I mean this could have implications I'm not seeing yet, and short selling crypto is extremely risky, so there's that, but on the surface it sounds like a path to something quite workable. I wonder what @ESYudkowsky thinks about that...
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So thinking about implications it immediately comes up as being an attack vector. So FaceBook for example could destroy a startup it doesn't like by shorting a 100 million of their tokens to turn investors away. Right?
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Replying to @coinfund_al @ESYudkowsky
They could do that on public markets just as well.
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Replying to @jbrukh @ESYudkowsky
Technically yes, but public markets are much bigger.
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Replying to @coinfund_al @ESYudkowsky
Facebook has little incentive to compete via shorting attacks. In “little” cryptomarkets when quasi-rationally priced and competitors are roughly the same size, attacking competitors by shorting might have very dangerous consequences.
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Replying to @jbrukh @ESYudkowsky
True. Shorting is an unlimited downside activity. I wonder if it's actually true that shorting solves the free energy problem completely, precisely because it's not truly symmetrical to buying.
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Does anyone sell put options?
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I have little knowledge of crypto derivatives. Selling put options is horribly risky even in traditional markets.
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With a put option, downside is capped on both sides.
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Replying to @ciphergoth @coinfund_al and
Selling a put has down-side up to the strike price of the put, if the price drops to zero. (Similar to buying the asset...)
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Actually, probably-dumb question: Why would anyone ever sell a put option on an asset as volatile as a cryptobuck, which goes to either zero or bignum? It's similar to buying the cryptobuck but without the unlimited upside.
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Replying to @ESYudkowsky @ciphergoth and
1) Sometimes people make leveraged bets on highly uncertain assets because they are cleverly maximizing return or hedging risk. 2) Most of the time someone thinks they are doing so, they are wrong.
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Replying to @davidmanheim @ESYudkowsky and
But in other very volatile markets, it's potentially useful because you can construct arbitrary payout profiles by combining puts + calls.
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End of conversation
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