Bitcoin Forum

thats how exchanges work

all commodities including oil

everything is leveraged out

X 100,000

of what actually exists

What are you talking about  ???

I don't understand, this guy sometimes talks really weird shit.

OP, no, no one can own more than 21 million BTC, that is the hard coded limit, it's immutable (unless massive consensus was reached to change it, which will never happen since it would insta crash the price).

Im lost here as well. Bitcoin cap is 21 million. we wont all hold 21 million bitcoins each. by the time supply is exhausted some people will own 100s or 1000s while the majority have 1 or less.

Exchanges only hold a fraction of the Bitcoin traded on them

Fiat is the most leveradged of all assets

The combined Fiat of all the Rich people could by all

the assets of the world over 100 times

and they already own all the assets

Thats why never ending inflation

though the OP is sometimes rambling..
this time he is not talking about the real bitcoins on private keys.. but all of the "account" balances on exchanges represented in mySql databases.

EG many people still think they can get back the 800,000btc that were on mtgox, then the few hundred thousand here and few thousand there from other exchanges.
then adding all the coins currently on coinbase, btcc, bitfinex and you will see that the total "presumption" of coins held on "accounts" is actually far more then the real amount of coins attached to private keys.

another thing is not only are their coins on exchange accounts databases that dont tally to private keys.. but the number of orders on the buy and sell order lists of every exchange does not always tally against funds held in accounts. the exchanges themselves add on a few orders (some call it ghosting) where it fills in the gaps and helps to try keeping the price within a certain range.

in short. if you added up all the orders on exchanges, and then done a balance check of exchange customers. and then tallied that against funds held on private keys.. the numbers wont match..

so althought you cannot fractional reserve a private key, you can fractional reserve the mysql database of an exchange.. both mtgox and cryptsy got in trouble for that. letting people play with funds with no real bitcoin private key backing the funds on the "accounts"

The 1 Trillion  TARP bailout in the United States in 2009 8)

was because of over leveraged mortgate backed securities

in other words more mortgage bonds where issued than

mortgages that existed not to mention house prices also

fell so people stopped paying those mortgages. If it

was just the case of 1:1 leverage of MBS their wouldnt

have been enough defaults to crash 100's of Banks.

The levarage multiplied the housing downturn by

a factor of 100 on the books of the banks.

 We might have a lot of gold except that in 1933, gold coins, bullion and certificates were taken from us at gunpoint by the federal gov't under Executive Order #6102, placed into Fort Knox and then in 1934 assigned a value of $35 per ounce.  This was in force until the 1970's and the US dollar was redeemable for gold.

 

I think the OP is correct (but the numbers exaggerated)

What he is trying to describe is a comex type situation where real gold is leveraged and sold currently at 542:1

i.e for every real 1 oz of gold it is sold as paper promises to 542 people.


I open a Bitcomex,

I hold 100 bitcoin - people buy in to that holding as an investment and I sell them leveraged at 100:1 (equivalent to 10,000 bitcoin)

Most people only ever settle their investment in cash and never request the real bitcoin so I can continue the leverage game.

Well I think he may be kind of right - if you consider that the actual "paper money" that is printed is only like 10% of all the money that is in people's bank accounts, the same scenario may appear with the bitcoin. So even if the number of bitcoins can't go over 21 million, the wealth of some people may be showed in Bitcoins, even tho they don't have them sitting in their wallets. But there is a flaw, because in the fiat world it's easy to print money - here it's not possible. I think that some kind of method will be implemented - like the use of another altcoins to support the system. So the OP is not so full of crap this time :D

I had quite a few coins on gox which i withdrew

u can understand why it crashed, withdrawals

where building because of the price run up

and he didnt have that many. Not everyone

wanted Fiat, funny too i withdrew to Cryptsy

before i moved them on again.

Unlike gold, stocks and whatever other instruments there are being exploited right now, you can move, store and take control of your coins anywhere there's a connection and some modest hardware.

You'll instantly know it's the real deal and it's a piece of piss to secure and just as easy to sell should the need arise. That's kind of the entire point of the whole thing.

Nothing else offers that so I don't think the current examples are applicable. Why would I put up with a fictional certificate when there's zero need for it?

I thought there was only 21 million BitCoins in circulation. You can't create a BitCoin.

Well that's makes sense.
But can't we just demand from the exchanges how much coins they really hold, for instance in their cold storage?

You could, technically speaking, but to my knowledge there is nothing that prevents companies from lying to you in the report or giving you falsified data alongside whatever else they want you to know.

But what OP says is somewhat true, there will be technically more than 21 million Bitcoins on paper, but hopefully speaking people rely less on online wallets and more on keeping their Bitcoin in their own wallets.

Then they'll keep on failing and imploding until there are companies which can deliver the goods. That shoddiness can only limp on for so long.

The commodities u r talking about does not have a public ledger. It is true that some exchanges are involved into fractional reserve trading. But, if volume goes up on their exchange and their calculation does not work as expected, they'll soon turn into a Gox or Cryptsy. People will lose coins, but as bailout is not possible in bitcoin, virtual supply wont dramatically increase.

We are like 100 000 000 000 000 000 000x more technical literate than most people.  People will store it on an exchange because they are stupid and ignore peoples warnings.

OP has a point, perhaps worded a bit oddly but there is a chance Bitcoin becomes leveraged out like gold, the odds are a lot lower as it is a lot easier to send and hold bitcoin.

It is something we should pay attention to, this is the easiest way to keep the price suppressed much like gold.


I have a feeling though we will see an awakening to that gold situation.

You guys need to understand the average person is amazingly stupid when it comes to money and monetary items.  Like levels of stupid you did not think were possible.

The gov might make it Illegal to withdraw your coins :S.. it has been done MANY times in the past with fiat.

True indeed, but there wouldn't be an exchange with countless millions of customers unless it was massively visible, very well backed and no doubt regulated to the hilt.

I don't think adoption would advance much further without holding technically illiterate hands.

No doubt there will be attempts to debase it but at least it gives you the option of opting out and exposing it.

Exactly, Mt.Gox, Cryptsy, everyone who tries to hide what they have will fail eventually because people will want their money, or they'll slip up and not have enough for one reason or another, and then everything collapses in spectacular fashion, while also shafting normal people.

One day we might get a decent exchange, but everyone wants to make money somehow and exchange owners are no exception.

You certainly don't have the feintest idea on how bitcoin works. If you knew something about it you would know that the total supply of bitcoin is only 21 millions and there is no possibilitty of more being issued.

You would be probably better of with some reading. check more about bitcoin here:
https://en.wikipedia.org/wiki/Bitcoin

Snipped for simplicity.  :D

This sounds like some conspiracy theory. I heard some story's how there is enough oil for next thousand years, but government's hiding the truth about it.

OP made some calculation and in his mind there is logic, but for rest of use is too hard to see it. I don't think he is right, but let's wait and see what will happen. In the case he is right truth will show her self soon.

You could always have future contracts for bitcoins with 100x the size of the actual bitcoin market.

The reactions to OP are very polarized yet few are based on fact.  Can bitcoin certificates be issued?  How does a bitcoin ETF work? (they certainly exist).  If you are shorting bitcoin with a 10X margin, would you expect to control the private keys?

Nope. But I'm shorting with the expectation of withdrawing the spoils from the exchange to a place where I do control the private keys. If they can't supply that then they're not going to last very long.

The general public would have no interest in withdrawing the bitcoin though, just the profits in cash.

Therefore the hard limit of bitcoin is irrelevant.

Well it is if the exchange is insolvent and that's decided by the ability to withdraw coins and fiat.

But probably long enough to part xhomerx10 from his bitcoin.
Another Hero member asking noob questions. Like you might hold the priv key if you 10x margin.

Sorry if i'm missing the humour?

Only the 21 million bitcoins will ever be the real ones.

Those people that hold bitcoin derivatives or IOU's are being scammed.

In a deflationary collapse, the real bitcoin's price will rise.

 No humour intended.  I'm trying to make people think.
You would be playing with more bitcoins than you control.

 To address your concerns about my status.  Posting more messages than a noob doesn't make me any smarter.  Also,
I don't trade.  I mine, buy and hodl.

you obviously have no idea how leverage on trading exchanges work.

Fine OP has a good point, if bitcoin future is traded in CME, then people will bet on future instead of actual Bitcoin. This is the conspiracy theory regarding Gold.
Personally I think we should all boycott Bitcoin future, Bitcoin ETF etc. If a person think Bitcoin will go up in value, buy the Bitcoin ,not ETF, not future.

If you keep the bitcoin in your own wallet and do not save them in banks, exchanges, then there will be no inflated coins.

We will not have that many Bitcoins per person that is I think not even possible. Do you know how much money that is right there. We would all become billionaires if that happened.