

I barely follow what they say the price of gold and silver is.

Sun, 12/08/2013 - 17:14 | Link to Comment Drifter
Drifter's picture

No, not yet, no futures market yet, but you can do short option, more or less naked.

And you bitcoin idiots said betting on bitcoin wasn't possible.  What dumbasses.

 

Mon, 12/09/2013 - 07:58 | Link to Comment Tall Tom
Tall Tom's picture

Somebody who gets it...

Sun, 12/08/2013 - 20:50 | Link to Comment xxxxx
xxxxx's picture

Thanks to the exciting virtual world Yes.

Sun, 12/08/2013 - 21:09 | Link to Comment therover
therover's picture

Only if you fully cover it before hand. 

Sun, 12/08/2013 - 14:32 | Link to Comment falak pema
falak pema's picture

now we know for sure Bitcoin will become a casino like the Greenback. 

If you need derivatives to sell a product then you are on steroids or viagra. 

Sun, 12/08/2013 - 15:27 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@falak pema

Seal Troll Rating: 2

Issues: Using the old Bitcoin == casino comparison, when a more likely bet is the equity markets are casinos.

References to chemical enhancement as a negative connotation towards the subject, how droll.

Sun, 12/08/2013 - 15:51 | Link to Comment jcaz
jcaz's picture

lol-  if you actually knew anything about finance, Exponere,  then you'd be happy that the derivatives market has found Bitcoin-  it's the closest thing I've seen yet to legitimizing the issue,  far better than the random Subway shop and Lamborghini dealer....

But you seen too busy spouting your Neo-Libertarian double-talk psychobabble to actually pick up a text book....

Mon, 12/09/2013 - 08:10 | Link to Comment Tall Tom
Tall Tom's picture

Since TPTB cannot stop it they absorbed it and are set to profit from it. I liked it when it was it was illegitimate and Black Market...er...Free Market. That was what was initially attractive.

 

Now the same people that it was used as a weapon against can control it? You support that?  Legitamization is for those whom support the statist power structure.

 

Count me out.

Sun, 12/08/2013 - 18:53 | Link to Comment malikai
malikai's picture

1851 - If you need derivatives to sell corn, pork bellies, and cattle then you're on opium.

Yawn.

Sun, 12/08/2013 - 14:32 | Link to Comment Matt
Matt's picture

Are you sure derivatives make the underlying asset prices more volitile, instead of less? This may also help soak up some of the speculative fever around Bitcoin, just like the alt coins.

Sun, 12/08/2013 - 14:36 | Link to Comment Citxmech
Citxmech's picture

Well, this does open the door to massive collusion/manipulation (cue the algos).    

Sun, 12/08/2013 - 14:54 | Link to Comment Duke of Earl
Duke of Earl's picture

First they'll need more than $300,000 to do anything substantial. I bet people are not exactly beating down their door given the amount of scams and shuttered businesses out there.

Also, the idealist population who fuels the growth has no real interest in this development. This will likely just exist long enough to burn speculators who want to invest in a derivative they don't understand on a technology they don't understand.

Sun, 12/08/2013 - 15:29 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@Duke of Earl

Seal Troll Rating: 1

Issues: Unsubstantiated claim of little volume [citation needed], dubious correlation to scams and theft that already exist in the current financial system [see Corzine, HSBC, etc...] so aligning the same properties to Bitcoin is one-sided and biased.

Inference that the Bitcoin userbase is non-technically inclined, which is patently false given the stage Bitcoin is in its development cycle. If anything, IT pros and programmers are the primary participants, slowly expanding to other groups.

 

Sun, 12/08/2013 - 15:47 | Link to Comment Duke of Earl
Duke of Earl's picture

Did you even bother to read what I wrote before you made up your reply?

Sun, 12/08/2013 - 15:51 | Link to Comment tocointhephrase
tocointhephrase's picture

I wonder how many levels this weirdo has. Total jackass

Sun, 12/08/2013 - 16:22 | Link to Comment Trimmed Hedge
Trimmed Hedge's picture

Bitcoins are sooo last month.. BigCoins™ are where it's at!

 

Now do me next, please, Mr. Troll-Rater...

Sun, 12/08/2013 - 20:43 | Link to Comment AUD
AUD's picture

I like Junkcoin. That sounds like it has its feet firmly planted on the ground.

Sun, 12/08/2013 - 14:32 | Link to Comment Magnix
Magnix's picture

Just sold my Physical Litecoins and got handsome profit!

Sun, 12/08/2013 - 14:33 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

invisible synthetics

Sun, 12/08/2013 - 15:34 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@dick cheney's ghost/Francis Sawyer

Seal Troll Rating: 0

Issues: Usual trite one-liner, italics included where regular font would be suitable. Inference on lack of visibilty to the naked eye - yet again ignoring that most of the world's wealth passes through the existing sytem in the form of electron pulses and modulated light beams.

Continued technical ignorance on a scale only consistent with the severe mental impairment found in meningitis victims.

Sun, 12/08/2013 - 15:50 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

Yah, your crediblity is untarded now.

Sun, 12/08/2013 - 17:20 | Link to Comment DoChenRollingBearing
DoChenRollingBearing's picture

+ 1 for new word (for me) "untarded".

Sun, 12/08/2013 - 19:43 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@magnetic_silver_ideas

Seal Troll Dissection: The subject, who wields a singular breast as an avatar, believes that credibility is determined by the least qualified participant in the forum. Subject continues to illustrate the phenomenon of posting before thinking, as most of the subject's post content is barely coherent, similar to patients who exhibit severe schizophrenia or personality disorders.

Sun, 12/08/2013 - 16:21 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

thank you for remembering francis_sawyer.........he had so much to teach us.......and yet he taught us so much

Sun, 12/08/2013 - 19:00 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@dick cheneys ghost

Seal Troll Rating: -1

Issues: Assumes that reference to francis is made in a favorable way, when the truth is quite the opposite. Subject believes that having an addled poster spreading anti-semitic slurs is a laudable goal, and continues this false praise to encompass his supposed "knowledge" that would be worth learning.

Subject is confused and believes racism and bigotry are positive forces, and is most likely living in a self-deluded fantasy world where he and his ilk are free to disparage entire races and creeds at a whim.

Subject also continues to display the most astonishing ignorance as to human social dynamics, and other complex subjects that require finesse and diplomatic precision. Recommend that subject refrain from futher self-embarrassment, although this suggestion will most likely be met with the usual poor impulse control kind of response.

 

Sun, 12/08/2013 - 19:18 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

yes, francis_sawyer was favorable.........please keep him in ur thoughts and in the future, if I want any lip out of you, I'll scrape it off VastDom's zipper

~~~

Sun, 12/08/2013 - 19:27 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@dick cheneys ghost

Seal Troll Rating: -2

Issues: Subject continues to believe a closet bigot and racist is still a valuable member of a forum, when it is clear that administrative actions have proven otherwise. Subject also fulfills the other analysis by responding in the classic poor impulse control manner, namely a peurile reference involving the crotch region. Subject seems to have a fixation on such things, and it will be noted on the long term record.

Sun, 12/08/2013 - 19:57 | Link to Comment silverserfer
silverserfer's picture

Behold ZH's only virgin is in the house. You and Phonestar shold like hang out and play world of warcraft together sometime. 

Sun, 12/08/2013 - 20:04 | Link to Comment dick cheneys ghost
dick cheneys ghost's picture

wont you join with me in starting a francis_sawyer fan club?

 

Sun, 12/08/2013 - 20:31 | Link to Comment Rock On Roger
Rock On Roger's picture

free francis_sawyer

 

Stack On

Sun, 12/08/2013 - 21:41 | Link to Comment NemoDeNovo
NemoDeNovo's picture

^^^^ +1000 ^^^^

 

FREE Francis_Sawyer!!!  

 

 

Sun, 12/08/2013 - 16:41 | Link to Comment yofish
yofish's picture

You're on to something sport. A clever way to be irritating that has an almost guaranteed built in 'need to reply' generator. Congratulations, impressive. 

Sun, 12/08/2013 - 18:43 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

Rate me! Rate me!

Here's my comment:

Can I has moar bitcoin, pleeze? If not, I puke on your shooes.

Sun, 12/08/2013 - 19:04 | Link to Comment ThirdWorldDude
ThirdWorldDude's picture

lol, people are actually waiting in line to get their personal rating by ZH's very own digital monkey...  :)

Mon, 12/09/2013 - 08:21 | Link to Comment Tall Tom
Tall Tom's picture

"...most of the world's wealth passes through the existing sytem in the form of electron pulses and modulated light beams."

 

Wealth is not "digits". World Currencies are digital. But Currency is not wealth.

 

Real wealth is tangible and useful, serving utility and purpose.

 

But if you want to ignore that then knock yourself out.

Sun, 12/08/2013 - 17:52 | Link to Comment Yenbot
Yenbot's picture

The Emperor's New Clothes. er, Coins...

Sun, 12/08/2013 - 14:32 | Link to Comment Skateboarder
Skateboarder's picture

Essentially unlimited naked CDS on bitcoin? Who didn't see that coming!

Sun, 12/08/2013 - 15:34 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@Skateboarder

Seal Troll Rating: 1

Issues: Implies direct linkage between derivative markets and the open bitcoin/spot market, ignorance on settlement of such contracts, continued lack of understanding reflecting other trading and/or technical terms and items.

Sun, 12/08/2013 - 18:04 | Link to Comment Skateboarder
Skateboarder's picture

Whether there is a direct linkage between ISDA variants/SFV derivative markets and the 'open bitcoin market' is irrelevant to the continuing destruction of the nation/state fiats. I was making an analogy at the worst and stating fact at the best. Unvested third parties betting on the performance of risky assets is naked betting, CDS or otherwise.

Your horse must be high as fuck, motherfucker, rating everyone you pass by.

Sun, 12/08/2013 - 19:04 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

Seal Troll Argument Dissection:

Issues: Suddenly bails on direvative argument, in favor of shifting emphasis to another tack - namely that Bitcoin derivatives will fail due to externalities, which makes it no different than any other financial contract and "force majeure" violating those conditions.

Concludes with usual insult containing references to subjects own habits, which is a common trait among those less skilled in the art of combative conversation. Shows supreme irritation with clinical analysis method, therefore providing evidence that subject can't handle simple statement of fact without excessive emotions overriding the subject's thought processes.

Sun, 12/08/2013 - 20:06 | Link to Comment silverserfer
silverserfer's picture

we got be careful on these bitcoin threads, the bicoin believers are like from the future or something and way more intellegent that we could ever imagine.

In a universe where the only limits are once you go up the stairs from your moms basement.

Sun, 12/08/2013 - 20:43 | Link to Comment xxxxx
xxxxx's picture

Open the F%cking pod door HAL

Sun, 12/08/2013 - 20:40 | Link to Comment xxxxx
xxxxx's picture

Exponere Mendaces

You are a kool troll, you sound like HAL

Evaluate comment XXXXX

Sun, 12/08/2013 - 14:35 | Link to Comment ebworthen
ebworthen's picture

We need a Trump Taj Mahal on the National Mall that has a stock exchange bulilt in.

It will symbolize the merger of religion, capitalism, cronyism, and casino gambling within the fabric of society.

Have to have lots of security cameras and a tough goon squad as well as overpriced rooms, bling eateries, and vapid floor shows to symbolize the mind of the nation.

Sun, 12/08/2013 - 15:30 | Link to Comment infinity8
infinity8's picture

One of the best posts, ever!

Sun, 12/08/2013 - 14:34 | Link to Comment Dr. No
Dr. No's picture

Confucius say, man who has Bitcoin, have too much hunger for greed.

Sun, 12/08/2013 - 15:07 | Link to Comment Bindar Dundat
Bindar Dundat's picture

Or as I say -- Never eat anything bigger than your head.

Sun, 12/08/2013 - 15:29 | Link to Comment magnetic_silver...
magnetic_silver_ideas's picture

Greed is agnostic to the medium.

Of course confucious would say that, because spewed non-sense credited to a philosopher almost makes it believable.

 

Sun, 12/08/2013 - 15:40 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@Dr. No

Seal Troll Rating: 1

Issues: Associative appeal to authority in the guise of ancient wisdom, only used as a cheap shot against Bitcoin. Assumes that the average participant is interested in profit more than the inherent freedom of the Bitcoin network and associated applications and business models built upon it.

Sun, 12/08/2013 - 16:25 | Link to Comment Dr. No
Dr. No's picture

Dude, it was a play on words.  A pun. 

But you bring up a point:  You believe the average participant is not interested in profit?  Ha!  Not much wisdom from you I see.

Sun, 12/08/2013 - 17:12 | Link to Comment OneTinSoldier66
OneTinSoldier66's picture

Define greed

Sun, 12/08/2013 - 17:23 | Link to Comment nmewn
nmewn's picture

Its an interesting concept.

To me its, accumulating more of the same thing of which you already have an abundance of, cannot ever possibly use/consume or giveaway in your lifetime (your life is spent getting "it" afterall) or have any intention of using or consuming "it".

It can be anything or multiple things...not just money.

You should see how many damned ladders I have...when I can only use one ;-)

Sun, 12/08/2013 - 18:54 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@Dr. No

Restatement of fact:

"[Dr. No] Assumes that the average participant is interested in profit more than the inherent freedom of the Bitcoin network and associated applications and business models built upon it."

-1 Point for lack of attention to detail.

Sun, 12/08/2013 - 19:39 | Link to Comment Dr. No
Dr. No's picture

With a price of $700+ per Bitcoin, it is a reasonable assumption.

Besides, how is it a fact when you assumed my assumption of the average Bitcoin user?

Sun, 12/08/2013 - 18:53 | Link to Comment FreeNewEnergy
FreeNewEnergy's picture

@Exponere Mendaces

Pseudo-intellectual Douche-Bag Rating: 316,087,450,557,462

Having to spend time on this stupid website, contriving ersatz drivel to alleviate boredom because Fox thinks I should be watching the Giants @ San Diego rather than the Seahawks @ San Francisco (yet another reason NOT to live in NY State) forced me to write this, but seriously, at least I have a poor reason to be here. What in Adam Smith's fuckfest is yours?

BTW: I think you're a grade 1 asshat, with wing tips.

And you're probably obese.

And a fag.

And you lick your fingers after wiping your arse.

Other than those obvious character flaws, you're probably late for your Starbucks gig.

Loser.

Blow me.

Sun, 12/08/2013 - 19:50 | Link to Comment Exponere Mendaces
Exponere Mendaces's picture

@FreeNewEnergy

Seal Troll Argument Dissection: Subject attempts mimicry and fails in delivery, as embodied in the reference post. Subject's failure to procure the typical evening's entertainment, watching grown men butt heads in skin-tight spandex pants, is the pretext for the failed attempt at humor.

Subject continues with rationalization and attempts to rate the experimentor, however in a true control this connot happen. The observer can't reach past the glass or bars to interact with the experiment. In the sense that inner insecurity drives response, we can see the subject thinks of themselves poorly, as reflected in the predictable insults regarding social standing, mass, sexual orientation and personal hygiene.

As a final statement, subject delivers what should be a tour-de-force argument, but merely sputters out with a veiled reference to a service job, which is ironic considering the resurgence of such job categories in the formerly great United States. The solicitation for sexual favors is unusual, and perhaps speaks to the inner turmoil experienced by the subject not being able to watch his men grab each other in tight clothes.

 

Sun, 12/08/2013 - 23:45 | Link to Comment Bay of Pigs
Bay of Pigs's picture

Sacrilege, you using a new sock puppet account?

 

Mon, 12/09/2013 - 02:44 | Link to Comment Quus Ant
Quus Ant's picture

That was funny.  Dickish, but funny. 

 

Tue, 12/10/2013 - 03:46 | Link to Comment spenny
spenny's picture

Confucius say "man who go to bed with ichy bum, wake up with stinky finger"


Sun, 12/08/2013 - 14:40 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Correct me if I am wrong here, if this derivatives exchange is not tied to the other exchange markets won't it have zero effect on the other exchanges unless the exchange manages to grab enough of the other market transactions to set the pricing?

 

 

Sun, 12/08/2013 - 14:41 | Link to Comment Dr. No
Dr. No's picture

I guess they will be like comex. If they are not tied to physic..er..actual Bitcoin, they will need to settle contract with cash equivalent.

Sun, 12/08/2013 - 15:03 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Or reserves on hand in general. The real interesting aspect of this is if the exchange has a mining operation sitting behind it to help provide liquidity to settle contracts will they disclose it or even settle contracts strictly in bitcoin/cash. If it was me I'd be settling contracts in peercoin or at least use them as a hedgefor this since there is no cap on the coins to be mined, it is right now the 3rd in market capitalization for the whole crypto-currency market and more importantly is the how they are mined.

http://motherboard.vice.com/blog/beyond-bitcoin-a-guide-to-the-most-prom...

concerning peercoin

And while Peercoin initially employs the same mining template as Bitcoin, the plan is eventually to transition from a proof-of-work mining setup to proof-of-stake. Rather than requiring processing power, the Peercoin algorithm is calculated based on the size of your holdings. So if you own one percent of peercoins, you’ll generate one percent of all proof-of-stake coin blocks. It also introduces the concept of coin “age,” which is the amount of time your coins have stayed static.

To mine, you “spend” the combined ages of your coins, which determines the probability of mining success. Attempting to mine and sending coins will reset their age. The benefit of this system is that it reduces energy waste, a criticism of Bitcoin mining, and addresses the “51 percent attack” vulnerability by making it much more expensive, relatively speaking, to take over the system. It also has a more consistent fee structure, which could incidentally lead to lower comparable transaction fees in the future.

Peercoin has yet to transition to this system so mining currently mirrors that of Bitcoin, which means it’s dominated by ASICs. Once that transition happens, Peercoin could be an easy choice for environmentally conscious cryptocurrency fans, you know, as a way to express themselves. And like Litecoin, Peercoin’s survival hinges largely on Bitcoin’s continued success. Its price, about $3.50, got a nice boost after being mentioned in The New York Times.

 

You should be able to create enough liquidity mining to settle contracts on a derviatives market in this manner unless I am misunderstanding something here.

Sun, 12/08/2013 - 15:54 | Link to Comment Non Passaran
Non Passaran's picture

> all proof-of-stake coin blocks. It also introduces the concept of coin “age,” which is ..

Gee the more I know about it the less I like it!
It's like Draghi or one of those "negative interest" lunatics designed the system. I hope the system can tell between regular spending and coin shuffling among different accounts setup to work around the system.
The idea is idiotic. You get ill or jailed and you can lose your coins.

Sun, 12/08/2013 - 14:42 | Link to Comment Citxmech
Citxmech's picture

A derivitie exchange could suck volitility out of the market by moving speculators to another arena - but what's keeping the Winklevoss's, for instance, from playing both markets at the same time?

Sun, 12/08/2013 - 15:07 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

Frankly I don't see that happening if anything this may entice people into the market including businesses that have a lower threshold and appetite in general for risk. And also frankly that is also a good thing if it gets more people to use and understand crypto-currency in general.

If the demand is there....

Like I've said elsewhere this whole system is constantly evolving and there will be plenty of evolutionary dead ends along with successes. Bitcoin may wind up going extinct but cyrpto-currency in general is here to stay. We shall see how derivatives play out. It was only a matter of time. I'd be long crypto-currency in general. The real fun starts when you can horse trade without the need for central exchanges and all this stuff is coded into the protocol standard itself. That is partly why I am intrigued by Ripple which a lot of venture capital money is being thrown at right now which will as it evolves and the kinks get worked allow for just such a thing.

Sun, 12/08/2013 - 15:49 | Link to Comment Non Passaran
Non Passaran's picture

Whatever payment system is financed by VC monies is guaranteed to turn into crap.
The deadest end, that.

Sun, 12/08/2013 - 15:04 | Link to Comment Bindar Dundat
Bindar Dundat's picture

In fact  they will. That is how you make great returns...ahh greater returns....they are playing with the house money and we are the house.

Tue, 12/10/2013 - 22:00 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

I'm not. Smarter than dirt so I don't touch bitcoins.

Sun, 12/08/2013 - 14:55 | Link to Comment seek
seek's picture

I don't see how it can have impact -- this stuff isn't going to be in the blockchain.

What I really puzzle over is how they can do anything other than zero-sum (less fees) on options. It'd be like COMEX if they has rigorous auditing and a 1:1 physical to contract requirement, and the settlement options were delivery or default (no USD payout.) Maybe these guys require 1:1 BTC margin accounts they can drain on bad price move?

I see this ending very badly for either the people playing on the exchange, or the exchange itself.

Sun, 12/08/2013 - 15:09 | Link to Comment Citxmech
Citxmech's picture

Assuming that big bitcoin players get involved in the derivitive exchange it could increase the volume in actual bitcoin trades on exchanges.  Once you get competing algos trying to move the price, my guess is that you'll start having flash spikes/crashes with greater frequency.  This could negatively effect retailers' acceptance substantially I think because the speed values could change.

Sun, 12/08/2013 - 15:23 | Link to Comment Dewey Cheatum Howe
Dewey Cheatum Howe's picture

As long the middlemen services guarantee the vendors get their payments in cash as it was priced originally regardless of which crypto-currency the buyer wanted to use it is a nonissue. The middleman service takes on that price fluctuation risk if anything this gives them a tool hedge againt the volatility which in turn may spur more of them to pop up or even larger players to jump in now and accept crypto-currency payments directly.

The system and infrastructure is really the key the coins are secondary. It is like building cellphone apps whats the fucking point if you have no network to use them on or building the coolest phone that everyone wants but can't use because of coverage issues etc.

Tue, 12/10/2013 - 21:41 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

You're just a bitcoin hater.

Everyone knows a 1000x multiplier / 0.001x per day is the sign of a healthy, stable currency.

at this point /sarc is entirely redundant.

Sun, 12/08/2013 - 17:52 | Link to Comment dracos_ghost
dracos_ghost's picture

They are trading price movement not Btc themselves Everything is cash settled. Maybe the Intrade guys starting a new biz?

Sun, 12/08/2013 - 19:21 | Link to Comment css1971
css1971's picture

Seek.

Don't you get it.? 97% of money is not bits of paper and coins, it's credit in computers. They don't actually ship the metal and paper around unless they absolutely have to.

Guess what. Bitcoin is going to be "creditised" in exactly the same way paper has been. They don't actually have to make the transaction on the blockchain, they simply allocate the money on their computers. It's only when you take the cash out of the bank that they have to make sure they have enough currency for your transaction.

Doh.

Sun, 12/08/2013 - 19:52 | Link to Comment TheHound73
TheHound73's picture

But they are betting against the price on the exchanges, which are fully allocated.

Tue, 12/10/2013 - 21:36 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

doesn't matter.
All that matters is who pledged what into any given account, who controls it, and that's that.
Either a match is made, profit on fees, or it isn't, profit on premium, or nothing can be, profit on Corzine-effect of entire exchange.

Sun, 12/08/2013 - 20:53 | Link to Comment tradewithdave
tradewithdave's picture

Thermite - self application

Sun, 12/08/2013 - 15:26 | Link to Comment ebworthen
ebworthen's picture

Think of it as Black Tulip deriviatives, and people are betting on the crop, the weather, and the price people will pay for Black Tulips.

Betting on the perceived value of something affects the value of that something.

Odds of 30-1 on "Old Nag" affects people's behavior and betting.

Sun, 12/08/2013 - 19:59 | Link to Comment TheHound73
TheHound73's picture

Can't stop people from making side bets.  Bets of Bitcoin has been up for a while.  Some interesting gambling going on there:

1:1 odds Bitcoin reaches $10k before the end of 2016.

3:1 odds US Bonds will be downgraded by Aug 2016

2:1 odds Gold, Oil, and U.S Dollars will be stored in the blockchain by 2015

Mon, 12/09/2013 - 01:36 | Link to Comment ebworthen
ebworthen's picture

Yes, see my first post on this thread.

People already selling children.

This is HELL.

Tue, 12/10/2013 - 21:33 | Link to Comment MeelionDollerBogus
MeelionDollerBogus's picture

You can't store physical things in a digital pattern made OF other physical things. It's nonsensical. Gold has ATOMS. Oil has chemical STRUCTURE.

By definition nothing can go in a blockchain but other bits, states of photons, voltages, optical patterns burned into a crystal or disc, magnetic fields, punched holes in a card, etc.

Sun, 12/08/2013 - 16:51 | Link to Comment dracos_ghost
dracos_ghost's picture

But it doesn't necessarily have to be tied to the exchange markets. Aggregate mining pools could move prices via this. A crytpo-dark pool so to speak. Setup an option trade and then use their hefty wallets to push things around. "Seek" did a good forensics analysis the other day of the the BTC thud and showed a HUGE sell order came in out of the Blue and pushed the markets down quickly by compressing the order stack. His logic was pretty solid that it might not have been panic. The mining pools pump and dump now, imagine their returns if they can mess with options too.

The $300k right now doesn't seem like much, but neither did BTC when it started. It was inevitable that the derivatives angle creeped in. From their site, everything is settled in dollars, don't ask me why. Seems like an inverted trade, instead of using fiat to trade BTC, their are using BTC to trade fiat.

Sun, 12/08/2013 - 14:39 | Link to Comment hugovanderbubble
hugovanderbubble's picture

BTC will be below 455 next trading days

Do NOT follow this link or you will be banned from the site!