Post
Topic
Board Speculation
Re: Gold collapsing. Bitcoin UP.
by
Odalv
on 01/11/2014, 16:40:42 UTC
let me put it in simple terms w/o numbers.

you're taking a chunk of coin off a very secure ledger and moving them over to a less secure ledger.  it's too be expected those coins moved will be worth less b/c they are now less secure.  

b/c of arbitrage, you can expect the moved coin to drag down the price of the not moved coin to a lower equilibrium.

But why will you move the coins in the first place???

for experimentation, speculation, stupidity, pump and dump, who knows?  we know it will occur.

But why will you sell them for a lower price instead of transfering them back to BTC?

you don't have to do anything.  the arb bots will take care of it for you.

What??? Someone have to sell the cheap coins?

do you seriously think that when a SC is first established on Day 1, 1 scBTC = 1 BTC in fiat terms?.  it can't be b/c of newness, less security, chance of failure, etc.  with time, as it proves itself, the arb bots will equilibrate the price but at a lower level b/c of the always present risk of failure of the SC.  the SC is not Bitcoin.  

"newness, less security, chance of failure, etc." is compensated with "increased utility"  so yes on Day 1, 1 scBTC = 1 BTC in is fiat terms and forever until SC crash.

another way to address your point is that a "theoretical" will never trump a "known".

we know MM is less secure than direct mining.  we don't know that a new untested "innovation" will counter weigh the value of less security.

MM is only one type of SC (it is good only for world wide use).  It is possible to use "oracle" for mining or ...  group of people at an island can use private SC with fixed difficulity (b/c they know each others) ... they can use their virtual currency, and this currency can be exchanged 1:1 bitcoin. They do not have to pay transaction fees if they agree and use only 1 confirmation (every 2 min).