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Comment by module0000 | Hacker News Reader

Bitcoin has come a long way... 7 years ago I was writing perl scripts to cobble together a depth-of-market program that operated on the mtgox API. I would get excited scalping coins from $17-19 USD back then. No SEC/CFTC, no regulation, no anything, just good old fashioned auction market theory - combined with a sucker being born every moment and winding up on the other end of a mtgox trade. The sky was the limit, it was an exciting time if you were an oddball breed of programmer crossed with day trader.

Fast forward.... WTF is going on now? Regulated exchanges for bitcoin, dozens of btc clones, new exchanges being birthed/destroyed each month, and the dinosaurs of finance adopting it 10 years too late. It's a crazy mixed up world.

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> the dinosaurs of finance adopting it 10 years too late

The monoliths of finance will set the legislation that will determine everything about crypto-currencies in all major economies. And if their extreme political power isn't enough, they already by far own the most patents relating to blockchain tech.

Bitcoin + Ethereum = $58 billion.

JP Morgan = $330 billion. That's one "dinosaur" with $25 billion per year in net income.

The notion that they're dinosaurs and they're ten years late, is laughable. Along with all the other banks and central banks, they'll dictate the terms by which crypto-currencies will exist (the only alternative to being controlled by the banksters that control everything related to finance, is to remain a niche that never goes big / mainstream).

Give it enough time and crypto-currencies will develop its own rapacious elite. It has already happened to some extent with Bitcoin, since the early adopters are kings and the peasants must fight for the scraps.

> The monoliths of finance will set the legislation that will determine everything about crypto-currencies in all major economies.

As it turns, they won't. Or, more to the point, can't. Bitcoin didn't 'ask' for permission for anything, because permission isn't required to do math.

There seems to be this unshakeable belief in some people that things that things that aren't given permission by a government aren't legal, where it is, in fact, the other way around.

> There seems to be this unshakeable belief in some people that things that things that aren't given permission by a government aren't legal, where it is, in fact, the other way around.

It's got more to do with the knowledge that governments are the ones who decide what's legal and what's not. So if governments deem cryptocurrencies as "illegal", or something worth regulating, then there's literally nothing you can do against that.

Wouldn't be the first time mere math has been heavily regulated: https://en.wikipedia.org/wiki/Export_of_cryptography_from_th...

No. Rights define what governments can and cannot do in democracies. It's amazing how many people from America of all places, that now fail to understand this.

And who defines those rights? Governments do. That's something only very few people from US America seem to understand. Even the mighty US constitution has had twenty seven amendments since it's original inception.

We are not talking about some unchangeable "god given natural law" here, we are talking about human made contractual frameworks which have been evolving just as much as the societies they are meant to govern.

No. The constitutions define the limitations of government, not the other way around. It is those limitations that people give governments to act on their behalf within those limitations. Again. It is amazing that this has to be explained to an American.

Guns are not 'legal'. The government doesn't have the power to take them away from you. Free speech isn't 'legal'. The government doesn't have the power to take it away from you. These amendments which you have brought up are about defining the limitations of government. QED.

> The constitutions define the limitations of government, not the other way around.

Not every nation does have a constitution, some even completely lack a comparable document. I'm also not a US American because as I said before: It's pretty much only US Americans who seem to have issues understanding this very simple dynamic.

> Guns are not 'legal'. The government doesn't have the power to take them away from you.

As confirmed by the supreme court: The government does have said power to enact regulations of said firearms because the second amendment leaves that interpretation room.

> Free speech isn't 'legal'. The government doesn't have the power to take it away from you.

The government, of course, has the power to take that away from you: https://en.wikipedia.org/wiki/Free_speech_zone

How "free" is speech really when you can't even choose time, place and manner of said speech?

I ask you again: Who is in the ultimate position of power to interpret a nations constitution and actually enforce said interpretation? Idealists might claim "the people!", when in all actuality it's the acting government.

Case in point: Many of the people in Hamburg also demanded their constitutional given right to "freedom of assembly", the vast majority of them did so peacefully. Guess how that turned out? With a media campaign painting the whole movement as rioters and common Germans demanding that police should simply shoot them.

Hate to break it to you, you've just brought up a bunch of disjointed statements, with questions peppered throughout in order to deflect attention away from the reality of what I wrote. Not a single one of your points counters what I said. Not sure why you'd do that, but here we are.

> The notion that they're dinosaurs and they're ten years late, is laughable.

Maybe I wasn't clear. They are ten years late because they missed the 100,000% return on investment. I promise you, before they sell their board members on the idea of "getting involved" with BTC, they will present a figure called "opportunity cost", which represents the gains they have not realized by not participating. That figure is incredibly high, hence they are ten years late.

Also, I don't believe they can dictate terms with BTC's existance at all. They can depress or inflate the market, but since there is no central authority - all they can do to influence prices is determined by their market participation. An example of a real market that they can dictate terms with would be US debt(treasury bond futures). By participating in the bond auctions with the fed: they get to set the rate. There is no equivalent process by which they can influence BTC, much less dictate it's existence.

Why do you say they will dictate the terms? They will own the mining? The whole point of bitcoin is decentralization (unless some large entity owns mining majority).

> (unless some large entity owns mining majority).

Without control of the nodes, the mining hashpower is only a secondary concern. If the miners ever tried to enforce their will, the nodes would simply change the PoW algorithm, and the miners would effectively be out of work.

The cynical example:

- People live in countries

- countries levy taxes to be paid in "real money"

- banks deal with the "real money"

- BTC exchanges have to work with these banks + gov't

This assumes that future commerce will always revert back to 'real money'.

Commerce is irrelevant.

At the end of the day, you need to pay your taxes - presumably in your national currency.

Suppose you had a commerce that only accepted bitcoins. How will you pay your taxes ?

a good thought experiment. I think it's likely that the government forms a symbiotic relationship with Bitcoin if things get that far.

If the public does not want national currencies, then governments need to make them wanted. Physical force is an obvious approach, but probably impractical.

You don't think they can create their own distributed ledger?

Oh I see. Bank/corporation owned currency is a weird concept....

What do you mean? Obviously if they can create their own blockchain they can issue their own currency, too. It's just a book of who has how much.

Blockchains only improve the efficiency of permissionless system. If you're going to create an in-house currency, it would be idiotic to use something as un-scalable as a blockchain.

What makes Bitcoin, not an in house currency, also not idiotic in your case?

Permissionless ownership.

Instead here your gatekeepers are speculators and miners and early adopters.

The 'gatekeepers' are anyone who has bitcoin.

Even further, there are no gatekeepers...

It sounds like something you'd find in a cyberpunk novel.

Are you comfortable saying how much you made with your program on mtgox?

Sure, it's not too impressive though...I think my net gains were in the 15k area. I was a really small fish back then, I ended up making more(in BTC) by selling the actual program for other people to use. At the time, there wasn't a depth-of-market setup available for mtgox, so the majority of trading was people looking at the last sale price and throwing their bid/ask based entirely on that. Nowadays I think every exchange has their own flavor of depth-of-market platform available, and there are plugins for major trading platforms(xtrader/ninjatrader/multicharts) that work with the BTC exchanges.

There is still money to be made scalping BTC, but since the price is higher the margin required is much, much, much greater. And with more margin comes more possibility of loss, etc.

> Regulated exchanges for bitcoin

Working on it. See: Bitshares, or any other decentralized excange

He was answering his own question

> just good old fashioned auction market theory -

Which is? I would love to read more, any pointer/links for reading about that?

This is a good read about auction theory: http://www.mysmp.com/stocks/auction-market.html

It's easy to simplify though... imagine that all trades for anything, happened between $1 and $10. Now imagine a graph from bottom to top, starting at the bottom($1) and ending at the top($10). Horizontally, draw a bar next to each price, and the width of the bar should represent how many trades happened at each price. In my poorly drawn example below, you can see 2 trades happened at $1, while 4 trades happened at $3(more than any other price). Auction market theory says that the price is likely to return to $3, since that is where the majority of business was done. So to trade based on that, you are looking to sell at $5 and buy at $1, in anticipation of the market moving back towards that center of $3. It's a gross oversimplification, but that's the heart of auction theory.

$5 ++

$4 +++

$3 ++++

$2 +++

$1 ++

I'd highly recommend this book. The math is decently sophisticated, but it has a lot of cool insights.

https://www.amazon.com/Auction-Theory-Second-Vijay-Krishna/d...

> dozens of btc clones

Why is having new BTC competitors a bad thing?

Because the high number of these competitors make it look like the vast majority of them are just pump and dump speculation schemes.

In a way cryptocurrencies have become the new Wallstreet where few people, with very specialized knowledge and connections, can make money while they keep telling everybody else "It's so easy everybody can do it" so they have a steady supply of new suckers.

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