I calculated the Bitcoin circulating supply equivalent of Central Bank gold reserves.pic.twitter.com/lSTvK7Szkh
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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 …
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.
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