Topic: CoinLab News = Price collapse - page 4. (Read 6910 times)

Wow. That is an AMAZING idea. Given the thirst for bitcoin startups by VCs wanting to get in on the action, I think someone should really do this!!

So what? Physical silver prices and paper silver prices routinely diverge. If they aren't actually receiving BTC (like in the paper silver market), they can short and long prices in whatever direction they want.

They might even receive some sort of credit to BTC (without having to actually take possession), but coinlab or the TPTB could be just be employing fractional banking. At least with BTC some red flags will get raised when the total value of contract on the trading plaform go up over BTC1M

I'm sure most of the bulls around here will still be happy with artificially driving the price down in the near term. And the conspiracy theorists will surely have a field day!

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

My "bank" would create cryptographic signatures on a daily basis proving in fact that I have every single bitcoin I say I have on deposit.  Meanwhile, I would break down that 1000 BTC into "ranges" to assert that they are owned by specific depositors (but only in a manner where the depositors themselves can identify their own funds, not the public).  For example, if I held 4 deposits for 4 people, and they were 100, 200, 300, and 400, then I would say that coins 1-100 belong to depositor 1, coins 201-400 belong to depositor 2, 401-600 and 601-1000 belong to depositors 3 and 4.  I would sign and send messages to each depositor, which would allow them to reconcile, catch, and out me if (for example), I told two people they each own the same range of coins.

The real goal would be to help the public know they really can and should demand proof that their deposits are safe and sound and not fractionally pledged, the same way "provably fair gaming" is teaching us by example that we should demand, well, provably fair games.

In turn, this would cut down the number of "paper bitcoins" in existence (or rather, I should say, "bitcoin-denominated promises", because the "paper bitcoins" I have in mind - like bitaddress.org and bip38 - are actually close to the best kind of bitcoins you can have!)

I know, right?!  I once had hope that the bears would come back to Earth once they were proven wrong enough times, but it seems like they just double down and go for even worse theories.  Theories even Alex Jones would be like, "Man, you be trippin'."

The ability to short doesn't magically allow the price to be driven down longer than the term of the loan contract.  They have to rebuy the units they short-sold within the time limit, and if the rest of the market hasn't agreed with them during that period of time, they lose money on the short.

Gentlemen, bayonets out and tin foil hats at the ready!

This is possible when you can create commodities out of thin air (like "paper silver").
With bitcoins this is not possible.

In addition to the news that CoinLab is gonna manage USA/CA funds from Mtgox, they are announcing a professional, safe and licensed trading platform for US Corporations.

Trading platform = shorting.

3 or 4 medium sized corporations with 3 or 4 multimillion shorts puts the prices in $10 or below in no time.