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Non-paywall source http://archive.is/pwC2S http://archive.is/pwC2S This is when the real fun begins for cryptos with oversized floats. Look to see a lot of nak

Non-paywall source http://archive.is/pwC2S http://archive.is/pwC2S This is when the real fun begins for cryptos with oversized floats. Look to see a lot of naked shorting https://www.investopedia.com/terms/n/nakedshorting.asp https://www.investopedia.com/terms/n/nakedshorting.asp as it will be the primary means of enabling WallSt sharks to create "death spirals" https://www.investopedia.com/terms/d/deathspiral.asp https://www.investopedia.com/terms/d/deathspiral.asp by creating artificial over-supply https://www.investopedia.com/terms/a/ax.asp https://www.investopedia.com/terms/a/ax.asp driving a cryptos price down so they can scoop it up at rock bottom prices. There will be other cryptos with smaller floats that will burn shorts via the classic "short squeeze" driving the price up for these cryptos at the same time.

chollida1 9y ago
Maybe you can explain this for me a bit more. In the cash equities markets you can naked short because the exchange doesn't hold your shares. In bitcoin the exchange itself holds your bitcoin so they can only allow you to short what you own. How do you propose a user naked shorts something on a bitcoin exchange where the exchange can simply not let you enter the sell without the required bitcoin?
- KasianFranks 9y ago
  A "note" by a partner investment house or broker that will back you, because of your rep with them or because you've got an inside track, saying that you do "own" the required amount. This is how it works on the traditional Street. And it won't just be Bitcoin, but now most crypto according to what the article is describing.
  - JumpCrisscross 9y ago
    > This is how it works on the traditional Street No, it isn’t. Brokers certify ownership through official channels. Lying about a customer’s account is fraud. In the repo market, that is investigated directly by the Federal Reserve. Naked repos aren’t a thing.
    - KasianFranks 9y ago
      Fraud does not exist on Wall Street? Try again. This is another reason the blockchain and crypto do exist.
      - skybrian 9y ago
        The relevant comparison would be between stock brokers and crypto exchanges. Crypto exchanges get hacked all the time.
    - xenihn 9y ago
      >Lying about a customer’s account is fraud. Does that mean that you think that it doesn't happen?
      - JumpCrisscross 9y ago
        > Does that mean that you think that it doesn't happen? It happens, but it’s rare, at least with repos. Treasuries are tracked by the CUSIP—the U.S. Treasury knows every nominal owner. Being short-term, settled up front and centrally tracked makes it a bad place to attempt fraud. Fraud is a frequency, not binary, metric. Fraud in crypto-currencies is rifer than anything we’ve seen in America for generations. Complaining about potential repo fraud when BitConnect and pump and dumps run rampant is a bit silly.
  - chollida1 9y ago
    > A "note" by the a partner investment house or broker that will back you, because of your rep with them or because you've got an inside track, saying that you do "own" the required amount. This is how it works on the traditional Street In the cash equities markets? Maybe 15 years ago. But in the past 10+ years, you have to have the shares to short or you get in "alot of trouble.". What you are describing is straight up illegal and no prime broker will allow this. I get that you probably don't work in the markets and you are relaying on something you read, don't feel too bad, there is alot of mis-information about wall street out there :)
    - KasianFranks 9y ago
      Of course it's straight up illegal and has been since 2008. On Wall St it still happens. And nope, not relying on something I've read but experienced runing a public company as founder and CEO: https://news.ycombinator.com/item?id=13844765 https://news.ycombinator.com/item?id=13844765
  - landryraccoon 9y ago
    So I’m still unclear on how this works. The difference with shorting a stock is that the short seller actually has to give the bitcoins to the person they sell the shorted bitcoins to - a “signed note” doesn’t work. The person buying the btc from the one shorting expects bitcoins to appear in their wallet. Where do those bitcoins come from? In the case of a short sale, the brokerage can manufacture imaginary “negative shares”, say a piece of paper, like you say. But that doesn’t work here because the brokerage can’t manufacture bitcoins. To put it another way, let’s say you are shorting gold, but your counterparty won’t accept a piece of paper. They want delivery, like an actual gold bar. That gold bar has to come from someone who now has one less.
    - KasianFranks 9y ago
      It's more about what's possible with "short interest" and falsely reporting "shares short" that can give the perception that there is more supply than there really is thereby inhibiting buyers and increasing sell pressure. It's a form of high level manipulation that occurs in the traditional markets everyday. How this kind of manipulation translates to crypto is up for grabs, but some form of it is coming I can guarantee you that. Source, me: https://news.ycombinator.com/item?id=13844765 https://news.ycombinator.com/item?id=13844765
- FearNotDaniel 9y ago
  There are crypto exchanges that allow naked shorting. As long as you hold the equivalent USD or EUR amount in the exchange, Cexio for example will let you margin short BTC with 3x leverage, when you don't actually own the BTC. I'm not saying you should, just that you can.
deleted 9y ago
[deleted]
- bby 9y ago
  What do you think are realistic ways for making money in the crypto space as the market evolves? Once the unsophisticated money slows down.
airza 9y ago
Why did you link this extremely non-related link to 'death spiral'?
- KasianFranks 9y ago
  When vehicles are created to short crypto you can bet there will be manipulation on the short side. This is why it's relevant according to my experience and the experience of others, see: https://en.wikipedia.org/wiki/Patrick_M._Byrne https://en.wikipedia.org/wiki/Patrick_M._Byrne https://www.businesswire.com/news/home/20061004005632/en/Cal-Bay-International-Orders-NOBO-DTC-Lists-Determine https://www.businesswire.com/news/home/20061004005632/en/Cal... I also trade crypto. Just trying to provide insight that might protect a few people related to my first hand experiences in the traditional financial markets running a public company in the OTC markets.

chollida1 9y ago

Maybe you can explain this for me a bit more. In the cash equities markets you can naked short because the exchange doesn't hold your shares. In bitcoin the exchange itself holds your bitcoin so they can only allow you to short what you own. How do you propose a user naked shorts something on a bitcoin exchange where the exchange can simply not let you enter the sell without the required bitcoin?

KasianFranks 9y ago
A "note" by a partner investment house or broker that will back you, because of your rep with them or because you've got an inside track, saying that you do "own" the required amount. This is how it works on the traditional Street. And it won't just be Bitcoin, but now most crypto according to what the article is describing.
- JumpCrisscross 9y ago
  > This is how it works on the traditional Street No, it isn’t. Brokers certify ownership through official channels. Lying about a customer’s account is fraud. In the repo market, that is investigated directly by the Federal Reserve. Naked repos aren’t a thing.
  - KasianFranks 9y ago
    Fraud does not exist on Wall Street? Try again. This is another reason the blockchain and crypto do exist.
    - skybrian 9y ago
      The relevant comparison would be between stock brokers and crypto exchanges. Crypto exchanges get hacked all the time.
  - xenihn 9y ago
    >Lying about a customer’s account is fraud. Does that mean that you think that it doesn't happen?
    - JumpCrisscross 9y ago
      > Does that mean that you think that it doesn't happen? It happens, but it’s rare, at least with repos. Treasuries are tracked by the CUSIP—the U.S. Treasury knows every nominal owner. Being short-term, settled up front and centrally tracked makes it a bad place to attempt fraud. Fraud is a frequency, not binary, metric. Fraud in crypto-currencies is rifer than anything we’ve seen in America for generations. Complaining about potential repo fraud when BitConnect and pump and dumps run rampant is a bit silly.
- chollida1 9y ago
  > A "note" by the a partner investment house or broker that will back you, because of your rep with them or because you've got an inside track, saying that you do "own" the required amount. This is how it works on the traditional Street In the cash equities markets? Maybe 15 years ago. But in the past 10+ years, you have to have the shares to short or you get in "alot of trouble.". What you are describing is straight up illegal and no prime broker will allow this. I get that you probably don't work in the markets and you are relaying on something you read, don't feel too bad, there is alot of mis-information about wall street out there :)
  - KasianFranks 9y ago
    Of course it's straight up illegal and has been since 2008. On Wall St it still happens. And nope, not relying on something I've read but experienced runing a public company as founder and CEO: https://news.ycombinator.com/item?id=13844765 https://news.ycombinator.com/item?id=13844765
- landryraccoon 9y ago
  So I’m still unclear on how this works. The difference with shorting a stock is that the short seller actually has to give the bitcoins to the person they sell the shorted bitcoins to - a “signed note” doesn’t work. The person buying the btc from the one shorting expects bitcoins to appear in their wallet. Where do those bitcoins come from? In the case of a short sale, the brokerage can manufacture imaginary “negative shares”, say a piece of paper, like you say. But that doesn’t work here because the brokerage can’t manufacture bitcoins. To put it another way, let’s say you are shorting gold, but your counterparty won’t accept a piece of paper. They want delivery, like an actual gold bar. That gold bar has to come from someone who now has one less.
  - KasianFranks 9y ago
    It's more about what's possible with "short interest" and falsely reporting "shares short" that can give the perception that there is more supply than there really is thereby inhibiting buyers and increasing sell pressure. It's a form of high level manipulation that occurs in the traditional markets everyday. How this kind of manipulation translates to crypto is up for grabs, but some form of it is coming I can guarantee you that. Source, me: https://news.ycombinator.com/item?id=13844765 https://news.ycombinator.com/item?id=13844765
FearNotDaniel 9y ago
There are crypto exchanges that allow naked shorting. As long as you hold the equivalent USD or EUR amount in the exchange, Cexio for example will let you margin short BTC with 3x leverage, when you don't actually own the BTC. I'm not saying you should, just that you can.

deleted 9y ago

[deleted]

bby 9y ago
What do you think are realistic ways for making money in the crypto space as the market evolves? Once the unsophisticated money slows down.

airza 9y ago

Why did you link this extremely non-related link to 'death spiral'?

KasianFranks 9y ago
When vehicles are created to short crypto you can bet there will be manipulation on the short side. This is why it's relevant according to my experience and the experience of others, see: https://en.wikipedia.org/wiki/Patrick_M._Byrne https://en.wikipedia.org/wiki/Patrick_M._Byrne https://www.businesswire.com/news/home/20061004005632/en/Cal-Bay-International-Orders-NOBO-DTC-Lists-Determine https://www.businesswire.com/news/home/20061004005632/en/Cal... I also trade crypto. Just trying to provide insight that might protect a few people related to my first hand experiences in the traditional financial markets running a public company in the OTC markets.