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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 "ow

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

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