Skip to comments.Bitcoin swap agreement could lead to regulated derivatives
Posted on 03/24/2014 1:02:40 PM PDT by Errant
The Tera Group Inc. said Monday it had finalized the terms for a multi-million dollar bitcoin swap agreement between two U.S. institutions, but declined to name the parties involved.
Such transactions are currently unregulated, Tera said. The company said it has reached out to the U.S. Commodities Futures Trading Commission in order to work on a regulated bitcoin swap. The CFTC hadnt responded to a request for comment as of writing this post.
The goal is for us to bring this to the bitcoin community because there are many commercial entities that want to take bitcoin in but have concerns about the price volatility, Leonard Nuara, president of Tera, said in an interview.
The idea of the swap is to hedge the exchange-rate risk for companies accepting bitcoins for payment, similar to how companies hedge against currency risk in the Brazilian real and Indian rupee, he said.
It would work like this: An institution would ensure that a company accepting bitcoin for payment gets a predetermined exchange rate, regardless of the actual exchange rate at the time the payment is due. If the price of bitcoin has dropped during the period, the institution pays the difference. If the price has risen, it books a profit.
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Bitcoin: Fiat currency on steroids. Might even be a pyramid.
I watched part of it. I’ll finish it at home. I wonder if it is going to get into the concept that all money is loaned into existence. ;)
So why is the world's central banks and governments so concerned about little ol' Bitcoin with a total cap presently of around only 10B?
Things that make you go hmmmmm...
When I think "on steroids" I think of something that is not in a natural state or something that seems better than it is because it is being aided by extraordinary means.
I would think when a government with an unlimited amount of guns and force passes laws to prop up a certain currency or uses their guns to force others to accept a certain currency, that would more fit the description of a fiat currency being "on steroids".
A fiat currency that is only used by those who choose to find value in it and which needs no force of government to spread would seem to me to be a more "natural" currency.
That is just my two cents.
We’re pretty much on the same page. Instead of “on steroids” I should have said “textbook” because it is so “fiat” that it is backed by nothing whatsoever except for faith. Reminds me of the early earth culture in hitchhiker’s guide that used leaves for money.
They ended up with an inflation problem that was easily resolved by burning down all the forests.
The reason that Bitcoin is superior to the leaves you mention and Federal Reserve Notes is because it has a limiting, self regulating structure built into it. Unlike leaves or Federal Reserve notes, the protocol was designed to be anti-inflationary without any external measures such as orchestrated crashes, warfare, trade wars, currency manipulation or burned forests.
So who backs fiat? Could it be the same governments who are running up debt, appeasing their dependent supporters?
There is only one outcome for such a system...
Fiat is the currency that needs "backing". Gold, silver, and crypto currencies don't need backing. Their units required work to produce, which limits supply. And values are set by free markets (back before gold and silver price manipulation that is).
A Wall Street heavy weighs in. Bill Miller is highly respected on the Street.I agree 100% with everything he says here.This is a guy who gets it. Listen very carefully to his comments about Bitcoins potential should it capture just 10% of the gold market. 10% is extremely conservative in my estimation. This man sees the future.
some of this story is just made up.
you can in theory, start a futures exchange for bitcoin.
that is different from some ‘market maker’
trying to provide ‘stability’.
so called ‘stability’ would be...
you buy at 600
you sell at 500.
does that fool anyone here?
Yep, thats the one!
When I say “fiat” currency, I mean currency that is backed by nothing but faith. But that is just me. ;-)