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Location: At the dude ranch / above the sea Gender:
Posted:
Feb 25, 2026 - 9:27am
rgio wrote:
Kurt...we agree on something!
The current market cap is $768B for Bitcoin. I think the entire market will be almost worthless at some point, but that market cap makes it the 7th largest "organization" on the planet...just ahead of Berkshire Hathaway. Nobody is trading enough Bitcoin to front-run. They may gain some tiny advantage, but by the time the trade is complete, they could have lost more than any gain.
Well, it makes total sense, as long as the value of bitcoin is tied toâ¦
wait. What is its value tied to? What is it acting as a proxy for?
I listen to Paul Krugman: âItâs a cult.â He finds no legitimate reason for bitcoin to be used. This is in alignment with what we all know.
Even the bros canât really answer: is it an investment (HODL!) or is it currency that you spend actively? Itâs certainly not Shimmer floor wax/dessert topping. I donât fall for that twice.
An interesting read. Filled in some holes in my understanding of things. Ether has allegedly addressed some of the mining concerns mentioned with Etherium 2.0 coming this summer.
It would seem that front running would be dependent on a high rate of volatility. Stable or very slowly changing prices would take away the incentive, no ?
Kurt...we agree on something!
The current market cap is $768B for Bitcoin. I think the entire market will be almost worthless at some point, but that market cap makes it the 7th largest "organization" on the planet...just ahead of Berkshire Hathaway. Nobody is trading enough Bitcoin to front-run. They may gain some tiny advantage, but by the time the trade is complete, they could have lost more than any gain.
Do you know what front running is? Let's say you're a hedge fund and you put out a big order. Let's say: You buy 100.000 Adidas shares. Such a purchase increases the demand and more demand means that the price goes up. So if the broker, through whom your hedge fund places the order, sees the order, he can profit from it by buying Adidas shares cheaply, then making your big transaction, and then selling the Adidas shares again. This is, of course, illegal insider trading. And there are authorities that are supposed to uncover and punish something like that. Because of this kind of criminal activity, financial markets are regulated. You can probably guess where it's going now. With cryptocurrencies, there is no regulator. Can you do front running there? Well, sure you can! Bitcoin is not as vulnerable, but Ethereum with its smart contracts is tailor-made to make that possible! You can also generalize the whole thing and think about the concept of "Miner Extractable Value", i.e. value that a miner can extract by manipulating the fresh block. Oh, and once you have a model like that, you can look through the transactions to see if you can find any clues. You won't guess what you'll find! Read for yourself. Hey, all this cryptocurrency stuff, it looks like a super-solid investment! Makes you want to invest your money!1!!!
An interesting read. Filled in some holes in my understanding of things. Ether has allegedly addressed some of the mining concerns mentioned with Etherium 2.0 coming this summer.
It would seem that front running would be dependent on a high rate of volatility. Stable or very slowly changing prices would take away the incentive, no ?
Let's say you're a hedge fund and you put out a big order. Let's say: You buy 100.000 Adidas shares. Such a purchase increases the demand and more demand means that the price goes up.
So if the broker, through whom your hedge fund places the order, sees the order, he can profit from it by buying Adidas shares cheaply, then making your big transaction, and then selling the Adidas shares again.
This is, of course, illegal insider trading. And there are authorities that are supposed to uncover and punish something like that. Because of this kind of criminal activity, financial markets are regulated.
You can probably guess where it's going now.
With cryptocurrencies, there is no regulator. Can you do front running there? Well, sure you can! Bitcoin is not as vulnerable, but Ethereum with its smart contracts is tailor-made to make that possible!
You can also generalize the whole thing and think about the concept of "Miner Extractable Value", i.e. value that a miner can extract by manipulating the fresh block.
Oh, and once you have a model like that, you can look through the transactions to see if you can find any clues. You won't guess what you'll find!
Read for yourself.
Hey, all this cryptocurrency stuff, it looks like a super-solid investment! Makes you want to invest your money!1!!!
âPeople who play blackjack, according to research, are more likely to push you off a cliff while hiking and set your car on fire. Hereâs our graphâ¦â
"Our results do not support the idea that the high valuation of cryptocurrencies is based on the demand from illegal transactions. Instead, they suggest that the majority of Bitcoin transactions is linked to speculation"
"...the only reason for the massive carbon footprint of Proof-of-Work and the complexity and risk of the alternatives is to maintain the illusion of decentralization."
Not sure about that. One thing that gives me pause is the idea that someone in India can do the same job, via the internet, that someone in the US can do. Why are they paid so very differently (that is, the person in India gets paid â of the US person and still lives like a king - but not the US person)?
The difference in value of goods and services is a result of local factors that begin to disappear as the world gets smaller.
That's exactly why it doesn't work.
When US unemployment is 20% (because all of the work is done in India at half price), and the US can't pay its debts because tax revenues are down 15%, there is nothing policymakers can do to maintain competitiveness. Sure, you can attempt to get Americans to take a pay cut, but then they can't pay their bills which are already fixed (mortgage, car loans, student debt). If you want to see how this works, look up Ireland and more dramatically Greece 10 or 12 years ago.
What's interesting about your comment is that currency is not a barrier to offshoring. Yeah, remember that word. The world has been getting smaller for a few decades. Ten years ago corporate America was Satan for moving US jobs offshore. Now you can do it on your own. Need a Java developer or Tax Lawyer, they're just a click away?
When people don't come to an office, why pay them US salaries and benefits? As this happens, a single currency would cause catastrophic problems for declining economies.
They already have. Paper bills, coins, and paper checks and other things you can hold in your hand are anachronisms, having been replaced long ago by digital worth. You can see its digital worth on the little signs outside a bank telling you what relative values each digital currency (dollar, yen, peso) have to each other.
The real future is the stabilization of the relative values so that they donât fluctuate. Once thatâs agreed upon (if ever) then a single currency is possible. This was certainly the goal of the Euro, although it mightâve been too soon for that when it was conceived. Now, with all currency being digital, itâs much more possible.
Right.... Central Banks will create something very similar to the crypto currencies we currently observe. And yes, that is happening as we speak.
Central bank backing should stabilize the value of any official purely digital currency.
The real future is the stabilization of the relative values so that they donât fluctuate. Once thatâs agreed upon (if ever) then a single currency is possible. This was certainly the goal of the Euro, although it mightâve been too soon for that when it was conceived. Now, with all currency being digital, itâs much more possible.
The inability for policymakers to control economic factors (interest rates), regional social norms (homeownership vs. rental), and economic factors (growth, tourism) make a single currency impossible. It's not paper vs. digital, it's output, innovation, efficiency, and workforce dynamics that are not controllable on a global scale. To maintain a healthy competitive balance, the value of goods and services can't be fixed.
Location: At the dude ranch / above the sea Gender:
Posted:
Jan 22, 2022 - 10:28pm
westslope wrote:
Central banks will create/adopt some kind of digital currency.
They already have. Paper bills, coins, and paper checks and other things you can hold in your hand are anachronisms, having been replaced long ago by digital worth. You can see its digital worth on the little signs outside a bank telling you what relative values each digital currency (dollar, yen, peso) have to each other.
The real future is the stabilization of the relative values so that they donât fluctuate. Once thatâs agreed upon (if ever) then a single currency is possible. This was certainly the goal of the Euro, although it mightâve been too soon for that when it was conceived. Now, with all currency being digital, itâs much more possible.
Central banks will create/adopt some kind of digital currency. Then central governments will either ban privately sponsored cryptocurrencies or make life increasingly difficult for them.
Cryptocurrency can facilitate transactions for violent non-state actors, domestic and international. Police agencies and national security organizations will be really keen on either learning how to observe these transactions, thus rendering them pointless, or stamping them out.
Yes, I find macro economics fascinating. Along with logistics. I was going to go for a Masters in Supply Chain Management at CWRU after I got my BBA in 2007. In 2008 the starting pay for grads was an easy $100 k. Found out I needed 2 years of Calculus and I didn't know if I had it in me to write another paper. I did a 40 pager for my BBA. Then I got sick and that ship sailed for good.
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I do very little in precious metals. Too moody for my tastes. Ever notice that the really successful Gold Bug speculators take profits and then sit in cash? Sometimes sitting in cash for rather long periods of time? Contradictions much? How about that discourse that the world was ending?
Rare metals is a tough trade. No understanding? Stay away. Say no to envy. Say no to regret.
Foreign exchange is super speculative. Currencies can trade well above or well below purchasing power parity rates of exchange for years and years at a time. The currency speculators who I have met and appear to do well are usually trading on technicals (TA) and the trading horizon is very, very short. Days or hours. One of Canada's best known international finance economists trades currencies using TA (technical analysis) suggesting that mean reversion and fundamental analysis are not all that useful.
Too bad you missed the Masters in Supply Chain Management. Those are skills that will remain in high demand going forward despite all the current bleating by economic nationalists and those calling for a more muscular industrial policy.
Calculus is extremely useful. I did well in high school calculus and algebra but in hindsight wished that the teachers had invited in folks with a background in either academia, financial sector, engineering, etc., to explain just how incredibly useful these math skills are in real life.
One of the things I have learned over the years is that one can make really good coin in boring equity plays. Blue-chip, dividend-paying stocks. REITs. Probably MLPs too (don't have those in Canada). A good understanding of macroeconomics helps. Some understanding of market structure and the regulatory environment also helps.
Covered-call enhanced ETFs may not appreciate much but can crank out high yields year in, year out (e.g., 5% to 12%). A little understanding of the history of the ETF and the sector(s) it focuses on are helpful. Even if the capital value trends down over time, the cash distributions in a tax-protected account can more than make up for the capital loss. The managers do all the heavy lifting in the options market; the investor sits back and collects cash distributions — monthly.
