The Starting Of The "Bitcoin Derivative" - What side are you on?

[Bitcoin Computer]

Ok, My good friend Al just got drunk off one glass of wine and posted in the Econimics Section of the Forum.... Jesus.... Beware of Al.... His honesty is the truth....
Here is his post :
Dear BitcoinTalk.Org
Is the economy in for another shock,   Could bitcoin be the future.  I have worked with Bloomberg for the last ten years and the talk here is exciting form a trading perspective.  What would happen to the valuations if bitcoin was not considered a currency but rather a commodity. The idea is relatively simple.  If we take the idea that bitcoin will become more popular and mining operations become more prevalent than eventual a wall will be hit.  Does bitcoin actually have a value or is it something that we can hold in the hopes that it will exponentially hit the prices of gold, and if it does how ling will it last.

Monday morning I am sitting down with an investment firm to work out the algorithm to augment and shock this industry.  It is not a currency but rather traded on the fear of lack of other opportunities.  There is a finite time in which it could be profitable.  A derivative will allow the mass majority of people to weigh in on the potential valuation an month, two or three in the future.  A derivative could crush this industry, there are currently no constraints and institutional investors want their piece of the profit with the risk of being stuck with bitcoin potentially negated.  It seems as if the big banks want their cut and a willing to screw all those that are trying to mine coins that have only intrinsic value.  Meaning that bitcoin would have a different value if you could trade it without every having to mine or own any bitcoin.

I would not want to be the one stuck holding the bag, so to speak. depending on the derivative bets , puts and calls these institutional investors are just betting on the future and what the masses think about the product.  Think of it like the Abacus fund from Goldman.  The mortgage holders did not loose their homes during the bet but if you bet incorrectly you could have lost a lot.  The only difference is that you guys are mining and holding a commodity thats value is based not on potential uses but rather on the emotions that have driven you from "mainstream" investment strategies.

If i was to place a bet on a derivative of this nature it would be that the value would collapse the longer that industry existed seeing that the demand of the "product" has no intrinsic value.   

This all may sound crazy to you but at the end of the day there is a recorded history of this

Thanks -

Al - Stock Analyst, M&A Consultant since 97' and the holder of over 7500 BTC

[BurtW]

We will simply buy your calls and take delivery.  You will then be forced to buy BTC in order to cover, price goes up, everyone happy but you.

Where do I sign up?    

[faisalp]

Buy my calls?  What if I don't want to sell them, what if I want to take delivery?

[faisalp]

Sorry burt, got confused.  We're on the same page here.

[AnonyMint]

Seems to me that most speculators in Bitcoins are in it for long-term, thus shorter-term derivatives won't cannibalize current demand for Bitcoins. It will allow institutional investors to get in, because they can hedge, adds liquidity, etc..

Seems like a net positive for Bitcoin demand, not negative.

[Wekkel]

Am I the only one that has trouble understanding this?

[BurtW]

Am I the only one that has trouble understanding this?

Try reading his post history.  He is all over the map, especially now with the new alt "Al".

Since his new derivatives are not backed by actual BTC (seems to be what he is saying in his other thread) then these derivatives will have as much effect on the actual price as any other side bet on the price - zero.

You can already place price side bets at any number of gambling sites.

If Wall Street starts betting on price movements in a big way this will just introduce more people to Bitcion.  Most may be only interested in betting but even if only a small number get interested in the actual product it is positive for Bitcoin.