I'm looking for ways to hedge against volatility. Having been almost scammed by Bitfinex (read this topic for further info), I'm no longer interested in centralized exchanges offering this option
BitShares seems to offer what I need without the pitfalls of a centralized exchange, even though there are other potential drawbacks and dangers. I understand how smart coins work in general, but I'm not sure how reliable their networks are when under attack. In other words, if the network of such a coin is compromised and brought down, it will most definitely be a game over despite all its decentralization and robustness
So how to hedge against volatility in a smart and safe way (other than cashing out)?
BitShares seems to offer what I need without the pitfalls of a centralized exchange, even though there are other potential drawbacks and dangers. I understand how smart coins work in general, but I'm not sure how reliable their networks are when under attack. In other words, if the network of such a coin is compromised and brought down, it will most definitely be a game over despite all its decentralization and robustness
So how to hedge against volatility in a smart and safe way (other than cashing out)?
The only thing you have without going to fiat is "cryptos" which simulate fiat, so we are talking about Tether, and all the other "USDcoins", of course there's nothing free in life, so by converting your BTC in one of these tokens you are gaining in certainty price wise, but you are losing in certainty in terms of knowing that what you own isn't going to disappear because the feds decide to crush Tether or whatever other USD-pegged coin as they start auditing accounts and things may not add up
There are quite a few ways to hedge against volatility using "regular" cryptocurrencies. The simplest and likely most straightforward and reliable (at least, this is what I thought till recently) method, which is my personal preference, is using covered shorts. Basically, you open a short position in some currency on an exchange which allows margin trading equal to the amount of your market exposure. You will have to provide some collateral and pay interest on borrowed funds but other than that, you would be 100% protected against volatility action
Until the exchange decides they know better and liquidate your position, for example, due to a "glitch" in their system
At this point I would consider my money safer on BTC regardless of price volatility. Once you realize that you either have a fixed price regulated by a government or sovereignty over your own money, you value BTC even more.
I actually agree with that but if you can effectively hedge against volatility, there is no reason not to do it
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