CME Group Announces Launch of Bitcoin Futures

[johnarb]

You don't get it. People who are holding these are coins in their private wallets are doing so not because it's a beautiful work of art they want to hang on their wall and show their friends, they are waiting for a price. And when they get that price they will gladly relinquish their coins...

I do get it. I've made statements here that I don't think of bitcoin as a currency but as a store of value and yes, I'm in it for the price appreciation. I have a friend who has been telling me to sell all my coin as it hit $1k, $2k, $3k.... Sell for what? Dollar$? I don't need to, I've been spending them recently on food, clothes, travel, laptops, etc. etc. I trade other cryptos which (by luck) increases my bitcoin holdings.

The nice thing about not "cashing out completely" is that the only taxable event is the amount I spend, but I take a risk that cryptos can go to zero tomorrow or whenever.

It's the nice thing about bitcoin, it can be held as an asset for speculation (like a stock) but can
also be spent in an instant (unlike a stock which takes a few days for the proceeds to clear to your bank). Another nice thing is that it's easily portable, like gold, but very easily can cross borders unlike gold. Another nice thing is that it can be sent to anyone anywhere in the world instantly. And also having bitcoin in your wallet is nice like a swiss or offshore bank account except the bank administrators don't have power over your coins or your privacy.

Ok, back on topic and the effect of futures on the bitcoin supply...

 

[Hoi]

If you want to get really paranoid, NSA, DOE and perhaps oddly the NWS have supercomputers that they could use to also manipulate supply on the up side.

Sorry but you have no idea about what kind of computer power is needed to mine Bitcoins. For sure no NSA or what ever super computer can compete the Bitcoin-network (which is thousands more powerful than the list of 1000 fastest world super computers combined). This because computing SHA256 is very different to what the chips in super-computers can do.

And if you want to get super paranoid, if you control over 50% of the network's computing power you can reverse transactions allowing you to double spend, prevent transactions from confirming, and block all other miners.
.

This indeed a theoretical possibility. But the costs are that high (> $25 billion) that it's practical impossible. Game theory would say that if you had 51%, it's much more profitable to become a normal miner. Besides that: the developers will soon release a software modification to disable the attack (which they will do in the future anyway, if quantum-computers can break SHA256).

 

[Maverick74]

I do get it. I've made statements here that I don't think of bitcoin as a currency but as a store of value and yes, I'm in it for the price appreciation. I have a friend who has been telling me to sell all my coin as it hit $1k, $2k, $3k.... Sell for what? Dollar$? I don't need to, I've been spending them recently on food, clothes, travel, laptops, etc. etc. I trade other cryptos which (by luck) increases my bitcoin holdings.

The nice thing about not "cashing out completely" is that the only taxable event is the amount I spend, but I take a risk that cryptos can go to zero tomorrow or whenever.

It's the nice thing about bitcoin, it can be held as an asset for speculation (like a stock) but can
also be spent in an instant (unlike a stock which takes a few days for the proceeds to clear to your bank). Another nice thing is that it's easily portable, like gold, but very easily can cross borders unlike gold. Another nice thing is that it can be sent to anyone anywhere in the world instantly. And also having bitcoin in your wallet is nice like a swiss or offshore bank account except the bank administrators don't have power over your coins or your privacy.

Ok, back on topic and the effect of futures on the bitcoin supply...

I agree with most of your points and my comments were not really directed at you but the more people who are running around pontificating this technology. I agree with you that most are simply in this thing for the same reason they were long ivillage.com in 1999 and globe.com, because those stocks kept going up. I'm more interested in trying to understand the economics of why this should even exist and what is it's purpose.

I don't see it as a currency or a store of value but rather as a commodity where each digital asset is a raw input into the blockchain technology. This makes more economic sense to me. This also means value can be determined by one, figuring out the value of the output and two, what should the marginal return be for supplying this input to get a certain output. The problem we have now is no one can seem to value blockchain or even propose how it might be valued. All we get is, shut up and just buy it, the price is going up. We all know how that ends. My point earlier is that some are making this argument that there is a real use for say BTC but then scoff at the idea of how quickly this use could go away if someone hoarded the supply in which the response is, great, then i'l get rich. But these are counter arguments. It's one or the other, but not both. Anyway, I digress.

 

[sss12]

I do get it. I've made statements here that I don't think of bitcoin as a currency but as a store of value and yes, I'm in it for the price appreciation. I have a friend who has been telling me to sell all my coin as it hit $1k, $2k, $3k.... Sell for what? Dollar$? I don't need to, I've been spending them recently on food, clothes, travel, laptops, etc. etc. I trade other cryptos which (by luck) increases my bitcoin holdings.

The nice thing about not "cashing out completely" is that the only taxable event is the amount I spend, but I take a risk that cryptos can go to zero tomorrow or whenever.

It's the nice thing about bitcoin, it can be held as an asset for speculation (like a stock) but can
also be spent in an instant (unlike a stock which takes a few days for the proceeds to clear to your bank). Another nice thing is that it's easily portable, like gold, but very easily can cross borders unlike gold. Another nice thing is that it can be sent to anyone anywhere in the world instantly. And also having bitcoin in your wallet is nice like a swiss or offshore bank account except the bank administrators don't have power over your coins or your privacy.

Ok, back on topic and the effect of futures on the bitcoin supply...

@johnarb. Every "benefit" you listed is identical (and can accomplish the same) to owning a rapidly appreciating stock such as AAPL or FB in a cash management account at the better brokerages (not the IB's). There may be some bene's to BTC, but not the ones you listed.

What you call administers others call insurance (SPIC, etc). And who cares if securities are lent ? It adds liquidity and transparency which is the hallmark of an enduring market.

 

[Maverick74]

@johnarb. Every "benefit" you listed is identical (and can accomplish the same) to owning a rapidly appreciating stock such as AAPL or FB in a cash management account at the better brokerages (not the IB's). There may be some bene's to BTC, but not the ones you listed.

What you call administers others call insurance (SPIC, etc). And who cares if securities are lent ? It adds liquidity and transparency which is the hallmark of an enduring market.

I do concede there is a value though to those who wish to move large amounts of money across country borders. And even more specifically countries that have capital controls. This is an obvious benefit to those who live in say China, North Korea or even Zimbabwe.

 

[johnarb]

I agree with most of your points and my comments were not really directed at you but the more people who are running around pontificating this technology. I agree with you that most are simply in this thing for the same reason they were long ivillage.com in 1999 and globe.com, because those stocks kept going up. I'm more interested in trying to understand the economics of why this should even exist and what is it's purpose.

I don't see it as a currency or a store of value but rather as a commodity where each digital asset is a raw input into the blockchain technology. This makes more economic sense to me. This also means value can be determined by one, figuring out the value of the output and two, what should the marginal return be for supplying this input to get a certain output. The problem we have now is no one can seem to value blockchain or even propose how it might be valued. All we get is, shut up and just buy it, the price is going up. We all know how that ends. My point earlier is that some are making this argument that there is a real use for say BTC but then scoff at the idea of how quickly this use could go away if someone hoarded the supply in which the response is, great, then i'l get rich. But these are counter arguments. It's one or the other, but not both. Anyway, I digress.

Thank you, I'm enjoying the ride in cryptos, that's for sure.

Btw, I'm a fan of your posts on options and all the intricacies of the options' greeks and read many of your discussions with riskarb from many years ago. I lost money in options, needless to say. I don't have the educational background or the comprehension skills to understand many of the stuff you guys talked about, but I sill appreciated the little bits of stuff that I did get. Peace

 

[Maverick74]

Thank you, I'm enjoying the ride in cryptos, that's for sure.

Btw, I'm a fan of your posts on options and all the intricacies of the options' greeks and read many of your discussions with riskarb from many years ago. I lost money in options, needless to say. I don't have the educational background or the comprehension skills to understand many of the stuff you guys talked about, but I sill appreciated the little bits of stuff that I did get. Peace

We'll have options on the BTC futures soon if not from day one. That will be fun!

 

[sss12]

I do concede there is a value though to those who wish to move large amounts of money across country borders. And even more specifically countries that have capital controls. This is an obvious benefit to those who live in say China, North Korea or even Zimbabwe.

Yes, this among other aspects is a benefit , but I don't think that was what the post was referring to.

I just feel that the BTC fan club is assigning characteristics of the coin to solve problems that do not really exist.

 

[johnarb]

@johnarb. Every "benefit" you listed is identical (and can accomplish the same) to owning a rapidly appreciating stock such as AAPL or FB in a cash management account at the better brokerages (not the IB's). There may be some bene's to BTC, but not the ones you listed.

What you call administers others call insurance (SPIC, etc). And who cares if securities are lent ? It adds liquidity and transparency which is the hallmark of an enduring market.

So, your stock on Amazon, you can purchase $250 worth of groceries at Whole Foods (which is owned by Amazon now)? We did last night using btc. How about purchase a laptop from NewEgg using your Apple stock? And this transaction happens in fractions, like you can us 16.35 AAPL stock coz that's all you needed to purchase the laptop and still leave the rest to appreciate (or decline) in value in your wallet? I didn't know, and I'm sorry I underestimated your stocks.

Also, if you wanted to send $16,000 to your cousin in Mexico, how would you go about it using your bank account? You don't need to get permission and sign all kinds of paper declaration and KYC/AML statements to Western Union? Sending 2 btc to your cousin is instant, but I did not know you can do this with your bank account and I'm sorry I underestimated it.

And if you have an offshore account in the Caymans and they found out your name is on the Paradise Papers leaked holding $50 Million to avoid taxes, you don't think you might get in trouble? Now your government may request the offshore or swiss bank to freeze your account but you know, the bank administrators don't have real control over your assets, do they? Apologies again as I might have underestimated that aspect.

And if you needed to go to Italy to visit the old world, but wanted to bring a gold bar's value with you, you don't think a gold bar will be confiscated if found in your luggage or bag?

I forgot to add, I'm just stating these benefits, but I'm in it for the speculation. This CME futures thread is a good one for the market discussion and maybe I should not have opened up this can of worms. Will stop bringing this up ad it may turn into a different discussion. Apologies for bringing this off-topic

 

[sss12]

So, your stock on Amazon, you can purchase $250 worth of groceries at Whole Foods (which is owned by Amazon now)? We did last night using btc. How about purchase a laptop from NewEgg using your Apple stock? And this transaction happens in fractions, like you can us 16.35 AAPL stock coz that's all you needed to purchase the laptop and still leave the rest to appreciate (or decline) in value in your wallet? I didn't know, and I'm sorry I underestimated your stocks.

Also, if you wanted to send $16,000 to your cousin in Mexico, how would you go about it using your bank account? You don't need to get permission and sign all kinds of paper declaration and KYC/AML statements to Western Union? Sending 2 btc to your cousin is instant, but I did not know you can do this with your bank account and I'm sorry I underestimated it.

And if you have an offshore account in the Caymans and they found out your name is on the Paradise Papers leaked holding $50 Million to avoid taxes, you don't think you might get in trouble? Now your government may request the offshore or swiss bank to freeze your account but you know, the bank administrators don't have real control over your assets, do they? Apologies again as I might have underestimated that aspect.

Wow, you really do not know how a modern day cash management account at a reputable US broker dealer works. I don't have time to educate but you should check it out.
Btw..wired 45k to Germany, fx done spot, no fee on wire based on a 2 min phone call yesterday.
Western Union ? Hope you were kidding.

BTC/block chain has a future, but I doubt it is cash management.