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The BTC future will settle against a spot reference price so you cannot take delivery. My big issue with this is if the reference price is manipulated by excha

The BTC future will settle against a spot reference price so you cannot take delivery. My big issue with this is if the reference price is manipulated by exchanges (there is a lot of speculation about that exchanges aren't being honest with their trades) there is no way for the future to correct this. Shorting the future would do nothing. The future is a prediction on that settlement index and not the actual price of BTC. The usual move would be to take delivery and sell elsewhere or carry the underlying. I really wish BTC wasnt financially settled. I have no trust in the current BTC exchanges. They really don't deserve it.

runeks 9y ago
> My big issue with this is if the reference price is manipulated by exchanges (there is a lot of speculation about that exchanges aren't being honest with their trades) there is no way for the future to correct this. How would this manipulation be done by the exchanges in practice? a) If they lie about the last trade price, their order book wouldn’t match this. b) If they use deposited USD to buy up BTCUSD sell orders (to push up the price), their USD assets would no longer match their USD liabilities. And if only a single exchange does b), its USD assets would quickly drain from the exchange, as arbitrageurs would 1) buy cheap bitcoins at the other exchanges 2) sell on the expensive/cheating exchange 3) withdraw USD from cheating exchange (draining USD that is already in short supply because of the cheating) 4) deposit USD at low-price exchanges and repeat 1).
- jnordwick 9y ago
  I've worked in trading for a while now, and after talking to a could people specifically about bitcoin, inter-exchange arbitrage isn't as big as it should be. The issues tend to be around clearing and counterparty risk (BTC on two different exchanges have different prices reflecting the difficulty in moving BTC off the exchange). There is a lot of friction in BTC movement which really shouldn't exist. Also you assume exchanges operating financial information is open and trusted which is definitely not the case. It's easy for the exchange to paint the tape with false trades and it doesn't cost them anything. A large player getting a fee discount can self trade without much loss either. I don't think the order books are to be trusted with these BTC venues.
  - chris_st 9y ago
    > There is a lot of friction in BTC movement which really shouldn't exist. Maybe this is protecting the BTC market from flash traders?
    - jnordwick 9y ago
      I don't know how you call this massive volatility and fraud "protection" from me and my cohorts. BTC could use the depth provided by high volume electronic trading, and also the linkage between all the venues and alt coins.
- empath75 9y ago
  > their USD assets would no longer match their USD liabilities This is exactly what bitfinex is doing with tethers.
csomar 9y ago
Bitcoin price being manipulated is a popular and cool story. It is not real, though. Bitcoin is traded on a dozens of international exchanges, hundreds of small local ones, P2P with cash, by OTC for large players, against other cryptocurrencies... You get the picture. It is not possible to manipulate it for a long period. Maybe a spike up or down? But that's it.
- empath75 9y ago
  Except one of the exchanges is literally printing 100s of millions of dollars of fake money a month and using it to pump the price. The ‘price’ of bitcoin on the largest exchange isn’t actually based on dollars it’s a cryptocurrency called ‘tether’ which is supposedly backed by dollars but isn’t.
  - csomar 9y ago
    Except that you are not a real person but a slightly improved AI that goes on the internet and start commenting. If I don't need to have proof I can say anything. How do you know the same is not happening with the big banks we have? The difference in bitcoin is that trading is not limited to a single exchange. The amount of Tether is very small compared to the crypto market. (0.6bn to 250bn)
    - CamelCaseName 9y ago
      >How do you know the same is not happening with the big banks we have? Whataboutism, and there is substantially less potential for everything to disappear, more transparency, and decades (centuries?) of regulation. >The difference in bitcoin is that trading is not limited to a single exchange. The amount of Tether is very small compared to the crypto market. (0.6bn to 250bn) Look at the tether volume vs. the BTC volume and you will get a very different story. It's misleading to talk about Bitcoin's market cap when such a huge amount of it is lost forever or not actively traded/moving the market.
      - csomar 9y ago

runeks 9y ago

> My big issue with this is if the reference price is manipulated by exchanges (there is a lot of speculation about that exchanges aren't being honest with their trades) there is no way for the future to correct this. How would this manipulation be done by the exchanges in practice? a) If they lie about the last trade price, their order book wouldn’t match this. b) If they use deposited USD to buy up BTCUSD sell orders (to push up the price), their USD assets would no longer match their USD liabilities. And if only a single exchange does b), its USD assets would quickly drain from the exchange, as arbitrageurs would 1) buy cheap bitcoins at the other exchanges 2) sell on the expensive/cheating exchange 3) withdraw USD from cheating exchange (draining USD that is already in short supply because of the cheating) 4) deposit USD at low-price exchanges and repeat 1).

jnordwick 9y ago
I've worked in trading for a while now, and after talking to a could people specifically about bitcoin, inter-exchange arbitrage isn't as big as it should be. The issues tend to be around clearing and counterparty risk (BTC on two different exchanges have different prices reflecting the difficulty in moving BTC off the exchange). There is a lot of friction in BTC movement which really shouldn't exist. Also you assume exchanges operating financial information is open and trusted which is definitely not the case. It's easy for the exchange to paint the tape with false trades and it doesn't cost them anything. A large player getting a fee discount can self trade without much loss either. I don't think the order books are to be trusted with these BTC venues.
- chris_st 9y ago
  > There is a lot of friction in BTC movement which really shouldn't exist. Maybe this is protecting the BTC market from flash traders?
  - jnordwick 9y ago
    I don't know how you call this massive volatility and fraud "protection" from me and my cohorts. BTC could use the depth provided by high volume electronic trading, and also the linkage between all the venues and alt coins.
empath75 9y ago
> their USD assets would no longer match their USD liabilities This is exactly what bitfinex is doing with tethers.

csomar 9y ago

Bitcoin price being manipulated is a popular and cool story. It is not real, though. Bitcoin is traded on a dozens of international exchanges, hundreds of small local ones, P2P with cash, by OTC for large players, against other cryptocurrencies... You get the picture. It is not possible to manipulate it for a long period. Maybe a spike up or down? But that's it.

empath75 9y ago
Except one of the exchanges is literally printing 100s of millions of dollars of fake money a month and using it to pump the price. The ‘price’ of bitcoin on the largest exchange isn’t actually based on dollars it’s a cryptocurrency called ‘tether’ which is supposedly backed by dollars but isn’t.
- csomar 9y ago
  Except that you are not a real person but a slightly improved AI that goes on the internet and start commenting. If I don't need to have proof I can say anything. How do you know the same is not happening with the big banks we have? The difference in bitcoin is that trading is not limited to a single exchange. The amount of Tether is very small compared to the crypto market. (0.6bn to 250bn)
  - CamelCaseName 9y ago
    >How do you know the same is not happening with the big banks we have? Whataboutism, and there is substantially less potential for everything to disappear, more transparency, and decades (centuries?) of regulation. >The difference in bitcoin is that trading is not limited to a single exchange. The amount of Tether is very small compared to the crypto market. (0.6bn to 250bn) Look at the tether volume vs. the BTC volume and you will get a very different story. It's misleading to talk about Bitcoin's market cap when such a huge amount of it is lost forever or not actively traded/moving the market.
    - csomar 9y ago