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Author Topic: Risk free interest rate of Bitcoin  (Read 1245 times)
wangxinxi
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October 25, 2014, 10:37:35 AM
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Bitfinex has an interest rate of Bitcoin, but that's obviously not risk free. The true risk free interest rate should be lower than that. Anybody knows better sources?
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wangxinxi
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October 25, 2014, 02:07:05 PM
 #2

Bitfinex has an interest rate of Bitcoin, but that's obviously not risk free. The true risk free interest rate should be lower than that. Anybody knows better sources?

Interest rate is an extremely important economic metric. It is also useful if you want to trade Bitcoin volatility using Bitcoin options.
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October 25, 2014, 02:07:59 PM
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Bitfinex has an interest rate of Bitcoin, but that's obviously not risk free. The true risk free interest rate should be lower than that. Anybody knows better sources?

I guess it would be close to zero. Given that there are no btc-denominated, traded bonds, it would be very difficult to get a risk free interest rate. But given the number of people just holding bitcoins (equivalent to stuffing dollars under the pillow), my guess is that the risk free interest rate would be close to zero.
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October 25, 2014, 02:39:48 PM
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Bitfinex has an interest rate of Bitcoin, but that's obviously not risk free. The true risk free interest rate should be lower than that. Anybody knows better sources?

I guess it would be close to zero. Given that there are no btc-denominated, traded bonds, it would be very difficult to get a risk free interest rate. But given the number of people just holding bitcoins (equivalent to stuffing dollars under the pillow), my guess is that the risk free interest rate would be close to zero.

That is true. I agree it is near zero if talking about risk free

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October 25, 2014, 05:04:26 PM
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It is interesting that U.S. treasury bonds are considered "risk-free" when real interest rates are negative. Anyway, I don't believe that there exists debt denominated in Bitcoin that has negligible risk, so the risk-free rate must be 0.

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wangxinxi
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October 25, 2014, 05:16:59 PM
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It is interesting that U.S. treasury bonds are considered "risk-free" when real interest rates are negative. Anyway, I don't believe that there exists debt denominated in Bitcoin that has negligible risk, so the risk-free rate must be 0.


So the the positive rate in Bitfinex is totally due to the risk?
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October 25, 2014, 05:28:26 PM
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It is interesting that U.S. treasury bonds are considered "risk-free" when real interest rates are negative. Anyway, I don't believe that there exists debt denominated in Bitcoin that has negligible risk, so the risk-free rate must be 0.
So the the positive rate in Bitfinex is totally due to the risk?

I'm probably jaded, but the rate on Bitfinex is lower than the risk in my opinion. So, yes.

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October 25, 2014, 06:32:51 PM
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So I am considering moving a bit of my BTC investments into bitfinex. Part for day trading, part for offering liquidity swaps.

Obviously I'm concerned about a sudden closure (and for the liquidity swaps a rapid fall resulting in losses against my loaned funds); however, I am finding it relatively difficult to evaluate that risk.

Based on their volume and fee structure, do you think its likely that they are generating enough money to not be tempted to cut and run? Are there developers/admins here/in the community that are well respected? How long have they been in business?
wangxinxi
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October 25, 2014, 06:36:40 PM
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So I am considering moving a bit of my BTC investments into bitfinex. Part for day trading, part for offering liquidity swaps.

Obviously I'm concerned about a sudden closure (and for the liquidity swaps a rapid fall resulting in losses against my loaned funds); however, I am finding it relatively difficult to evaluate that risk.

Based on their volume and fee structure, do you think its likely that they are generating enough money to not be tempted to cut and run? Are there developers/admins here/in the community that are well respected? How long have they been in business?

They should be making considerable amount of money. But if they are hacked, it's possible that they will run away with the money. Who knows. I still think that they should manually check all withdrawals.
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