| 13:05 |
thimbronion |
That story is what planted the seed. |
| 13:10 |
thimbronion |
Along the same lines, I'm surprised at the lack of an ETF. Seems like a great way to flood the market with paper Bitcoin. |
| 13:11 |
thimbronion |
Perhaps for now the altcoin shit show is working well enough |
| 13:12 |
BingoBoingo |
Well, the USG powers that would be seem allergic to approving Bitcoin ETFs |
| 13:14 |
BingoBoingo |
thimbronion: How familiar are you with the role synthetics played in the 2007 thing |
| 13:15 |
thimbronion |
I don't know what you mean by synthetics. 2007 is the housing crisis right? Credit default swaps? |
| 13:18 |
BingoBoingo |
thimbronion: Aite, so the credit default swaps are a type of insurance. If you're not a gambler, but a bookie... when folks come in and play a wager you gotta get some exposure on the other side to balance your risks. |
| 13:18 |
BingoBoingo |
Despite the best efforts of the folks inflating the bubble, there were only so many mortgages to be written and bundled. |
| 13:20 |
BingoBoingo |
The earlier eyes to spot the bubble bought credit default swaps from banks. Banks could hedge by getting the thing being insured against. |
| 13:20 |
BingoBoingo |
As the bubble became more apparent, more people wanted to buy credit default swaps, and the demand greatly outgrew the mortgage bundles to insure against. |
| 13:21 |
BingoBoingo |
So what happened is "synthetic" versions of the mortgage backed securities were produced |
| 13:22 |
BingoBoingo |
Here's some synthetics MPEx produced to short some scammers http://trilema.com/2013/the-list-of-discontinued-assets-on-mpex/ |
| 13:24 |
BingoBoingo |
The synthetic instrument mirrors the actual instrument in its terms and performance, but it doesn't actually have the underlying. |
| 13:27 |
BingoBoingo |
In the lead up to the 2007 mess, both the synthetic mortgage bonds and the credit default swaps found eager buyers. As the underlying mortgages began shitting the bed, the credit default swaps began to get desperate buyers while the value of the synthetics fell to zero just as the bonds with the actual underlying did. |
| 13:31 |
BingoBoingo |
Now if you are the USG powers that would be and you want to wreck Bitcoin price signal, do you want to encourage ETFs printing paper Bitcoin or do you want to have futures, initially promising delivery, that can fall into sin by producing "synthetic Bitcoins" against the futures. |
| 13:34 |
BingoBoingo |
thimbronion: Are you following, do you have questions, are there points I need to break up and expand? |
| 13:35 |
thimbronion |
I can't answer the rhetorical question because my understanding of futures is lacking. |
| 13:35 |
BingoBoingo |
Aite, here's an explainer on what futures are http://trilema.com/2012/futures-simply-put/ |
| 13:35 |
thimbronion |
excellent |
| 13:37 |
thimbronion |
Hah I didn't start reading trilema until 2014 so I missed this gem. |
| 13:39 |
BingoBoingo |
Ah, I recommend trying to catch up on 2012 and 2013. |
| 13:42 |
thimbronion |
I will do that. |
| 13:43 |
BingoBoingo |
Now, I don't recommend doing it all at once but do try to work through it at a pace you can sustain. |
| |
~ 2 hours 15 minutes ~ |
| 15:59 |
thimbronion |
BingoBoingo: I can't quite grasp the relationship between a synthetic and an actual commodity. How can a synthetic affect the price of a commodity? |
| |
~ 1 hours 36 minutes ~ |
| 17:35 |
BingoBoingo |
thimbronion: Well, a synthetic instrument usually maps on to an established instrument and follows that instrument's contract, like the synthetic mortgage bonds sold to balance out the risk taken on by selling credit default swaps on those mortage bonds in excess of the actual supply of mortgage bonds. |
| 17:36 |
BingoBoingo |
A synthetic on a commodity is gives you your paper gold wagering houses and bucket shops. A synthetic "bitcoin" instrument would be one sold in dollars, settled in dollars, completely avoiding any actual holding or touching of Bitcoin. |
| 17:36 |
BingoBoingo |
For folks with a press that prints USD, it can appear a tempting solution to Bitcoin supply inflexibility provided folks with money are stupid enough to treat the synthetic paper BTC like actual BTC. |
| 17:36 |
BingoBoingo |
The reason synthetics are hazardous with commodities is visible in the struggles of other governments repatriating their gold reserves from the Queendom. By trying to paper over an actual supply constraint, [http://trilema.com/2013/digging-through-archives-yields-gold/][the evil financial network is necessarily engaging in |
| 17:36 |
BingoBoingo |
debasement and inflation.] |
| 17:37 |
BingoBoingo |
Or to put it differently: A synthetic on a commodity sidesteps the actual market for that commodity and presents the wagering house as though it were the market. |
| 17:41 |
BingoBoingo |
The actual commodities exchange has a bunch of warehouses |
| 17:42 |
BingoBoingo |
Or at the very least it has relations with warehouses whose receipts it will honor with regard to quality and quantity of the deliverable commodity |
| 17:43 |
BingoBoingo |
There is a physical inventory that gets tracked. Shuffled around with forklifts, etc |
| 17:47 |
BingoBoingo |
If you are trading futures on Aluminum of a certain grade, you yourself may not want to take delivery of the aluminum, but someone does. |
| 17:49 |
BingoBoingo |
And they probably don't just want it, they need it or they can't do whatever it is their business to do with the aluminum |
| 17:52 |
BingoBoingo |
Sometime in the 20th century a bunch of retards, coerced by socialist violence, decided they'd play along with the failure of government run gold markets to deliver gold. |