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Author Topic: [2014-09-13] Winklevoss IPO Opens Backdoor for Arbitrage  (Read 1351 times)
Jumpy
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September 13, 2014, 11:54:23 PM
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http://bitcoinbabble.com/?p=263

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CoinMode
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September 14, 2014, 12:09:03 AM
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Let me summarize:

"The problem with COIN is that the trust has been concocted in a fashion that gives the Winklevii an exclusive line into a potentially huge arbitrage opportunity. First of all, the underlying price will be determined by the Winkdex. It isn’t exactly difficult to figure out who would be able to manipulate the prices using this index and my guess is that the SEC will look hard into the possibility of a conflict of interest here." - Bitcoin Babble

Arbitrage is simply a mechanism where you buy from one source and sell to another at the same time. So if gold is worth two dollars less on one market than on the other, you could, in theory, make a profit of $2 per ounce just for buying from one source and selling to the other source. There is nothing wrong with this if it is done ethically.

This is a mechanism that helps to keep prices consistent across different markets. The problem we have in this case is that the Winklevii have a hand in the mechanism that controls the price of their ETF, the Winkdex. If they have the power to sell their bitcoins AND move the price of their coins at will, then you have a major conflict of interest. This is nothing bad for bitcoin aside from a few headlines about a scam, if it does actually come to pass.

It would be amazing if the Winklevoss ETF was based on a price metric that was a completely independent from the twins. One can dream...
Chef Ramsay
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September 14, 2014, 04:49:36 AM
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They are also on record claiming the payment system is worth upwards of $400 Billion when it's all said and done.
http://www.investopedia.com/articles/active-trading/040814/winklevoss-bitcoin-payment-system-worth-400-billion.asp
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September 14, 2014, 05:15:20 AM
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They are also on record claiming the payment system is worth upwards of $400 Billion when it's all said and done.
http://www.investopedia.com/articles/active-trading/040814/winklevoss-bitcoin-payment-system-worth-400-billion.asp

Exactly. It is in their best interest to not take advantage of any shady arbitrage. Their golden nugget will be found by using their influence to raise the price on bitcoin itself and collecting revenue from their customers.
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September 14, 2014, 02:13:57 PM
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They are also on record claiming the payment system is worth upwards of $400 Billion when it's all said and done.
http://www.investopedia.com/articles/active-trading/040814/winklevoss-bitcoin-payment-system-worth-400-billion.asp
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So, how did the Winklevoss twins come up with their $400 billion estimate, which Tyler Winklevoss says is just “a starting point” for what it may ultimately be worth? The $400 billion estimate, he explains in an interview, is not its value as an alternative currency.

You see this is why I can't take this kind of speculation seriously. Whilst I have no doubts bitcoin is going to boom at some point in the future saying it is worth 400 billion is just a figure they seemingly pulled out of the air.
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September 14, 2014, 03:23:49 PM
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Damn, so if they think the Bitcoin technology is going to be 'worth' 400 billion how much do they think each coin will be worth?
Eindbaas69
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September 14, 2014, 08:02:48 PM
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Damn, so if they think the Bitcoin technology is going to be 'worth' 400 billion how much do they think each coin will be worth?

http://www.quickmeme.com/img/2c/2c0bc3c6cb57f321a926cece6962481518f5f682e6106a28c90808d977625b05.jpg
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