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Thanks for the feedback on my post guys. As a few people responded to it, I'll try to address all follow-up comments in this post: Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges.
Thanks for your input. But I don't think I understand your position. If you would be happy to buy and hodl (as per your statement), rather than HFT, why wold you not: transfer whatever amount you are comfortable to an exchange (e.g. $5000?); buy XBT with the USD; withdraw the XBT to your personal wallet on your computer; rinse and repeat until you've exchanged your hundreds of thousands? You exposure to counterparty risk can be limited to whatever figure you keep on the exchange at any one time. Alternately, if you really want to take a position of hundreds of thousands, I would imagine you might be interesting to someone like BitPay, whose biz model requires a regular source of $ for which they would provide XBT. You might contact them directly and ask. This definitely would make me feel comfortable with the amount of risk, but it's a lot of work, even for someone like me who I'd only consider a small investor in comparison to general Wall Street types you guys are after. For example, a typical position size in any particular given stock for me on any given day may be ~mid six-figures. To acquire that $ amount of bitcoins by the method you mentioned, I'd have to "rinse and repeat" 100+ times. If each time even took only a single day, that's still 3+ months to enter a position. And that's for someone like me who is pretty small potatoes in the Wall Street world. Let alone the fact that Wall Street people tend to make a decent amount of money, so dealing with that every day has a high real-dollar opportunity cost in terms of their time. And that's just for a small/mid-sized investor like myself. Large funds are the type you'd really want, and they'd come in and pick up 10, 20, 30 million dollars of BTC at a time. That'd never work for them. You need a way that an investor can come safely and buy up BTC all in one go. Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.
You could always buy from SecondMarket... Check them out. SecondMarket is actually probably a good option - I wasn't aware of them being an option at all in fact, didn't know their exchange had launched yet. They're a known quantity nowadays in the private-company-shares market, as many large institutional investors have conducted business with them for the past couple of years in trading private shares. They have a track record of not just running away with your money, and also of not getting hacked (thus far, heh). Their involvement in BTC will be very positive for the bitcoin community, imho. Don't understand your point? If you want buy and hold you don't must leave your coins/money at any untrustful exchange. Buy few coins and send the coins to you wallet and keep the coins safe. Or buy at local Bitcoin seller, or buy in many steps small amounts at any exchanger (even to avoid to affect the price with your hundreds or millions of $$  )...or or or... Many many possible and safe ways to do...Easy as that... If you are that big stockmarket trader as you say (doubts are allowed) you might be able to handle risk of small amounts. You gonna lose same or more at stock market trades everyday. Same as above, that's just not realistic for the type of investment you guys want to get from Wall Street -- you want to make it easy for people to acquire large quantities of bitcoins all at once (millions of dollars). Local isn't a realistic option for both that reason, and hassle, and probably legal reasons. As far as not "leaving the BTC on the exchange" -- I agree with you 100% there, and never was advocating leaving any assets at the exchange for an extended period of time at all. But even a couple hours of having Mt Gox have any large quantity of my money for instance would be too much and deter me from trading it. Well I guess he wants to do it at once as he is used to with more established financial institutions.
I kinda can see why an Wall Street investor will have problems wiring money to Japan to the company of a fat 29 year old jerk.
Even in $50k increments.
Very well said  That's total bullshit, counterparty risk is the only reason you won't get into btc lol.
Find some miners who will sell you blocks, go on localbitcoins, there are people offering up to $100,000 trades actually located on Wall street.
You're basically just shilling for secondmarket, or you'll announce soon that wannabe investors no longer need worry about counterparty risk because.....some company you're involved with has sorted out this issue you have created.
I wasn't even aware the SecondMarket exchange had launched, and I have no companies involved in BTC at all atm, nor do I plan on launching any at the moment, so no worries there hah. I have no agenda here, I've never even conducted a single trade on any exchange with bitcoin. Just trying to give some insight into how people who work in my world think about things like this, thats all. Localbitcoins is an absurd option to me for a wall street type trade. tl;dr: You want to make it as safe and easy as possible for large institutional investors to come and buy bitcoins. Not $5k at a time, not $50k at a time, not even $100k at a time. You want the guy who runs a $2 billion dollar fund and wants to allocate $20 million of it to bitcoin to come in and be able to deposit $20 mil at the exchange and run a TWAP buy algorithm over the following few days and get his whole position in one swoop from one exchange. That's how you get real wall street money involved, and that real wall street money would probably crank the BTC price wayyyy up. |
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I'm what most of you would consider a wall street person: I'm a high frequency trader, have been for the past decade, and make my income solely from trading.
I own ~4 bitcoins that I mined myself a couple years back just because I thought/think the bitcoin project is cool.
I'd like to buy many, many more bitcoins (to buy and hold, not to HFT). Putting a few hundred thousand dollars into an investment like bitcoin would be something I'd be happy to do - the risk adjusted returns are within my risk profile. I haven't. The reason is I don't trust any of the exchanges. Even the 'reputable' ones are still small/unproven startups. Coming from the wall street world, there's a lot to be said for the security that larger battle-tested financial institutions offer. When you're talking about putting hundreds of thousands to millions of dollars at risk, counterparty risk is a very real concern. At this point in time, no exchange has given me enough faith to trust them with my money, even if it was only for a single hour where I wired it to them and then bought the BTC and transferred the BTC out immediately. While I never would have used gox, just as an example: What if the company happens to blow up in that hour, and I never get my BTC and my USD are stuck in some sketchy small company that is in a foreign bankruptcy proceeding for the next three years?
Wall street types are happy to accept financial risk, but aren't very fond of counterparty risk, especially if we can't hedge it off onto someone else. At the moment that's not particularly possible. If you got even a single reputable financial institution (bank, equity/commodity exchange, something of that nature) to operate a BTC exchange, we'd come flocking.
All of the "fear of the unknown" type comments aren't particularly accurate about why wall street isn't investing bigtime in BTC yet. Wall Street will invest in pretty much any asset as long as the asset provides appropriate levels of risk adjusted returns -- certain assets are clearly far more risky, however, if the returns are sufficient for that level of risk, and that type of investor is able to stomach that risk, they'll happily invest. Imho, BTC has a track record long enough at this point with returns high enough to make it an interesting risky investment for many many institutional investors -- aka, the returns aren't the problem. For example, ask anyone who trades long-dated far-out-of-the-money options how they feel about risky investments. In my opinion, the reliable, safe infrastructure simply isn't there yet to get institutional investors to feel comfortable trading BTC -- it's too much the wild west, with small fly-by-night companies (gox, btc-e, etc) having large market share in the exchange markets.
Just my $0.02.
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given the large # of gox withdrawls (makes it seem like they bought em on gox...), the timeline, and the large # of btc.... winklevoss twins?
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CNBC transcripts for those interestedWhat was said at 13:20 EST: >> WELCOME BACK.
WE ARE BACK.
BIG COIN IN A BIT OF A MESS. SPARKING A RUSH OF ACTIVITY AND OVERWHELMING TRADING PLATFORMS.
IT'S A VIRTUAL CURRENCY.
IT DOES HAVE A LOGO. IF YOU WANT TO BUY THEM YOU DO SO ONLINE AT WEBSITES WHERE YOU PUT IN YOUR ACCOUNT NUMBERS AND THE AMOUNT OF BITCOINS THAT YOU
WANT TO BUY.
THEY HAVE BEEN AROUND FOR FOUR YEARS BUT THE NEW YORK LOUNGE JUST STARTED ACCEPTING THE DIGITAL CURRENCY LAST WEEK. .
>> IT'S IRREVERSIBLE.
THEY ARE INSTANT.
THEY ARE PRIVATE.
THE FEE IS LESS THAN 1% TO ACCEPT IT. AND THEY GET THEIR MONEY THE NEXT DAY IN THEIR BANK ACCOUNT. .
>> THE TAB IN DOLLARS, IS PUT TOGETHER.
AND BIT PAY TAKES THE COINS FROM THE WALLET AND SENDS DOLLARS TO THE BAR.
BUT THE PROBLEM IS THAT IT TAKES A LOT MORE TO BUY A BEER TODAY THAN IT DID YESTERDAY, LAST NIGHT IT WAS DOWN 77% SINCE WEDNESDAY.
RECENT GAINS LO FROM YEAR PEENS LOOKING TO STASH CASH.
ITS VOLATILITY CASTING DOUBTS ON RESPONSIBILITY TO REPLACE DOLLARS AND CENTS.
WHERE ONE MOVES IS CAUSE FOR ALARM SOMETIMES.
REPORTEDLY THEY OWNED ABOUT $11 MILLION!!$$!!!!!!!!!!!! MILLION.
THEY WERE CREATED AS AN UNIDENTIFIED HUMAN PURN.
THERE ARE ONLY 21 MILLION -- ONLY SUPPOSED TO BE 21 MILLION BITCOINS, 11 MILLION IN CIRCULATION PRESENTLY.
IT IS VERY APPEALING TO FREE MARKET ADVOCATES AND IT SEEMS IT IS APPEALING TO SPECULATORS AS WELL THESE DAYS. .
>> THANK YOU SO MUCH.
SUCH AN INTERESTING STORY.
WHAT DO YOU GUYS THINK ABOUT THAT? .
>> TWO KEY POINTS.
ONE IS THE UNDERPINNING MAKES SOME SENSE.
WE HAVE HAD INCREDIBLE DEVALUATION OVER TIME BECAUSE YOU HAVE GOVERNMENT ISSUING MORE.
POLITICIANS WANT TO GET RE-ELECTED.
THERE ARE A LOT OF ADVANTAGES TO IT. AND THEN YOU HAVE THIS BUBBLE ASPECT. .
>> WHAT DID YOU SAY?
DID YOU LIKE IT? .
>> IT'S PERFECT FOR A BUBBLE BECAUSE YOU CANNOT VALUE IT. IT IS SIMPLY DETERMINED BY SUPPLY AND DEMAND.
I CAN MAKE AN ARGUMENT THAT IT'S WORTHLESS. .
>> YOU JUST DON'T KNOW. .
>> YOUR LOSS IS 100%.
YOUR GAIN IS INFINITY, I PRESUME. .
>> IT'S BEANIE BABIES FOR 2013.
THERE WAS THE GREATER FOOL THEORY, SOMEONE ELSE WILL PAY MORE.
THEY WANT THINGS THEY CAN TOUCH OR FEEL.
I DON'T SEE THIS BEING A REAL INVESTMENT.
IT IS ACTUALLY A NEGATIVE. .
>> YOU CAN'T USE BEANIE BABIES TO BUY THINGS.
AND BITCOINS. .
>> THIS TOTALLY REMINDS ME OF BACK IN THE 90s WHEN WE THREW ALL FUNDAMENTALS OUT THE WIP DOE.%,, .
>> IT SEEMS TO ME LIKE A SUPER MARIO GAME WHERE YOU GO AROUND AND COLLECT THE COINS. .
>> I HAVE BEEN GLORIOUSLY UNINFORMED ABOUT THIS AND NOW WE'RE TALKING ABOUT IT ON TELEVISION. .
>> I DON'T WANT A VIRTUAL WALLET. .
>> I WOULD LIKE TO THINK MY BANK IS SAFER THAN HAVING MONEY IN BITCOINS.
DO YOU WANT TO BE PAID IF BITCOINS? .
>> WHICH MEANS GREATER FOOL IN JAPANESE. .
>> THE BILLIONAIRES.
ARE THEIR LUCKY OR REALLY SMARTER THAN THE REST OF US. .
What was just said at 14:48 EST IF YOU DIDN'T BITE AT THE BITCOIN CRAZE YOU MAY HAVE SAVED YOURSELF SOME MONEY.
WHAT WAS THAT WITH THE FLASH CRASH? .
>> BITCOIN'S VALUE PLUMMETING TO A LOW -- SHE SAID 54.25 EACH OVERNIGHT, A STUNNING 77% DECLINE.
BITCOIN STILL MAKING MONEY FOR INVESTORS WHO GET ITS RECENT RISE FUELLED BY DEMAND AND THE COMMODITY IS WHAT A LOT OF PEOPLE LIKEN IT TO. WITH ONL
Y $11 MILLION IN CIRCULATION, VALUE DETERMINED BY PEER TO PEER TRANSACTIONS WITH NO INTERVENTION FROM A GOVERNMENT OR CENTRAL BANK.
THAT IS A GREAT PART OF BIT KOINT'S APPEAL.
THERE ARE NO DAMMING RECEIPTS THEY MIGHT WANT TO COOP FROM A SPOUSE OR SIGNIFICANT OTHER. .
>> I THINK IT'S REFRESHING FOR A LOT OF CONSUMERS TO BE ABLE TO SPEND MONEY WITHOUT EVERYONE ELSE BEING IN ON THEIR BUSINESS. .
>> THAT ATTRACTED A CERTAIN USER TO BITCOIN.
ONLINE PORN AND GAMBLING HAVE BEEN FERTILE GROUND FOR BITCOIN TRANSACTIONS. .
>> IT IS INTERESTING THAT ANGLE.
IT GIVES THE SUGGESTION THAT MAYBE IT'S A LITTLE SHADY? .
>> IF I HAD I HAD A BITCOIN AND I WAS PAYING YOU IN BITCOINS, THEY COULD BASICALLY LOOK AT OUR ACCOUNT NUMBERS, BUT IT HAS NOTHING TO DO WITH OUR
IDENTITY.
SO YOU CAN BUY THINGS, AGAIN, WITH NO ONE KNOWING. .
>> WE DON'T EVEN KNOW WHO INVENTED THIS, RIGHT? .
>> NO, WE DON'T. .
>> THERE ARE SOME RUMORS THAT IT'S THIS JAPANESE NAME.
YOU'RE LITERALLY PUTTING ON TO REAL MONEY ON TO A SYSTEM THAT WE DON'T EVEN KNOW WHO CREATED IT. .
>> IT'S KIND OF AN AMAZING STORY. .
>> AND IT'S ONE THAT'S GOING TO MERIT ANOTHER SEGMENT.
LET'S BRING IN THE ATLANTIC'S DEREK THOMPSON.
ALL RIGHT, DEREK, YOU SAY THIS IS NOT A CURRENCY, IT'S MORE LIKE A DOT-COM STOCK.
AND I AGREE WITH YOU, BUT A LOT OF PEOPLE BELIEVE -- I SAW A GUY JUST BOUGHT A CAR, $38,000 USED PORSCHE, USING BITCOINS.
PEOPLE ARE TAKING THIS FOR REAL, MY FRIEND. .
>> RIGHT, IT CERTAINLY CALLS ITSELF A CURRENCY AND SOME PEOPLE CONSIDER IT A CURRENCY, BUT IT'S NOT A VERY GOOD CURRENCY.
SO WHAT DOES MAKE A GOOD CURRENCY?
A GOOD CURRENCY IS SOMETHING YOU CAN USE AND EXCHANGE FOR GOODS AND SERVICES, WHOSE VALUE YOU CAN TRUST.
BECAUSE IT DOESN'T CHANGE THAT MUCH OVER THE TIME.
IF I BUY A SANDWICH TODAY FOR $5 AND I GET ON THE PLANE AND I FLY AND SIX HOURS LATER AND I'M IN LOS ANGELES, I SHOULD MORE OR LESS EXPECT THAT $5 S
HOULD BUY THE SAME SANDWICH.
IT SHOULDN'T BUY AN INCREDIBLY EXTENSIVE STEAK OR ONLY A TENTH OF A SANDWICH.
I SHOULD HAVE A CERTAIN EXPECTATION THAT IT SHOULD BUY THE SAME AMOUNT HOUR TO HOUR.
AND BITCOIN CERTAINLY DOESN'T.
THE STOCK QUADRUPLED IN A MATTER OF DAYS AND THEN AGAIN A WEEK LATER, AND NOW IT'S FALLEN 75% IN JUST A FEW DAYS AS WELL.
THERE'S NO TRUST NOR TERMS OF THE VALUE.
IT'S BEHAVING MUCH MORE LIKE A SHOCK THAT WE ENJOY WATCHING THE GYRATIONS OF, BUT NOT REALLY A CURRENCY WE CAN TRUST ON ITS VALUE HOUR TO HOUR. .
>> IT KIND OF FEELS LIKE A DPAM!!$$!!!!!! GAMBLE AND A SPECULATIVE STOCK.
SO WHY ARE PEOPLE, AND NOT JUST EVERYDAY PEOPLE, BUT BIG INVESTORS, WHY ARE THEY STARTING TO GET ON BOARD WITH THIS? .
>> I THINK THERE ARE TWO REASONS.
I THINK THERE'S A GOOD REASON AND A BAD REASON.
WHEN YOU HAVE A STABLE SUPPLY OF CURRENCY AND THERE ARE MORE THINGS THAT THAT CURRENCY CAN BUY, THE VALUE SHOULD GO UP. SO THE MAINSTREAMING OF BITC
OINS ON THE INTERNET, I THINK, HAS HELPED ITS VALUE AND MAYBE BROUGHT IT FROM $1 TO $10 OR $10 TO $30. BUT WHEN YOU SEE IT EXPLODING TO 250, $260 AN
D THEN FALLING AGAIN TO $75, YOU REALIZE THIS IS REALLY A SPECULATIVE EXERCISE.
THIS IS A SITUATION WHERE PEOPLE SEE LIKE A STOCK PRICE RISING AND THEY WANT TO GET IN THE GAME SO THEY CAN, YOU KNOW, FEEL THAT VALUATION. .
>> DEREK, IT'S ALMOST LIKE IF YOU PUT MONEY IN PAYPAL AND THE NEXT MONEY YOU HAD HALF AGAIN AS MUCH AS YOU PUT IN.
I FIND THAT TO BE VERY DIFFICULT TO UNDERSTAND, WHY PEOPLE WOULD WANT TO DO THAT. .
>> EXACTLY.
WE HAD A WRITER, MATT O'BRIEN, WHO WROTE A PIECE BASICALLY SAYING, THIS ISN'T A CURRENCY, IT'S A TECH STOCK.
BUT IS IT PETS.COM OR PAYPAL?
AND IN ADDITION TO BEING CLEVER BECAUSE IT WAS ILL LIT!!$$!!!!WRITTIVE.
WHEN YOU TRANSFER MONEY FROM PAYPAL, THE FRIEND HAS THE EXPECTATION THE TRANSFER WILL BE $100.
BUT A PETS.COM KIND OF STOCK, WHERE YOU INVEST ONE DAY AND LOOK AT YOUR PORTFOLIO ONE MONTH LATER AND YOU REALIZE YOU'VE EITHER LOST 50% OR GAINED
200%, THIS ISN'T A CURRENCY. THIS ISN'T SOMETHING THAT PEOPLE, IN THE REAL WORLD WILL WANT TO BUY, WILL WANT TO USE AS A MEANS OF EXCHANGE. .
>> YOU KNOW, IT'S VERY EASY TO BE CYNICAL, BUT IF YOU TAKE THE WINKLEVOSS TWINS, WHO HAVE ONE OF THE LARGEST BITCOIN PORTFOLIOS OUT THERE, THEY SA
Y THIS IS JUST TEETHING PAINS.
THIS IS WHAT HAPPENS WHEN YOU'VE GOT LIKE THE NASCENTS OF A CURRENCY OR ANYTHING ELSE, IT'S GOING TO GO THROUGH A BIT OF A BUMPY PATCH.
IS THERE ANY CRED TO THAT? .
>> SURE, THERE MIGHT BE CRED TO THAT.
I CAN'T PREDICT THE FUTURE, AND IT'S CERTAINLY POSSIBLE THIS COULD TURN OUT TO BE A CURRENCY WHOSE VALUE STABILIZES AND PEOPLE REALLY USE.
ONE THING WE'VE SEEN AROUND THE WORLD IS THAT ALTERNATIVE CURRENCIES CAN EXIST AND CAN THRIVE.
THERE'S THE ITHACA DOLLARS THAT EXIST IN NEW YORK, WHERE IF I MOW SOMEBODY'S LAWN, I CAN USE THAT HOUR TO BUY SOMEBODY ELSE'S HOUR.
THERE'S THINGS WHERE THEY WANTED AN TARIFF CURRENCY TO HELP CREATE INCENTIVES TO HELP PEOPLE CARE FOR THEIR ELDERLY ONES.
THAT'S BEEN ANOTHER ALTERNATIVE SUCCESSFUL CURRENCY.
IT REMAINS THE TO BE SEEN WHETHER BITCOINS CAN JOIN THE RANKS OF THESE ALTERNATIVE CURRENCIES THAT HAVE THRIVED OVER THE LAST FEW YEARS.
BUT RIGHT NOW, IT'S BEHAVING LIKE A TECH STOCK. .
>> INDEED, DID NOTHING ALL YEAR, ABSOLUTELY NOTHING IF YOU LOOK AT THE CHATTER, AND NOW, WHOOF, UP IT GOES LIKE TULIPS IN THE 1600s. .
>> I'M FULLY INVESTED IN OLD PEOPLE CARE STOCKS IN JAPAN. .
>> OR FUNERAL OPERATORS.
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made an app to watch for this. net fees the pnl is actually pretty darn tiny in general when the opportunities do pop up. and yeah you gotta have inventory of both btc and dollars in both and be constantly moving em around. was small enough profit to not be worth my time.
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Unregulated market. Nothing can really be done about it. But yeah, of course. Same things exist in any market - knowing a client is coming in with a 1 million share block order in a 100k ADV stock will have same effect. Only diff is there's SEC to watch for that.
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need workers. use the workers login, not your primary slush login.
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It most definitely is. I'm an algorithmic equities trader and there are definitely super easy opportunities in the BTC market right now.
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Absolutely. Massive volatility in the BTC market isn't good for its long term viability. Price appreciation is good, but not 50%/day and whatnot.
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Location: USA
Actual Job: Sophisticated algorithmic trader focused primarily on domestic (US) equities. High frequency, high volume (millions of shares/day).
Been following bitcoin developments for the past few months. Haven't been trading it due to poor exchange software. If large-scale traders like myself are going to get seriously actively involved in the btc markets there needs to be much better exchange software. $500,000 per single trade isn't anything to me in the stock market (and do many many of those daily) but I don't trust the BTC exchanges at all to handle even 1/10th that right now. Been considering coding up some open source exchange software for btc based on my extensive experience with equity market exchanges. At very least probably will be coding up some public data feed software for use by the general public - BTC tickerplants/feeds/etc. to encourage algorithmic trading. The current software/interfaces for it offered by the BTC exchanges is a total joke and entirely pathetic.
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