Re:Beyond the Bitcoin bubble
by todd_wanna_code on Tuesday January 16, 2018 @12:53PM
(#16160242)
Derivatives are just instruments to bet against or for market trends of assets. There are futures contract, options, swaps and other derivative vehicles for every market, be it cryptocurrency or forex. What makes you think the coin part represents that derivative?
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A derivative is a security with price that depends on the value of the underlying asset.
Bitcoins are derivatives for the blocks in the blockchain. You find a new block and you have a coins. Bitcoin value depends on the value of the underlying, the blockchain network.
Re:Beyond the Bitcoin bubble
by todd_wanna_code on Tuesday January 16, 2018 @01:38PM
(#16160766)
Bitcoins are asset, plain and simple. Fiat currencies are derivatives, gold is not. There are derivative instruments on top of gold that let you make money on its market trends, but saying gold is derivative is totally meaningless. The bitcoin protocol gives bitcoin asset value. Now the speculative price market is a derivative, but that's not bitcoin, that's an instrument for people to make money on top of bitcoin.
It's sometimes said that fiat currency is a derivative, since removing bonds/T-Bills will collapse the currency. However, in practical reality, fiat currency is fiat, a decree with no underlying asset.
Re:Beyond the Bitcoin bubble
by thanatropism on Wednesday January 17, 2018 @06:45AM
(#16167145)
> The bitcoin protocol gives bitcoin asset value.
* sigh *
You can't math something into having value.
Bitcoin is structurally deflationary fiat, but it's still fiat. It's not scarce if no one wants it.
Why would people want it? Possibly because mathematical limits suggest it's going to be a store of value -- people want gold because of a kind of civilization-scale madness. But Gresham's law might just kick in, everyone hoards bitcoin to the max and then it has no value because it has no liquidity.
Thus the value of bitcoin is either zero or infinity.