Alt-Options Weekly Report (12.04.15)
It was an exciting three weeks of trading; Anik Dang, of Boston University crushed the competition, racking up a PnL of nearly 1000%. Massive price swings (from European VAT to a supposed Russian Ponzi scheme) provided multiple opportunities to hedge against Bitcoin volatility and turn risk into massive reward. Even though the competition is over, we encourage you to keep on trading and sending us suggestions, on how to improve the user experience.
Dating back to a patent application filed last year, GS has developed SETLCoin. The premise of the new virtual currency will be to reduce the trade settlement window (period over which promised cash and securities — such as stocks and bonds — actually change hands).
That gap between the time the trades are executed and the settlement of the trade is a risk for traders. (It’s always possible that the person you were trading with goes bankrupt before they deliver the cash or securities you are expecting.) Goldman Sachs says in the patent application that SETLCoin guarantees “nearly instantaneous execution and settlement” for trades.
Goldman’s patent application for SETLCoin might suggest that as they become more familiar with the technology themselves, banks and financial institutions could step-up their own development of blockchain technology.
In one of the most poorly written articles, Jim Kramer’s staff summarizes why they think Bitcoin will explode:
Bitcoin is a classic case of supply and demand. With a known and predictable supply, demand is the lever that we must closely monitor. If bitcoin continues to pervade Fortune 500 boardrooms, bulge bracket bank trading desks and hedge fund water cooler conversations, demand for bitcoin could grow meaningfully(and so could bitcoin’s value).
We’d like to thank The Street for attributing Bitcoin’s success to a gallon of water in an office.
In a previous report we discussed how banks refuse to acknowledge Bitcoin; they are taking exploratory measures in understanding blockchain technology while attempting to distance themselves from Bitcoin. The mistake they are making, according Barry Silbert, is that Bitcoin and Blockchain tech are symbiotic and that big banks will come full circle to adopt Bitcoin.
“All these banks are trying to get the best attributes of the Bitcoin blockchain without the Bitcoin, and ultimately, I think they’re going to capitulate and revert back to Bitcoin.”
Silbert also went into detail on why banks are choosing not to use the Bitcoin blockchain right now. He pointed out two aspects of Bitcoin that worry bank executives:
“The reason why they’re trying to not use the Bitcoin blockchain is they’re worried about Chinese miners not securing the network properly [and] they’re worried about indirectly paying terrorists for mining bitcoin, which supports the network.”
Bitcoin as a brand is a bit tarnished because of Silk Road, MtGox, and other parts of the industry, which have been perceived negatively by the general public. For this reason, many companies, developers, and investors have started to refer to Bitcoin as the blockchain.
Antoinette L. Smith + Miriam F. Weismann — November 2014
This research paper explores the ins-and-outs of Bitcoin ranging from market regulation to associated risk.
Increasingly, companies and customers are beginning to hear, “We accept all major credit cards and Bitcoins.” Virtual or digital currency is a new financial “black box” product that has seeped into the retail market and is slowly becoming the currency of choice for nation states like Iceland. As the cash or treasury manager of your organization, are you ready to take on Bitcoin currency — or any virtual currency, for that matter? — Abstract
This is a great read for newcomers into the space, to understand the periphery virtual currency environment.
Alt-Options Collegiate Trading Competition: Wrap-Up
Congrats to Anik Dang, from Boston University. He crushed the competition, approaching an unreal 1000% PnL. This success clearly demonstrates the power of derivatives and the leverage they can provide for smart investing.
Keep on trading and sending us suggestions on how we can improve your experience!