
Institutional Investors Are Using Back Door for Crypto Purchases - petethomas
https://www.bloomberg.com/news/articles/2018-10-01/institutional-investors-are-using-back-door-for-crypto-purchases
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woodpanel
My key takeaways from reading this:

\- investors chipping in not because of potential upside, but because of
reduced volatility. [1]

\- there is such a thing as collectible coins and that "Clean Bitcoins" make
sense I guess :-) [2]

[1] > _Over the last four to six months, the market has been trading in a very
tight range, and that’s seems to be corresponding with traditional financial
institutions becoming more comfortable diving into the space. "_

[2] > _What’s more, miners can offer something unique: brand-new, “virgin”
coins, which some investors covet. Such coins command a premium of up to 20
percent, according to Travis Kling, founder of the hedge fund Ikigai. It’s
easier to prove they’ve not been involved in money-laundering operations, he
said_

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badge

      What’s more, miners can offer something unique: brand-new, 
      “virgin” coins, which some investors covet. Such coins 
      command a premium of up to 20 percent, according to 
      Travis Kling, founder of the hedge fund Ikigai. It’s 
      easier to prove they’ve not been involved in money-
      laundering operations, he said
    

Ironic, because that's actually the defacto method for laundering money in
Bitcoin land

See this bitcoin laundering method described in this post from a moderator on
BitcoinTalk dated August 22, 2013, 02:32:31 AM [
[https://bitcointalk.org/index.php?topic=279249.0](https://bitcointalk.org/index.php?topic=279249.0)
] Payment to miners / mining pool operators for their freshly minted "clean"
"virgin" coins in exchange for a 20% markup.. why would anyone want to
immediately lose 20% of their investment?...

~~~
21
> why would anyone want to immediately lose 20% of their investment?...

It's called insurance, just like after you buy a house you immediately insure
it by paying a premium of x% of it's value.

In this case, you insure against someone in the future claiming those coins
were stolen from him.

The investors want exposure to the bitcoin price, but not to some of the
risks, so they factor them out as much as possible.

~~~
dgant
It's telling that the risk premium is 20%.

~~~
wmf
This seems very high; have institutional investors ever had problems selling
"tainted" coins?

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deevolution
Back door as in OTC trades perhaps?

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rl3
Relevant:

[https://republicprotocol.com/](https://republicprotocol.com/)

~~~
badge
interesting...

"Decentralized dark pool exchange protocol. Built for laundering large volumes
of crypto."

[https://www.fincen.gov/news/news-releases/fincen-fines-
btc-e...](https://www.fincen.gov/news/news-releases/fincen-fines-btc-e-
virtual-currency-exchange-110-million-facilitating-ransomware)

~~~
rl3
Despite the scary name, I fail to see the laundering connection. Wouldn't the
trades hit the blockchain upon final execution anyways?

They look pretty legit. Here's more info:

[https://venturebeat.com/2018/09/27/worlds-first-
decentralize...](https://venturebeat.com/2018/09/27/worlds-first-
decentralized-dark-pool-launched-by-republic-protocol/)

It's worth noting that I've no connection to them nor any conflict of
interest, just thought it was topical. Didn't have time to make a disclaimer
in my original post.

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xchaotic
Institutional investors = lots of money desperate for positive (inflation
adjusted) returns. The earth doesn't get any bigger and somehow the whole
world economy is currently built on the expectation of perpetual growth.

~~~
slededit
The earth doesn't get a whole lot bigger, but consider that 100 years ago sand
was useful only as fill. Now there is a trillion dollar industry turning it
into microprocessors. Value does not derive solely from raw materials.

