We need a way to be able to short to reduce the impact of crashes!

[mgio]

I can't wait until coinlab is up and running so that we will be able to short bitcoins.

It will do a lot for reducing volatility and provide a cushion for these insane crashes we've been seeing.

[ManBearPig]

My personal opinion?

No we don't.

[mgio]

Explain why you disagree ManBearPig.

Shorting will help stabilize the market. Less volatility will make bitcoin more attractive to merchants and that in turn with cause bitcoin to become more valuable.

Shorting is GOOD for bitcoin.


I'm not saying I would short bitcoin. But I think others should be allowed to do so.

[GraphicImpulse]

Seriously? Shorting introduces MORE volatility as it commonly causes short squeeze coverings.

By the way - www.bitfinex.com - omg we can short the market should be stable wtf!

Go away.

[bitchess]

Seriously? Shorting introduces MORE volatility as it commonly causes short squeeze coverings.

By the way - www.bitfinex.com - omg we can short the market should be stable wtf!

Go away.

No it doesn't, when you have a market that only allows long exposure, the result is more people panicking when prices go down rapidly.

[casascius]

The volatility is nothing more than a direct reflection of the fact that getting money into and out of Bitcoin is terribly inefficient.

Drivers of inefficiency include: lack of trust in exchanges, fear that they will get hacked, their bank accounts shut down, or suddenly go out of business; lack of confidence that sending funds to an exchange can be transacted upon in a predictable timeframe.

Basically, the price shoots up until it is so high that people wanting to sell but are hesitant become willing to take those risks to capture a big reward.  Then it crashes so low that people wanting to buy but are hesitant become willing to take those same risks.  It will zigzag continuously until we get to a point where all market participants can be confident about their ability to trade one direction or another whenever they so desire and without a bunch of exchange-related uncertainty and risk.

[bitchess]

The volatility is nothing more than a direct reflection of the fact that getting money into and out of Bitcoin is terribly inefficient.

Drivers of inefficiency include: lack of trust in exchanges, fear that they will get hacked, their bank accounts shut down, or suddenly go out of business; lack of confidence that sending funds to an exchange can be transacted upon in a predictable timeframe.

Basically, the price shoots up until it is so high that people wanting to sell but are hesitant become willing to take those risks to capture a big reward.  Then it crashes so low that people wanting to buy but are hesitant become willing to take those same risks.  It will zigzag continuously until we get to a point where all market participants can be confident about their ability to trade one direction or another whenever they so desire and without a bunch of exchange-related uncertainty and risk.

but volatility increases when people can only long or sell the asset.  Unless you can lend stocks to sell, it's not even.

[mgio]

bitchess knows what she or he is talking about. Shorting is GOOD for bitcoin and will reduce volatility. And there is presently no easy and safe way to short bitcoins.

[BurtW]

You can short at https://www.bitfinex.com
There are plenty of people just waiting to lend you the BTC to do it
The interest rate on BTC loans is very reasonable
Now quit talking about it and go get to it!
(I would love to loan out my BTC and earn the interest as I am long BTC).

[Impaler]

My understanding is that FUTURES markets have a stabilizing effect on commodities.  Shorting I am a bit less familiar with in terms of what effects is has on a market, though I'm open to the argument that it has a futures like effect, also their are varieties of rules such as naked-short-selling which is probably not good (or they wouldn't have given it that naughty sounding name).  

The main problem I see with shorting is that the massive, pervasive and so far correct expectation for deflation means anyone shorting unless they times the crash perfectly is going to get destroyed.  I think the built in hyper-deflation just breaks through any control that shorting could have, and I think deflation is bad so this is just a terrible dynamic when it can't be controlled.

[bitchess]

My understanding is that FUTURES markets have a stabilizing effect on commodities.  Shorting I am a bit less familiar with in terms of what effects is has on a market, though I'm open to the argument that it has a futures like effect, also their are varieties of rules such as naked-short-selling which is probably not good (or they wouldn't have given it that naughty sounding name).  

The main problem I see with shorting is that the massive, pervasive and so far correct expectation for deflation means anyone shorting unless they times the crash perfectly is going to get destroyed.  I think the built in hyper-deflation just breaks through any control that shorting could have, and I think deflation is bad so this is just a terrible dynamic when it can't be controlled.

you can make money from going short via futures market or by actual shorting.  They are the same thing economically speaking, futures markets are useful for commodities where you can't actually hold the thing you want to trade.  Ie, you don't have a warehouse to store 1000s of lbs. of pork belly but want to make money when the prices go down.

Deflation = value of BTC going up.  So people who short BTC would lose money if BTC goes through deflation.

[abigfish]

you can't assure people that it's ok to hoard and speculate ...

maybe we should reduce the decilne in AAPL's value per share too ? just to make sure all those made millionaires there don't loose 20% of their bullion due to this quarters drop....if you know what i mean ? )
both would be very very stupid ideas

wanna hear a 3rd stupid idea from the same league ? when banks get into deep shit the g-man helps them out a bit a first ...pumps a little wonder juice in their vaults (when they seem to approach bankrupcty) ...these are/were the same banks that made BILLIONS for years and years and NEVER gave the g-man 1 dollar extra from their profits just because they were approaching the billionaire ladder to quickly .... )

[dataphile]

What bitcoin needs is more trading volume, enormous exposure, and widespread use before the price stabilizes. Anything that incentivizes bearish OR bullish speculation will result in volatility.

[bitchess]

The volatility is nothing more than a direct reflection of the fact that getting money into and out of Bitcoin is terribly inefficient.

Drivers of inefficiency include: lack of trust in exchanges, fear that they will get hacked, their bank accounts shut down, or suddenly go out of business; lack of confidence that sending funds to an exchange can be transacted upon in a predictable timeframe.

Basically, the price shoots up until it is so high that people wanting to sell but are hesitant become willing to take those risks to capture a big reward.  Then it crashes so low that people wanting to buy but are hesitant become willing to take those same risks.  It will zigzag continuously until we get to a point where all market participants can be confident about their ability to trade one direction or another whenever they so desire and without a bunch of exchange-related uncertainty and risk.

BTC's value is correlated with its usage and popularity.  There is wide debate about what BTC's future will look like.  That is my opinion of what is the main driver for volatility.  I think transactional efficiency and trust is only part of that discussion. 

The long term value for BTC is uncertain, just like private facebook shares were uncertain when Zuckerberg launched facebook in the early years. 

I want to highlight that another big part of the discussion is whether BTC will enter a deflationary spiral when total supply hits 21 MM.  Worry about what happens later makes big time investors stay away.