Bitcoin derivatives
Finance and crypto
bitcoin options exchange
SHOW HN2014
95points
55comments
#287of 2,272 in 2014
Top 13%of 2014 by points
How HN took it
RoastedHalf or more of the comments are critical
1 positive, 8 neutral or asking, 1 mixed, 20 critical, out of 30 comments about the project. Thread score -0.54.
Design: 1 for, 8 againstIdea: 0 for, 7 againstPrivacy: 0 for, 2 againstPricing: 0 for, 1 againstDocs: 0 for, 1 against
The thread, comment by comment
Each row is a top-level comment and its replies, in HN's order. Select a cell to open that comment on HN.
positive neutral or mixed critical about another commenter or something else the maker
What HN said
Objections
Put options are effectively capped at margin, so they do not hedge tail risk
From 2 comments
I would be very careful with using this for risk management. It has very different characteristics from exchange-traded options contracts that you may be familiar with in the US.…
bjterry on HNI was going to write a response disagreeing based on the assumption that, like any normal exchange, Derivabit would fully intermediate the trade. But after reading the guide, I…
simon_ on HN
Counterparty risk with no clearing or guarantee of trades
From 3 comments
So... counterparty risk?
Tycho on HNWhy 20% for puts? Although loss for puts is capped at 100% of margin value, BTC is as much liable to go up 20% or 20% in a short period of time. How often is margin calculation…
noname123 on HNFormer volatility market maker here. Interesting concept, one I have considered playing with myself. Issues I see so far: (1) Not compliant. No SIPC coverage for customer funds…
JumpCrisscross on HN
Likely not regulatory compliant in the US; no SEC registration or SIPC coverage
From 2 comments
Former volatility market maker here. Interesting concept, one I have considered playing with myself. Issues I see so far: (1) Not compliant. No SIPC coverage for customer funds…
JumpCrisscross on HN(1) As Bitcoin has yet to be recognised/classified as a currency or security, one could argue that derivatives based on the price of a Bitcoin are more akin to bets than…
jackgavigan on HN
Lack of order book and rates or collateral markets hampers price discovery
From 2 comments
I just noticed that they don't actually provide an order book or any sort of bid-ask spread information. That makes price discovery extremely challenging, and makes this even…
bjterry on HNFormer volatility market maker here. Interesting concept, one I have considered playing with myself. Issues I see so far: (1) Not compliant. No SIPC coverage for customer funds…
JumpCrisscross on HN
Withdrawals require photo ID, not clearly disclosed
From 2 comments
I would be very careful with using this for risk management. It has very different characteristics from exchange-traded options contracts that you may be familiar with in the US.…
bjterry on HNIt's not obvious that you need to verify your identity to withdraw. It would be very easy for someone to see a deposit address and assume withdrawals would be just as…
topynate on HN
Requests
Clarify the guide and make it more visible
From 2 comments
Looks cool (like the Authy integration), but you might want to make the Guide a little more visible (https://derivabit.com/guide). That was the first thing I was looking for.
mrmch on HNIt's not obvious that you need to verify your identity to withdraw. It would be very easy for someone to see a deposit address and assume withdrawals would be just as…
topynate on HN
Provide an API
From 2 comments
Is there any API to speak of?
michaelgrosner2 on HNNot yet, it's on the roadmap. Contact info in my profile.
ciscoriordan on HN
Questions
What underlying price is used for settlement
From 3 comments
Former volatility market maker here. Interesting concept, one I have considered playing with myself. Issues I see so far: (1) Not compliant. No SIPC coverage for customer funds…
JumpCrisscross on HN(1) As Bitcoin has yet to be recognised/classified as a currency or security, one could argue that derivatives based on the price of a Bitcoin are more akin to bets than…
jackgavigan on HNI would be very careful with using this for risk management. It has very different characteristics from exchange-traded options contracts that you may be familiar with in the US.…
bjterry on HN
What legal jurisdiction and licensing applies
From 2 comments
What's the legality of this operation in terms of your base of operation and location of customers you are serving? Did you guys have to get a MSB license or similar oversight?…
jboggan on HNWe only support Bitcoin derivative instruments, which we believe to be under the CFTC's jurisdiction (http://www.law.cornell.edu/uscode/text/7/2).
ciscoriordan on HN
How margin and collateral are handled if a counterparty cannot pay
From 2 comments
Why 20% for puts? Although loss for puts is capped at 100% of margin value, BTC is as much liable to go up 20% or 20% in a short period of time. How often is margin calculation…
noname123 on HNThe margin is a percentage of the underlying Bitcoin. So no margin calls. If your counterparty can't pay, then you get the full value of their margin account for that trade (plus…
ciscoriordan on HN
Alternatives named
Intrade and Nadex binary options markets
From 2 comments
> (1) As Bitcoin has yet to be recognised/classified as a currency or security, one could argue that derivatives based on the price of a Bitcoin are more akin to bets than…
runeks on HNI seem to recall that the CFTC were primarily concerned with the fact that Intrade offered options based on the price of currencies and gold. Nadex were also smacked down when…
jackgavigan on HN
Counterparty and Mastercoin decentralized exchange protocols
From 1 comment
A couple of projects have looked at solving the trust issue by implementing a distributed exchange without counterparty risk on top of the bitcoin blockchain:…
mlubin on HN
Bitfinex liquidity swap market
From 1 comment
So is Bitfinex' "liquidity swap market" [1][2] a rates market? It's basically just people with either USD, BTC or LTC deposited with the exchange, offering to lend it out at a…
runeks on HN