SERVING THE QUANTITATIVE FINANCE COMMUNITY

Cuchulainn
Posts: 56673
Joined: July 16th, 2004, 7:38 am
Location: Amsterdam
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### Is bitcoin crashing?

Quote

Originally posted by: APlus
"We probably need a clearing house?"

Definitely. If you can remove all the other intermediaries you do need a clearing house. And not any bank, but a proper central counterparty, to guarantee you that you have the settlement. It is exactly what is missing now. The selling-sites were sort of central clearing houses but they did an awful job.

Maybe there should be a Bitcoin "10 Commandments", e.g. 1. "build on (existing) (technical) infrastructure". To start all over again would be krazy.

In the 70s/80s you had (expensive!) proprietary XNS, DECNET. NEtbios, Ungermann-Bass networks that talked to each other with difficultty. Then came OSI (and TCP/IP) and Cisco and soon things became more interop.

DNS, (ATM??) etc. Bitcoin?

Maybe like the early Internet folk did it?
Last edited by Cuchulainn on June 2nd, 2014, 10:00 pm

tagoma
Posts: 18233
Joined: February 21st, 2010, 12:58 pm

### Re: Is bitcoin crashing?

By curiosity, any particular reason why BTC is plunging (again) today?

bearish
Posts: 3582
Joined: February 3rd, 2011, 2:19 pm

### Re: Is bitcoin crashing?

A former boss of mine liked to quote a line from the WSJ, probably circa 1992, stating "The price of gold dropped because it was too high". Something like that going on here, perhaps?

tagoma
Posts: 18233
Joined: February 21st, 2010, 12:58 pm

### Re: Is bitcoin crashing?

Thanks, bearish. Your reply makes me feel more secure in some way. I mean I ended up thinking I'm the only one not understanding how crypto currencies move.

Alan
Posts: 9512
Joined: December 19th, 2001, 4:01 am
Location: California
Contact:

### Re: Is bitcoin crashing?

Kim Jong-un is simply selling a few of his coins to meet his Singapore travel expenses

ppauper
Posts: 68453
Joined: November 15th, 2001, 1:29 pm

### Re: Is bitcoin crashing?

to answer tag's question, an exchange was hacked
Bitcoin price plunges after cryptocurrency exchange is hacked

PatoHush
Posts: 1
Joined: June 11th, 2018, 1:45 pm

### Re: Is bitcoin crashing?

I am new here and I am already enjoying reading. Hopefully I will be able to contribute something meaningful in the future

tagoma
Posts: 18233
Joined: February 21st, 2010, 12:58 pm

### Re: Is bitcoin crashing?

@ppauper thanks. from an investor perspective, it looks like hacking is a too common reason for security setback.
@PatoHush. welcome. we are looking forward to your contributions!

rmax
Posts: 5964
Joined: December 8th, 2005, 9:31 am

### Re: Is bitcoin crashing?

<snip>
I don't think you can do anything like an IR swap with bit coin yet because I don't think bit coin (or Hayek Money) has any intrinsic mechanisms for lending the currency.  <snip>

Can't you agree to transfer a bitcoin for a specified length of time? OK it might be better if the settlement was automated in the BlockChain, but I can't see why you could not write a (paper) contract on a Bitcoin.

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Is bitcoin crashing?

rmax wrote:
<snip>
I don't think you can do anything like an IR swap with bit coin yet because I don't think bit coin (or Hayek Money) has any intrinsic mechanisms for lending the currency.  <snip>

Can't you agree to transfer a bitcoin for a specified length of time? OK it might be better if the settlement was automated in the BlockChain, but I can't see why you could not write a (paper) contract on a Bitcoin.
You are right that anyone can write a contract with lending and repayment terms denominated in bitcoins. But without some form of blockchain/cryptographic lock on the borrower's assets and automated settlement on the blockchain, that contract is only as good as the lender's trust in the borrower which seems to defeat the whole ethos of bitcoin. I'm sure Ethereum can handle these kinds of issues with multi-party locks on escrow or collateral accounts.

P.S. The story of the DAO is a cautionary tale about the reliance on smart contracts (https://www.coindesk.com/understanding- ... urnalists/)

rmax
Posts: 5964
Joined: December 8th, 2005, 9:31 am

### Re: Is bitcoin crashing?

rmax wrote:
<snip>
I don't think you can do anything like an IR swap with bit coin yet because I don't think bit coin (or Hayek Money) has any intrinsic mechanisms for lending the currency.  <snip>

Can't you agree to transfer a bitcoin for a specified length of time? OK it might be better if the settlement was automated in the BlockChain, but I can't see why you could not write a (paper) contract on a Bitcoin.

You are right that anyone can write a contract with lending and repayment terms denominated in bitcoins.  But without some form of blockchain/cryptographic lock on the borrower's assets and automated settlement on the blockchain, that contract is only as good as the lender's trust in the borrower which seems to defeat the whole ethos of bitcoin.  I'm sure Ethereum can handle these kinds of issues with multi-party locks on escrow or collateral accounts.

P.S.  The story of the DAO is a cautionary tale about the reliance on smart contracts (https://www.coindesk.com/understanding- ... urnalists/)

Yep makes sense. And thanks for the DAO link. very edifying.

ppauper
Posts: 68453
Joined: November 15th, 2001, 1:29 pm

### Re: Is bitcoin crashing?

>> Can't you agree to transfer a bitcoin for a specified length of time?

there are futures contracts on the CME

Posts: 23951
Joined: September 20th, 2002, 8:30 pm

### Re: Is bitcoin crashing?

ppauper wrote:
>> Can't you agree to transfer a bitcoin for a specified length of time?

there are futures contracts on the CME
Indeed! But aren't those secured by US laws and the US court system rather than magic anonymized cryptoconstructs?

JacobVip89
Posts: 1
Joined: June 27th, 2018, 8:26 am

Bitcoin is at the threshold of $6000 tagoma Posts: 18233 Joined: February 21st, 2010, 12:58 pm ### Re: Is bitcoin crashing? JacobVip89 wrote: Bitcoin is at the threshold of$ 6000

BTC threshold is $0. Fortunately, not a commodity or interest rate, so can't go below$0.