Bill Blain: Bitcoin Futures Could Be "A Clusterf*ck Of Monumental Proportions"

Crypto-'currency' or total carnage?

Mike Novogratz doesn’t see "quick adoption" of Bitcoin as a currency, preferring to think of it as 'digital gold'.

Perhaps this is one reason why.

Amid its meteroic rise, Bitcoin is now 20 times more volatile than the US Dollar...

As MINT Partners' Bill Blain exclaims, next week sees the improbable launch of Bitcoin futures. This looks like having the potential to be a clusterf*ck of monumental proportions when it bursts.

Every bank knows BTC’s extraordinary gains are a crowd delusion fuelled by the extraordinary promise of free wealth!

Yet, many will be willing to trade and settle them for their clients – largely retail.

Bitcoin has become the ultimate Klondyke.

Most folk don’t have a clue what BTC and the associated Blockchain ledger might be, but everyone knows what the price action has been.

Where that price is going is clouded by a lack of clarity on the technological nuances, distorted by Libertarian/Geek monetary gobbledy-gook, confused by a plethora of me-too coin offerings, speculators who see the chance of a quick buck, and investors scared they are missing out.

I’ve spent most of this week learning more and more about the limitations of Blockchain and two things are crystal clear – it doesn’t work, and it’s an evolutionary dead end that nimbler cryptocurrencies will take the niche of. But I still don’t understand why we need them at all?

If its central banks you object to, let’s have a private cryptocurrency based on gold, or oil, or something else tangible… but based on some computer babble? Not for me.

On the other hand, the long-term possibilities that BTC exploits in terms of Blockchain distributed ledgers are very real. Blockchain applications are going to utterly change finance..

Comments

Bumpo Klassenfeind Fri, 12/08/2017 - 20:40 Permalink

"Computer Babble" just points out the writer's ignorance on how hashing a bitblock works, or how difficulty increases when more than one block is mined at a 10 minute average over the course of 2 weeks. Dude, just because you don't understand, doesn't mean this hasn't been completely thought through at a very high level.

In reply to by Klassenfeind

centipede Bumpo Sat, 12/09/2017 - 08:55 Permalink

All you bitcoin worshipers are delusional. How has it been completely thought through at a very high level? You do not realize one basic substantial fact. Bitcoin is easily replaceable by zillions cryptocurrencies using the same algorithm only with different names. That is exactly the fundamantal difference in comparison to commodity currencies like gold, silver .... Those are not replaceable with their unique properties and usabilities for us. Just imagine what is easier to replace. The bitcoin mania will end up in the same way as the tulip mania. Some (few) will get rich for sure but most will lose everything they invested in bitcoin.

In reply to by Bumpo

Mango327 centipede Sat, 12/09/2017 - 09:04 Permalink

Zillions? Oh fuck, I hadn't considered that. You're right though, ever since the Zimbabwe dollar came around, haven't seen too much of those ole USD bank notes or gold coins around... After all, Gresham says that people automatically abandon the good money to hold the bad money, right? I think that's how it works. Yeah. Cheers.

In reply to by centipede

Teja Okienomics Fri, 12/08/2017 - 17:36 Permalink

Kind of decentralized Ponzi. Early buyers and miners the winners. Earlier investors paid out by newcomers. But I would say a such a decentralized Ponzi might have its good sides... kind of random redistribution of money. If large enough, it might have POSITIVE effort on the economy, long term, even when it bursts.But where Bill Blain is totally wrong is where he writeslet’s have a private cryptocurrency based on gold, or oil, or something else tangible…Total bullshit - any such cryptocurrency must have a centralized management to guarantee the conversion in the tangible stuff. A Single Point of Failure. Would not work, because the management would be tempted to cheat.

In reply to by Okienomics

centipede Teja Sat, 12/09/2017 - 09:11 Permalink

The problem is that you can not have remote transaction of commodities without third party - centralized management. But it can not be solved/replaced by pure virtual noncommodity transactions either. All bitcoin worshipers are delusional if they think otherwise. They do not realize one basic substantial fact. Bitcoin is easily replaceable by zillions cryptocurrencies using the same algorithm only with different names. That is exactly the fundamantal difference and the flaw in comparison to commodity currencies like gold, silver .... Those are not replaceable with their unique properties and usabilities for us. Just imagine what is easier to replace. The bitcoin mania will end up in the same way as the tulip mania. Some (few) will get rich for sure but most will lose everything they invested in bitcoin.

In reply to by Teja

Bumpo FactDog Fri, 12/08/2017 - 20:45 Permalink

Okay, buy miilions of Bitcoin, then sell it all at once to short it. In other words, price ain't moving unlesss you do it the old fashioned way. Said "Trader" who hasn't been watching the market intensely, from at least August, has no clue what happens when shorts sell hard. What happens? Sell off lasts between 2-20 minutes, then the buyers come rushing in. Sure, there will be moments like when China said they would close down exchanges, and cut off electricity to some miners. It took about 2 days for people to move on.

In reply to by FactDog

BarkingCat slyhill Fri, 12/08/2017 - 23:18 Permalink

Does not matter how the futures are settled. Unlike commodities where futures manipulate the price, this will not happen with Bitcoin. With commodities the producers use the futures market to guarantee themselves a certain level in income. Bitcoin miners have no such need. Those who write those futures contracts will likely get their asses handed to them. Same goes for options. At least until the prices stabilize. Bitcoin is manipulation proof as the architecture that it rests on has built in requirements to keep the transactions balanced. This means no short selling is possible along with the other funny games that the Wall Street and Chicago schisters like to play.

In reply to by slyhill

ejmoosa BaBaBouy Fri, 12/08/2017 - 11:25 Permalink

As long as stuff is priced in dollars and it's the number of Bitcoins it takes to purchase something varies wildly, good luck detemining what you are paying for something as you hit the enter key.If that changes, and you see something to purchase in Bitcoins, regardless of the fluctuations in the dollar/Bitcoin ratio, then you might have something. So who is willing to set a selling price on their home in Bitcoins, and then stick to it as you wait for closing to occur?

In reply to by BaBaBouy

E5 ejmoosa Fri, 12/08/2017 - 11:46 Permalink

Where is it priced in Dollars?  I see yuan, yen, euro.... pretty much like getting your money exchanged.  Oh, wait, exactly like a currency exchange minus the fees.  Oh I see, it is like trading any currency.  For shame, one would have to be an idiot to trade in a currency that can be HEDGED so YUGE!

In reply to by ejmoosa

fbazzrea ejmoosa Fri, 12/08/2017 - 11:56 Permalink

BTC seems to be evolving into a store (volatile) of value rather than function as an everyday currency. imo, tho BTC has 8-digit divisibility, high transaction fees are a deterrent for purchasing a cup of coffee. but other cryptos have/are quickly filling the everyday "money" niche.cryptos are not broadbrush applications. each offer specific utility or in some cases, well, many cases, speculative solutions.for example, private blockchain Ripple already has over 80 international banks using their cross-border settlement network with much lower fees and much faster near instantaneous transaction times.cryptos are here to stay as long as civilization continues on its digital pathway. any abrupt departures from current trend will create larger problems than lost crypto wallets. naysayers should at least investigate enough to make informed decisions. and on the "closing" thing, blockchain shortens weeks, possibly months, into minutes, maybe a few hours. so volatility is an issue, but mostly containable within small timeframe."diversification is a good thing"--possible quote by Martha?

In reply to by ejmoosa