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2017-12-22 10:17 by Karl Denninger
in Editorial , 591 references Ignore this thread
And Now We Find Out....
[Comments enabled]

which of the so-called "exchanges" have been acting as true exchanges (that is, not attempting to insert themselves into the transaction for profit-by-arbitrage) and which have been playing bucket shop, "not really delivered" games and similar.

The opportunities for chicanery in a "market" that has a couple of thousand people controlling 95% of the float are ridiculous.  When the people who own the "exchanges" are some of those folks the opportunities are not only ridiculous they're nearly assured to be taking place, especially when there are no cops on the beat.

The government would never allow the people with any material percentage ownership of the stock outstanding to run a stock exchange.  Why?  Because there is an obvious conflict that cannot be policed or resolved.  Yet we have exactly that today with the Winklevoss twins, among others, in the crypto space.  This, in any regulated market, would never be permitted and if attempted through concealment would lead to immediate indictments and imprisonment -- for just cause.  But in a space where no such rules exist, well, why not?

In the crypto space, especially with the recent parabolic moves in price, the incentives for intentional misconduct are just too high.  The simple arb games between exchanges and the privileged position of the exchanges in terms of settlement and pricing make a nearly-impossible to resist target for such activity, especially when there's nothing like the Exchange Act that makes such illegal (never mind that nowhere near all of them are subject to US laws anyway!)

For the people running same, however, the risk is obvious -- when the worm turns what was a profitable arb turns into a monstrously losing one -- and can do so before you can react and stop doing whatever you were doing.  That which was in "float" (being gamed) at the time it happens you now eat, and if you can't absorb the loss, well..... sucks to be you, and worse, sucks to be a customer of the "you" who had your funds there and allegedly "safe."

Remember that unlike regulated brokerages and such there is no SIPC protection on these places, or any other sort of protection for that matter.  A few exchanges have taken out "insurance" against hacks (can the insurer pay?), but this is not a hack.  Does that insurance cover losses in an instance where the organization holding the funds fails and even if they are involved in something nefarious?  I don't know, but you may be about to find out.

Never mind the liquidity problem -- to sell, someone else has to buy.  To turn Bitcon or any of the other scams into dollars someone has to give you dollars for those cryptographic solution keys.  If nobody will then your Bitcons are worth exactly bupkis.

So have fun folks, because a 40% decline in price over a couple of days isn't a "dip".

It's a crash, and in a crash those who are out over the end of their skis or worse, playing games all lose their clothes in the resulting yard sale and wind up in the snow with their 2" dicks hanging out.

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Ktrosper
Posts: 3328
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ft collins co
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But Scott Adams loves blockchain cryptos :)
Mine is 2.5 btw!!

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The unexamined life is not worth living.-Socrates
The only stable state is the one in which all men are equal before the law.-Aristotle
Liberty exists now in the spaces government has not yet chosen to occupy.-Doc Zero
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Tickerguy
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A True American Patriot!
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Scott Adams has turned into a huckster. Sad, really, because he's a great cartoonist.

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Winding it down.
Rollformer
Posts: 188
Incept: 2013-02-13

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I guess there is a bubble. What the **** is this? From my email, just now:

Hi Adam,

Our first ICO pre-sale in partnership with Indiegogo is closing in 12 hours. You can read about the Fan-Controlled Football League below with more details in the whitepaper about the FAN Token.



Quick Pitch

The Fan-Controlled Football League (FCFL) is a blockchain-supported football league that blends traditional sports, fantasy sports, and eSports to create immersive experiences for sports fans around the world by allowing them to build teams, call plays, and help guide teams to victory. Powering fan interactivity and engagement in the FCFL are FAN tokens. Each fans level of control will be directly proportional to their ownership of FAN tokens. Purchasers who participate in this pre-sale have the right to receive certain units of FAN Tokens sold by company in its Token Sale.

Key Highlights
Leveraging the Ethereum blockchain, FCFL will maintain ledger-based transparency for all fan-driven decisions and reward allocations; funds raised during the initial token sale will be used to develop and advance the FCFL and the overall fan experience
Games will be played in a state-of-the-art production facility that will include the latest in sports tech, such as live-stream helmet cameras, real-time player biometrics, microsensors in the ball, and video drones
The worlds first fan-controlled professional sports team, the Salt Lake Screaming Eagles, debuted in the Indoor Football League, attracting over 8,000 fans and selling out the Maverik Center in Salt Lake City
FAN tokens allow fans to participate in the FCFL, from voting on which coach to hire to real-time play calling during the games; the skill and volume with which fans engage with the FCFL will add to their collection of tokens
Depending on the number of FAN tokens owned, certain fans may also become VIPs and gain complimentary tickets, special seating and in-venue access, free Virtual Front Office subscriptions, invites to exclusive events, and more
Jazen
Posts: 3597
Incept: 2007-07-17

****cago
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Margin call in BTC is going to make the equity markets go boom. And not boom up either....

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Tickerguy
Posts: 151178
Incept: 2007-06-26
A True American Patriot!
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Quote:
Margin call in BTC is going to make the equity markets go boom. And not boom up either....

Not in the way you'd think.

There is no "margin" per-se. Unfortunately this makes people think there are no margin calls. There are.

It's just that they're in your credit card or HELOC account, where you don't lose your position, you lose your HOUSE.

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Winding it down.
Chaparral
Posts: 303
Incept: 2007-09-11

Los Angeles
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^ Well... zero ****s given.

I've had a lot of people asking me about bitcon lately and I've explained the whole thing to every one of them. Unfortunately for some of them, they'd rather believe the lie that they want to hear than the truth that they don't. Methinks the grinch is going to leave a big hot sulfurous-smelling turd in a few Christmas stockings this year.
Tickerguy
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Yep.

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Winding it down.
Supertruckertom
Posts: 1612
Incept: 2010-11-07

USA
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Somebody somewhere is screaming
Buy the dip!
Buy the dip!
For the Love of God, PLEASE BUY THE DIP!

One of those Eddie Murphy and Dan Aykroyd, Trading Places moments.


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Preparing to go Hunting.
Ckaminski
Posts: 4383
Incept: 2011-04-08

Mass-Hole!
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> One of those Eddie Murphy and Dan Aykroyd, Trading Places moments.

I've been wanting to rewatch that movie lately, for nostalgia's sake. Some Ghostbusters reruns have me pining for old 80's-era Dan Aykroyd.

Click
Posts: 76
Incept: 2017-06-26

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"Bitcons are worth exactly bupkis."

I've always said Bitcoin is a bigger scam than pretending a tulip is worth the equivalent of $60k... Bitcoin is not a coin but a ledger system of electronic accounting. That's it. Bitcoin is worth about as much as if I took a **** in my hand, divided the excrement into little bits and then claimed that little bits of **** are actually a currency which could be verified by a DNA test.

Bitcoin is a scam, but so are a lot of other "financial instruments". I used to tell friends and family that Bitcoin was a good long-shot speculation. And I was right, but nobody took my advice - not even me. I invested in gold and silver and other "hard assets" by scaling in instead --- which has proven to be a lousy speculation on my part. In fact, I only view gold and silver as an insurance policy, so I've not sold any amount..... And it would not surprise me one little bit to see Bitcoin bounce back and exceed $20k. It could also completely turn back into thin air from where it came...
Tsherry
Posts: 1012
Incept: 2008-12-09

Spokane WA
Online
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This whole Bitcon thing just comes down to one word: Nonsense.

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Omne mendacium est.
Flash3200
Posts: 11
Incept: 2010-11-02

Dallas, TX
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I would have thrown some lotto money into these things a while ago, but it seems that all of these "exchange" websites are on a one way street to blowing up. Sounds like the stock houses from the 1920s that you read about. It is also entertaining that anytime there is volatility the exchange websites are essentially unreachable. Great system.

It is kind of fun having this wild west action going on...true Libertarian paradise with 1000% moves and people getting shafted right and left. Even Goldman Sachs is having issues with how to secure custody of various cryptos so I guess the average punter on the street generally has zero clue what they are actually involved with. I am surprised that the CME went ahead and launched their product...will be fun if their settlement logic ends up blowing up with one of these moves and subsequent exchange blow ups (but I assume they have done due diligence).

We are in the gold rush portion of this market right now...if you are smart you are selling shovels and such to the fools actually participating (ie the people selling $10k cats on the virtual pet website).
Tinman
Posts: 292
Incept: 2008-02-16

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All cell phones have a replaceable battery. You just have to be a person that doesn't stare at cell phones all day.
Tickerguy
Posts: 151178
Incept: 2007-06-26
A True American Patriot!
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I think you're in the wrong thread....

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Winding it down.
Keenan
Posts: 267
Incept: 2013-01-11

Western PA
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Perhaps hedge fund runner Bill Miller made a move which precipitate a rush for the exit. I question the use of the term "investor" in the same sentence with Bitcoin:

Legendary investor Bill Miller's hedge fund has half its money in bitcoin
1:12 PM ET Mon, 18 Dec 2017 | 00:40

"It's just about 50 percent right now," Miller said regarding his MVP 1 fund on the WealthTrack podcast with Consuelo Mack released last week...."What we're studying is ways in which we can mitigate risk to the overall fund and the portfolio," he said on the podcast. "It won't be 50 percent of the fund for that much longer, which does not mean necessarily that we're going to be selling it."


https://www.cnbc.com/2017/12/18/bill-mil....
Thelazer
Posts: 140
Incept: 2009-05-11

Davenport, Fl
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Among those I count as "associates", I've been one of the very select few as of late that has cautioned and warned anyone who would listen. Not many did.

For me, well it's kinda like Christmas has come early watching the blood bath taking place. Guys who have NO CLUE what they are doing, thinking they can read charts, algo's, forecasts, even pump and dumpers.. Suddenly it's a 180 turn from them cheering to going.. OMG? WTF? SHOULD I STILL HODL?

Take this for what it's worth.

Spoke to a long time investment advisor last week. He had a client bring in there 22 year-old kid, kid had put 20K into Bitcoin, worth a cool 1.9 million at the time. The parents, doing the right thing, bring him in for a consultation.

The advisor sits him down, says "take your profits out, let the 20k ride.. you've got 1.9 million now in cash, far better than anyone your age!" and this kid is like "Nope, I'm just going to hold it and let it ride.." and his parents let him.

That's..
That's how insane this thing has gotten.

Orionrising
Posts: 49
Incept: 2017-01-26

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Hah, so the hedge fund took a small position in bitcoin and it bubble sooo much its now half the worth of the hedge fund... but they cant safely sell much without crashing the hedge fund value again.
Uwe
Posts: 8316
Incept: 2009-01-03
A True American Patriot!
24091
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Quote:
Spoke to a long time investment advisor last week. He had a client bring in there 22 year-old kid, kid had put 20K into Bitcoin, worth a cool 1.9 million at the time. The parents, doing the right thing, bring him in for a consultation.

The advisor sits him down, says "take your profits out, let the 20k ride.. you've got 1.9 million now in cash, far better than anyone your age!" and this kid is like "Nope, I'm just going to hold it and let it ride.." and his parents let him.

Aw hell, take HALF the profit out then and let the rest ride.

Letting it all ride after that kind of gain is how you end up netting nothing.

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"I am free, no matter what rules surround me. If I find them tolerable, I tolerate them; if I find them too obnoxious, I break them. I am free because I know that I alone am morally responsible for everything I do." -- Robert Heinlein
Supertruckertom
Posts: 1612
Incept: 2010-11-07

USA
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At least pay off the Student Loans that he probably has.

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Preparing to go Hunting.
Ckaminski
Posts: 4383
Incept: 2011-04-08

Mass-Hole!
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Quote:
let it ride


I have a buddy who is in the same situation. Sitting on 1.5M in BTC. I send him the whole Long Island Ice Tea nonsense, and remind him about Y2K/Y2K1. He had a seat at ground zero for that nonsense, but his quote to me was:

"5th time this year it's dropped more than 30%. YAWN".

Ok, I was wrong when it hit $1000 - I would probably have cashed out then. But it would be insane to not be taking 50% out now and turning it into actual cash.

He's thinking in 10 years it'll still be around and worth something. I don't.

Tickerguy
Posts: 151178
Incept: 2007-06-26
A True American Patriot!
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I can't imagine not talking AT LEAST half off the table here.

I'm not shocked that it has done this, but I'll be EXTREMELY surprised if it's not a zero -- or effectively so, given today's price -- in five years.

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Winding it down.
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