Can Bitcoin Affect The Same As Eliminating Gold?

Enemies with unrestricted money (like the Federal Reserve or the International Monetary Fund) can restrict Bitcoin prices when they turn to gold, but not in the same way.

Here we explain how to achieve short term cost savings and why the strategy does not work in the long term.

future market

Price control can be ensured by future financial markets. Here is what. Suppose you have 1 Bitcoin and you want to predict its future value. Suppose the current site price is $ 50,000. Within a year of signing the contract (you can choose another time, but I'll stick to 1 year for convenience) you will sell 1 Bitcoin for a price of $ 50,000 (you can create the value you you want).

What is the value of this contract? Well, let's first consider the benefits of buying a contract.

There are costs because, instead of paying $ 50,000 right away, you wait a year and pay 1 bitcoin, you can have $ 50,000 in cash in a year, and have some extra cash to earn.

They can also join Bitcoin exchange rates without paying in full. Because there is no problem with the price of Bitcoin after one year, you should buy it for $ 50,000 at that time. When the price hits $ 70,000, you can buy bitcoin for $ 50,000 and immediately sell it for $ 70,000 for a profit of $ 20,000 or keep the bitcoin you have cheap. However, if the price drops, you will still have to shell out $ 50,000, even if it is greater than the market value of Bitcoin.

We cannot say how much the future contract is worth. Let's say it's commercial, but there is a cost of $ 15,000. Here is the price you pay for the above benefits. If the purchase price is $ 15,000, the contract value is $ 65,000. (The value of Bitcoin is 50,000 and the annual fee is $ 15,000.) US $ 15,000 is 30% of the annual fee.

Example: One-year Bitcoin futures contract with a starting price of $ 65,000 - Cash:

Now you no longer have to write the terms of the future contract, but the terms of the contract are fixed by the exchange. This allows for swaps, allowing it to operate in an open market.

All you have to do is go to the futures exchange and check the one year contract, check the list and see if you want to buy or sell.

Feel that you are "selling". The order appears on the order book. (What are you selling? You are selling a contract according to the terms.)

It can be bought, and only then will a new contract be created on time and the open position (all open positions) will increase depending on the market for the product. You don't have to wait for your contract to expire. You can buy back a contract with income or loss at any time to close a business (for example, liquidate a position or reduce an open position).

Why is the contract price changing? There are three things.

1. The payment period expires

Time is of the essence and the cost is less than time. Although the value of Bitcoin will remain stable for a year, the value of $ 15,000 will be reduced to zero when the contract expires, and the value of Bitcoin will reach a total of $ 50,000 by the end of the promise. . If you keep the contract at the end, your income will be $ 15,000 (since you sold it for $ 65,000 and it will now expire at $ 50,000). In fact, however, the Bitcoin spot price exchange, however, futures contracts waste their payment time until the last minute when the contract price is equal somewhere.

2. The volatility fraction of the charging time

The bonus time goes out due to the lapse of time, but the value of the additional bonus time fluctuates greatly due to fluctuations in the value of the prize. The payment deadline is like insurance. High volatility means that prices will change quickly, making “insurance” costs more expensive.

3. Bitcoin exchange rate

In addition to the premium period, the volatility of Bitcoin rates overlaps. Usually, when the price of Bitcoin rises, so does the price of bonds. So, if the site's value doubles, the value is not the time in the contract that needs to be doubled (or closed enough).

How it works:

Sell ​​more futures, less losses, and lower prices.

The operator does not need Bitcoin as collateral for this. All you need is cash. Why do you need personal items? There is a guarantee if the transition occurs. If the exchange deteriorates and the guarantee expires, the exchange liquidates the contract, forfeits the guarantee and collects the arrears. If there is no responsibility, you need to pay for the exchange.

In general, futures prices do not differ from selling prices due to competition.

manipulation by arbitration

Consider that after a huge futures sale, it suddenly went from $ 49,000 to $ 65,000, but the value of the facility did not start to move to $ 50,000. (Consider where the value changes but hasn't changed yet. I'll explain why it's "automatic".)

Smart traders will see that future prices are too low. What can it be used for? One way is to buy a contract for $ 49,000 knowing that it is $ 1,000 less than the property's value. All he could do was buy a bitcoin contract for $ 49,000 and then sell his bitcoin stake in the store for $ 50,000.

He paid $ 49,000 for the futures contract and sold 1 Bitcoin for $ 50,000, making a profit of $ 1,000 for free. However, the sale also pushed the price of Bitcoin to $ 49,000. Why $ 49,000 and less? Indeed, arbitration is only useful at certain times.

(I ignored the $ 15,000 payment deadline for convenience, but taking this into account, it would be worth losing Bitcoin from $ 34,000. In doing so, the obvious loss makes the loss very much. cheap. Purchase - Contract for the next year. Payment term is Win, it is canceled free of charge.)

Returning to $ 49,000 to $ 50,000 of arbitrage, our good trader now has a reduction in the total number of Bitcoins he holds by 1.0, but the price of Bitcoins he has in terms of price has not. not changed. Although the value of Bitcoin doubles, it can still be turned into cash, but it can also be used as fiat currency. He can cancel his futures contract at any time, earn money in fiat, and then redeem bitcoin at market value for a $ 1,000 discount (free).

Where does the $ 1,000 come from? Who is his money? You are a "jerk" selling futures at very low prices. But are they stupid? If they wanted to print unlimited fiat currency and reduce the value of Bitcoin, they wouldn't.

does it work

It depends on what "works" means. This lowers the cost of Bitcoin, but only temporarily, and I'll explain why later.

It is also interesting that this idea of ​​reducing the price of gold has been realized. The number of future gold requests exceeds the available gold. How does it end?

This is because contract delivery is based on the price of fiat, not real gold, and there is no limit to the number of fiat coins that can be offered. No obligation to deliver gold.

Most people don't need gold. Because it costs money to get body gold.

As a result, the scam continues and the “supply” of gold increases, maintaining the prices. Everyone trades in "paper" gold, which is rare, and it seems that there is no limit to the amount of paper gold that can be made.

However, this is not the case with Bitcoin.

Why Bitcoin Manipulation Is Not Sustainable: Reason # 1.

This process works for gold, but not for long-term Bitcoin. This is because Bitcoin is easy to store and allows instant P2P payments directly to anyone in the world. Gold is not. Of course, I'm not saying you can't store gold. You can, but it's not a lot. The world market where gold is not regulated in the medium term is scarce, so the gold price market will continue.

You can store your bitcoins using your wallet and a private key. Most people will learn to do this on their own, and I advise those in need. After all, almost all bitcoin is stored on its own.

The more people collect arbitrage bitcoins from Marxists who wish to convert fiat currency to bitcoins, buy bitcoins on exchanges, request services or manipulate prices, the more real bitcoins need to be bought with gold and more. money. Not the same contract, but long term need and to be kept.

This activity also supports fiduciary appreciation, drives demand and awareness of Bitcoin. In short, it may be temporary, but it will be counterproductive and counterproductive to the growing demand for Bitcoin.

In addition, the fall in the price of Bitcoin will allow those who have collected Bitcoin to withdraw more Bitcoins from a fiat currency.

Here's Why You Really Need Bitcoin To Break Price Manipulation

Let's say there are millions of Bitcoin holders who still do, and that number continues to grow. When you bring fiat money into the market you are betting low and sometimes you will not be able to use Bitcoin. So they give more. Although the future cost is less than the cost of the site, it is higher. If you bet more, other Bitcoin holders will try to sell. As a result, Bitcoin has gone from a weak hand to a strong one. Where this price is determined by people who want to bet on real Bitcoin rather than a futures contract.

For places where prices fall to futures prices, one can initiate an arbitrage strategy to have bitcoin reserves to complete the plan, but more bitcoins. He only holds futures or fiat currencies. So the cost is always cheaper.

It's the end of the work.

It is important to note that just buying bitcoin in stores is not enough to break the rig and should be eliminated. Not all bitcoins held on the stock exchange are real bitcoins.

You can say you have 1 Bitcoin, but you can't be sure if there is a lot of demand for that Bitcoin. Part of the banking industry retains practices like resuming the Bitcoin exchange.

For example, an exchange with 1 million bitcoins can commit a total of 10 million bitcoins to its customers. These users only have an account page showing their Bitcoin balance. There is no way to identify the availability of bitcoin until you have withdrawn it. If 1 million Bitcoins are withdrawn immediately, other consumers who think they have 9 million Bitcoins will not receive them.

I like to use gold as an example. Suppose you have a gold seller, go to your trading page and your "gold" wallet and you will see a picture of your gold bars. You don't really know if the bar is safe, and you don't know how many people think they have it. It is sent to you and does not belong to you unless you put it in a safe place. Ditto for Bitcoin. Here we have presented "6 reasons to delete Bitcoin".

So, to count the last argument, if you keep your bitcoins on the exchange, you don't have to ask for bitcoins (which affects the price).

Why Bitcoin Manipulation Is Unsustainable: Reason # 2

Another reason for the lack of control is that people tempted into arbitrage (for example, selling Bitcoin in exchange for futures that are too low) may want to renew their Bitcoin bundles in the future. They then enter into futures contracts or let them expire, collect fiat currency and gains / losses, use fiat currency to buy back bitcoin in the market, and then raise the prices. Part of the downsides of long term futures contracts is noise.

generalize

In summary, I have described how cost constraints work and how they will be used for future activities. He also explained why they couldn't stay long. Since Bitcoin does not have the same power as gold, it is amazing to think that the Bitcoin experience is similar to knowing gold.

Bitcoin can be easily applied, stored, and traded on the fly around the world, and it's a real demand for Bitcoin that separates Bitcoin's price from future value.

Remember that you cannot buy food or clothing by paying in the future.