OT: Bitcoin and blockchain

12/9/2017 11:32:52 AM

My 2 cents (consider I have some understanding of blockchain and high finance :)

1. Invest at your own risk in bitcoin or alt coins. Do not enter from short side if you are not a trader, monitor your investment every 15 min ( atleast every hour) and run like hell when value starts falling over 20%, you cannot predict where will it fall and falls are extremely fast (in minutes). Avoid holding overnight position.

2. Baby talk explanation: Bitcoin is one use case of blockchain. The blockchain technology is still raw. To avoid central clearing or authorization, the idea was to create a problem that takes very high computation to be solved. And the general way to solve is just trying all possible solutions like hit and trial. A large number of people (miners) running special machines ( antminer/ bitfury) are doing this hit and trial (hashes at 10 to the 12th power) every second. ANY RANDOM PERSON CAN GET THE SOLUTION. Then its easy to verify by others and the chain continues.
The disadvantage of creating this randomness to decentralize the process is wasting a lot of electricity (compute power) to get to the solution. TODAY to mine 1 bitcoin/ persist 1 block of transaction/ 1 solution, it takes 1000 dollars in China ( cheap electricity) .
People want to do this as long as the cost benefit makes sense.

3. Will blockchain rule the world, not in the next 20 years. Its still in nascent phase. People in high finance have no problem with centralized authentication and authorization, verification and reporting. Govt want to control inflation and economy by expaning and contracting the money supply (not possible with blockchain)

4. Satoshi will rise (philosophically and transformationally) . but the applications will be totally different than what seem obvious today.
Smart contracts and public records are the 2 things that will be on blockchain. Not much progress in any other application now.

Don’t give them your money yet.

27 comments

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Mate27

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7 years ago

I suppose it's a little like in investing into marijuana stocks. The beurocracy at large will regulate the hell out of it eventually, so many will try yet fail.

My bet is eventually marijuana will be accepted on the Federal level, too.

Dougster

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7 years ago

Don't agree with much of the OPs post:

1) I think this is absolutely terrible advice. No do watch the ticker every 15 minutes. No don't get out because your favorite coin just dropped 20% in one day. Go in knowing there will be extreme volatility. If you cannot handle then don't get in at all. Do not glue your eyes to the ticker and get all emotional and sell at the bottom. Choose something you have strong conviction in so you don't get shaken out by normal market volatility.

2) Some coins have new supply created by mining. Others by proof of stake which use some energy but not much. Ethereum wants to move to proof of stake. I think environmentally conscience millennial will insist on it.

3) Definitely in the next 20 years. Things move faster now than they did in the past. Blockchain is one thing that will further accelerate the pace.

4) This is the one point I'm closest to agreeing with. I think finance and decision making will be the primary applications of block chain. There are others related to supply chains. Maybe some in the medical field too.

Even though I disagree with the OP, it's nice to see someone thinking about it beyond just parroting what ever the financial media's consensus message is.

ThereAndBackAgain

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7 years ago

@Dougster check how many times the value fell below 20%, every time it did it did not stop before retracing to 50%. The implied volatility for normal stocks, and indexes is same both ways, but not for bitcoin. CME is launching bitcoin futures starting tomorrow and no brokerage is allowing to short it. Think about it. Just find me anyone who will sell a put option 20% in the money or even out for bitcoin.

Dougster

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7 years ago

Nope. There have been plenty of 20% or 30% drops in a day when it did not go down 50% later.

And where are you finding option data to compute Bitcoin implied volatility from? For me cryptocurrencies are volatile enough that derivatives are not needed to make things move faster. I think the real use case is hedging.

Dougster

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7 years ago

I also quite skeptical of your claim that no brokerage will allow Bitcoin shorting. If it's volatile they just increase the margin. If there was no shorting allowed that would create a very dangerous market condition: all the small money forced to be long. Well you can guess what the first thing bigger players would. I'll check your claim on Monday morning.

ThereAndBackAgain

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7 years ago

^^^ go ahead find me one for tomorrow

Dougster

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7 years ago

It's not that urgent for me. No desire to trade futures on Bitcoin. You'll have to wait until Monday before I can check it.

Dougster

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7 years ago

I did find this interesting in the futures contract specification: "Price Limits: A market rise or decline means a rise or decline in price of the future between 8:30 a.m. and 3:00 p.m. central time on a trading day, as compared to the closing price of the future for the immediately preceding trading day. There are three levels that will trigger a suspension or halt to trading at a price rise or decline of 7%, 13%, and 20%."

7%, 13%, and 20% are very common moves in Bitcoin. Think there will be lots of trading halts.

rogertex

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7 years ago

TABA - Good summary.

ThereAndBackAgain

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7 years ago

Thanks.
@ Dougster, I take my word back on options. LedgerX got approved by CFTC last month and allows trading options but the implied volatility is over 100% , case in point S&P volatility is 6.7% and the iv for Lehman’s was 65% just before bankruptcy.

ThereAndBackAgain

•

7 years ago

The market pauses for sometime after 7% and 13% for the rumors to settle, but on occasions after the pause it starts to fall again.... panic selling is very common, especially because traders dont want to touch that thing once it makes unpredictable move, small fish cannot cover the gap. Remember when ethereum went to 13 cents at night and bounced back the next day?

Dougster

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7 years ago

Options on what symbol though? GBTC? Or the options on the futures contracts (If bitcoin isn't volatility enough for you, and futures on bitcoin still doesn't cut, guess what! we have options on bitcoin futures!)? Are they some kind of cash settled index option?

Dougster

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7 years ago

@TABA: yes that was on GDAX, it happened in just a few minutes.

Thinking about it some more, markets have often turned around just before trading halt levels or just a bit into them. The theory is that people who run the bots don't make any money when the market is halted. :-) So it could be that the halt will less BTC volatility.

ThereAndBackAgain

•

7 years ago

I want to just buy cheap ( C-H-E-A-P) options for the black swan event. Something like a strangle like 5000 and 50,000 for a 500-1000 dollars.

Go to LedgerX.com check compliance they have product listing. Its simply option on BTC mostly.

san_jose_guy

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7 years ago

I just saw my neighbor cramming his mini-van full of bitcoin, floor to ceiling. So I asked him, "You look like you're going to buy a tank of gas."

"Naw, just going to try and get a loaf of bread."

SJG

For those who want to view:
http://www.laschavelasbar.com/gallery/
Use password: 28chavelas10

What Is Marxism?
https://www.youtube.com/watch?v=Vz3eOb6Y…

ThereAndBackAgain

•

7 years ago

The 2000 recession was caused not by the housing bubble but hedge funds buying cheap CDSs with huge rewards in case of defaults (even when they had no stake) . The big brokerages were selling huge MBS products and buying (and getting hedge funds) to buy short positions against them.

Hedge funds are now deep in the game. One redemption from 1 fund of a million bucks (less than 700 coins) can rattle the market.
It will be interesting to see how many transactions of more that 1 bitcoin trade daily, even though the transactional value is 400 million.

ThereAndBackAgain

•

7 years ago

^^2008-9

san_jose_guy

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7 years ago

Capitalism can no longer perpetuate itself because so little labor is needed, and there is no longer the ability to consume much without living on credit.

This crisis has been predicted for a long time.

:) :) :)

SJG

Las Chavelas Bar Gallery
http://www.laschavelasbar.com/gallery/
password: 28chavelas10

What is Marxism?
https://www.youtube.com/watch?v=Vz3eOb6Y…

BART Through Downtown San Jose, A Tunnel? Cost, Time? That area has a very high water table.
https://www.nbcbayarea.com/news/local/BA…

jackslash

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7 years ago

Bitcoin is better than tits and ass.

san_jose_guy

•

7 years ago

Tits and ass will prove to have a longer shelf life.

SJG

Are all women sluts?
https://www.youtube.com/watch?v=qgiROKU5…

Dougster

•

7 years ago

@SJG: was your mother a slut?

Dougster

•

7 years ago

I don't like IOTA: too many weird things and bad security choices. That my view in terms of its technology. I have no opinion on whether people will buy it despite the technology. So far they are. But I won't want to be around on the day people wake up to it. I'll invest in sounder technologies to reduce the risk. If people think they can figure out how to trade it: good for them!

Mate27

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7 years ago

How about European markets? Anyone jumping the shark on that option?

Dougster

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7 years ago

Who's gonna be at home with the big popcorn bowl tonight waiting to watch the effects when futures trading starts?

Dougster

•

7 years ago

Haven't look at those ones at all.

san_jose_guy

•

7 years ago

Dougster eating popcorn as he watches futures trading ensue. Of course he will be with his all male cadre, practicing what they call, "Athenian Democracy".

SJG

Marxism 101
https://www.youtube.com/watch?v=Vz3eOb6Y…

Yardbirds
https://www.youtube.com/watch?v=N9ULMxxl…

san_jose_guy

•

7 years ago

After all of this, will anyone ever listen to Dougster again, about anything?

SJG

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