Strategy for manipulating the exchange rate of Bitcoin

[edwinhere]

I believe the exchange rate of Bitcoin in fiat money can be fixed by using financial derivatives.

Financial derivatives are promises to deliver the underlying asset i.e. Bitcoins at a future date.

If the promises are broken, the law allows the debt to be settled in the relevant fiat currency.

So if Goldman Sachs makes promises to sell 1 million Bitcoins in a future date at pre-determined exchange rate, and fail to keep that promise, the US government will forgive them if they use USD to settle their debts due to the broken promise.

Since Goldman Sachs can borrow USD at a discount rate of 0%, they will use the USD to make ridiculous promises they cannot keep.

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

I believe this is what SecondMarket aims to achieve with its Bitcoin exchange.

SecondMarket is backed by government funds like that of the Temasek Holdings which is chaired by a Singapore minister, and Li-Ka Shing Foundation of China which also has government connections.

I believe the establishment will try to fight the competition to central banking that Bitcoin represents.

Destroying one crypto currency would be enough to propagandize the invalidity of all future crypto-currencies. The anglo-american establishment, has the left leaning media (useful idiots), and the Nobel Laureate economists (Krugman) ready to announce the demise of Bitcoin at the first sign of trouble.

[1715094763]

1715094763

[justusranvier]

This is exactly what Second Market is planning to do.

It remains to be seen whether or not they'll get away with it.

[Adrian-x]

I believe the exchange rate of Bitcoin in fiat money can be fixed by using financial derivatives.

Financial derivatives are promises to deliver the underlying asset i.e. Bitcoins at a future date.

If the promises are broken, the law allows the debt to be settled in the relevant fiat currency.

So if Goldman Sachs makes promises to sell 1 million Bitcoins in a future date at pre-determined exchange rate, and fail to keep that promise, the US government will forgive them if they use USD to settle their debts due to the broken promise.

Since Goldman Sachs can borrow USD at a discount rate of 0%, they will use the USD to make ridiculous promises they cannot keep.

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

I believe this is what SecondMarket aims to achieve with its Bitcoin exchange.

SecondMarket is backed by government funds like that of the Temasek Holdings which is chaired by a Singapore minister, and Li-Ka Shing Foundation of China which also has government connections.

I believe the establishment will try to fight the competition to central banking that Bitcoin represents.

Destroying one crypto currency would be enough to propagandize the invalidity of all future crypto-currencies. The anglo-american establishment, has the left leaning media (useful idiots), and the Nobel Laureate economists (Krugman) ready to announce the demise of Bitcoin at the first sign of trouble.

So wouldn't the result be of the bold situation above that whomever is buying Bitcoin gets a a lot of fiat. They can then use that fiat to push up the price, and so it would escalate. Is the situation that happens on the selling Bitcoin side backwardation?

[V4Vendettas]

Ok so what would be a community counter to this ?

[Bit_Happy]

Ok so what would be a community counter to this ?

Non-member firms or individuals would not be allowed to trade -- at least at the outset -- but likely could do business via the member firms.

Ignore them and/or laugh at the high fees.

[V4Vendettas]

Ok so what would be a community counter to this ?

Non-member firms or individuals would not be allowed to trade -- at least at the outset -- but likely could do business via the member firms.

Ignore them and/or laugh at the high fees.

Hmmm rarely in history when someone plots against you is the right move to do nothing. So I can only assume your wrong or this is a laughable threat to btc ?

[edwinhere]

I believe the exchange rate of Bitcoin in fiat money can be fixed by using financial derivatives.

Financial derivatives are promises to deliver the underlying asset i.e. Bitcoins at a future date.

If the promises are broken, the law allows the debt to be settled in the relevant fiat currency.

So if Goldman Sachs makes promises to sell 1 million Bitcoins in a future date at pre-determined exchange rate, and fail to keep that promise, the US government will forgive them if they use USD to settle their debts due to the broken promise.

Since Goldman Sachs can borrow USD at a discount rate of 0%, they will use the USD to make ridiculous promises they cannot keep.

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

I believe this is what SecondMarket aims to achieve with its Bitcoin exchange.

SecondMarket is backed by government funds like that of the Temasek Holdings which is chaired by a Singapore minister, and Li-Ka Shing Foundation of China which also has government connections.

I believe the establishment will try to fight the competition to central banking that Bitcoin represents.

Destroying one crypto currency would be enough to propagandize the invalidity of all future crypto-currencies. The anglo-american establishment, has the left leaning media (useful idiots), and the Nobel Laureate economists (Krugman) ready to announce the demise of Bitcoin at the first sign of trouble.

So wouldn't the result be of the bold situation above that whomever is buying Bitcoin gets a a lot of fiat. They can then use that fiat to push up the price, and so it would escalate. Is the situation that happens on the selling Bitcoin side backwardation?

Whoever is buying the far out-of-the-money 5 year put options sold by Goldman Sachs will get the fiat, after 5 years when the promises are broken, and the exchange intervenes to make Goldman settle their debt using fiat.

All those 5 years bitcoin traders will live under the false knowledge that 5 years later Goldman would flood the market with 1 million bitcoins. So the traders armed with such false foresight, will discount that into the exchange rate before the option expires.

[dyask]

I believe the exchange rate of Bitcoin in fiat money can be fixed by using financial derivatives.

Financial derivatives are promises to deliver the underlying asset i.e. Bitcoins at a future date.

If the promises are broken, the law allows the debt to be settled in the relevant fiat currency.

So if Goldman Sachs makes promises to sell 1 million Bitcoins in a future date at pre-determined exchange rate, and fail to keep that promise, the US government will forgive them if they use USD to settle their debts due to the broken promise.

Since Goldman Sachs can borrow USD at a discount rate of 0%, they will use the USD to make ridiculous promises they cannot keep.

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

I believe this is what SecondMarket aims to achieve with its Bitcoin exchange.

SecondMarket is backed by government funds like that of the Temasek Holdings which is chaired by a Singapore minister, and Li-Ka Shing Foundation of China which also has government connections.

I believe the establishment will try to fight the competition to central banking that Bitcoin represents.

Destroying one crypto currency would be enough to propagandize the invalidity of all future crypto-currencies. The anglo-american establishment, has the left leaning media (useful idiots), and the Nobel Laureate economists (Krugman) ready to announce the demise of Bitcoin at the first sign of trouble.

So wouldn't the result be of the bold situation above that whomever is buying Bitcoin gets a a lot of fiat. They can then use that fiat to push up the price, and so it would escalate. Is the situation that happens on the selling Bitcoin side backwardation?

Whoever is buying the far out-of-the-money 5 year put options sold by Goldman Sachs will get the fiat, after 5 years when the promises are broken, and the exchange intervenes to make Goldman settle their debt using fiat.

All those 5 years bitcoin traders will live under the false knowledge that 5 years later Goldman would flood the market with 1 million bitcoins. So the traders armed with such false foresight, will discount that into the exchange rate before the option expires.

That isn't how options work.  First there wouldn't be far out-of-the-money 5 year contract in the first place.   Second when a contract is written you have to have the means to cover the contract, otherwise it is a naked position.  In general a naked position can't be created by someone without the resources to handle it.   Third, any contract will probably be written as part of a spread to control the risk.  Contracts can be used in many combinations and the market will look at a whole series of contracts.  

In general contracts only influence market prices at two points, when they are created and when they are exercised and that only happens with contracts that have value.   If bitcoins aren't being bought or sold to created contracts or to cover contracts there wouldn't be any impact on the markets.      

[edwinhere]

I believe the exchange rate of Bitcoin in fiat money can be fixed by using financial derivatives.

Financial derivatives are promises to deliver the underlying asset i.e. Bitcoins at a future date.

If the promises are broken, the law allows the debt to be settled in the relevant fiat currency.

So if Goldman Sachs makes promises to sell 1 million Bitcoins in a future date at pre-determined exchange rate, and fail to keep that promise, the US government will forgive them if they use USD to settle their debts due to the broken promise.

Since Goldman Sachs can borrow USD at a discount rate of 0%, they will use the USD to make ridiculous promises they cannot keep.

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

I believe this is what SecondMarket aims to achieve with its Bitcoin exchange.

SecondMarket is backed by government funds like that of the Temasek Holdings which is chaired by a Singapore minister, and Li-Ka Shing Foundation of China which also has government connections.

I believe the establishment will try to fight the competition to central banking that Bitcoin represents.

Destroying one crypto currency would be enough to propagandize the invalidity of all future crypto-currencies. The anglo-american establishment, has the left leaning media (useful idiots), and the Nobel Laureate economists (Krugman) ready to announce the demise of Bitcoin at the first sign of trouble.

So wouldn't the result be of the bold situation above that whomever is buying Bitcoin gets a a lot of fiat. They can then use that fiat to push up the price, and so it would escalate. Is the situation that happens on the selling Bitcoin side backwardation?

Whoever is buying the far out-of-the-money 5 year put options sold by Goldman Sachs will get the fiat, after 5 years when the promises are broken, and the exchange intervenes to make Goldman settle their debt using fiat.

All those 5 years bitcoin traders will live under the false knowledge that 5 years later Goldman would flood the market with 1 million bitcoins. So the traders armed with such false foresight, will discount that into the exchange rate before the option expires.

That isn't how options work.  First there wouldn't be far out-of-the-money 5 year contract in the first place.   Second when a contract is written you have to have the means to cover the contract, otherwise it is a naked position.  In general a naked position can't be created by someone without the resources to handle it.   Third, any contract will probably be written as a spread to control the risk.  Contracts can be used in many combinations and the market will look at a whole series of contracts.  

In general contracts only influence market prices at two points, when they are created and when they are exercised and that only happens with contracts that have value.   If bitcoins aren't being bought or sold to created contracts or to cover contracts there wouldn't be any impact on the markets.      

Here is a 3 year Put option by CBOE Options Exchange: https://www.cboe.com/products/leaps.aspx

Writing naked puts is possible as shown here: http://seekingalpha.com/article/617921-naked-puts-versus-traditional-margin-leverage-for-a-little-less-coin

All you need to do is when you are unlucky you buy the Bitcoins at the strike price from the buyer of the put option you wrote. Of course after you purchase Bitcoins from the buyer of the put you wouldn't hold on to the Bitcoins if you are Goldman, you would sell the Bitcoins for USD and suffer the loss. With 0% interest USDs, Goldman can write infinite number of such options can create future supply in the market. Such an expectation of future supply of Bitcoins can be used to discount the current price.

[riekinho]

Such broken promises settled in USD, can be used to affect the exchange rate of bitcoin, by creating a false expectation about the future supply of Bitcoin.

How would they do that?
By design Bitcoin's supply is predictable.

How would someone buy a future contract that obliges Goldman Sachs to deliver say 2 out of 12 million bitcoins?
You know upfront that they are here to scam you because there is no way they can obtain that amount of bitcoins in the market.

[r0ach]

The anglo-american establishment

After mentioning Goldman Sachs several times as the market controller/destroyer, you then use the word "anglo-american establishment" as a synonym for it.  Lloyd Blankfein is not an "anglo", therefore, you should probably correct your post as to what kind of monetary establishment America actually has.

has the left leaning media (useful idiots)

Since all that's required to take over a country is control of the media + monetary system, they are obviously not "useful idiot" bystanders.  They're at the top as key players.




Don't worry, even though the ethnocentric, racial supremacist cult in charge of the media and monetary system aren't well represented in Bitcoin, far leftists like Cathy "Mossad" Reisenwitz posing as libertarians are here to help change that:

[sunnankar]

Ok so what would be a community counter to this ?

Bitcoin is a whole different animal and censorship resistant; including the pricing signal.

The pricing signal of gold to perform economic calculation has largely been censored by , as Dr. Greenspan testified twice before Congress, 'Central banks stand ready to lease gold should the price rise.' Central banks carry gold in the vault and gold out on loan as the same line item; in effect reporting cash and accounts receivables as the same thing. Additionally, the bullion banks have largely sold the physical gold into the market. Eventually this scheme to suppress the price of gold will fail to market forces which demand physical delivery and will be express through backwardation. One reason it does not happen faster is because it is difficult and costly to verify the quantity and quality of physical gold.

In contrast, the quantity and quality of bitcoins can be instantly determined for free be looking at the blockchain.

Consequently, the Bitcoin community's counter to any attempted price manipulation is pretty simple by standing for delivery; demand the bitcoins sent to an address where you solely hold the private key like in Armory.

And if courts allow naked short sellers to be unjustly enriched by delivering fiat instead of bitcoins then the market will simply remove that risk by shifting to collateralized options that settle in bitcoin like on Mpex.

[BitOnyx]

This proposition would put more pressure on bitcoin, while we should try to keep it as free and liberal as possible. Besides only government would be able to use such enforcement on people and I want to keep government as far away as possible from any kind of government.

The anglo-american establishment

After mentioning Goldman Sachs several times as the market controller/destroyer, you then use the word "anglo-american establishment" as a synonym for it.  Lloyd Blankfein is not an "anglo", therefore, you should probably correct your post as to what kind of monetary establishment America actually has.

has the left leaning media (useful idiots)

Since all that's required to take over a country is control of the media + monetary system, they are obviously not "useful idiot" bystanders.  They're at the top as key players.




Don't worry, even though the ethnocentric, racial supremacist cult in charge of the media and monetary system aren't well represented in Bitcoin, far leftists like Cathy "Mossad" Reisenwitz posing as libertarians are here to help change that:

You can always try to not to watch tv. Bitcoin is heavily related to internet, not tv, it is even more international then you think, especialy since biggest bitcoin buyers recently are russians and china and they don't care about american tv or government. Fun fact, I don't watch any of this channel. People should watch whatever they want, it is they problem. You can be jewish or any color and still be part of anglo-american culture if you decide to. Hell, it is not even relevant.