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rkbabang

By rkbabang
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jfan
jfan

@Luca   I came across this short article that you might find interesting regarding the value proposition of Bitcoin.    Bitcoin's unique value proposition | BitMEX Blog  

gfp
gfp

Well finally somebody lays it out in a way I can understand it    

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SharperDingaan Mentor

SharperDingaan

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Posted

In the non-too-distant future I will be back in the crypto 'game', but this time as issuers of our own altcoin.

4 pref share altcoin and 1 utility token using fractional banking.

 

For quite some time now, it has been practical to issue a block-chain altcoin as evidence of a stock certificate. The Oracle acts as both transfer agent, and exchange facility; the company itself typically being market-maker. The expectation is that the altcoin will not have a market unless there is a 'liquidity' event.

 

We will be a regulated (FSCO) issuer in the charity space, funds for development and air-drops financed by prefs, liquidity event being a sale to a larger player (province, fed, etc.). Structured as esentially a modified P3; contribute to the venture and get your cummulative contributions back if we can get it taken out; block-chain, smart-contract applications heavily supporting operations.

 

It will very likely launch with the 'traditional' whitepaper, and a seperate business plan released under confidentiality agreement.

We also understand that it will be the first of its kind in Ontario, & quite possibly Canada as well.

 

There were lots of ways to 'short' the Bitcoin run-up to 20K/token.

This is just one of them  ;)

 

SD

 

 

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Lakesider Newbie

Lakesider

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Correct me if I'm wrong, But are people mining on an industrial scale forced sellers?

 

If I own a warehouse full of rigs mining bitcoin I have to sell a certain amount of BTC every month to cover my overheads. As the price falls  I and other miners have to sell more.

 

Surely this is a significant contribution to the feedback loop?

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SharperDingaan Mentor

SharperDingaan

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Correct me if I'm wrong, But are people mining on an industrial scale forced sellers?

 

If I own a warehouse full of rigs mining bitcoin I have to sell a certain amount of BTC every month to cover my overheads. As the price falls  I and other miners have to sell more.

 

Surely this is a significant contribution to the feedback loop?

 

The warehouse full of rigs is a mining pool, the biggest of which are in China.

Their main issues are the costs of eletricity, obsolescence, and ongoing crackdowns by various authorities.

https://www.buybitcoinworldwide.com/mining/china/

 

Mining pools mine for multiple coins, & essentially allocate CPU based on return/CPU second. Pay up or you get no mining, & do it by reducing the complexity of the hash - to push out more coin for the same amount of CPU time. The result is multiple coin, and quasi monopoly control.

 

Coin from mining pools is typically converted into Bitcoin, for later sale into the market. Bitcoin options and futures are used to control price volatility, and provide liquidity until the underlying coin is sold. Hence there is a persistent seller of underlying coin, and a bias for downside price protection. Opportunity 

 

So long as mining rig sales, & traditional ICO's continue to funnel cash into the eco-system, there is cash to cover operating costs. But squeeze the back-street exchanges, regulate the ICO process, and speed up rig obsolescence - & only the Bitcoin derivatives market is left. Again, opportunity.

 

Altcoin is a P2P business, and one of the key business models of P2P is addiction.

The consolidated mining pool is the digital equivalent of a drug cartel.

 

SD

 

 

 

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DeepSouth Rookie

DeepSouth

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Correct me if I'm wrong, But are people mining on an industrial scale forced sellers?

 

If I own a warehouse full of rigs mining bitcoin I have to sell a certain amount of BTC every month to cover my overheads. As the price falls  I and other miners have to sell more.

 

Surely this is a significant contribution to the feedback loop?

 

 

This feature exists in effectively any commodity business.

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Liberty Contributor

Liberty

Posted
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Correct me if I'm wrong, But are people mining on an industrial scale forced sellers?

 

If I own a warehouse full of rigs mining bitcoin I have to sell a certain amount of BTC every month to cover my overheads. As the price falls  I and other miners have to sell more.

 

Surely this is a significant contribution to the feedback loop?

 

 

This feature exists in effectively any commodity business.

 

Not only that, but crypto-mining equipment probably has a rather short useful life and needs to be replaced at frequent intervals to keep up. That's if it doesn't become worthless at some point because of proof-of-stake becoming more popular.

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SharperDingaan Mentor

SharperDingaan

Posted
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They haven't thought this through.

Every one of those holding altcoin/token needs to meet KYC enhanced DD requirements, and there is only one investable altcoin (Bitcoin). Then you have to choose to hold your Bitcoin in a hackable account, instead of in your own annonymous 'unhackable' account at Mt Gox  Take out those who can't pass the DD, don't need the annonymity, and who don't want the more attractive 'direct' account at Mt Gox - and it's a very small market.

 

We wish them luck, but it doesn't look promising.

 

SD

 

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rkbabang Mentor

rkbabang

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They haven't thought this through.

Every one of those holding altcoin/token needs to meet KYC enhanced DD requirements, and there is only one investable altcoin (Bitcoin). Then you have to choose to hold your Bitcoin in a hackable account, instead of in your own annonymous 'unhackable' account at Mt Gox  Take out those who can't pass the DD, don't need the annonymity, and who don't want the more attractive 'direct' account at Mt Gox - and it's a very small market.

 

We wish them luck, but it doesn't look promising.

 

SD

 

 

No.  Everyone buying or trading or holding crypto through them needs to meet KYC enhanced DD requirements.

No one "has" to hold their Bitcoin with them.  The same could be said for Coinbase yet "Coinbase has twice as many customers as Charles Schwab.”

 

You can build a trusted network on top of a trustless one, just not vice versa.

 

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SharperDingaan Mentor

SharperDingaan

Posted
Posted

 

They haven't thought this through.

Every one of those holding altcoin/token needs to meet KYC enhanced DD requirements, and there is only one investable altcoin (Bitcoin). Then you have to choose to hold your Bitcoin in a hackable account, instead of in your own annonymous 'unhackable' account at Mt Gox  Take out those who can't pass the DD, don't need the annonymity, and who don't want the more attractive 'direct' account at Mt Gox - and it's a very small market.

 

We wish them luck, but it doesn't look promising.

 

SD

 

 

No.  Everyone buying or trading or holding crypto through them needs to meet KYC enhanced DD requirements.

No one "has" to hold their Bitcoin with them.  The same could be said for Coinbase yet "Coinbase has twice as many customers as Charles Schwab.”

 

You can build a trusted network on top of a trustless one, just not vice versa.

 

Not so sure....

Agreed that a NYSE BTC counterpart to Chicago BTC Futures and Options is a desirable thing.

Agreed that buyer/seller enhanced DD isn't their responsibility - IF they are PURELY an exchange.

 

BUT .. why would you use a regulated channel to buy/sell Bitcoin, in scale?

When the whole value-add of Bitcoin is it's annonymity, and its ability to evade capital and regulatory controls.

It can only be a small but very active market

 

I would suggest that the only reason for this is so that institutions can trade BTC Futures and Options.

Limit the trades to just Bakkt, evidence that all FI's trading through Bakkt have to have an enhanced DD US account, and institutional BTC hedging becomes much easier. Problem is that any trading done through a fraudulent DD US account, will make Bakkt complicit - as it has just abetted a theft. And a great many people, have a very strong incentive, to do exactly that. 

 

Agreed it's a good idea.

But these are just two of the more obvious things they don't seem to have thought through.

 

But we wish them luck.

 

SD

 

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rkbabang Mentor

rkbabang

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They haven't thought this through.

Every one of those holding altcoin/token needs to meet KYC enhanced DD requirements, and there is only one investable altcoin (Bitcoin). Then you have to choose to hold your Bitcoin in a hackable account, instead of in your own annonymous 'unhackable' account at Mt Gox  Take out those who can't pass the DD, don't need the annonymity, and who don't want the more attractive 'direct' account at Mt Gox - and it's a very small market.

 

We wish them luck, but it doesn't look promising.

 

SD

 

 

No.  Everyone buying or trading or holding crypto through them needs to meet KYC enhanced DD requirements.

No one "has" to hold their Bitcoin with them.  The same could be said for Coinbase yet "Coinbase has twice as many customers as Charles Schwab.”

 

You can build a trusted network on top of a trustless one, just not vice versa.

 

Not so sure....

Agreed that a NYSE BTC counterpart to Chicago BTC Futures and Options is a desirable thing.

Agreed that buyer/seller enhanced DD isn't their responsibility - IF they are PURELY an exchange.

 

BUT .. why would you use a regulated channel to buy/sell Bitcoin, in scale?

When the whole value-add of Bitcoin is it's annonymity, and its ability to evade capital and regulatory controls.

It can only be a small but very active market

 

I would suggest that the only reason for this is so that institutions can trade BTC Futures and Options.

Limit the trades to just Bakkt, evidence that all FI's trading through Bakkt have to have an enhanced DD US account, and institutional BTC hedging becomes much easier. Problem is that any trading done through a fraudulent DD US account, will make Bakkt complicit - as it has just abetted a theft. And a great many people, have a very strong incentive, to do exactly that. 

 

Agreed it's a good idea.

But these are just two of the more obvious things they don't seem to have thought through.

 

But we wish them luck.

 

SD

 

 

Some might not care about evading regulatory controls and simply want a currency which can not be inflated by governments. In fact the lack of regulatory certainty is probably what is keeping institutional investors on the sidelines. There are other ways already for people who do not like KYC.

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SharperDingaan Mentor

SharperDingaan

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Posted

The reality is that to touch Bitcoin is to deal with the criminal element.

We can do our best to avoid legal restrictions by market segmentation, and seperating the legal from the illegal via a closed system, but the criminal element remains a major price determinant in the underlying BTC market. Bakkt account holders will also feel enormous pressure to money-launder via the 'legal' channel, and major banks are routinely caught money-laundering.

 

https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-us-money-laundering-sanctions-battles-clean-act/

"Britain’s biggest lender had to pay a $1.9bn (£1.4bn) fine in 2012 for helping drug cartels launder money in Mexico and for contravening sanctions to do business with Iran."  Funds were being deposited in the UK, and wired to the US through a process of 'wire-stripping'

 

Bakkt is a good idea, but they would have been far smarter to create their own token (BKKT)

Open a futures and options market for it on Chicago, & make it exchangeable into BTC. Institutions get to safely buy/sell BKKT as the proxy for BTC, can hedge BKKT directly on Chicago, and can arbitrage BKKT/BTC via derivatives on Chicago. Remove the 21M BTC token limit, remove the institutional need to buy/sell BTC directly, and make all BKKT/BTC FX exchanges so visible - that few can stand the scutiny. Isolate BTC, and the institutional market, from the criminal element.

 

That this DOES NOT exist yet, suggests they haven't fully thought it through.

 

SD

 

 

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rkbabang Mentor

rkbabang

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The reality is that to touch Bitcoin is to deal with the criminal element.

We can do our best to avoid legal restrictions by market segmentation, and seperating the legal from the illegal via a closed system, but the criminal element remains a major price determinant in the underlying BTC market. Bakkt account holders will also feel enormous pressure to money-launder via the 'legal' channel, and major banks are routinely caught money-laundering.

 

https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-us-money-laundering-sanctions-battles-clean-act/

"Britain’s biggest lender had to pay a $1.9bn (£1.4bn) fine in 2012 for helping drug cartels launder money in Mexico and for contravening sanctions to do business with Iran."  Funds were being deposited in the UK, and wired to the US through a process of 'wire-stripping'

 

Bakkt is a good idea, but they would have been far smarter to create their own token (BKKT)

Open a futures and options market for it on Chicago, & make it exchangeable into BTC. Institutions get to safely buy/sell BKKT as the proxy for BTC, can hedge BKKT directly on Chicago, and can arbitrage BKKT/BTC via derivatives on Chicago. Remove the 21M BTC token limit, remove the institutional need to buy/sell BTC directly, and make all BKKT/BTC FX exchanges so visible - that few can stand the scutiny. Isolate BTC, and the institutional market, from the criminal element.

 

That this DOES NOT exist yet, suggests they haven't fully thought it through.

 

SD

 

LOL.  The same as everything you wrote above can be said for anyone who deals with cash.  You said it yourself all of the banks launder drug money to one extent or another (as do grocery stores and retail outlets when drug dealers buy stuff with cash).  None of that is anything new.  Why would cash on the internet be any different from physical cash in that respect?

 

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SnarkyPuppy Newbie

SnarkyPuppy

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Posted

The reality is that to touch Bitcoin is to deal with the criminal element.

We can do our best to avoid legal restrictions by market segmentation, and seperating the legal from the illegal via a closed system, but the criminal element remains a major price determinant in the underlying BTC market. Bakkt account holders will also feel enormous pressure to money-launder via the 'legal' channel, and major banks are routinely caught money-laundering.

 

https://www.telegraph.co.uk/business/2017/12/11/hsbc-spared-us-money-laundering-sanctions-battles-clean-act/

"Britain’s biggest lender had to pay a $1.9bn (£1.4bn) fine in 2012 for helping drug cartels launder money in Mexico and for contravening sanctions to do business with Iran."  Funds were being deposited in the UK, and wired to the US through a process of 'wire-stripping'

 

Bakkt is a good idea, but they would have been far smarter to create their own token (BKKT)

Open a futures and options market for it on Chicago, & make it exchangeable into BTC. Institutions get to safely buy/sell BKKT as the proxy for BTC, can hedge BKKT directly on Chicago, and can arbitrage BKKT/BTC via derivatives on Chicago. Remove the 21M BTC token limit, remove the institutional need to buy/sell BTC directly, and make all BKKT/BTC FX exchanges so visible - that few can stand the scutiny. Isolate BTC, and the institutional market, from the criminal element.

 

That this DOES NOT exist yet, suggests they haven't fully thought it through.

 

SD

 

Think you're missing the forest for the trees here.  You're too smart for your own good.  Simply viewed as an alternative to gold (fixed non inflatable supply) - even agnostic of the clear benefits of censorship resistance - are incrementally better than gold at golds use case.  Replaces gold easily in 10-15 years.  Time, accessibility, and custody will be the catalyst. 

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SharperDingaan Mentor

SharperDingaan

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Posted

People want to pay with BTC 'cause it's cool. I get it.

Problem is that BTC mining is too slow for most commercial purposes (buying a coffee). So deposit your BTC instead, into what is esentially an institutional enhanced DD 'wrap' account (hackable). Then pay for your transactions via existing payment rails, by 'margining' against your BTC and settling up with the institution once/day in satoshi (at 'their' buy/sell spread  :))). Viola, the transactional speed problem is solved - and you're paying with Bitcoin! For most people, good enough.

 

Agreed if I dont like fiat currency long-term, hold BTC intstead. But I'm going to hold it annonymously at Mt Gox, and beyond the reach of ALL banks AND governments; and NOT in a US institutional enhanced DD account. And yes it will be part of my portfolios 'gold' weighting, but to pay for coffee I'll just continue to use my nice annonymous fiat cash ;)

Anarchy can be a bastard!

 

We just don't want to hear that cash isn't going away,

or that the real Bakkt value proposition isn't what's claimed.

 

SD

 

 

 

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