Traders Brace for Bitcoin Futures Launch after Wild Week for Currency

Megalith

Megalith

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Bitcoin is one step closer to becoming a part of the mainstream financial world. Cboe is launching the first US bitcoin futures exchange at 6PM Eastern, giving speculators a chance to bet on the value of the cryptocurrency through a listed (XBT), regulated entity.

The futures are cash-settled contracts based on the auction price of bitcoin in dollars on the Gemini exchange, owned and operated by virtual currency entrepreneurs Cameron and Tyler Winklevoss. Bitcoin fans appear excited about the prospect of an exchange-listed and regulated product and the ability to bet on its price swings without having to sign up for a digital wallet.
 
The old financial dinosaurs attempt to hold their power... It will fail. Dinosaurs meet meteor.
 
i find it comical when some of thease people talk about bitcoin. "its showing a nice patter" "its way over/under sold" the rules to stocks hardly apply to cryptos and it will create a intreating market when they get heavily involved.
 
maybe I just don't understand the basics of virtual coin so I'll ask: Bitcoin is virtual money so it's not backed by anything. What if internet structure in any given Country is attacked and destroyed, how will people access their money? Cash and gold are king; where does virtual coin fit in to this fact of life ? If the internet fails tomorrow I can physically go to my bank and withdraw all my cash but how is that done with virtual money? With the internet down you can't exchange virtual coin for dollars
 
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_l_ said:
maybe I just don't understand the basics of virtual coin so I'll ask: Bitcoin is virtual money, it';s not backed by anything. What happens if someone decided top pull the plug out of the wall outlet?
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im assuming your talking about the miners going offline? for one there are alot of miners its not just one person, and if one person stops profitability for the rest of them will jump enticing more people to mine or mines to expand. there will always be miners therefor the actual bitcoin blockchain is impossible to take down without getting rid of the internet. with that said if there isnt enough miners transaction time and fees jump way up on bitcoin (the reason bch and segwit2x was supose to replace it)
 
I removed the plug/wall outlet part, made it too confusing ... my bad
 
_l_ said:
maybe I just don't understand the basics of virtual coin so I'll ask: Bitcoin is virtual money so it's not backed by anything. What if internet structure in any given Country is attacked and destroyed, how will people access their money? Cash and gold are king; where does virtual coin fit in to this fact of life ? If the internet fails tomorrow I can physically go to my bank and withdraw all my cash but how is that done with virtual money?
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It is encrypted and decentralized. Only 21 million will ever be mined. it is written in the open source code and baked into the block chain. If we go back to the stone age we have bigger problems than not having bitcoin. I don't think your ATM wil work either ... or gas stations....
 
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_l_ said:
I removed the plug/wall outlet part, made it too confusing ... my bad
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if i had bitcoin and the us intenet sudenly disapered i would still have bitcoin in any countrie that still has internet, technically as long as people can communicate bitcoin can exist but its not really probable without the internet. if we are talking about a apocaliptic situation then any curency wont have value (even possibly gold) and goods are king.
 
celeron300 said:
It is encrypted and decentralized. Only 21 million will ever be mined.
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with how easily people are able to hack into the NSA do you actually consider what you said there to be safe? LOL, I don't laugh at you but at the concept that coin is safe and secure. Once coin is on Wall Street it can be taxed and IMO that's the only reason it's heading there now ...

cdabc123 said:
if we are talking about a apocaliptic situation then any curency wont have value (even possibly gold) and goods are king.
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Yea, I play Fallout too but in real life gold is always a draw for people, always. it doesn't need to be the end of the world to knock out the internet, nor war time.

I get the concept, it's like trading shells 5000 years ago ... whatever people put value on, that's what is used. 2000 years ago Roman soldiers were paid in sugar and/or salt
 
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_l_ said:
with how easily people are able to hack into the NSA do you actually consider what you said there to be safe? LOL, I do't laugh at you but at the concept. Once coin is on Wall Street it can be taxed and IMO that's the only reason it's heading there now ...
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you wont be able to hack bitcoin. you can get into the exchanges that hold a good portion of it and you can hack online wallets but bitcoin is inherently safe. as for taxes its near impossible to know if anyone has any bitcoin and how much they have however if they pull any out to usd the goverment knows of that and can tax that.
 
cdabc123 said:
if we are talking about a apocaliptic situation then any curency wont have value (even possibly gold) and goods are king.
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too much Fallout buddy, way too much (plea
cdabc123 said:
you wont be able to hack bitcoin. you can get into the exchanges that hold a good portion of it and you can hack online wallets but bitcoin is inherently safe. as for taxes its near impossible to know if anyone has any bitcoin and how much they have however if they pull any out to usd the goverment knows of that and can tax that.
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sure, and that sounds like the perfect tool for laundering money ...
 
_l_ said:
too much Fallout buddy, way too much (plea


sure, and that sounds like the perfect tool for laundering money ...
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lol it (and others like dash monero and zcash) are pretty good for money laundering. you still have to worries about pulling it back out though.
 
cdabc123 said:
you wont be able to hack bitcoin. you can get into the exchanges that hold a good portion of it and you can hack online wallets but bitcoin is inherently safe. as for taxes its near impossible to know if anyone has any bitcoin and how much they have however if they pull any out to usd the goverment knows of that and can tax that.
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The government is making the exchanges report transactions. They will get their money.
 
Verge said:
The government is making the exchanges report transactions. They will get their money.
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you dont have to go through a exchange :p with that said i have no dought the government sees any large amount that touches USD no matter how you go about it.
 
cdabc123 said:
you wont be able to hack bitcoin.
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Not with tech of today, but in the not so distant future quantum computing will be capable of slicing through the encryption in a very short time period. Bitcoin will need to either evolve or change entirely at some point in the near future.
 
FlawleZ said:
Not with tech of today, but in the not so distant future quantum computing will be capable of slicing through the encryption in a very short time period. Bitcoin will need to either evolve or change entirely at some point in the near future.
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that may be a possibility. and honestly i dont see bitcoin lasting in this form for that long with its current scaling issues. but i have no dought crypto will outlive all of us. and actually guessing a privet key with money behind it seams like a stretch for even the best computers we can even think of. and crptos (besides bitcoin really dont have to much dificaulty evolving.
 
Pretty sure it's to the moon from here on out.

The current price level reflects folks who sold off cause they fear the futures impact.
 
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cdabc123 said:
that may be a possibility. and honestly i dont see bitcoin lasting in this form for that long with its current scaling issues. but i have no dought crypto will outlive all of us. and actually guessing a privet key with money behind it seams like a stretch for even the best computers we can even think of. and crptos (besides bitcoin really dont have to much dificaulty evolving.
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I can believe that some cryptocurrency will exist that doesn't have bitcoins horrible scaling problems. But bitcoin? A very small number of people control the majority of all bitcoins so what kind of foolish moron is going to speculate here? A few people have control over the price so they know what will happen, because they make it happen.

Oh and everyone says the lightning network will fix bitcoins scaling problems. Well where is this lightning network? And once you have that you've just centralized transactions, which eliminates the entire point of decentralization in bitcoin.

I really don't see any way out of this. Yes people say well maybe they can get bitcoin to be like the deep investment behind an actually scalable crypto. With bitcoin only being used to transfer massive amounts of money. But why even have bitcoin at all if the overwelming majority of all purchases are being made with a crypto that can actually scale?

It will be interesting to see what happens in any event.
 
What kind of "foolish moron" is going to speculate on Bitcoin?

Lots.

Perhaps they're not the morons everyone makes them out to be.
 
_l_ said:
maybe I just don't understand the basics of virtual coin so I'll ask: Bitcoin is virtual money so it's not backed by anything. What if internet structure in any given Country is attacked and destroyed, how will people access their money? Cash and gold are king; where does virtual coin fit in to this fact of life ? If the internet fails tomorrow I can physically go to my bank and withdraw all my cash but how is that done with virtual money? With the internet down you can't exchange virtual coin for dollars
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I think there's (barely?) enough diversity in mining that the network should manage to go on without any particular continent staying online, should there still be value in it. However, if you're somewhere where there's more or less no power and no internet, like Puerto Rico after the hurricane, it gets pretty hard to spend your bitcoin. Incidentally, it may be hard to make withdrawals at your bank in these circumstances as well. Cash is king, but only when its in your possession. Credit cards can be processed in offline mode, but at significant risk for the merchant.
 
So the last Bitcoin thread, or one of them, stated that like 1000 people control 40% of the world's "supply", and that they very often collude with each other to manipulate the price as they see fit. If they start opening up a futures market with BTC does that mean these types of collusion will now be illegal? Because seriously what's to stop those 1000 people from simply manipulating the futures market as they see fit to profit from that?
 
_l_ said:
With the internet down you can't exchange virtual coin for dollars
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It's difficult to convert virtual currency into dollars even with the internet up, and why would anyone ever use bitcoin as a medium of exchange when it's value is so volatile?

It also has inflation despite claims to the contrary. People keep saying that 'only 21 million can be mined,' but when demand outpaced supply people just started making up altcoins to mine and trade for bitcoin...

These aren't 'scaling issues,' they're a fundamental problem with decentralized banking.

cdabc123 said:
you wont be able to hack bitcoin. you can get into the exchanges that hold a good portion of it and you can hack online wallets but bitcoin is inherently safe.
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Sure, and the pool on the Titanic is still full.
 
cdabc123 said:
you dont have to go through a exchange :p with that said i have no dought the government sees any large amount that touches USD no matter how you go about it.
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Money launderers wouldn't mind paying taxes if they can get their original investment out free & clear. Hell they probably would still make money with the current trend.
 
Over 40% of all bitcoin are owned by a handful of people. If they decide to sell even a part of their coin, the valuation will drop like a rock.
 
_l_ said:
maybe I just don't understand the basics of virtual coin so I'll ask: Bitcoin is virtual money so it's not backed by anything. What if internet structure in any given Country is attacked and destroyed, how will people access their money? Cash and gold are king; where does virtual coin fit in to this fact of life ? If the internet fails tomorrow I can physically go to my bank and withdraw all my cash but how is that done with virtual money? With the internet down you can't exchange virtual coin for dollars
Click to expand...

Let me take your quote apart, one line at a time.

Bitcoin is virtual money so it's not backed by anything. Amazingly enough, neither is paper currency. I'll focus on US money, since that's what I'm most familiar. When the US dollar was taken off the gold standard, the only thing that backed it was the word of Congress. Think about that.

What if internet structure in any given Country is attacked and destroyed, how will people access their money? If the internet structure is attacked such that you cannot access your bitcoin, then the banks will face even worse problems. They don't ship bullion back and forth, it's all done electronically. (Only a tiny fraction of monetary shifting occurs with paper.)

Cash and gold are king; where does virtual coin fit in to this fact of life ? Virtual coin fits in between gold and cash. Printed currency only has value because the government forces it to be accepted by merchants. That is why it is called "fiat" currency. "This note is legal tender for all debts, public and private" is printed on every US note. FDR had that added. Before him, since it was linked to gold, people were not FORCED to accept US notes. In fact, many other notes were in circulation. Local/regional banks had their own notes.

Gold is king.

Cryptocurrency is non-governmental controlled. It floats in value. It is not a fiat currency. The market prices it as it is deemed worthy. There is no artificial valuation...like fiat currency.

If the internet fails tomorrow I can physically go to my bank and withdraw all my cash but how is that done with virtual money? With the internet down you can't exchange virtual coin for dollars Not really. If the internet is down, your ATM will not process your transaction, will it? But, you can go the bank...and be met with withdrawal limits. In fact, Cyprus did this, as did Greece and every other fiat currency country which faced financial issues. They keep your money. It's in a bank, not physically, but on an electronic ledger. The government controls the currency and the banks. In Cyprus, the took all the deposits over 100,000 euros. (They wanted all the deposits over 10,000, but riots stopped that.)

If your cryptocurrency "wallet" is stored on a USB stick, I'd imagine you could still do point-to-point cryptocurrency transactions. No, it is not widely accepted, so you'd be jammed with where to buy/exchange. Gold is still king.

Every fiat currency in every case and in every country and colony has exploded in hyperinflation. It's just a matter of time. Tie a currency into a base metal (gold or silver) and you have long-term stability. Cryptocurrencies are attempting to tie a new currency into a new measure of value. Cash is no longer tied to anything.
 
c3k said:
Let me take your quote apart, one line at a time.
Bitcoin is virtual money so it's not backed by anything. Amazingly enough, neither is paper currency. I'll focus on US money, since that's what I'm most familiar. When the US dollar was taken off the gold standard, the only thing that backed it was the word of Congress. Think about that.
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What is this nonsense? The US dollar and banking system is backed by the most powerful government on the planet. The United States government wields unmatched military might and has hundreds of trillions of current USD worth of land and resource assets available within it's borders. What am I supposed to be thinking about? Nation states are among the most enduring things created by people, and centralized banks have been more stable than commodity-backed currencies ever were.

If civilization completely collapses in a nuclear war or whatever I don't think either dollar bills or bitcoin is going to be much of a concern.
 
B00nie said:
Over 40% of all bitcoin are owned by a handful of people. If they decide to sell even a part of their coin, the valuation will drop like a rock.
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So then they obviously wouldnt dump because they'd tank their own assets in the process. It's not like $40 billion in bitcoin can just be sold overnight without anyone noticing. In fact thats the beauty of blockchain, every transaction is recorded thanks to p2p. It's very easy to spot tidal fluctuations in BTC. One person could probably dump a billion USD, but not all of them, the value would drop so fast they'd be screwing themselves to even try.

Best bet is for them to either slowly peel away at their own BTC reserves or hold on to it for a future in which digital currency reigns king over fiat. A future in which you can buy a house, buy a car, buy groceries all with the same relative ease as using a debit card today. Now they truly can retire without converting their currency to anything.
 
Can someone better versed in finance markets explain why they are opening futures trading before all 21 million bitcoins have been mined?

Just jumping on a bandwagon? Shouldn't there be less volatility as time goes on? Or does the nature of the bitcoin "market" make that impossible to predict?
 
deton8 said:
Can someone better versed in finance markets explain why they are opening futures trading before all 21 million bitcoins have been mined?

Just jumping on a bandwagon? Shouldn't there be less volatility as time goes on? Or does the nature of the bitcoin "market" make that impossible to predict?
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The point of futures trading is that you're locking in the price now for delivery in the future of a commodity whose value is fluctuating.
Using corn as an example: if you're a corn farmer, you have an idea of how much corn you can grow, and what the price will be when it's harvested. If you're a corn syrup manufacturer, you have an idea of how much corn you'll need to make your corn syrup and what it should cost. But the price of corn can fluctuate from predictions: if there's great weather and low pests, more corn may be grown than expected, and so the price may drop. Likewise, if there's no rain, corn supplies may be low and price goes up.
If you're the syrup manufacturer, you want to reduce the risk that there's a higher than expected price. Likewise, if you're the farmer, you want to reduce the risk that prices must be set lower than expected. So, before the crop is even planted, the buyer and seller might come to an agreement on a price for the harvested crop.
There's lots of farmers, and lots of buyers, so instead of the farmers dealing with the buyers, a futures market exists where traders whose sole job is to set deals up with farmers, and then they sell the finished product to the buyer. The futures traders have no interest in the commodity themselves, but they do provide a valuable service as brokers essentially between the producers of the commodity and the consumers of it.

This is perfect for bitcoin, where the price next week can be wildly higher or lower than it is now. If for example you're interested in starting a business that will use BTC for some purpose, and you need a reliable supply of a large quantity, you can lock in a price. Likewise, if you're a miner, you can guarantee that even if the BTC spot price drops that you will get paid (with the risk that the price rises higher and that you lose out on some potential profit).

Which brings the answer to your question on why the futures trading is taking place before the 21 million have all been mined: that's the point. Once all BTC have been mined, no more new coins will be available, and at that point you can't have futures before there's no commodity being produced.
 
nysmo said:
So then they obviously wouldnt dump because they'd tank their own assets in the process.
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They obviously wouldn't? I don't think you comprehend. This post is about a futures market for BTC.
Megalith said:
giving speculators a chance to bet on the [future] value of the cryptocurrency through a listed (XBT), regulated entity.
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What B00nie is saying is that since a very small number of people control a very large portion of available coins, it could be possible for those people or a subset of those people to affect the price of BTC at any given time.
 
Nicepants42 said:
They obviously wouldn't? I don't think you comprehend. This post is about a futures market for BTC. What B00nie is saying is that since a very small number of people control a very large portion of available coins, it could be possible for those people or a subset of those people to affect the price of BTC at any given time.
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Exactly. If BTC goes for futures trading it's elementally simple for a large owner to short BTC and then cause the short himself. Since bitcoins value is based on that nobody can really trade it, it should lose its value based on that alone.
 
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B00nie said:
Exactly. If BTC goes for futures trading it's elementally simple for a large owner to short BTC and then cause the short himself. Since bitcoins value is based on that nobody can really trade it, it should lose its value based on that alone.
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And, even worse, within the approximately 1,000 individual owners of 40% of Bitcoin, there are known relationships. Meaning, some of these guys know the other guys. This is rife for a short.
 
About 4 years ago I signed up for a newsgroups account. I saw that the provider accepted Bitoin for payment. Hvaing never used it fbefore, for shits and giggles I created a coinbase account, and bought enough bitcoin to pay for the subscription.

I had 27 cents worth of bitcoin left in th eaccount, and then forgot about it.

I just checked last week. It's worth over $400 now. That's quite amazing.

I'm fairly certain the value of bitcoin will crash once people get over the cryptocurrency hype, but I'm just going to leave mine in there for now and see what happens. After all, I'm only in for 27 cents :p
 
If you want to go full Infowars on this, the futures will probably crash hard, then they'll drag out some grandma who went bankrupt because her investor put too much into it. Then they'll use that to ban or regulate crypto-currency when the flaw that causes that crash is endemic in the public trading modell not the currency (which has its own issues).
 
TrailRunner said:
Which brings the answer to your question on why the futures trading is taking place before the 21 million have all been mined: that's the point. Once all BTC have been mined, no more new coins will be available, and at that point you can't have futures before there's no commodity being produced.
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Once all the coins are mined, it becomes more currency future than commodity future. If I'm planning to pay someone a salary in bitcoin (or receive a salary in bitcoin), I probably want to lock in the exchange rate today. Given the wild fluctuations in exchange rates, I don't know any reason a sane person would offer or accept a contract for future payments denominated in bitcoin, but maybe that'll change.
 
_l_ said:
too much Fallout buddy, way too much (plea


sure, and that sounds like the perfect tool for laundering money ...
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That's pretty much the reason it got so much traction and I have a feeling may also be the reason it'll get banned everywhere... We shall see. Maybe there won't be so much wasted electricity given declining fuel supplies. ;)
 
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