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Author Topic: The bias of circuit breakers (up good, dn bad) - I lost more going up than today  (Read 1389 times)
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June 12, 2011, 07:21:09 AM
 #1

If Bitcoin were used by 1 billion people, I would say large drops would need circuit breakers.

BUT: Large drops caused by bots forgotten in the last century are the reason for the circuit breakers.

On the way up, I lost $80. $14.4 for every dollar it went up.

Trading in the middle of traffic, I had $250 worth around BTC = $18. I had a buyer at $20. I had a seller at $17.5. I opened up the two trades. I sold at $20. The $17.50 one disappeared. No scam. Just took off. I bought at $23 to complete the sale. I was left with $170 worth.

On the way down, I lost $70. $9.1 for every dollar it went down.

Later, I gave out loans and wasn't able to make the hypothetical trades everyone here is using to support their pet theories. I'd lost from $170 worth down to $100. As well as some due to lending out to someone with a high rating that ended doing something stupid and scamming lots of people. And I actually think he'll pay me eventually.

But we're only going to include the market risk.

The difference for the first loss was $5.5 per BTC higher than $17.50. And it cost me $80 due to the missed connection. Yesterday's drop was $7.5 per BTC down from $17.5 and it cost me $70.

I lost more from it going up and trading in traffic per dollar, $80 / $5.5 = $14.4 per $1 rise, versus lending and having a business on the market, $70 / $7.50 = $9.1 per $1 drop.

I lost 50% more per dollar motion for it going up.

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: http://forum.bitcoin.org/index.php?topic=12536.0
Means: Code, donations, and brutal criticism. I've got a thick skin. 1Gc3xCHAzwvTDnyMW3evBBr5qNRDN3DRpq
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phillipsjk
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June 12, 2011, 02:01:10 PM
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I think the bitcoin economy is really too volatile for giving out loans. Only about 50BTC are generated every 10 minutes. With rapid deflation you would need negative interest. The problem is that it is more profitable to buy and hold, rather than giving a negative interest loan.

For planning, I am using the 30 day weighted average price. I am assuming that should even out most of the volatility.


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June 12, 2011, 02:15:43 PM
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I think the bitcoin economy is really too volatile for giving out loans. Only about 50BTC are generated every 10 minutes. With rapid deflation you would need negative interest. The problem is that it is more profitable to buy and hold, rather than giving a negative interest loan.

For planning, I am using the 30 day weighted average price. I am assuming that should even out most of the volatility.

You can pay interest without problem in a price deflationary economy. You just need to invest the money in a business that generates income (which is the point of a loan). That is the problem on why nobody is lending in bitcoins right now, because its hard to generate a business that generates income in bitcoins.
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June 12, 2011, 03:08:07 PM
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I think the bitcoin economy is really too volatile for giving out loans. Only about 50BTC are generated every 10 minutes. With rapid deflation you would need negative interest. The problem is that it is more profitable to buy and hold, rather than giving a negative interest loan.

For planning, I am using the 30 day weighted average price. I am assuming that should even out most of the volatility.

You can pay interest without problem in a price deflationary economy. You just need to invest the money in a business that generates income (which is the point of a loan). That is the problem on why nobody is lending in bitcoins right now, because its hard to generate a business that generates income in bitcoins.

I plan on setting BTCs on fire. Business is coming. I'll take a small cut of course.

I charge fees not interest.

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: http://forum.bitcoin.org/index.php?topic=12536.0
Means: Code, donations, and brutal criticism. I've got a thick skin. 1Gc3xCHAzwvTDnyMW3evBBr5qNRDN3DRpq
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June 12, 2011, 03:17:23 PM
 #5

Circuit breakers are only possible with centralized control.

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June 12, 2011, 04:09:43 PM
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Circuit breakers are only possible with centralized control.

Or with a trading scheme.

Proposal: http://forum.bitcoin.org/index.php?topic=11541.msg162881#msg162881
Inception: https://github.com/bitcoin/bitcoin/issues/296
Goal: http://forum.bitcoin.org/index.php?topic=12536.0
Means: Code, donations, and brutal criticism. I've got a thick skin. 1Gc3xCHAzwvTDnyMW3evBBr5qNRDN3DRpq
TraderTimm
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June 12, 2011, 07:22:14 PM
 #7

Circuit breakers, daily price limits, whatever you want to call them - only delay the inevitable. The person who wanted to sell at $29 will want to sell at $15, $10, and possibly $5. Likewise for those who want to buy. Let the market serve its function. I find it ironic that a currency that is free of regulation would have regulations placed on its trading.

Forget this idea, the exchanges do it in equities, and it has never prevented anything.


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kiba
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June 12, 2011, 07:28:20 PM
 #8

Circuit breakers are only possible with centralized control.

Yeah. New markets will just pop up. The idea of close time for markets just never make sense to me.

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