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Author Topic: Bitcoin price increases are just getting started  (Read 35793 times)
Terpie
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May 11, 2011, 10:11:38 PM
 #21

One of the important concepts of a predictions market is that it incentivizes the sharing of information. This can be used maliciously or benevolently, but in my opinion, sharing information is a net benefit. Imagine if there was a predictions contract stating that a large scale terrorist attack would be attempted in September of 2001. Game theory comes into play here, all you need is one person with knowledge of the attack to defect and cash in by buying the contract. The price would rise, and information would be gained by the community that could be used to prevent the attempt from succeeding.
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May 11, 2011, 10:14:04 PM
 #22

One of the important concepts of a predictions market is that it incentivizes the sharing of information. This can be used maliciously or benevolently, but in my opinion, sharing information is a net benefit. Imagine if there was a predictions contract stating that a large scale terrorist attack would be attempted in September of 2001. Game theory comes into play here, all you need is one person with knowledge of the attack to defect and cash in by buying the contract. The price would rise, and information would be gained by the community that could be used to prevent the attempt from succeeding.

Very good point. And if you were such a terrorist, wouldn't you rather cash out in a completely untraceable anonymous currency?

99.9% of the time when people are speculating that such-and-such asset might be worth an absurdly large value, the price spikes (like bitcoins are), but then reality sets in and the price settles back down (you can learn all about how this happens with penny stocks from Timothy Sykes).

Most of the time, the boosters of the asset have their heads in the clouds and are ignoring important key facts.

With bitcoins, I keep running the numbers, and I keep calculating absurd values for what bitcoins could easily be worth someday. But everybody on the forum who suggests that these values might really happen seem to be nutzo government haters who only keep dollar bills for toilet paper.

I keep wondering: am I the only sane person who thinks this could actually be massively successful without requiring a doomsday scenario?

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May 11, 2011, 10:30:09 PM
 #23

I'd say that all these theories of underground exchanges which ignore KYC rules, move around billions of dollars in bitcoins are very interesting. Though idea that such exchanges would survive more than a few days or month before being taken down and operators imprisoned is rather far fetched.

The idea of a totally anonymous decentralized currency immune from government shut-down seemed pretty far-fetched to me a few months ago. What stops the same principles from allowing anonymous prediction markets?

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May 11, 2011, 10:32:54 PM
 #24

I'd say that all these theories of underground exchanges which ignore KYC rules, move around billions of dollars in bitcoins are very interesting. Though idea that such exchanges would survive more than a few days or month before being taken down and operators imprisoned is rather far fetched.



We should engage in a predictions contract regarding this.  Smiley
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May 11, 2011, 10:33:03 PM
 #25

Didn't someone just announce a website to do exactly that with bitcoins a few days ago?

Please post a link. I think maybe you are talking about the bitcoin stock exchange?

I glanced at that site. Looked like they were going to start a stock exchange where companies register and are traded in bitcoins. That may be a good idea, but it is not at all what I am imagining.
I will if I can find it.  It wasn't the bitcoin stock exchange.  It was definitely along the lines of what you are describing - basically, contract betting.

One of the important concepts of a predictions market is that it incentivizes the sharing of information. This can be used maliciously or benevolently, but in my opinion, sharing information is a net benefit. Imagine if there was a predictions contract stating that a large scale terrorist attack would be attempted in September of 2001. Game theory comes into play here, all you need is one person with knowledge of the attack to defect and cash in by buying the contract. The price would rise, and information would be gained by the community that could be used to prevent the attempt from succeeding.
I guess I don't quite understand how this works.  If someone bought a contract saying it would happen, because they had knowledge of such an attack, then why would they release the information about the attack before it happened, foiling the plans of the attack and losing the bet?  What am I missing here?
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May 11, 2011, 10:35:32 PM
 #26

I guess I don't quite understand how this works.  If someone bought a contract saying it would happen, because they had knowledge of such an attack, then why would they release the information about the attack before it happened, foiling the plans of the attack and losing the bet?  What am I missing here?

It would not be Osama Bin Laden that would bet on it, but his housekeeper who overheard the plan. She would bet big on a terrorist attack happening, because she doesn't care about Jihad and she sees a way to make some easy money.

There is a good chance her bet would NOT foil the attack, because she would not give specific enough information, but her employer would definitely not be pleased if he found out she was doing this. The CIA on the other hand, would be pleased to have some intel on when an attack might be happening.

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May 11, 2011, 10:39:42 PM
 #27

I guess I don't quite understand how this works.  If someone bought a contract saying it would happen, because they had knowledge of such an attack, then why would they release the information about the attack before it happened, foiling the plans of the attack and losing the bet?  What am I missing here?

It would not be Osama Bin Laden that would bet on it, but his housekeeper who overheard the plan. She would bet big on a terrorist attack happening, because she doesn't care about Jihad and she sees a way to make some easy money.

Even if the terrorist did bet on he'd be warning us. And even if he pulls it off anyway, he only wins money that people bet. Winning a bet would probably be the least bad thing the guy did in the day.

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Terpie
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May 11, 2011, 10:40:21 PM
 #28

Didn't someone just announce a website to do exactly that with bitcoins a few days ago?

Please post a link. I think maybe you are talking about the bitcoin stock exchange?

I glanced at that site. Looked like they were going to start a stock exchange where companies register and are traded in bitcoins. That may be a good idea, but it is not at all what I am imagining.
I will if I can find it.  It wasn't the bitcoin stock exchange.  It was definitely along the lines of what you are describing - basically, contract betting.

One of the important concepts of a predictions market is that it incentivizes the sharing of information. This can be used maliciously or benevolently, but in my opinion, sharing information is a net benefit. Imagine if there was a predictions contract stating that a large scale terrorist attack would be attempted in September of 2001. Game theory comes into play here, all you need is one person with knowledge of the attack to defect and cash in by buying the contract. The price would rise, and information would be gained by the community that could be used to prevent the attempt from succeeding.
I guess I don't quite understand how this works.  If someone bought a contract saying it would happen, because they had knowledge of such an attack, then why would they release the information about the attack before it happened, foiling the plans of the attack and losing the bet?  What am I missing here?

The bet is on the attempt, not the successful execution (in this hypothetical). Imagine the contract states a payout of $10 if the prediction is determined to be 'true'. It pays out $0 if the contract is determined to be 'false'. Therefore, a price of $5 is essentially telling the world that the market believes there is a 50% chance an attack will be attempted. If you know for a fact that an attempt will occur to a confidence of 99.9999% probability, then you stand to make a LOT of money by buying as many contracts as possible, therefore raising the price to $9.99. This effectively tells the world that 'the market' believes there is a 99.9% chance an attack will occur. Of course, it is a double edged sword. It also means a person can gain from buying the contract first, THEN having someone else orchestrate an attack, in order to profit.
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May 11, 2011, 10:41:27 PM
 #29

I'd say that all these theories of underground exchanges which ignore KYC rules, move around billions of dollars in bitcoins are very interesting. Though idea that such exchanges would survive more than a few days or month before being taken down and operators imprisoned is rather far fetched.



We should engage in a predictions contract regarding this.  Smiley

Yeah, know a good market where I can find such a contract? Or derivative upon the derivative perhaps n^3?

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May 11, 2011, 10:47:17 PM
 #30

Yeah, know a good market where I can find such a contract? Or derivative upon the derivative perhaps n^3?

That reminds me of another IM conversation I had with . . . somebody else:

him: on December 21 2012  is the day everyone will become aware.
me: aware of what?
him: UFO's are here, and always have been.
me: Interesting prediction
him: I don't think its a prediction.
him: its pretty well set in stone.
him: no pun intended
me: Do you think that on December 22nd 2012, I will believe that "UFO's are here, and always have been."?
him: I would bet my life on it.
me: Wow. Forget betting your life. I wish there was a way to bet money on it.
him: I guess we'll have to bet on December 20th.
him: 2012

I sure hope there is a predictions market running by then.

Terpie
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May 11, 2011, 10:49:02 PM
 #31

Yeah, know a good market where I can find such a contract? Or derivative upon the derivative perhaps n^3?

That reminds me of another IM conversation I had with . . . somebody else:

him: on December 21 2012  is the day everyone will become aware.
me: aware of what?
him: UFO's are here, and always have been.
me: Interesting prediction
him: I don't think its a prediction.
him: its pretty well set in stone.
him: no pun intended
me: Do you think that on December 22nd 2012, I will believe that "UFO's are here, and always have been."?
him: I would bet my life on it.
me: Wow. Forget betting your life. I wish there was a way to bet money on it.
him: I guess we'll have to bet on December 20th.
him: 2012

I sure hope there is a predictions market running by then.

A fool and his money...
Terpie
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May 11, 2011, 10:51:27 PM
 #32

Interestingly enough, I just came across this one Intrade:

http://www.intrade.com/v4/markets/contract/?contractId=745538
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May 11, 2011, 10:57:44 PM
 #33

Didn't someone just announce a website to do exactly that with bitcoins a few days ago?

Please post a link. I think maybe you are talking about the bitcoin stock exchange?

I glanced at that site. Looked like they were going to start a stock exchange where companies register and are traded in bitcoins. That may be a good idea, but it is not at all what I am imagining.
I will if I can find it.  It wasn't the bitcoin stock exchange.  It was definitely along the lines of what you are describing - basically, contract betting.

One of the important concepts of a predictions market is that it incentivizes the sharing of information. This can be used maliciously or benevolently, but in my opinion, sharing information is a net benefit. Imagine if there was a predictions contract stating that a large scale terrorist attack would be attempted in September of 2001. Game theory comes into play here, all you need is one person with knowledge of the attack to defect and cash in by buying the contract. The price would rise, and information would be gained by the community that could be used to prevent the attempt from succeeding.
I guess I don't quite understand how this works.  If someone bought a contract saying it would happen, because they had knowledge of such an attack, then why would they release the information about the attack before it happened, foiling the plans of the attack and losing the bet?  What am I missing here?

The bet is on the attempt, not the successful execution (in this hypothetical). Imagine the contract states a payout of $10 if the prediction is determined to be 'true'. It pays out $0 if the contract is determined to be 'false'. Therefore, a price of $5 is essentially telling the world that the market believes there is a 50% chance an attack will be attempted. If you know for a fact that an attempt will occur to a confidence of 99.9999% probability, then you stand to make a LOT of money by buying as many contracts as possible, therefore raising the price to $9.99. This effectively tells the world that 'the market' believes there is a 99.9% chance an attack will occur. Of course, it is a double edged sword. It also means a person can gain from buying the contract first, THEN having someone else orchestrate an attack, in order to profit.
Ahhh, that's the missing piece of the puzzle - the bet is on the attempt, not on it suceeding!

I realize that one could also bet on an attack succeeding, but they wouldn't want to give away ANY details about it if that were the case.  Maybe, "A terrorist attack on November 13th, 2011 in America".  It wouldn't give away enough information to stop whatever would happen, but would be specific enough to place a bet on.

Of course, anyone who bets on something like that with the knowledge that human lives will most likely be lost if they do not give the information out to the proper individuals is a sick person indeed...
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May 11, 2011, 11:14:30 PM
 #34

Interestingly enough, I just came across this one Intrade:

http://www.intrade.com/v4/markets/contract/?contractId=745538

Intrade has a new look. Wonder when they'll get a new currency Wink

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May 12, 2011, 12:34:07 AM
 #35


Bitcoin will be very valuable not because some insider trading on some black market betting services/exchanges. Bitcoin will be very valuable because every freaking single mobile phone on the planet (yes billions and billions of them) will have a bitcoin wallet with a few nanobitcoins in it.




Why would mobile phone users use an alien currency when they could use their native currency tied to their pre-existing checking account? (keeping in mind the average consumer dosen't care much about anonymity or ending the fed)

 For years there's been speculation that cellphones could replace debit/credit cards but it still hasn't taken off.
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May 12, 2011, 12:37:02 AM
 #36

ok so i realize this is my first post, but I was ( and am still trying to figure out why i don't have a has rate appear on my bitcoin program)
but why not set up something based off of current market information that's used everyday for real stock exchange to trade "virtual stocks" online. they could have the same volume listed and go for the same price, only difference is you wouldnt actually own a piece of the comapny. the value of these stocks would be given the same way value of the bitcoin is given, by confidence in the trades themselves. idk just a thought.
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May 12, 2011, 12:53:17 AM
 #37

ok so i realize this is my first post, but I was ( and am still trying to figure out why i don't have a has rate appear on my bitcoin program)
but why not set up something based off of current market information that's used everyday for real stock exchange to trade "virtual stocks" online. they could have the same volume listed and go for the same price, only difference is you wouldnt actually own a piece of the comapny. the value of these stocks would be given the same way value of the bitcoin is given, by confidence in the trades themselves. idk just a thought.


http://en.wikipedia.org/wiki/Bucket_shop_%28stock_market%29

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May 12, 2011, 12:55:15 AM
 #38


Bitcoin will be very valuable not because some insider trading on some black market betting services/exchanges. Bitcoin will be very valuable because every freaking single mobile phone on the planet (yes billions and billions of them) will have a bitcoin wallet with a few nanobitcoins in it.




Why would mobile phone users use an alien currency when they could use their native currency tied to their pre-existing checking account? (keeping in mind the average consumer dosen't care much about anonymity or ending the fed)

Because other people whom those people want to deal with are already using Bitcoin.

"The powers of financial capitalism had another far-reaching aim, nothing less than to create a world system of financial control in private hands able to dominate the political system of each country and the economy of the world as a whole. This system was to be controlled in a feudalist fashion by the central banks of the world acting in concert, by secret agreements arrived at in frequent meetings and conferences. The apex of the systems was to be the Bank for International Settlements in Basel, Switzerland, a private bank owned and controlled by the world's central banks which were themselves private corporations. Each central bank...sought to dominate its government by its ability to control Treasury loans, to manipulate foreign exchanges, to influence the level of economic activity in the country, and to influence cooperative politicians by subsequent economic rewards in the business world."

- Carroll Quigley, CFR member, mentor to Bill Clinton, from 'Tragedy And Hope'
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May 12, 2011, 03:27:21 AM
 #39

So essentially, big-time investors would use bitcoins to make insider trades, and that's what would make bitcoins worth a bunch of money?  Doesn't that mean bad news for corporate America?  As in, any big-wig could ruin a company while cashing in on it at the same time?

Not just big investors. Have you ever tried to trade stocks? It is a royal pain to get set up (they want to know everything about you), then you pay several dollars MINIMUM for each trade, and then if you are lucky enough to profit, the government taxes you.

Bitcoin solves all of those "problems".

I also don't like insider trading. I just know that like the drug money, it is inevitable. And I plan to profit from the resulting increase in bitcoin prices.
Good point about the fees.

I've always wondered why someone didn't create an online stock exchange that was made "for the little guy".  A place that pretty much just accepts any legitimate company that wants to go public, and allows anyone to trade with just a small percentage fee.  All done through a web interface with no stock broker middleman.  Sounds like a good idea to me...

I know Ubitex is attempting to head that direction.  It's not intuitive to use through the command line interface though, and most people "wouldn't get it".  Something with a GUI and a simple way to buy/sell could go like hotcakes in exactly the way you describe.  The hardest part would be getting some decent companies to register with the exchange.

try ubitex.org.  pretty easy to me.
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May 12, 2011, 03:29:39 AM
 #40

I know Ubitex is attempting to head that direction.  It's not intuitive to use through the command line interface though, and most people "wouldn't get it".  Something with a GUI and a simple way to buy/sell could go like hotcakes in exactly the way you describe.  The hardest part would be getting some decent companies to register with the exchange.

You never need any companies to register with a new exchange. You just need a way to speculate on existing companies. IE I bet the price will rise, you bet it will fall.

The most important thing missing from bitcoin right now is a way to create transactions that are dependent on an external variable (like what a certain stock does tomorrow).

The second most important thing missing is a way to advertise that anonymous person A wishes to bet on such a possibly-illegal external variable.

Stock trading in a separate bitcoin black market would definitely affect the real markets, because real traders will see a price difference between the real markets and the black market - if google is trading at $1 on the black market, they will buy google on the black market while shorting Google on the real market, then they will collect the difference. This kind of risk-free profit is called "arbitrage".

we do have a stock exchange:  GLBSE and we have stock to trade Ubitex and Dishwara
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