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EspressoLover


Total Posts: 285
Joined: Jan 2015
 
Posted: 2017-12-08 01:33
> I assume that there would be some kind of traffic into the network, but maybe that's only the case when transferring in and out of the exchange.

The other factor is inter-exchange arbitrage. That definitely clogs up the block chain. Say you're market making on Bitfinex, and hedging with GDAX. You're short Bitfinex and levered long GDAX. BTC jumps 20%. Now you get a margin call at Bitfinex, and have to route funds from your GDAX account.

This kind of activity scales up super-linearly with volume and volatility. The transaction network is so fucked once the futures list. Even if all the CME/CBOE activity is dollar denominated, there's going to be huge knock-on effects in the spot markets. Every time these spot exchange get DDoS it only makes things worse. Everyone moves BTC to other exchanges to hedge.

I think the smart trade is to buy LTC ahead of Dec 10. Sophisticated crypto arbers already use Litecoin to move money between exchanges. BTC, LTC and ETH are the only coins that all major exchanges support deposit/withdrawals on. BTC transaction times and fees are an order of magnitude higher. And Ethereum is currently clogged up with pictures of cats. (This is not a joke.) Goes to show the flaws with supporting Turing complete transactions inside the block chain.

When it comes to a practical medium of exchange, Litecoin's coming out the clear winner. When you're staring down a million dollar margin call, you don't want to wait four hours for an official confirmation. Taking residual LTC/USD price risk on your margin capital is much less worrisome. We're in the middle of Tulip mania, and the price may suddenly spike up or down. But I want to be the guy investing in pots and soil.

Good questions outrank easy answers. -Paul Samuelson

Luciender


Total Posts: 75
Joined: Aug 2008
 
Posted: 2017-12-08 02:23
Any idea who will actually make markets in the future? Apparently the usual names cant really touch the spot market..

jslade


Total Posts: 1115
Joined: Feb 2007
 
Posted: 2017-12-08 03:54
FWIIW ETH settles significantly faster than LTC. The ethereum network has also never been "clogged up with pictures of cats." I made a half dozen transactions this morning; took about 30 seconds, just like it always does. I know some of the guys running the arbs; adding in a day of settlement time is pretty trivial, and no, it doesn't have any appreciable effect on BTC network traffic. Seriously man; where do you get this stuff?


https://cointelegraph.com/news/elite-investment-bank-goldman-sachs-to-clear-bitcoin-futures-for-clients

"Learning, n. The kind of ignorance distinguishing the studious."

EspressoLover


Total Posts: 285
Joined: Jan 2015
 
Posted: 2017-12-08 04:45
CryptoKitties, an online game that debuted on Nov. 28, is now the most popular smart contract -- essentially, an application that runs itself -- on ethereum, accounting for 11 percent of all transactions on the network, according to ETH Gas Station. That’s up from 4 percent on Dec. 2 for the network, which uses the distributed-ledger technology known as blockchain.

The game is actually clogging the ethereum network, leading to slower transaction times for all users of the blockchain, which is a digital ledger for recording transactions.

"The pending transactions on the ethereum blockchain have spiked in the last 24 hours, mostly from CryptoKitties traffic," Nolan Bauerle, director of research at CoinDesk, said in an email.


Bloomberg

Pending transactions in the queue has exploded from 5000 four days ago to over 20,000 today. Average transaction fees have spiked by 500%.



All because of friggin' cats. This does not feel like the money of the future. Ether's looking less scalable than even Bitcoin right now. Turing complete smart contracts on the blockchain just don't seem to work. It's like if every piece of code in the world all had to share time on the same shitty 386. The marginal consumer of Gas is probably always going to be whatever Ponzi scheme is currently hot.

Everything that can be done on the EVM, can be done with a dumb blockchain. It just takes a little clever application of functional encryption, ZK-SNARKs and one-time trusted key-generation. Most of the computation can be done offline, and contract vaults just need to periodically sign blocks with a hash of their internal state. The difference is that the offline approach only consumes O(1) network resources.




Good questions outrank easy answers. -Paul Samuelson

athletico


Total Posts: 954
Joined: Jun 2004
 
Posted: 2017-12-08 14:25
@Luciender
Looks like Akuna will be one of the marketmakers

Osiris2


Total Posts: 15
Joined: Sep 2017
 
Posted: 2017-12-08 19:25
backing up for a sec, and putting the hype aside

Does anyone really think that any of these coins are going to be money, in the economic sense of the word? I haven't heard a credible explanation for how or why that happens outside of very specific niche applications, but I'm trying to keep an open mind.

The blockchain technology itself is a separate thing which probably has some valuable applications that some companies like Oracle will probably monopolize and grind out steady profits.

EspressoLover


Total Posts: 285
Joined: Jan 2015
 
Posted: 2017-12-09 02:12
> The blockchain technology itself is a separate thing which probably has some valuable applications

How do you have blockchains without some implied monetary asset? The incentives behind Nakamoto consensus only work because a 51% attack would debase the currency that miners collect. (s/miners/stakeholders/ for PoS chains). If you control that much hashing power, then it's better to just keep collecting coins. But if the coins aren't worth anything, what's the incentive for new blocks to come out honest?

Okay, so maybe we're talking about some walled garden, where miners are more or less trustworthy? But in that case why go through the hassle of having a blockchain. They're only needed if you literally can't trust any other party in game. Even if only O(1/N) parties are trustworthy there are better schemes with better security guarantees, higher performance and easier maintainability.

One simple solution is just to require every transaction to be signed by a near unanimous quorum of O(sqrt(N)) randomly selected peers. The birthday collision paradox will assure that double spends are detected with 1-episilon probability. Unlike a blockchain this 1) doesn't require extravagantly wasteful proof-of-work and 2) only requires clients to keep a sublinear sampling of the full history.

Good questions outrank easy answers. -Paul Samuelson

jslade


Total Posts: 1115
Joined: Feb 2007
 
Posted: 2017-12-09 06:18
Your link shows flat rates of pending transactions. And you're referencing bloomberg as proof to someone who does this for a living. That makes no sense. In particular because you presumably work in finance and are aware of how badly they bork whatever it is you work on.

The actual story is metamask, which is a website, has slowed down because of the dumb kitty game. Please attempt to know what you're talking about. Thus far, your assertions about anything blockchain in this tread read like a Michael Lewis book on HFT.

"Learning, n. The kind of ignorance distinguishing the studious."

katastrofa


Total Posts: 378
Joined: Jul 2008
 
Posted: 2017-12-09 14:53
Dumb?! This game is the best use of this tech so far.

a路径积分


Total Posts: 80
Joined: Dec 2014
 
Posted: 2017-12-09 22:34
All right chill boys, you're both useful contributors to the community. Let's not fight over kitties.

Maggette


Total Posts: 1003
Joined: Jun 2007
 
Posted: 2017-12-10 01:15
Yeah... my father used to say to us: I don't care who started it, I am going to end itBig Smile

Ich kam hierher und sah dich und deine Leute lächeln, und sagte mir: Maggette, scheiss auf den small talk, lass lieber deine Fäuste sprechen...

EspressoLover


Total Posts: 285
Joined: Jan 2015
 
Posted: 2017-12-12 02:32
Okay, sure. But at least give me credit for that monster of a Litecoin call.

In other news, these CBOE futures blow. CFE always shoots themselves in the foot by setting their tick size way too large. Who the hell wants to pay $10 bid-ask spread when GDAX quotes at 0.01 most of the time? No wonder their volume sucks.

Good questions outrank easy answers. -Paul Samuelson

darkmatters


Total Posts: 74
Joined: Nov 2010
 
Posted: 2017-12-12 16:02
The CBOE futures have a 10 tick spread most of the time, so a $100 anyway.

Most of the major brokers (at least our 3) won't clear the contracts from the CME or the CBOE for now. Not sure when that will change.

jslade


Total Posts: 1115
Joined: Feb 2007
 
Posted: 2017-12-12 17:02
I am a grouch about your other statements, but I actually agree with you on this; I'm long term bullish on litecoin (bought some in June, for lulz; of the big 3 seemed most undervalued), and I'm pretty sure you'll see it getting more attention now that Charlie isn't wasting his life at Coinbase. It is basically the same thing as Bitcoin cash except it works better and is run by adults with a longer track record.

The CFE listing was a hilarious inversion of fortune. I've been laughing at the lack of sophistication in the crypto community since 2013; met a bunch of eventual founders crypto currency exchanges back then who didn't know what a limit order was.... the parity wallet hacks (bigger, IMO than the DAO thing), the endless "we're gonna change the woyuld" prating by these smurfs, the goofy REST and SignalR APIs on their exchanges. Yet, CFE's website crashed and their market looks pretty fucked compared to GDAX, and the various crypto currency networks hummed along as if nothing was happening. I still think the whole thing is bloody silly, but the last couple of days makes crypto candyland look like the future, and Chicago/Wall Street look like the past.


"Learning, n. The kind of ignorance distinguishing the studious."

EspressoLover


Total Posts: 285
Joined: Jan 2015
 
Posted: 2017-12-12 19:59
That's an interesting point. For all their faults the crypto exchanges really got two things right.

First, the tick sizes are wonderfully small. If an order book's sitting at a 1-tick spread with fat touch sizes, that's a price floor on the cost of liquidity. The market almost always has >1.0 demand elasticity for liquidity. Long term it's bad for everyone - even providers. The past 10 years has been an interruption to a century-long trend of exponentially rising trading volume. And I really think it's because we stalled at decimalization two decades ago. Sub-penny pricing on the lit market is way overdue. And futures are even worse. (I know this is formally set by the regulators, but the exchanges could easily lobby for a change.)

The second is that the crypto exchanges give away the market data and ancillaries, but make money on the trading fees. The real exchanges have an inverted business model: breakeven on trading fees but milk everyone on the ancillaries (data feeds, co-location, DMA registration, etc.). It's a great way to squeeze quarterly earnings when markets are tepid. But ultimately the market mostly consolidates to a few big players who can afford the fixed costs. Less participants = fewer opinions on market prices = less trading = less volatility = even higher market data fees. It's a vicious cycle that just kills long term growth.

Anyway, these two issues are almost large enough to make up for the terrible Node.js and ridiculous outages. Let's be real: a good amount (maybe most) of the flow in the "real markets" have no fundamental economic justification behind them. It's just noise traders and risk-lovers seeking speculative action. If FX stops moving they'll trade index futures. If index futures stop moving they'll trade tech stocks. If those top moving, they'll trade VIX. If VIX stops moving, they'll trade crypto. Hopefully crypto mania's enough to give the real exchanges the kick in the ass they need to get back to the kind of pro-growth outlook they had circa 2000.

Good questions outrank easy answers. -Paul Samuelson

ESMaestro


Total Posts: 138
Joined: Jun 2009
 
Posted: 2017-12-12 20:06
The CFE listing was a hilarious inversion of fortune.... Yet, CFE's website crashed and their market looks pretty fucked compared to GDAX, and the various crypto currency networks hummed along as if nothing was happening. I still think the whole thing is bloody silly, but the last couple of days makes crypto candyland look like the future, and Chicago/Wall Street look like the past.

CFE website crashed, exchange infrastructure held up fine. Quite a difference compared to website-grade BTC exchanges that routinely flounder. Why is CFE market messed up, how can we even make such an assessment at day 2? MM parties waiting to dip toes, no one sane is going to jump in the deep end with this nonsense volatility. Interactive Brokers did ~54% of the 1st session CBOE volume, and don't allow shorting. IB tentative plans to allow shorting, but will likely have >$100k margin/contract. I wouldn't expect much of anything on CFE front through at least 1st contract expiration. I personally think it's a joke CBOE/CME are getting in on this, but it's done. Reminded of CME Housing futures contract that came online May 2006.

Interesting stat: November...70-75% of all crypto-transactions based in Japan, S Korea, and Vietnam based on currency interface. Gambling junkie centers of the world unite!



jslade


Total Posts: 1115
Joined: Feb 2007
 
Posted: 2017-12-13 19:10
Lots of new stuff spinning up in S. Korea the last few months. As I said, the "Japanese Housewife NZD/JPY Carry Trade" seems to be migrating to crypto-currencies. I don't know what the story is in Vietnam. Some of this activity is probably Chinese; moving Chinese money out was the killer app for bitcoin even back in 2013.

"Learning, n. The kind of ignorance distinguishing the studious."

rickyvic


Total Posts: 120
Joined: Jul 2013
 
Posted: 2017-12-16 17:34
You summed it up pretty well. @espressolover

"amicus Plato sed magis amica Veritas"

mtsm


Total Posts: 211
Joined: Dec 2010
 
Posted: 2017-12-20 03:44
holy sh!t, did you just see that? coinbase introduced bitcoin cash (BCH) tonight and things just went all fucked up. It looks like BCH was trading at $9k on GDAX, while it was trading at around $3.5k elsewhere. Talking about free lunches. The BCH market on GDAX seems to be down now though, no wonder. This is so fucked up, the way coinbase did that intro.

HitmanH


Total Posts: 451
Joined: Apr 2005
 
Posted: 2017-12-20 09:23
Venue arb isn't really an easy thing to do...
Good summary on development of markets on https://davidgerard.co.uk/blockchain/2017/12/17/why-you-cant-cash-out-pt-1-why-bitcoins-price-is-largely-fictional/

hilss


Total Posts: 62
Joined: Jun 2007
 
Posted: 2017-12-21 18:28
no expert by any measure, but I was wondering if someone could shed some light on the risk associated with shorting GBTC (supposedly = 0.0919 of a BTC) and being long BTC (or perhaps better, being long the futures on CME or CBOE/CFE).

It appears that GBTC is trading a premium right now. I suspect some are shorting (and paying high borrowing rates - no idea how much >10%?), and getting long the futures.

Maybe I'm not understanding GBTC... sorry if this is a stupid question.

Thanks,
hilss

OTS


Total Posts: 21
Joined: Oct 2009
 
Posted: 2017-12-22 00:10
@hilss

It may be impossible to borrow shares or as you pointed out the rate could be outrageous. Honestly, 10% is probably low. Then even if you are able to borrow there is no guarantee that you will be able to continuously borrow the shares. If you end up having to buy in your shorts chances are the premium level you would have to pay would be higher than the level you shorted.

jslade


Total Posts: 1115
Joined: Feb 2007
 
Posted: 2017-12-23 22:27
There is a way to short on some of the exchanges. I assume the rate is high; never looked into it. Noticed it in the blackbird arb gizmo when I was looking for API collections.
https://github.com/butor/blackbird


LedgerX also provides a platform for European options on BTC at least.

"Learning, n. The kind of ignorance distinguishing the studious."

hilss


Total Posts: 62
Joined: Jun 2007
 
Posted: 2017-12-24 01:58
@OTS and @jslade, thank you both.

pj


Total Posts: 3373
Joined: Jun 2004
 
Posted: 2018-03-12 14:37
Bitcoin on Last Week Tonight

The older I grow, the more I distrust the familiar doctrine that age brings wisdom Henry L. Mencken
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