Topic: Winklevoss Twins File to Launch Bitcoin Exchange-Traded Product - page 3. (Read 8509 times)

and when they redeem for bitcoins the price drops as has been the case with the transfer from GLD to physical of late.

Every single satoshi in ETF should be backed by real bitcoin. If they publish their cold storage addresses to prove they are not short-selling paper bitcoin, I can't see why this is not good

It's pretty pathetic and destructive and it's not only here, it's the majority of bitcointalk and r/bitcoin who are happy to scam the unsuspecting public out of the option to withdraw Bitcoins and store them as long as it makes the current Bitcoin holders money. This is nowhere like with gold where it's simply unfeasible. Unfortunately this has become the world we live in.

Regardless, it probably won't be approved by the SEC anyway.

FUD? Did anything I wrote caused Fear, Uncertainity and Doubt in you? Well, you are really faint hearted then.

Winkle-evil's Bitcoin ETF is just a laughable attempt at market making. ETFs are a "normal" tool for speculative manipulation, especially ETFs related to physical commodities. JP Morgan has been using its tricks to heavily manipulate the silver market for years. Everybody in silver is bitching about them, but now if the Winkle-evil's do the same thing in BTC everyone cheers them because that will very possibly increase the BTC price in the short term, which is the only thing most of people in here cares about.

The Winkle-evil's shares are just worthless pieces of paper. Nobody sane would believe he is holding any Bitcoins by owning their shares. There's no way to redeem those shares for blockchain BTC, right?

BTW, Kazu says ETFs are a "bundle"... What are the Winkle-evil's bundling together? Nothing. He says that "they are legally obligated" not to scam. Yeah, like everybody else, still these are tools used for fools to be parted with their money on a recurrent basis.

As I said earlier, I won't be touching their toilet paper with a bargepole, but still I believe their eventual success would be bullish for the BTC/USD exchange rate. It would add liquidity for sure, but on the other side also a powerful manipulation tool.

Sure, if I'm going through a broker. But if I'm a bank with a seat on the exchange, and I'm careful to always cover my shorts before the T-3 delivery deadline, then who has the authority to issue a margin call against them?

The SEC?

Ok so the issue with this is that eventually that 5000 shares are going to have to be paid back, and since brokerages aren't a big fan of letting you essentially form a ponzi scheme with them as the lender, they're going to trigger margin calls. Think about it this way, you know John Law's land scheme? Its essentially that, except in reverse. So it might work for a while, but it will eventually fail, and at that time Bitcoin will have to revert to higher than it was thanks to interest & margin calls.

Yeah, okay, you can profit from other peoples' naked shorts. But the idea that it will increase the value of the asset assumes that the person shorting naked will actually cover their position someday.

Lemme explain.

You have your BTC ETF. There's one million shares of it. I naked-short-sell 5,000 shares. Three days later I cover my position by buying 5,000 shares, and immediately naked-short another 5,000. Less exchange fees, my position hasn't changed - it was -5000 (naked) shares yesterday, and I bought 5000 and sold 5000, leaving -5000 (naked) shares today.

The result is that, as long as I keep this up, at any given time there are 1,005,000 shares of the ETF on the market - 1,000,000 "real" shares, and 5,000 created by my perpetually renewed naked short position. Which means that to the extent that market considers these ETF shares to be equivalent to holding BTC, I've effectively inflated the supply of BTC.

That's the attack I'm proposing, and why I think that even though the Winklevosses can't really cheat, this bitcoin paper can still exist at over-unity to the actual specie.

That's only if you believe in the delusion that you've laid out.  "possible 100 billion or trillion..."  This will never happen with Bitcoin and while I don't presume the twins are the sharpest tools in the shed (i.e. getting jacked for Facebook) they are certainly far from stupid.  Bitcoin peaked in media attention over the last couple of months and mass adoption is virtually nill.  No amazon, ebay, Paypal or any other major company accepted Bitcoin.  Not because they don't know about it but purely because they are not interested in dealing with Bitcoin.

Now, nobody knows for sure what the twins are up to but they certainly can't just dump their holdings on the open market and this seems the mostly like way to accomplish that, while reaping a massive profit.  My gut says this is an exit strategy because the "traction" you speak of, does not exist.  Time will tell.  

And for many institutional investors / pension fund managers, they may not be allowed to invest in physical commodity directly. They can only invest in instruments on a public exchange like NASDAQ and the Bitcoin ETF will be their best and only choice; and these are where the real big money comes from.

And if you are trading bitcoin purely for speculation, Bitcoin ETF on NASDAQ will be a better choice. You don't need to worry about the incompetency of MtGOX. You don't need to worry about wire-transfer halt. You don't need to worry about DDOS as that also means DDOS of everything on NASDAQ.

/thread

The people saying that they don't see the point in an ETF because you can manually purchase your own bitcoins are living in a bubble world.

Not everyone is a Bitcoin nerd.

If you make anything easier to access, you expand the market. The ETF isn't for people on this forum. It's mainly for everyone else.

Some people are still stick in 2010 thinking the entire world of BTC is just a few thousand computer geeks. The world has moved on. The ETF is a great idea.

jpmorgs and those banking giants run the SEC?

Thanks for the great explanation
Really hope you are right. I read and watch a lot from M. Keiser, Celente, Ron Paul, Schiff and some more and i am really worried that what they do to metals or other rigged markets could happen to bitcoin in the future. It is probably my own lack of knowledge about advanced financial instruments but sometimes those advanced financial instruments seem to allow for very unfair practices for the normal saver and for all normal citizens in general. Playing  with death insurances, paying employees with credit cards, rigging markets for ever with low risk, and a thousand more.

I know bitcoin provides a pseudocode that would allow to begin working at some extent with more advance financial assets and I wonder if us, bitcoin early adopters should really try to develop that pseudocode instead of using normal financial methods that satoshi, all the world  already know are hugely rotten. In no one we should trust only on numbers. There is an X amount of Tons of Gold  and yet they rig it to some extent. We have 21 million bitcoins, and they will probably try to rig it aswell. The problem is not the scarcity of the underlying, the problem might be that the method to control the finances is absolutely corrupted. Using their methods might probably be a problem for bitcoin because they will lie, rob and do whatever it takes to take what is yours. I say, lets use derivatives, but derivatives based on the blockchain not on "their methods".

Ok now explain to me how JPMorgan is going to keep bitcoin price down realistically.

The major difference between Bitcoin and Silver is that (1) its very hard for a 'normal' person to own silver as efficiently as JPMorgan can and (2) Silver isn't 'spent.'

With Silver people sort of have to buy JPMorgan's products because JPMorgan can own Silver for less than its fees. This effectively makes the institution a defacto issuer of a Silver-Based currency. Clearly this won't work with Bitcoin because anybody can own Bitcoin for free. Silver requires resources to maintain, Bitcoin doesn't.

Also bitcoins are spent, and the ETF can't be 'spent.'

What does all this mean? The ETF is worth less than the actual Bitcoins. So people will be naturally encouraged to slowly redeem their ETF for Bitcoins, not the other way around. This means that the ETF serves more as a newfangled vehicle of exchange, that charges a fee for the convenience of exchange (just like, say bitinstant) rather than a defacto JPMorgan-issued pseudo-currency.

And if the main idea is just to mantain bitcoin undervalued all the time, like JPMorgan does with silver and they have access to infinite resources (printing press) and no legal risk whatsoever (too big to fail).

What would happen with BTC? Wait for long years until JPMorgan just stops playing with your money like is happening to silver investors on their rigged market?

....

Trust me, assuming you are a bull, you should be hoping for tons of naked shorts. The more the better. They borrow bitcoins / ETF bitcoins (in a best-case-scenrio, from you), and start dumping them. You let the market depth eat up his asks and let the price go down. Now you wait until the short is about to expire, re-buy at the lower price, the more the better, causing increase in price. Sooner or later the first of those shorters take profit, buying back more bitcoins than they borrowed to pay you back with interest, but these first dudes walk away with a fair profit. You time your own buy just before the first shorts are about to expire, now the price is going up and the shorters owe you coins, and you just bought bitcoins at a discounted price, and due to margin calls & interest, the whole deal is actually liable to INCREASE the bitcoin price.

There's a reason why naked shorting is a bad practice, its because its incredibly risky, and if too many people do it, then it essentially forms an inverse bubble except worse, since there is the potential to lose MORE than you originally invested. And when the bears take a big risk, and that risk fails, they lose money, and when the bears lose money, the bulls win.

Too much naked shorting can cause all sorts of problems for a commodity, but a declining price (at least in the long term) is not one of them.

For the moment and until we can hire Shakira is either them or Mr Karpeles giving interviews to the press sit on a purple relax balloon.

I don't know how "capable" the twins are. Just because you have money doesn't mean you are capable of being a figure head for an entire emerging industry. If you've ever seen the twins interview or their presentation at the previous bitcoin conference you wouldn't be so keen on them representing the bitcoin community. I don't however believe that they have some sort of malicious intent against the currency. I think they truly want it become widely adopted and more accessible to the american public. Nevertheless, the introduction of this ETF will probably be one of the worse things to happen to the currency. If it doesnt get approved, the price of bitcoin will go down. If it does get approved the price of bitcoin will go down as major wallstreat investors will maninpulate the price of the ETF and short it, ultimately devaluing all bitcoin in the long run. Although the number of bitcoin in the fund will only constitute a little more than one percent of all bitcoin, it will still represent public sentiment for the currency since it will seem to the vast majority of americans as the most legitamate marker for bitcoins price.

The ETF will most likely not get approved. But if it does it will probably bring about bitcoins end and open the door for another crypto currency to emerge as the most popular.

I support them rather than Jpmorgans and those banking giants

Hope you guys are right but JPMorgan and the likes are powerful and abyect vampires with eyes inyected on blood and infinite thirst on money.
They also have billions of lifes because they are too big to fail.
They WILL try to corrupt bitcoin on their own benefit.
And derivatives and naked shorts might very well be the path.