Topic: Belgium Bans Virtual Derivatives - page 2. (Read 2502 times)

"the least hackable thing in the world"

"BITCOIN IS BEST COIN!"

A derivative is a financial contract which derives its value from the performance of another entity such as an asset, index, or interest rate, called the "underlying."

It will be very interesting to watch how this develops in regards to colored coins.  A company like Groupon could issue vouchers using colored coins for their small-business clients, leveraging the accounting/verification system offered by bitcoin.  In my opinion, vouchers would not be banned under the Belgium FSMA regulation, but I'm not sure.  And what about issuing bonds or shares with colored coins?  In this case, the colored coins are the underlying because the underlying is just a contract and the colored coins represent pieces of that contract so to speak.  

The rational for the FSMA decision was:

an overall prevalence for operating risk, hacking virtual currency platforms, exchange rate risks and volatility, and the lack of legal guarantee for actual face value

With colored coins, the "virtual currency platform" that a hacker would have to hack is the blockchain itself and probably the least hackable thing in the world.  The "exchange rate risk and volatility" is irrelevant IMO and the "prevalence for operating risk" is ambiguous.

One point I think it partially valid is "the lack of a legal guarantee for actual face value."  If a company issues bonds as colored coins and creates a contract with the hash of that contract embedded within the colored-coins-issuance transactions, this becomes very strong proof of the agreement the was made between the issuer and the colored coin holders.  IMO this is as legally binding as any other contract and is a guarantee of face value, but IANAL.  However, whether the issuer will actually honour the contract is another matter.  But the credit worthiness of the issuer is a problem that has nothing to do with bitcoin.  

that's an extremely dumb statement and the kind of thinking that's slowing the advance of bitcoin. bitcoin should integrate into the existing financial system, not in some way overthrow it. there's just absolutely no way bitcoin could stand up against an established, working and (in large parts) useful multi trillion dollar derivatives market. and it doesn't need to. everything else is anarchism.

lol, you're probably mostly right  .

Incorrect.

so far I'm pretty sure not a single person in this thread actually knows what a Derivative is.

-bm

yes, but belgium is the one of the most user of tresor US paper money (paper debt deposit). 

I don't really want to use my btc like fiat anyway. Derivatives and futures etc. are an old economy thing.

So derivatives are fine everywhere but in crypto? Right ....

This isnt good news. Really wish countries would stop trying to ban or restrict bitcoin.

it appears to be a response to the release of ShortNXT which is the first pure P2P Crypto Derivative.  You can purchase short positions(NXT is the underlying) on the NXT network.

https://nxtforum.org/assets-board/official-nxtshort-thread-faq/

-bm

http://en.wikipedia.org/wiki/Derivative_(finance)

Examples would be futures and options.

What are virtual derivatives? crytocurrencies?

http://dcmagnates.com/belgium-regulator-fsma-issues-ban-of-virtual-currency-based-derivatives-effective-july-1/


-bm