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It would indeed stabilize Bitcoin, but I don't see what's so ironic about it. Short-selling and other derivatives substantially stabilize a lot of markets, popu
by fennecfoxen 14y ago
It would indeed stabilize Bitcoin, but I don't see what's so ironic about it. Short-selling and other derivatives substantially stabilize a lot of markets, popular delusion to the contrary notwithstanding.
- runT1ME 14y agoBut now there is double the incentive to artificially drop the value of BitCoin as much as possible, no? I don't know how trading bitcoins work, but won't this increase volatility both ways in addition to overal stability (taken as an average).
- derefr 14y agoYes--basically, short-selling just creates the same kind of "flight to quality" gravity that kills markets when people start to feel pessimistic about them, but pulls in the opposite direction: so now, on average, everything will "draw a straight[er] line", but moment-to-moment you'll just have price spikes that kill the short positions in the same way price-plummets kill the long positions. What Bitcoin really needs to smooth out its volatility, as far as I can tell, is HFT market-makers trading tiny amounts of BTC by the millisecond. Which should theoretically be easier with an all-digital currency--but, if done in "real" BTC, requires probably at least a million times the block-chain growth velocity Bitcoin currently has. It could still probably be done with "BTC liabilities" on a private exchange, though.