[HN Gopher] How An Obscure OTC-Traded Derivative From The 80s To...
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How An Obscure OTC-Traded Derivative From The 80s Took Over Crypto
Author : julianhul
Score : 28 points
Date : 2023-05-13 20:46 UTC (2 hours ago)
(HTM) web link (blog.everstrike.io)
(TXT) w3m dump (blog.everstrike.io)
| woleium wrote:
| perpetual futures, first used by Chinese gold miners in Hong
| Kong, took off at bitmex with 100x leverage.
| microtherion wrote:
| I was reminded of the characterization of cryptocurrencies as
| "Perpetual Zero Coupon Bonds":
| https://martincwwalker.medium.com/impossible-finance-the-per...
| hippich wrote:
| First time hearing about Zero coupon bonds and Perpetual
| bonds... Nonetheless, wouldn't author's description of
| perpetual zero coupon bond apply to many (most? all?) fiat
| currencies as well, since these are not really backed by
| anything anymore?
| maxbond wrote:
| You can think of currency as a negative coupon bond, even -
| if you hold onto cash you generally expect it to lose value.
|
| In order to function properly as a currency, an asset needs
| to be the least volatile liquid asset available in the
| economy (or at least to be competitive along this axis). The
| expectation the asset will slowly depreciate is compatible
| with this requirement. The expectation that your currency is
| a highly deflationary lottery ticket to be traded on 100x
| margin (and the kicker is that your collateral is some other
| highly volatile cryptoasset) - not so much.
|
| That's why the price of goods and services are almost never
| set in Bitcoin (rather, the price is set in dollars and
| floating in Bitcoin). It's too volatile to fulfill all of the
| roles of a currency, but if you're quick about it you can use
| it as a medium of exchange.
|
| This is more or less a summary of Taleb's argument that the
| net present value of Bitcoin is zero.
|
| https://arxiv.org/abs/2106.14204
|
| https://youtube.com/watch?v=XeG0FzPxSh4
| ourmandave wrote:
| From OP link:
|
| _The value of cryptocurrencies, in spite of a collapse in
| value, is stopped from falling to their natural value, i.e.
| zero, by a combination of market manipulation, investor
| ignorance and a tsunami of lies on social media from those
| paid to promote these worthless frauds._
|
| Which isn't how the US government backing the USD works at
| all.
| ProjectArcturis wrote:
| If the contract never expires, what mechanism keeps the price of
| the contract in line with the price of the physical good?
| red2awn wrote:
| Through "funding". If the perpetual future's price is above
| (below) spot's price, long holders pay (receive) short sellers
| an interest at a regular interval (every 8 hours at most crypto
| exchanges).
| julianhul wrote:
| Periodic exchange of money between longs and shorts, AKA
| "funding".
|
| If the contract price is above the price of the physical good,
| holders of the contract ("longs") pay the sellers of the
| contract ("shorts") a small fee every few hours.
|
| This makes it less valuable to hold the contract, and pushes
| the price of the contract down, until its on par with the price
| of the physical good.
| monero-xmr wrote:
| Pay a fee to maintain the contract. Must post collateral if
| price moves against you or get liquidated.
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