I calculated the Bitcoin circulating supply equivalent of Central Bank gold reserves.pic.twitter.com/lSTvK7Szkh
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Volatility can be sold using derivatives while keeping the trust-minimized underlying, so a liquid and mature derivatives market may advance government adoption.
No, the trust-minimized underlying has to pay a big premium for this artificial construct. Also how do you do this in a trust-minimized way, without an oracle?
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You could sell futures contracts in a traditional exchange matching bitcoin holdings (volatility hedge is not trust-minimized). The cost equals convenience yield associated to holding the underlying until expiry (the price of trust minimization) of course.https://twitter.com/fnietom/status/1084815552223285248 …
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A centralized exchange isn't trust-minimized. The holders of the longs and the shorts (the latter needed to hedge the volatility of the underlying) would, unlike the underlying, have political vulnerability, eliminating which was the whole point of the exercise.
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A central bank could keep part of its holdings in bitcoin (trust-minimized) even if it uses a trust-based hedge to eliminate bitcoin volatility exposure. These are risks of a very different magnitude, it's not the same risking the hedge as risking the principal.
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That's an interesting idea.
End of conversation
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Often the ‘market’ or ‘economy’ becomes personified as the only oracle.
Thanks. Twitter will use this to make your timeline better. UndoUndo
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