Hedge against BitCoin collapse

[AlgoSwan]

NMC would be a perfect candidate for BTC hedge.

[Bullion333]

What about a BTC options trade or sorts, there must be some sort of financial product whereby you can hedge i.e go short and cover your long BTC exposure??

Like a BTC put option?

---------------------

Update; after a quick search on google I came across this:  http://btclevels.com/   might be of interest or is there an alternative?

As soon as it is available, bitshares aims to do just that. Protoshares are being mined now for that. http://bitsharestalk.org/index.php?topic=13.0

I think there is something very interesting in the bitshares concept. Although I, and I think many other people, would like more of a "vanilla" solution. That is, a straightforward option ( call and put ) contract based on an aggregate strike price on Mtgox, bitstamp and other exchanges. The contract length should be for at least a few months - this is where btclevels.com falls down as the binary contract length is so very short. As bitcoin is unregulated and not traded on an open exchange the option premium should be low.

The price of BTC is so volatile as the currency matures people will absolutely need products like this to mitigate price risk. I am new in taking an active interest in BTC although have been aware of the currency since 2011 after reading a New Yorker article. http://www.newyorker.com/reporting/2011/10/10/111010fa_fact_davis

Personally I am really surprised their is not a product in that hedges bitcoin price risk?? 

[kkaspar]

The perfect hedge against bitcoin collapse would be an another cryptocurrency. If the crash begins and enough people would fall into LTC for instance, then a new bubble would start forming there that would attract most of the past BTC investors. Then it would be a mater of days when most of the value would return from LTC to BTC. BTC would keep the bigger part of it's original value and would even stay attractive to new investors. When BTC will fall into USD/EUR, then the investors won't touch BTC for months, because the idea of cryptos seemed to fail.
BTC has to have supporting cryptocurrencies, because otherwise it is looking for support from fiat currencies. And the financial system that rules fiat, does not exactly want BTC to succeed and they will try to use the strenght of their money to break the cryptocurrency idea as a whole. Only way for cryptos to survive the fight against fiat is when they support eachother and be autonomous enough from the traditional monetary system.

The people who speak for bitcoin, should promote more of altcoins, because currently we have this "nr.1 and none" situation that is very unhealthy for the entire process of cryptocurrency evolution.

[yogg]

I am looking for the perfect edge against a bitcoin collapse. My biggest fear is selfish mining or some
other hack on the system. Not so much worried about bears, volatility and governments.   

there

http://www.avatrade.com/trading-info/range-of-markets/bitcoin

make a deposit and go short on BTC

[mgio]

Buy HedgeCoin. It's designed to go up when Bitcoin crashes and go down when Bitcoin goes up.

[chaosknight]

USD and Silver would be the best hedge against Bitcoin.

[MaxBTC1]

Hopefully PPC would be a good hedge, unfortunately Ripple too.

Alt coin wise PPC is your best bet.

In other asset classes you want to look at USD, Gold, Silver.

[CMMPro]

i heard that there are already trading options ("short" and "long" etc) but i cant recognize that service. but as time goes by, there will be more online services, that offer that stuff.

That would be good. Either that or insurance or bookmakers that pay out in the event of a bitcoin collepse.

You are over invested if you are so worried about it.
If you don't believe in what you are investing, or are worried that it is too risky, then bitcoin IS too risky and is not the investment for you.

There is no perfect hedge....have a little of this and a little of that to back up what you are risking.
I have my stocks, bonds, precious metals, real estate, toys, and a certain "who gives a shit" percentage I play with in bitcoin.

Has it caused me the occasional bit of lost sleep? So far only during the April crash, and only because it was an exciting time not because I was afraid to lose.

[DeathAndTaxes]

The perfect hedge against bitcoin collapse would be an another cryptocurrency. If the crash begins and enough people would fall into LTC for instance, then a new bubble would start forming there that would attract most of the past BTC investors. Then it would be a mater of days when most of the value would return from LTC to BTC. BTC would keep the bigger part of it's original value and would even stay attractive to new investors. When BTC will fall into USD/EUR, then the investors won't touch BTC for months, because the idea of cryptos seemed to fail.
BTC has to have supporting cryptocurrencies, because otherwise it is looking for support from fiat currencies. And the financial system that rules fiat, does not exactly want BTC to succeed and they will try to use the strenght of their money to break the cryptocurrency idea as a whole. Only way for cryptos to survive the fight against fiat is when they support eachother and be autonomous enough from the traditional monetary system.

The people who speak for bitcoin, should promote more of altcoins, because currently we have this "nr.1 and none" situation that is very unhealthy for the entire process of cryptocurrency evolution.

LTC uses the same cryptographic primitives so if BTC is collapsing due to a cryptographic failure then LTC is dead too.  LTC uses the same protection method (proof of work) and although it uses a different algorithm if some entity has decided to spend hundreds of millions of dollars to destroy BTC (and destroy their investment at the same time) then they aren't going to forget about LTC.  LTC dies too.   IF BTC is collapsing because of unjust legal and regulatory action then all virtual currencies are in the crosshairs and LTC is dying too.

LTC is too much of a clone to provide any meaningful benefit as a hedge against a failure of BTC.  While I am not an advocate of PPC for a variety of technical reasons at least in one of those three scenarios PPC is different enough to provide a meaningful hedge.

Note: I own no LTC or PPC.

[Thenen]

Gold would be a good choice...

[Undefeatable]

Not gold but GoldCoins...

[DeathAndTaxes]

Not gold but GoldCoins...

Not that is just stupid.  I will take the one which hasn't lost 80% of its purchasing power.

[toomsie]

i heard that there are already trading options ("short" and "long" etc) but i cant recognize that service. but as time goes by, there will be more online services, that offer that stuff.

That would be good. Either that or insurance or bookmakers that pay out in the event of a bitcoin collepse.

You are over invested if you are so worried about it.
If you don't believe in what you are investing, or are worried that it is too risky, then bitcoin IS too risky and is not the investment for you.

There is no perfect hedge....have a little of this and a little of that to back up what you are risking.
I have my stocks, bonds, precious metals, real estate, toys, and a certain "who gives a shit" percentage I play with in bitcoin.

Has it caused me the occasional bit of lost sleep? So far only during the April crash, and only because it was an exciting time not because I was afraid to lose.

I am not too worried about losing my money because I am in for the long run.  Who would worry about losing a few thousand dollar with the chance to be upper middle class to stinking rich. When the April crash happened I wasn't to worried, just disappointed that I didn't do any active trading.

[AnonyMint]

The perfect hedge against bitcoin collapse would be an another cryptocurrency. If the crash begins and enough people would fall into LTC for instance, then a new bubble would start forming there that would attract most of the past BTC investors. Then it would be a mater of days when most of the value would return from LTC to BTC. BTC would keep the bigger part of it's original value and would even stay attractive to new investors. When BTC will fall into USD/EUR, then the investors won't touch BTC for months, because the idea of cryptos seemed to fail.
BTC has to have supporting cryptocurrencies, because otherwise it is looking for support from fiat currencies. And the financial system that rules fiat, does not exactly want BTC to succeed and they will try to use the strenght of their money to break the cryptocurrency idea as a whole. Only way for cryptos to survive the fight against fiat is when they support eachother and be autonomous enough from the traditional monetary system.

The people who speak for bitcoin, should promote more of altcoins, because currently we have this "nr.1 and none" situation that is very unhealthy for the entire process of cryptocurrency evolution.

Agreed all, except also agree with DeathAndTaxes that LTC offers no significant difference, other than it can't yet be mined by ASICs. GPUs are 30X faster than CPUs at mining on Bitcoin and only 15X on Litecoin, so Litecoin didn't even really solve the CPU-only prize. LTC has faster transactions at 2.5 minutes versus 10 minutes per block. I don't have an opinion on whether PPC is a viable investment, other than I explained in the Problem with Altcoins thread why I think PoS can never be secure. Although I believe my hypothesis is correct (about the input entropy), I could  be proven wrong.

I haven't done the analysis to verify, but someone claimed it works to buy LTC when it is undervalued relative to BTC and vice versa, I guess based on the trendline ratio.

[AnonyMint]

I am not too worried about losing my money because I am in for the long run.  Who would worry about losing a few thousand dollar with the chance to be upper middle class to stinking rich. When the April crash happened I wasn't to worried, just disappointed that I didn't do any active trading.

The key to sanity and risk management is as you said diversification and thus don't buy all at one time. Average in over time, so you have cash to make purchases on flash crashes. However, everyone is trying to do this now, so the flash crashes have shorter and shorter duration. You could see Risto's thread where they try to calculate when to buy based on being above or below the exponential trend line.

[marcotheminer]

As mentioned before, either fiat (USD) or Gold and Silver

[AnonyMint]

As mentioned before, either fiat (USD) or Gold and Silver

As has been pointed out upthread, you are referring to diversifications, not to hedges. Those are not proportionally inversely correlated to BTC, i.e. if BTC crashes to 1/10 value, the value of your USD does not increase by 10 times.

Normally a hedge is used to maintain a position in an asset, while guarding against a catastrophic loss of value.

[User705]

A structured sale would be a hedge.  Something along the lines of selling BTC at a 20% discount to current price deliverable in 30 days or however long you wish coupled with an option to buy back at 120%.  Pricing may need to be adjusted depending on what kind of interest that would generate.

[JekyllIsland]

Gold and silver for the win. More specifically bitcoin specie made by new liberty dollar. Some very nice looking pieces, not to mention the future resell value that will most likely be attributed to a rising bitcoin and silver price.

[Jumpy]

Don't we have Bitcoin put options yet?

Most of the existing puts that I've seen are settled in BTC, so it may be useful for short term market movements but not really helpful if bitcoins become worthless.