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February 28, 2015, 01:26:23 AM
Last edit: February 28, 2015, 01:36:32 AM by Erdogan |
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Here is a suggestion for those who are safe in the solvency department, and believe that the probability for bitcoin going up is greater the probability for bitcoin to go down, but are afraid to draw down their everyday working fiat account. There could be a rainy day soon, right?
The answer is that you can safely draw down your fiat account to almost nothing, because bitcoins are extremely liquid, and if you get a surprise expenditure, or the balance is a little too tight before salary day, you can sell just enough coins to get by. High liquidity means (for me) that I can sell bitcoins on localbitcoins for a national bank transfer or better, to someone having an account in the same bank as me, and the trade can be completed and cleared in minutes.
A problem you might point out, is that the price of bitcoins at the exact moment you need the fiat, might be too low to your liking, and you prefer to avoid selling while the price is low. But you don't necessarily have to sell bitcoins in advance for that: enter the magic of finance. For each coin that you have to sell for what you think is a too low price, enter a long forward contract for one bitcoin. To do that, you have to post half a bitcoin as collateral on cryptofacilities.com or something like it.
The effect is that you sell the bitcoin, but buy back the risk (both up and down), so risk wise, you are just as good as if you did not sell at all.
Clever, eh?
Edit: There are fees, spread and third party risk to think of also.
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