Hacker News Reader

Hacker News

Comment by ringaroundthetx | Hacker News Reader

Parent Full thread

ringaroundthetx

R3 had an options contract to purchase 5 billion Ripples for $42,500,000 any time until 2019

Ripple doesn't like that the same purchase would give Ripple Inc. $1,000,000,000 at today's exchange rates

Ripple doesn't know how options contracts work. ha ha oh well.

I wonder if there is another side to the story. Otherwise, easy case!

View on HN

That is incredible. The market cap of XRP is almost 8 billion, and having so many coins with a competitor would most likely crush the currency. I'm having difficulty imagining why Ripple would ever give a R3 the option to purchase 5% of coins in circulation, business agreements aside.

The market cap of Ripple (and many of the premined coin/token supplies) is very misleading as often %70 or more of the total supply is in the hands of the founders or an anonymous presale/ICO "purchaser"

i.e. Ripple co-founder owns ~9,000,000,000 Ripple units, and is selling them off en mass:

https://www.coindesk.com/ripple-jed-mccaleb-settle-suit-over...

But still the public view EOS year long token distribution as a scam

No other business model to distribute tokens besides wasteful mining

masse :)

Did you read the article? Ripple wanted out because there were other agreements in the partnership that Ripple claims R3 did not follow through on and they are countersuing for this reason.

how do you know those agreements have any ties with this one.

How do you know there's not? If there was only some sort of legally binding arbitration system we could find out.

The wording in the article is kind of vague "parallel technology partnership agreement". I have no idea if "parallel" means that the 2 contracts are connected or not. Maybe that's what the court is going to determine.

The code is the contract! /s

A contract requires something to be exchanged, there is a minimum of one other thing that has to be connected to this. (I.e. payment for the option)

I read the article, my post was reading through it

You missed a few zeroes in that billion.

Also, shouldn't it be "cause losses" rather than "give"? It is unlikely that a corporation doesn't like being given money.

thanks, fixed now

But would it be possible to sell even $42,500,000 of Ripple right now?

Easily. That's less than the daily volume on just one exchange:

https://coinmarketcap.com/currencies/ripple/#markets

Of course, you won't get a good deal if you just try and dump $42M worth of Ripple in one sale order. I'd spread it over a week over multiple exchanges.

But note that it will actually be a billion dollars worth of Ripple, which is much much harder to sell.

Right, I was thinking more along the lines of needing to raise the $42 mil to exercise the option.

Anyway, I'm really curious about what the relationship between trading volumes and how much money you can actually get is - it doesn't seem obvious to me. Like, if I'm a trader trying to make short term gains trading a million dollars a day, and I decide on a new strategy that involves doing 10 times more trades, the volume just went up by $9,000,000/day but the underlying demand for currency is still the same.

I posted an ask HN about this at https://news.ycombinator.com/item?id=15203974

It depends which currency/ICO you're talking about. Trading $10M/day in bitcoin world is not a big deal.

You can look at the market depth on various exchanges:

http://bitcoinity.org/markets/bitstamp/USD

For instance, if you dump $10M worth of bitcoin on Bitstamp, the price will shift by only $270, and that's ignoring the hidden limit orders. And the market will react to it as well - cheaper coins create more demand.

I'm not totally sure what the chart means (and I did read the explanation), but if I'm understanding you correctly, you're saying that Bitstamp has $10M worth of buy orders for BTC at a price of at least $(current price - 270)?

Yes, that is what he means. You can see a combined order book for most of the large exchanges here:

http://data.bitcoinity.org/markets/books/USD

For example, by looking at this chart one can calculate that if one sold 10,000 Bitcoins right now with simultaneous market orders across all exchanges, one would receive north of $40M and the price would drop to $4,000.

That's great in theory, but in practice that's not what happens, because new orders influence existing orders, and cause additional new orders to be created. Much smaller sales can in fact, and to do, cause much larger price movements.

> Right, I was thinking more along the lines of needing to raise the $42 mil to exercise the option.

I have a hunch that finding someone willing to lend $42m, given a court ruling that it can be turned into something worth $1bn, will be quite easy.

If you can quickly sell 42M worth, it's risk free. Otherwise, you're betting on the long term viability of Ripple.

That’s a fair point. I’m not sure how much the Ripple/USD market can actually handle. Probably a lot less than a $1bn market sell order. And selling them slowly isn’t really a solution if people know what’s going on, since they will then front-run the large sell, thus eating up buy orders and lowering the price before everything has been sold off.

$10million+ single transactions rarely happen on the orderbook. More like OTC. Bitfinex for example has an OTC window for large transactions.

$50-100m+ transactions probably happen through dinners, multiple meetings, multiple negotiations, etc...

That is not what the option is for. They're buying ~1 billion ripples for a fraction of what they cost.

I understand what an option is...

Reply on news.ycombinator.com