One opportunity no one in Bitcoin universe talks about

[UnunoctiumTesticles]

You simply can't have the Bitcoin asset go to $10 million (under the false conditions of that false assumption stated above) without killing several billion people.

That is why you must have derivatives if you realistically want to scale in the world's wealth.
 

Sounds like hyperbole...No one thinks Bitcoin will (or even should) go to $10M per coin by 2015...come on dude.

I agree. My posts in this thread are about how to increase interest and capital involved in Bitcoin ecosystem while reducing volatility and supporting a normal rise in the price consumerate with rapidly growing ecosystem and adoption.

Yet the supporters of Bitcoin attack it. Go figure    

Apparently some readers are too stupid (or closed-minded Butthurt) to distinguish an enhancement from a criticism.

Just goes to show you can fool a dog to fight his own tail (and lick his balls and his anus).

[johnyj]

It's too early to talk about derivatives at this stage, when average joe could not even get their wallet working securely  When the wallet is stolen or lost or broken, then the derivatives related to underlying assets will be shaken badly

The reason that bank exists is mainly for security: General public have a one stop security solution for all their money in a bank. But from time to time you could hear that someone lost his 2fa secured wallet on blockchain.info   And you have a whole bunch of technical and strategy challenges when it comes to offline cold storage

[toknormal]

I am clearly writing about how to move more capital into the coin without necessarily increasing the price. For example, with bets long and short, they cancel each other out and allow people to hedge.

Ununoctium....the tool that does this in the crypto world is called "Bitshares". It used to be BitsharesX but now merged with a sister currency and it's all one - "Bitshares".

It's a 2-tier crypto consisting of a base layer of blockchain-based asset collateral (the shares or "DACs") and a derivative layer backed by that collateral.

The derivative layer is referred to as "BitAssets". The BitAssets are usually proxies for real world assets (such as USD and Gold) such that they track a real world peg.

BitAssets are able to scale in the way you describe (increase liquidity without increasing the price) by matching a long and a short position such that the short position collateralises new issues of the BitAssets. In this way liquidity can increase for those who are long BitAssets while collateral value can increase for those who are short.

i.e. those who want to invest in crypto and watch their investment grow with increased adoption would invest in Bitshares and those who are interested in increased liquidity at a stable price (e.g. retailers) would take the long positions in the BitAssets.

See more info here...https://bitsharestalk.org

[doof]

liquidity, liquidity, liquidity.. fark I'm sick of hearing this.

[Lauda]

It can be construed as a death threat. Be careful with your words. They can be construed as a crime.

Nobody forced you to read my words. Elevating that to wishing someone dead is insane.

No it can not.
Stop writing more nonsense Bitcoin and legality wise.

It's too early to talk about derivatives at this stage, when average joe could not even get their wallet working securely  When the wallet is stolen or lost or broken, then the derivatives related to underlying assets will be shaken badly

The reason that bank exists is mainly for security: General public have a one stop security solution for all their money in a bank. But from time to time you could hear that someone lost his 2fa secured wallet on blockchain.info   And you have a whole bunch of technical and strategy challenges when it comes to offline cold storage

Exactly. This is exactly the same that we have with people who make threads about what will happen when we reach 21M Bitcoins (probably won't). That's not even something that matters right now..

[toknormal]

It's too early to talk about derivatives at this stage...

Exactly....That's not even something that matters right now..

On the contrary. EVERYTHING matters right now. Right from top to bottom - security, liquidity, derivatives, 'what happens when we reach 21M bitcoin'.

The number of  people invested in cryptocurrencies is negligible. The potential adopters are all "out there" clueless about this little world. They are a wide spectrum of individual, corporate and public entities with diverse priorities.

For example, possibly the biggest adoption sector in the near term is retail. For them liquidity is a big deal because they want to know that if they price an item in dollars then they're going to receive that amount of dollars at the end of the month. They can insure themselves against security issues but it's much harder to insure yourself against volatility in value. That's why many of them won't touch bitcoin with a bargepole because whatever its merits as a store of value, a completely different set of priorities comes into play in specific financial sectors such as retail where the supply chain cycle constitutes a period lasting anywhere from a few days to several months.

The big deal about bitcoin was that it merged the store of value property of money with a payments system and rolled them into one.

Great. And maybe when the entire world runs on Bitcoin there will be enough stability in it for goods traders to use it directly. In the meantime however, derivatives are needed to provide stability to potential adopters while the crypto-economy is growing. Bitcoin itself doesn't need to address these issues because it can continue to act as the reserve currency for the entire crypto economy just as gold did for the dollar under the Bretton Woods system. Other cryptocurrencies can do the job of evolving the right approach to meet specific market needs.

I just described in my last post one such system which offers an elegant solution to the volatility problem for retailers and real world goods traders. It directly addresses the OP's question. The OP asked very reasonable questions in a civilised manner and didn't deserve the shitstorm of defensive abuse from clueless bedroom cryptonerds who didn't know what he was talking about. Maybe they would do well to re-read the specific point:

how to move more capital into the coin without necessarily increasing the price

And that is also the question that half the world is going to ask before they adopt because they probably want to avail themselves of the advantages of crypto-currencies but they don't want to buy in at ridiculous prices which will then just tank on them later.

The answer is derivative assets which don't have the volatility that bitcoin does and the people doing all the moaning had better get used to it because they're here and they're what people are looking for to do day to day goods trading.

[Lauda]

It's too early to talk about derivatives at this stage...

Exactly....That's not even something that matters right now..

On the contrary. EVERYTHING matters right now. Right from top to bottom - security, liquidity, derivatives, 'what happens when we reach 21M bitcoin'.

So it matters to me what will happen to the planet in a 1000 years even though I won't live to see the day?
These questions are being brought up due to FUD, not because the users were interested in solving/getting answers to them. That's the issue.
If the President of "..." asked about that, I'd gladly explain everything to him. On the other hand, when such a random members open the same threads over and over again, nothing matters.

[toknormal]

So it matters to me what will happen to the planet in a 1000 years even though I won't live to see the day?
These questions are being brought up due to FUD, not because the users were interested in solving/getting answers to them. That's the issue

Unfortunately it's you who's doing the fudding. Possibly unwittingly, but still doing it.

If you don't know the answer to the OP's question just say so. But don't start spamming everyone with your own agenda which is that these things don't matter - they do.

For example. You're trying to promote the idea that liquidity and volatility are not relevant till much further down the line - they're something for later. I've just given you a pile of reasons why they do matter right now and why they present a huge barrier to adoption. The principle barrier to adoption is exactly the point that the OP brought up which I highlighted in bold in my last post.

As far as I can see only two posts in this entire thread remotely address that point. The rest are all just people throwing their toys out of the pram because they don't really understand what he's talking about and accusing him of "fud" as you are above.

[Soros Shorts]

As far as I can see only two posts in this entire thread remotely address that point. The rest are all just people throwing their toys out of the pram because they don't really understand what he's talking about and accusing him of "fud" as you are above.

I think that most people who responded are not receptive to the idea of gaining mass adoption at the expense of depressing the value of the underlying and having the profits going to some derivatives holder. I certainly am not.

[toknormal]

I think that most people who responded are not receptive to the idea of gaining mass adoption at the expense of depressing the value of the underlying and having the profits going to some derivatives holder. I certainly am not.

Firstly, other people are not prepared to pay for your profits directly....and there's a lot more of them than us. You don't have much choice in the matter.

Secondly, adoption of derivative products *increases* the "value of the underlying" as opposed to depressing it.

[turvarya]

I think that most people who responded are not receptive to the idea of gaining mass adoption at the expense of depressing the value of the underlying and having the profits going to some derivatives holder. I certainly am not.

Firstly, other people are not prepared to pay for your profits directly....and there's a lot more of them than us. You don't have much choice in the matter.

Secondly, adoption of derivative products *increases* the "value of the underlying" as opposed to depressing it.

It doesn't become true, just because you repeat it often.

[toknormal]

It doesn't become true, just because you repeat it often.

No. It becomes true because buy them.

And right now they're buying a debt-based fractional reserve derivative product known as the fiat dollar and they ain't buying no Bitcoin unless it gives them what they've already got without paying extra for it. Two of the things they've got are are massive liquidity and stability so maybe you'd like to apply your smart a*ssd brain to that problem instead of the smug remarks.

[TrustedSourceCrab]

There will be more bubbles.
I promise. And more Crashes look at the oil price.

[Lauda]

Unfortunately it's you who's doing the fudding. Possibly unwittingly, but still doing it.

If you don't know the answer to the OP's question just say so. But don't start spamming everyone with your own agenda which is that these things don't matter - they do.

For example. You're trying to promote the idea that liquidity and volatility are not relevant till much further down the line - they're something for later. I've just given you a pile of reasons why they do matter right now and why they present a huge barrier to adoption. The principle barrier to adoption is exactly the point that the OP brought up which I highlighted in bold in my last post.

As far as I can see only two posts in this entire thread remotely address that point. The rest are all just people throwing their toys out of the pram because they don't really understand what he's talking about and accusing him of "fud" as you are above.

No you're wrong.
Yes I know the answer, but it's not worth it. Your answers on the other hand aren't valid either.
Look at the responses of the "wisest" members (or the lack of). That should explain.

I think that most people who responded are not receptive to the idea of gaining mass adoption at the expense of depressing the value of the underlying and having the profits going to some derivatives holder. I certainly am not.

and the ones who didn't respond.

[toknormal]

No you're wrong.
Yes I know the answer, but it's not worth it.

w.t.f. kind of response is that ?

If it's "not worth it" then leave the thread alone and let people who actually have something to say on the matter at hand discuss it in good faith without being antagonised and labelled as "fudsters"

Your answers on the other hand aren't valid either.

They are valid in that they directly addressed the original question, as opposed to this type of nonsense:

Go kill yourself.

[jyakulis]

How do you reconcile the common held belief amongst many people that derivatives are really a tool to skim money off the top? What I mean is institutional investors running these computer programs with programmed trades to take money out of the hands of smaller investors.

Secondly, can the system handle quadrillions of derivatives in transaction. Also, how can you have derivatives without credit creation out of thin air. Is it going to be smoke and mirrors like what goes on with the libel price setting scandal or what goes on in comex. What I mean here is will these trades be going on without people actually holding bitcoins or will there be actual bitcoins transferred. How can you have derivatives in a system like bitcoin that does not allow money creation without some sort of smoke and mirrors scenario? I could care less if someone wants to develop some sort of derivatives platform that would be fine with me. But actual coins need transferred and not what goes on in places like comex.

That trillions of dollars in capital isn't even capital.

[Lauda]

whats new? another dumb fck making another thread " bitcoin never work"

This is better suited for this thread.
Yes I'll leave the thread, but once it is dead as it should be.

You're an altcoin person, go back to where you came from.  

You should change the title of the thread from "no one in Bitcoin universe talks about" to "is brought up almost weekly by some n00b.

.

[toknormal]

How do you reconcile the common held belief amongst many people that derivatives are really a tool to skim money off the top? What I mean is institutional investors running these computer programs with programmed trades to take money out of the hands of smaller investors.

No financial or advanced economic system can function without derivatives. I suspect that what you're alluding to is *toxic* derivatives which are obviously a special case. But most uses are genuine and essential to the smooth running of the world. Derivatives weren't invented for speculators, they were invented for real world uses:

 - if a motor car manufacturer wants to source materials months in advance and have their production line come in on budget so they purchase materials futures contracts to lock their budget prices in and enable them to plan a pricing strategy that's less exposed to fluctuations in cost of manufacture

 - then they want to hedge their future export sales against foreign devaluations so they purchase currency swaps to offset their losses in that event

The examples are endless - not least the entire insurance industry which is designed to spread risk amongst society so that the misfortune of the few are borne by the many.

It's not the *use* of these things thats a problem, it's the *abuse*.

Also, how can you have derivatives without credit creation out of thin air. Is it going to be smoke and mirrors like what goes on with the libel price setting scandal or what goes on in comex...But actual coins need transferred and not what goes on in places like comex.

Again - there's nothing wrong with the credit creation process - it's needed to absorb fluctuations in the GDP of the economy. What happens if there's a bumper coffee crop in Brazil one year and their GDP takes off but there's no spare liquidity in the financial system to accommodate it without massive price inflation ?

What you're alluding to here is *ridiculously over-levered, centralised, fractional reserve credit creation* which is obviously prone to collapses and losses.

An equally useful but much more sane version of the credit creation process is now emerging in the crypto-currency world smart contracts world such as the Bitshares example I cited above.

What happens there is that holders of Bitshares are able to borrow new assets into existence - such as BitUSD - but they have to put up twice the collateral of their shares to do so. So lets say I am a Bitshares owner and I want to provide liquidity for the booming Brazil coffee market. I can for example:

 - lock up $1 million of my Bitshares on the blockchain
 - borrow half a million new BitUSD dollars into existence backed by that collateral
 - sell the BitUSD it into the economy
 - as the economy grows and adoption of this blockchain-based liquidity increases the BitUSD value stays pegged to the dollar but the value of my Bitshares increases
 - if I think the coffee season's over and it looks like demand for dollars is going to go down, I can buy back my BitUSD and repay the loan to the blockchain thereby extinguishing that liquidity from the economy as it's no loger needed

If it worked out then everybody has gained:

 - the coffee traders got the liquidity they needed to grow and transport their products to market without having to charge extortionate prices for it and make themselves uncompetitive

 - I got compensated for the use of my collateral by means of its associated accrual in value

[jonald_fyookball]

well explained, thank you.

[UnunoctiumTesticles]

Thank for those who have more knowledge about derivatives taking the time to make some explanations. Admittedly my patience was too short to elaborate sufficiently.

It doesn't really matter that some people are ignorant of the utility of derivatives, because they will always gravitate to what is succeeding.

And derivatives boost the ecosystem by orders-of-magnitude, because a large portion of the business world can't participate without them. No hedging, sorry they can't do Bitcoin.