CoinLab News = Price collapse

[siulynot]

In addition to the news that CoinLab is gonna manage USA/CA funds from Mtgox, they are announcing a professional, safe and licensed trading platform for US Corporations.

Trading platform = shorting.

3 or 4 medium sized corporations with 3 or 4 multimillion shorts puts the prices in $10 or below in no time.

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[bzzard]

In addition to the news that CoinLab is gonna manage USA/CA funds from Mtgox, they are announcing a professional, safe and licensed trading platform for US Corporations.

Trading platform = shorting.

3 or 4 medium sized corporations with 3 or 4 multimillion shorts puts the prices in $10 or below in no time.

This is possible when you can create commodities out of thin air (like "paper silver").
With bitcoins this is not possible.

[humanitee]

Gentlemen, bayonets out and tin foil hats at the ready!

[bullioner]

The ability to short doesn't magically allow the price to be driven down longer than the term of the loan contract.  They have to rebuy the units they short-sold within the time limit, and if the rest of the market hasn't agreed with them during that period of time, they lose money on the short.

[mccorvic]

Gentlemen, bayonets out and tin foil hats at the ready!

I know, right?!  I once had hope that the bears would come back to Earth once they were proven wrong enough times, but it seems like they just double down and go for even worse theories.  Theories even Alex Jones would be like, "Man, you be trippin'."

[casascius]

This is possible when you can create commodities out of thin air (like "paper silver").

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

My "bank" would create cryptographic signatures on a daily basis proving in fact that I have every single bitcoin I say I have on deposit.  Meanwhile, I would break down that 1000 BTC into "ranges" to assert that they are owned by specific depositors (but only in a manner where the depositors themselves can identify their own funds, not the public).  For example, if I held 4 deposits for 4 people, and they were 100, 200, 300, and 400, then I would say that coins 1-100 belong to depositor 1, coins 201-400 belong to depositor 2, 401-600 and 601-1000 belong to depositors 3 and 4.  I would sign and send messages to each depositor, which would allow them to reconcile, catch, and out me if (for example), I told two people they each own the same range of coins.

The real goal would be to help the public know they really can and should demand proof that their deposits are safe and sound and not fractionally pledged, the same way "provably fair gaming" is teaching us by example that we should demand, well, provably fair games.

In turn, this would cut down the number of "paper bitcoins" in existence (or rather, I should say, "bitcoin-denominated promises", because the "paper bitcoins" I have in mind - like bitaddress.org and bip38 - are actually close to the best kind of bitcoins you can have!)

[Rygon]

In addition to the news that CoinLab is gonna manage USA/CA funds from Mtgox, they are announcing a professional, safe and licensed trading platform for US Corporations.

Trading platform = shorting.

3 or 4 medium sized corporations with 3 or 4 multimillion shorts puts the prices in $10 or below in no time.

This is possible when you can create commodities out of thin air (like "paper silver").
With bitcoins this is not possible.

So what? Physical silver prices and paper silver prices routinely diverge. If they aren't actually receiving BTC (like in the paper silver market), they can short and long prices in whatever direction they want.

They might even receive some sort of credit to BTC (without having to actually take possession), but coinlab or the TPTB could be just be employing fractional banking. At least with BTC some red flags will get raised when the total value of contract on the trading plaform go up over BTC1M

I'm sure most of the bulls around here will still be happy with artificially driving the price down in the near term. And the conspiracy theorists will surely have a field day!

[chriswilmer]

This is possible when you can create commodities out of thin air (like "paper silver").

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

My "bank" would create cryptographic signatures on a daily basis proving in fact that I have every single bitcoin I say I have on deposit.  Meanwhile, I would break down that 1000 BTC into "ranges" to assert that they are owned by specific depositors (but only in a manner where the depositors themselves can identify their own funds, not the public).  For example, if I held 4 deposits for 4 people, and they were 100, 200, 300, and 400, then I would say that coins 1-100 belong to depositor 1, coins 201-400 belong to depositor 2, 401-600 and 601-1000 belong to depositors 3 and 4.  I would sign and send messages to each depositor, which would allow them to reconcile, catch, and out me if (for example), I told two people they each own the same range of coins.

The real goal would be to help the public know they really can and should demand proof that their deposits are safe and sound and not fractionally pledged, the same way "provably fair gaming" is teaching us by example that we should demand, well, provably fair games.

In turn, this would cut down the number of "paper bitcoins" in existence (or rather, I should say, "bitcoin-denominated promises", because the "paper bitcoins" I have in mind - like bitaddress.org and bip38 - are actually close to the best kind of bitcoins you can have!)

Wow. That is an AMAZING idea. Given the thirst for bitcoin startups by VCs wanting to get in on the action, I think someone should really do this!!

[piramida]

This idea requires cooperation between your clients which isn't realistic unless anonymous. So really, you can as well have these coin ranges in a form of a public but anonymous ledger. Anybody who knew his/her id in the ledger would be able to verify quickly that their coins are on display. No overlaps possible. No communication needed A completely transparent bank.

[Piper67]

This idea requires cooperation between your clients which isn't realistic unless anonymous. So really, you can as well have these coin ranges in a form of a public but anonymous ledger. Anybody who knew his/her id in the ledger would be able to verify quickly that their coins are on display. No overlaps possible. No communication needed A completely transparent bank.

Yeah, not a big problem. You just sign in as user 011010100 and check it there.

[adamstgBit]

I would like to remind all Canadians that http://cavirtex.com/ is an outstanding exchange I really feel i can trust them with my money ( and with more security improvements on the way!) .  Keep using cavirtex!

[Spaceman_Spiff]

This is possible when you can create commodities out of thin air (like "paper silver").

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

My "bank" would create cryptographic signatures on a daily basis proving in fact that I have every single bitcoin I say I have on deposit.  Meanwhile, I would break down that 1000 BTC into "ranges" to assert that they are owned by specific depositors (but only in a manner where the depositors themselves can identify their own funds, not the public).  For example, if I held 4 deposits for 4 people, and they were 100, 200, 300, and 400, then I would say that coins 1-100 belong to depositor 1, coins 201-400 belong to depositor 2, 401-600 and 601-1000 belong to depositors 3 and 4.  I would sign and send messages to each depositor, which would allow them to reconcile, catch, and out me if (for example), I told two people they each own the same range of coins.

The real goal would be to help the public know they really can and should demand proof that their deposits are safe and sound and not fractionally pledged, the same way "provably fair gaming" is teaching us by example that we should demand, well, provably fair games.

In turn, this would cut down the number of "paper bitcoins" in existence (or rather, I should say, "bitcoin-denominated promises", because the "paper bitcoins" I have in mind - like bitaddress.org and bip38 - are actually close to the best kind of bitcoins you can have!)

I actually thought of the same thing recently, great minds think alike   , ahum .  
You could publish the holdings of each user by providing the hash of their username and then the balance that corresponds to that user. EDIT: I see piramida posted a similar idea.
Of course, your users still need to trust you not to elope with the funds, but at least you can prove you are still holding the money.
I was actually thinking of this being used by a bitcoin backed central bank, which could do micro-transactions without clogging the blockchain.  This bank would produce bitcoin-replacement currency that would be created the moment a user deposited bitcoins in a "shared address" (only possible to withdraw with approval of both parties, I don't know the proper term).
The downside is that this bank would be a single point of failure, so it is probably not a good idea until bitcoin is really mainstream and free of governmental crackdown fear.

[cedivad]

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

I love this guy.

[AndyRossy]

If i loan 50k BTC @ 1% interest over the week - e.g. so must pay back 50500BTC, and sell 50k BTC at once time, it'll start a panic / bubble burst.

There's enough people out there looking for "ways" to invest their BTC with viable returns.

As soon as someone makes a nice platform to short, the bubble will burst a lot quicker.  It wont take more than a sell off of say 100k BTC lent to cause a crash.  As soon as it crashes, can easily buy it back in a weeks time to cover the short.

[Gatekeeper]

good luck finding someone who will lend you $1.5m - $3m worth of btc

[vokain]

TO GOD I HOPE SO. I NEED CHEAP COINS

[🏰 TradeFortress 🏰]

OP is now on my ignore list.

[xxjs]

OP is now on my ignore list.

That must hurt. Scary.

[bullioner]

If i loan 50k BTC @ 1% interest over the week - e.g. so must pay back 50500BTC, and sell 50k BTC at once time, it'll start a panic / bubble burst.

I would love to see you try.  Most likely, you would have to pay substantially more purchasing the 50500 BTC towards the end than you get for selling the 50000 BTC all at once at the start, and thus would lose a lot of money.  So long as rational market makers outweigh those engaging in irrational herd behaviour in the interim period.  Hint: they probably will.

[notig]

If i loan 50k BTC @ 1% interest over the week - e.g. so must pay back 50500BTC, and sell 50k BTC at once time, it'll start a panic / bubble burst.

There's enough people out there looking for "ways" to invest their BTC with viable returns.

As soon as someone makes a nice platform to short, the bubble will burst a lot quicker.  It wont take more than a sell off of say 100k BTC lent to cause a crash.  As soon as it crashes, can easily buy it back in a weeks time to cover the short.

Still trying to figure out how this will cause a crash. (i've never played other markets).  If you loan someone 50k BTC plus interest and they have to pay you back bitcoins then how does that involve selling at all? Or are you saying that they loan in bitcoins but expect to be paid in cash?