This makes me so happy. That's good work outta you.

Trolls

+1

Also, do I smell an arbitrageur? lol.

Doesn't matter to me, none of my strategies try to capitalize on overall trend. I don't care if overall trend is bullish, bearish, or neutral. I have strategies to take my piece of the action in just about any market conditions.

I'm sure we could too. I work on the exchange floor of the Chicago Board of Trade and I will gladly introduce you to more traders than you will ever bother to remember that have traded almost their entire lives quite successfully. Traders that fail to change with the market, fail in the end. And the way our brains work is exactly like you said. When the market goes up the bulls come out and when the market goes down the bears come. The smart, successful trader is the one who removes himself from either of those two groups and proceeds to take advantage of both of them.

The only things I would somewhat agree with in your post are the problems of liquidity, and stupidity.

Like you said, people are pretty predictable based on what the market is doing. If you can't see the insanely simple logic to using that in trading then you're smart to stay out of the game. Being a successful trader is often times so ridiculously easy and stupid that people refuse to believe it.

I also worked in Wealth management and will soon be receiving my degree in finance. The worlds of finance and of trading are insanely different worlds and I didn't realize that until I started working on the floor and meeting traders. I know now that every perception I had of trading before I surrounded myself by it was completely wrong, and is also shared by just about everybody in the finance world that ISN'T in trading.

Uhhhhhhh, what are you talking about? The postmaster DOES keep all the stamps to himself. That is until the time comes to sell them for an acceptable price in order to compensate both himself and his workers for the work that they do in order to deliver your damn mail.

I think you need to give your own critical thinking another shot.

You can now link a U.S. bank account to SnapSwap.us and use that to directly transfer funds into your Ripple wallet. In fact, OpenCoin themselves is giving 1k XRP to anyone who verifies their bank account on SnapSwap.

I personally did this and put 200 USD into my wallet to test it out. Took 2-3 days but didn't have to deal with excess wire fees or anything like that. I think I paid something like $2.80 to SnapSwap for the transaction which is significantly lower than any other option I've dealt with for getting funds to a BTC exchange.

I would say this, but I don't feel like sorting through a bunch of over-the-top conspiracy theorist bullshit.

No, Ripple isn't actually intended to be a currency unto itself. XRP is designed to work as payment for a transaction on the Ripple network. However, being used in this way also gives it a value of its own in which it could be used like a currency. That is why people freak out about the creators not just giving it all away or letting it be mined. They don't understand the core concept of the "currency" itself.

I equate it to the resources required to create a product. In order to make a wooden chair a person needs lumber, and this lumber has a value. Well, in order to make a transaction on the Ripple network a user needs XRP. The "transaction fee" which gets destroyed and not collected by anyone is incredibly small (1/1000th of an XRP).

But it's also more than that, it is an intermediary. So XRP has a certain value that can be quoted in terms of every currency instead of in traditional pairs like you will see on the Forex market. This way, any currency can be exchanged for another instantaneously by going from currency 1 -> XRP -> currency 2.

As someone who works in the trading industry I beg to differ. Day traders make money by identifying patterns and finding the probability of a certain result. They then trade based on positive expected values so that in the long run they DON'T lose. I think you'll find that the majority of traders who understand this and do their due diligence before ever trading come out to be quite successful in the long run.

Day traders who think they can look at a moving average and tell where price is going in the next five minutes always lose in the long run. Don't group us all together.

Ripple is absolutely not against everything Satoshi Nakamoto envisioned. You definitely need to open your eyes and think a little harder. Ripples adds an excruciating amount of utility to bitcoin and electronic transactions as a whole. It is easier for me to load my Ripple account with USD than it ever has been to get USD into an exchange to buy bitcoins. But with Ripple, I can instantaneously change my USD into BTC, EUR, CNY, and almost any other currency all from one single interface, and I can also trade all of those vehicles against one another. Now I can send BTC directly from my Ripple wallet and not have to cash it out to an exchange and then wire it out to another wallet? I'm game.


Yes, I'm curious if the sending address that the merchant would see is the gateway's address or what. If it is the gateway address, then individuals would not be able to sign a message to prove that the transaction came from them.

Yeah, yeah. I'll take an invite to see what's going on here.

Thanks.

This is hands down the number one thing that I wanted Ripple to implement ASAP. Though I'm worried that signing transactions and whatnot isn't really possible if sending from a Ripple address.

I was actually just thinking about this, and you could be right that we will soon be left with only just a few large mining companies because of the very real hardware gap that we have entered. However That is not to say that they would have no need for my service. In fact they may have even more need for it in the same way that the big oil companies do much of the same thing to hedge their oil and gas companies.  If we were left with only a few big mining companies they would be locked in a perpetual battle for network share with no indication of when their competitors will role out large amounts of new miners. The larger the operation, the more that is at risk when they lose market share. Therefore it would still be very wise for them to seek out ways to hedge being beaten to the punch by one of the other companies.

In fact, I personally know a trader at BP who's only job is to trade futures and options on oil and other products that the company uses in operations so as to not be pushed out of the market. He's saved them billions in a single year before.

Definitely true, however shorter term patterns seem to be relatively linear in themselves. Obviously I would be more prone to writing shorter term contracts, with extra caution baked into premiums both in longer term contracts as well as contracts issued when new technology is expected. True that I can never predict when these will actually happen or if they ever will. But I would say that the probability of new technology hitting the market without any idea beforehand which would kick difficulty into one of these quantum jumps is quite low.

It is akin to options on agricultural products. We can never fully know when some freak natural disaster will hit and wipe out an entire crop, thus propelling prices to ridiculous heights. However, you can compensate for these probabilities in your pricing model as well as take on extra hedges when there is any sort of a hint that they might occur.

Good question, bear in mind that derivative contracts like these are not written to make the hedgers money. They are designed to stabilize their returns and bar some of their downside risk. Pricing models are typically designed to give the creator (writer) of the contract a certain probability of not having to pay out. This probability is quite often in the neighborhood of 95%.

Miners must determine whether the premium they are paying for the contract is worth it. This would be some function of the premium being paid for the contract, the risk that difficulty will rise above the selected strike, and the amount the miner stands to lose if difficulty DOES rise that high. They may also throw some blind speculation into the mix, but that's not for me to say, nor is that my policy when trading.

Be assured, though, that most of these contracts would end up expiring worthless for the miners and the writer would be keeping those premiums that were paid.

In short, if I'm being completely honest, these contracts are ALWAYS written in the writer's favor. That's how it works. As a whole, however, a net benefit is provided to both the writer and purchaser of a contract assuming that both are making wise decisions in their best interests using all of the information available to them.

Also, these contracts have expiration dates that would line up with approximate difficulty changes. They are not perpetual contracts and therefore miners would not lock in their difficulty forever. They could, however, lock in a certain difficulty weeks, months, even years into the future.

Nothing happens fast when you bring in the regulators. And this certainly won't be fast due to its peculiar nature and untested ground. Expect it to take quite some time. (Months, perhaps even years. No one can say because this is such a novel concept for us all)

Just trying to gauge some interest here to see if this would be a worthwhile endeavor. I thought this might get more of an accurate reaction in the mining forum, but I think it would end up being moved here so... it is what it is.

I'm considering offering derivative difficulty contracts so that miners would be able to hedge against large spikes in difficulty.

The way I'm thinking it would be structured is this: one contract would represent "x" amount of hashing power at a certain strike (difficulty). Should difficulty spike above the strike price before expiration, the contract would pay out the difference between what "x" hashing power would have mined at the strike difficulty and what WAS mined at the current difficulty upon expiration. Obviously some premium would be paid for the contract based upon historical/implied volatility and whatnot. I'm not going to discuss the full pricing model in mind here, but if you're interested and considering backing this endeavor I would certainly entertain more questions privately.

Put simpler: 1 ghash would be expected to mine ~0.352BTC in a week with difficulty at 10,000,000. If difficulty happened to rise to 20,000,000 we would only expect that same ghash to mine ~0.176BTC that week. In this case, the contract would be worth ~0.176BTC at expiration which would be settled with and paid out to the miner.

Bear in mind that these contracts are not designed to make miners money on the whole. They are designed to hedge against downside risks associated with volatile difficulty in order to provide more stable returns over time. These would be more beneficial the larger your mining operation is. To a lesser extent, these contracts would also allow individuals to speculate on things like: massive btc price spikes bringing more rigs on board, new companies delivering equipment, etc. There are a plethora of ways these contracts could be used besides hedging a mining operation.

It's just an idea that I've been kicking around my head for a little while, and I've got a few other "products" in mind but this seemed to me like the most reasonable to start with.

What do you think? Poke some holes in it if there is anything that bothers you. I just want to see how much, if any, interest there is in a service like this.

Some background about myself: I work on the floor of the Chicago Board of Trade in the options pits, trade all sorts of financial instruments, and have had a passion for this sort of thing since I was a lad.

I've thought of offering CFDs that would be created and priced specifically for individual miners but wasn't sure if there would be enough interest for me to sink the inordinate amount of time it would require to start.