Down, down, down, down, down

[alexeft]

UP UP UP UP UP, oh hey.. the price is $650.

I need $5k thank you! 

[NoWhammies]

UP UP UP UP UP, oh hey.. the price is $650.

oh hey, it's like a MONTH later.

[BitOnyx]

Well there is difference between mining rate and its cost and speculation that happens right now. Bitcoin will slowly move up, but when it reaches certain price, we shall never know. We probably will be able to mine until around 2100 sooo... yeah. Still it is just past few days. If you bought bitcoin as investment instead of payment vassal , you need to accept there always will be some kind of risk.

In general it shall go up, it depends when.

[notabot]

A buying opportunity for those with strong hands and convictions.

[deisik]

I can't agree with that. Money as such doesn't make you the owner of anything (save for the money itself). I don't think bitcoin is any different in this aspect. I think you are unintentionally confusing bitcoin as money and bitcoin as a commodity here. If the latter, I don't see how you can't fix its price now for future delivery just like you do with a foreign currency (which can be easily shorted though it obviously doesn't have delivery problem)...

No confusion here. Bitcoin is a commodity at this point, digital commodity. It does act as money too, but not many merchants and limited liquidity, so I wouldn't refer to it as money yet.

You can't manipulate its price a lot, because you can't issue paper derivatives against it. You either own bitcoins and sell them or you don't own them and can't sell them. Other commodities have storage and transporation issues, thus making possible the practise of trading paper contracts only (which exactly is what 95% or more traders do at commodity exchanges), which in turn opens possibilities for naked short sales, which is used for price manipulation

Okay then. So, if bitcoin is a commodity, why do you think you can't really enter a contract "between two parties to buy or sell a specified asset (bitcoin) of standardized quantity and quality for a price agreed upon today with delivery and payment occurring at a specified future date, the delivery date"?

This futures contract (the definition of which is given above) is just one among many other possible types of paper derivatives

[devphp]

Okay then. So, if bitcoin is a commodity, why do you think you can't really enter a contract "between two parties to buy or sell a specified asset (bitcoin) of standardized quantity and quality for a price agreed upon today with delivery and payment occurring at a specified future date, the delivery date"?

This futures contract (the definition of which is given above) is just one among many other possible types of paper derivatives

I never said this cannot be done. But because bitcoin is so easy to deliver, there is no practical sense in doing that. There is always a risk of non-delivery if delivery is delayed to the delivery date as is the case with physical commodities, so it makes more sense to buy bitcoin at spot price and withdraw from the exchange to your local wallet, and only deposit to the exchange when you want to sell. No point in storing bitcoins at the exchange while you're waiting to profit from the price appreciation, unless of course you're a day trader.

Physical commodities cannot be shuffled back and forth as easily as bitcoin, that's why future contracts in physical commodities are popular. It's a side effect that most people don't take delivery and just trade paper.

[deisik]

Okay then. So, if bitcoin is a commodity, why do you think you can't really enter a contract "between two parties to buy or sell a specified asset (bitcoin) of standardized quantity and quality for a price agreed upon today with delivery and payment occurring at a specified future date, the delivery date"?

This futures contract (the definition of which is given above) is just one among many other possible types of paper derivatives

I never said this cannot be done. But because bitcoin is so easy to deliver, there is no practical sense in doing that

Okay, what about currency futures then? Should I explain to you the purpose of them (it will be the same for bitcoin, and even more for bitcoin, for that matter, lol)?

[devphp]

Okay, what about currency futures then? Should I explain to you the purpose of them (it will be the same for bitcoin, and even more for bitcoin, for that matter, lol)?

Currency futures exist and are popular. They are popular exactly because central banks can print as much fiat as they want and banks can receive that fiat at low cost and do all kinds of funny business with them on big leverage. This has limited application to bitcoin.

Bitcoin exchanges need to have all (or almost all) deposited bitcoins ready to be withdrawn or at least in cold storage and available at short notice. If a bitcoin exchange introduces bitcoin future contracts, and they get popular and then lends customers' bitcoins to someone for promise that they are returned by the date of the future contract expiry or use those bitcoins to fund some other project, and for some reason most customers decide to sell their future contracts before the bitcoins the exchange lent are returned and to withdraw their bitcoins, the exchange is f*cked, because it can't quickly borrow bitcoins same as a bank could borrow fiat from a central bank.

See the difference with currency futures? Physical commodity exchanges can do future contracts too, because most customers trade paper contracts only and don't ask for delivery, so they would only withdraw cash, not actual commodities. It doesn't work same way with bitcoins. If they withdraw, the exchange has to deliver bitcoins digital commodity to all customers, not just to 1-2% of customers who ask for actual delivery, or declare bankruptcy.

Under those circumstances what's the point of having future contracts in bitcoin from the customer's point of view if they could as well just by at spot, withdraw and wait to sell, and not risk being f*cked by the exchange in 1-2 month when a future contract is due for delivery/expiry?

[deisik]

Okay, what about currency futures then? Should I explain to you the purpose of them (it will be the same for bitcoin, and even more for bitcoin, for that matter, lol)?

Currency futures exist and are popular. They are popular exactly because central banks can print as much fiat as they want and banks can receive that fiat at low cost and do all kinds of funny business with them on big leverage. This has limited application to bitcoin.

Please, be concise. Bitcoin futures would exist just for the same reasons that currency futures and commodity futures exist. The primary aim of futures is hedging against price volatility whether it is currency or commodity. And yes, there are even futures for commodities that don't even exist yet (consider crops)...

[devphp]

Please, be concise. Bitcoin futures would exist just for the same reasons that currency futures and commodity futures exist. The primary aim of futures is hedging against price volatility whether it is currency or commodity. And yes, there are even futures for commodities that don't even exist yet (consider crops)...

Can you explain to me what would be the advantage of buying a bitcoin futures contract instead of just buying bitcoins at spot? How would that advantage outweight the risk of losing bitcoins due to the bitcoin exchange bankruptcy? Can you really afford the risk of keeping your bitcoins at the exchange for 1-2 months? Why and who would do that, if bitcoins are available to withdraw now/deposit back within 1 hour if needed, compared to those crops that will be available only when harvested and that most traders just trade paper contracts of anyway?

Bitcoin futures can exist, but noone would use them, because it makes no sense to.
Bitcoin exchanges don't have incentives to introduce futures contracts, because they cannot be bailed out if they screw up.

Do you mean bitcoin miners would sell their future bitcoin production? That'd be interesting, but that requires much heavier levels of regulation than now, having them registered as companies, etc. In that case, yeah, futures contracts might have a chance.

[Nagle]

Please, be concise. Bitcoin futures would exist just for the same reasons that currency futures and commodity futures exist.

A big problem with Bitcoin futures, options, and derivatives is that there is no counter-party in the Bitcoin community which can be relied upon to pay up when they lose. The Bitcoin community can't even run a reliable remote wallet or exchange. Those are businesses which have zero speculative risk, yet most of them either fuck up or steal. Often both.

[CurbsideProphet]

Please, be concise. Bitcoin futures would exist just for the same reasons that currency futures and commodity futures exist.

A big problem with Bitcoin futures, options, and derivatives is that there is no counter-party in the Bitcoin community which can be relied upon to pay up when they lose. The Bitcoin community can't even run a reliable remote wallet or exchange. Those are businesses which have zero speculative risk, yet most of them either fuck up or steal. Often both.

Blockchain.info and Coinbase.

[Armis]

So I remember people saying that Bitcoins will be worth $40,000 per Bitcoin in 2014 ... HA! Looks more like they will be worth $40

It's going down but it doesn't have to, the longer it takes for the missing money to be found the faster and more permanent the injury will be to btc infrastructure and most of the cryptocurrencies that have mirrored their protocol on btc's protocol.


https://bitcointalk.org/index.php?topic=492776.0;all


If you want to improve things I'm suggesting the following:

1) help find the money
2) encourage the various exchanges to adopt higher standards of security, responsibility, transparency, and accountability.  They should be community certified, be bonded, have insurance, provide performance guarantees, provide better customer service, provide signed proof of solvency via the blockchain, provide regular audited statements, and the like
3) help develop a program that can search the blockchain for critical info
4) ask others to help the cryptocurrency industry in any of these 4 ways

as it stands right now, the situation that occurred at Mt Gox could happen at any other exchange, which places the whole cryptocurrency in a downward pointing spiral.  Essentially, btc holders are slowly cashing in their coins in hopes that something material changes.  But as time passes the realization of the btc protocol flaw (inability to find the money, resulting in unreasonably high risk) becomes painfully clear.

The blockchain is a perfect witness, it sees everything but if humans are unable to use it then it's useless large scale roll-out.

[deisik]

Please, be concise. Bitcoin futures would exist just for the same reasons that currency futures and commodity futures exist. The primary aim of futures is hedging against price volatility whether it is currency or commodity. And yes, there are even futures for commodities that don't even exist yet (consider crops)...

Can you explain to me what would be the advantage of buying a bitcoin futures contract instead of just buying bitcoins at spot?

If you take time to find out why people buy futures in the first place at all (and this is not for speculation, to begin with), this question will be a trifle for you. People buy currency futures since they don't need currency right now, but in the future (when they actually need it), the price may change disadvantageously... I guess you just don't know that the futures price is not the same as the price it allows (gives a right) to sell or buy the underlying currency (commodity) at...

[devphp]

If you take time to find out why people buy futures in the first place at all (and this is not for speculation, to begin with), this question will be a trifle for you. People buy currency futures since they don't need currency right now, but in the future (when they actually need it), the price may change disadvantageously... I guess you just don't know that the futures price is not the same as the price it allows (gives a right) to sell or buy the underlying currency (commodity) at...

I know what hedging is. I also know that there is a) nothing to hedge in bitcoin compared to forex exchange risks, b) no bailout of bitcoin exchanges makes any future disadvantageous price fluctuation not such a big risk compared to the case when bitcoin exchanges goes under, which is not so rare.

In practise it means that nobody in their right mind will buy a bitcoin futures contract with one exception:

Do you mean bitcoin miners would sell their future bitcoin production? That'd be interesting, but that requires much heavier levels of regulation than now, having them registered as companies, etc. In that case, yeah, futures contracts might have a chance.

and even this wouldn't be practical or popular as miners would have to offer a very attractive discount to entice someone to risk losing money due to the exchange bankruptcy.

[deisik]

If you take time to find out why people buy futures in the first place at all (and this is not for speculation, to begin with), this question will be a trifle for you. People buy currency futures since they don't need currency right now, but in the future (when they actually need it), the price may change disadvantageously... I guess you just don't know that the futures price is not the same as the price it allows (gives a right) to sell or buy the underlying currency (commodity) at...

I know what hedging is. I also know that there is a) nothing to hedge in bitcoin compared to forex exchange risks, b) no bailout of bitcoin exchanges makes any future disadvantageous price fluctuation not such a big risk compared to the case when bitcoin exchanges goes under, which is not so rare.

a) would effectively mean that bitcoin volatility is next to nothing (which is obviously not the case), b) is not relevant to the idea futures are about...

[deisik]

In practise it means that nobody in their right mind will buy a bitcoin futures contract with one exception:

Do you mean bitcoin miners would sell their future bitcoin production? That'd be interesting, but that requires much heavier levels of regulation than now, having them registered as companies, etc. In that case, yeah, futures contracts might have a chance.

Oh, now you make exceptions...

[apsvinet]

Speculation is quite pointless at this point. It's far from 40 dollars, but far from 1000 as well.
Whatever, for all we know it'll crash or rise again.

[deisik]

Speculation is quite pointless at this point. It's far from 40 dollars, but far from 1000 as well.
Whatever, for all we know it'll crash or rise again.

It is not that far from $1000 as it is from $40. And I don't mean just figures...

[lemier]

Speculation is quite pointless at this point. It's far from 40 dollars, but far from 1000 as well.
Whatever, for all we know it'll crash or rise again.

It is not that far from $1000 as it is from $40. And I don't mean just figures...

Good point)) in addition I can say that after all Bitcoin will never fall down to 60$ except the governments will help bitcoin to fall down