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Institutional Investors Are Using Back Door for Crypto Purchases

77 points by petethomas 8y ago

xchaotic 8y ago
Institutional investors = lots of money desperate for positive (inflation adjusted) returns. The earth doesn't get any bigger and somehow the whole world economy is currently built on the expectation of perpetual growth.
- slededit 8y ago
  The earth doesn't get a whole lot bigger, but consider that 100 years ago sand was useful only as fill. Now there is a trillion dollar industry turning it into microprocessors. Value does not derive solely from raw materials.
  - deleted 8y ago
    [deleted]
- hueving 8y ago
  The earth isn't the thing buying stuff. It's people. Once population count goes stagnant or starts to decline then a lot of investment models will have problems.
deevolution 8y ago
Back door as in OTC trades perhaps?
rl3 8y ago
Relevant: https://republicprotocol.com/ https://republicprotocol.com/
- badge 8y ago
  interesting... "Decentralized dark pool exchange protocol. Built for laundering large volumes of crypto." https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-virtual-currency-exchange-110-million-facilitating-ransomware https://www.fincen.gov/news/news-releases/fincen-fines-btc-e...
  - rl3 8y ago
    Despite the scary name, I fail to see the laundering connection. Wouldn't the trades hit the blockchain upon final execution anyways? They look pretty legit. Here's more info: https://venturebeat.com/2018/09/27/worlds-first-decentralized-dark-pool-launched-by-republic-protocol/ https://venturebeat.com/2018/09/27/worlds-first-decentralize... It's worth noting that I've no connection to them nor any conflict of interest, just thought it was topical. Didn't have time to make a disclaimer in my original post.
woodpanel 8y ago
My key takeaways from reading this: - investors chipping in not because of potential upside, but because of reduced volatility. [1] - there is such a thing as collectible coins and that "Clean Bitcoins" make sense I guess :-) [2] [1] > Over the last four to six months, the market has been trading in a very tight range, and that’s seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space." [2] > What’s more, miners can offer something unique: brand-new, “virgin” coins, which some investors covet. Such coins command a premium of up to 20 percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s easier to prove they’ve not been involved in money-laundering operations, he said
- badge 8y ago
  What’s more, miners can offer something unique: brand-new, “virgin” coins, which some investors covet. Such coins command a premium of up to 20 percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s easier to prove they’ve not been involved in money- laundering operations, he said Ironic, because that's actually the defacto method for laundering money in Bitcoin land See this bitcoin laundering method described in this post from a moderator on BitcoinTalk dated August 22, 2013, 02:32:31 AM [ https://bitcointalk.org/index.php?topic=279249.0 https://bitcointalk.org/index.php?topic=279249.0 ] Payment to miners / mining pool operators for their freshly minted "clean" "virgin" coins in exchange for a 20% markup.. why would anyone want to immediately lose 20% of their investment?...
  - 21 8y ago
    > why would anyone want to immediately lose 20% of their investment?... It's called insurance, just like after you buy a house you immediately insure it by paying a premium of x% of it's value. In this case, you insure against someone in the future claiming those coins were stolen from him. The investors want exposure to the bitcoin price, but not to some of the risks, so they factor them out as much as possible.
    - dgant 8y ago
      It's telling that the risk premium is 20%.

77 points by petethomas 8y ago

Institutional investors = lots of money desperate for positive (inflation adjusted) returns. The earth doesn't get any bigger and somehow the whole world economy is currently built on the expectation of perpetual growth.

slededit 8y ago
The earth doesn't get a whole lot bigger, but consider that 100 years ago sand was useful only as fill. Now there is a trillion dollar industry turning it into microprocessors. Value does not derive solely from raw materials.
- deleted 8y ago
  [deleted]
hueving 8y ago
The earth isn't the thing buying stuff. It's people. Once population count goes stagnant or starts to decline then a lot of investment models will have problems.

deevolution 8y ago

Back door as in OTC trades perhaps?

rl3 8y ago

Relevant: https://republicprotocol.com/ https://republicprotocol.com/

badge 8y ago
interesting... "Decentralized dark pool exchange protocol. Built for laundering large volumes of crypto." https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-virtual-currency-exchange-110-million-facilitating-ransomware https://www.fincen.gov/news/news-releases/fincen-fines-btc-e...
- rl3 8y ago
  Despite the scary name, I fail to see the laundering connection. Wouldn't the trades hit the blockchain upon final execution anyways? They look pretty legit. Here's more info: https://venturebeat.com/2018/09/27/worlds-first-decentralized-dark-pool-launched-by-republic-protocol/ https://venturebeat.com/2018/09/27/worlds-first-decentralize... It's worth noting that I've no connection to them nor any conflict of interest, just thought it was topical. Didn't have time to make a disclaimer in my original post.

woodpanel 8y ago

My key takeaways from reading this: - investors chipping in not because of potential upside, but because of reduced volatility. [1] - there is such a thing as collectible coins and that "Clean Bitcoins" make sense I guess :-) [2] [1] > Over the last four to six months, the market has been trading in a very tight range, and that’s seems to be corresponding with traditional financial institutions becoming more comfortable diving into the space." [2] > What’s more, miners can offer something unique: brand-new, “virgin” coins, which some investors covet. Such coins command a premium of up to 20 percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s easier to prove they’ve not been involved in money-laundering operations, he said

badge 8y ago
What’s more, miners can offer something unique: brand-new, “virgin” coins, which some investors covet. Such coins command a premium of up to 20 percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s easier to prove they’ve not been involved in money- laundering operations, he said Ironic, because that's actually the defacto method for laundering money in Bitcoin land See this bitcoin laundering method described in this post from a moderator on BitcoinTalk dated August 22, 2013, 02:32:31 AM [ https://bitcointalk.org/index.php?topic=279249.0 https://bitcointalk.org/index.php?topic=279249.0 ] Payment to miners / mining pool operators for their freshly minted "clean" "virgin" coins in exchange for a 20% markup.. why would anyone want to immediately lose 20% of their investment?...
- 21 8y ago
  > why would anyone want to immediately lose 20% of their investment?... It's called insurance, just like after you buy a house you immediately insure it by paying a premium of x% of it's value. In this case, you insure against someone in the future claiming those coins were stolen from him. The investors want exposure to the bitcoin price, but not to some of the risks, so they factor them out as much as possible.
  - dgant 8y ago
    It's telling that the risk premium is 20%.