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Counterfeit shares? Really? These are not really counterfeit shares, because they do not pay dividends or have any voting ability, the companies do not recogni

Counterfeit shares? Really? These are not really counterfeit shares, because they do not pay dividends or have any voting ability, the companies do not recognize them. More like "synthetic assets" that have the price pegged to the asset they mimic.

jb775 6y ago
The author likely used the term "counterfeit" since they're essentially copying the shares and redistributing them as if they represent the same value as the original, just like counterfeit money.
- bouncycastle 6y ago
  The author likely used the term "counterfeit" to stir up a controversy. It's more like if I started lending you some rocks, and told you that each rock is always 1 Tesla share. You can always come to me and cash in that rock for whatever a Tesla share is. I'm not lending you counterfeit Tesla shares, but rocks. There's no counterfeiting going on.
  - jb775 6y ago
    The salient aspect here is what they're using them for: to drive the price down or up. If I place a bet on the direction of the price pegged to a given type of rock, then borrow millions of those rocks from you, then trade those rocks back and forth with my buddies to create the illusion of demand momentum (linked to an artificial price pattern going down or up)...I can swing the price pegged to that rock. So the rock could still be cashed in for whatever price it's pegged to, but that doesn't mean I didn't mess with that price. (would take massive amounts of capital obviously) I'm also not sure if there's any way to tell if it's only being lent out once. Since futures contracts are even more abstract than stock ownership (i.e. have the option to possibly purchase blocks of shares in the future or just scrap the contract altogether), there's probably ways to create value by taking on risk in the form of overextending the appearance that you have access to a security at a certain price. This video explains everything going on: https://www.youtube.com/watch?v=gMShFx5rThI https://www.youtube.com/watch?v=gMShFx5rThI
professor_v 6y ago
Do you want to buy my synthetic dollars with the price pegged to a dollar? edit: I just realized this is exactly what USDT is, but I still feel like it will all come burning down at some point. Maybe it will take 30 years though.
- JumpCrisscross 6y ago
  > Do you want to buy my synthetic dollars with the price pegged to a dollar? This describes like half of finance. Treasuries, bank deposits and credit cards all represent to varying degrees “synthetic dollars.”
  - pgwhalen 6y ago
    Yep, and it's not some new-fangled form of finance, it is the entire history of finance. There is a hierarchy of money, and it has always been so. I highly recommend this Coursera course to shed light on this: https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking
- bouncycastle 6y ago
  Yes, exactly! There are also real world examples of currency pegs, for example the Hong Kong Dollar, which is pegged to the USD since the 70's.

jb775 6y ago

The author likely used the term "counterfeit" since they're essentially copying the shares and redistributing them as if they represent the same value as the original, just like counterfeit money.

bouncycastle 6y ago
The author likely used the term "counterfeit" to stir up a controversy. It's more like if I started lending you some rocks, and told you that each rock is always 1 Tesla share. You can always come to me and cash in that rock for whatever a Tesla share is. I'm not lending you counterfeit Tesla shares, but rocks. There's no counterfeiting going on.
- jb775 6y ago
  The salient aspect here is what they're using them for: to drive the price down or up. If I place a bet on the direction of the price pegged to a given type of rock, then borrow millions of those rocks from you, then trade those rocks back and forth with my buddies to create the illusion of demand momentum (linked to an artificial price pattern going down or up)...I can swing the price pegged to that rock. So the rock could still be cashed in for whatever price it's pegged to, but that doesn't mean I didn't mess with that price. (would take massive amounts of capital obviously) I'm also not sure if there's any way to tell if it's only being lent out once. Since futures contracts are even more abstract than stock ownership (i.e. have the option to possibly purchase blocks of shares in the future or just scrap the contract altogether), there's probably ways to create value by taking on risk in the form of overextending the appearance that you have access to a security at a certain price. This video explains everything going on: https://www.youtube.com/watch?v=gMShFx5rThI https://www.youtube.com/watch?v=gMShFx5rThI

professor_v 6y ago

Do you want to buy my synthetic dollars with the price pegged to a dollar? edit: I just realized this is exactly what USDT is, but I still feel like it will all come burning down at some point. Maybe it will take 30 years though.

JumpCrisscross 6y ago
> Do you want to buy my synthetic dollars with the price pegged to a dollar? This describes like half of finance. Treasuries, bank deposits and credit cards all represent to varying degrees “synthetic dollars.”
- pgwhalen 6y ago
  Yep, and it's not some new-fangled form of finance, it is the entire history of finance. There is a hierarchy of money, and it has always been so. I highly recommend this Coursera course to shed light on this: https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking https://www.coursera.org/learn/money-banking
bouncycastle 6y ago
Yes, exactly! There are also real world examples of currency pegs, for example the Hong Kong Dollar, which is pegged to the USD since the 70's.