
NYSE launches a Bitcoin index - ghosh
http://americasmarkets.usatoday.com/2015/05/19/nyse-launches-a-bitcoin-index/
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sdrothrock
NYXBT:
[https://www.nyse.com/quote/index/NYXBT](https://www.nyse.com/quote/index/NYXBT)

Methodology:
[https://www.nyse.com/publicdocs/nyse/indices/NYSE_Bitcoin_In...](https://www.nyse.com/publicdocs/nyse/indices/NYSE_Bitcoin_Index_Methodology.pdf)

It's apparently calculated once a day within two hours of 4 PM UK time (GMT
+1) and relies on one source: Coinbase Exchange.

The methodology is scheduled to be reviewed four times a year.

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jackgavigan
This is similar to (as in, they've basically copied, right down to the 4pm
timing) the methodology used to set the WM/Reuters closing spot rates:
[http://www.wmcompany.com/pdfs/WMReutersMethodology.pdf](http://www.wmcompany.com/pdfs/WMReutersMethodology.pdf)

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ShirsenduK
Good to see Bitcoin going mainstream!

~~~
eterm
Sadly Bitcoin is fundamentally unstable. If the difficultly ever stabilised it
is vulnerable to a mining efficiency attack that de-stabilises it. It's one
reason that I'll be staying clear even if it does become more mainstream.

~~~
nostrademons
So are all assets. It's one of the quirks of capitalism that markets remain
efficient only to the extent that people believe that they're inefficient, and
liquid only to the extent that people are misinformed about an asset's value.
To see why, imagine a perfectly efficient asset market with perfect
information, where the goal of every participant is to maximize their
financial returns. In such a market, all participants know everything that all
other participants do, they know that all other participants know everything
they do, and they can transact instantaneously without cost. Prices in this
market converge instantly upon the "true" value, which can be agreed upon by
all market partipants because of their omniscience. Such a market has zero
liquidity. Why would anyone transact if they know that a security already has
the correct value? For there to be profit potential, the person who sells to
you must be misinformed about the security's true value, which contradicts the
assumption of omniscience. The interesting thing is that the more market
participants believe in the market's efficiency, the more inefficient it
becomes. With little incentive to do their own research (why bother, when the
current price reflects more information than they could possibly amass?), the
underlying fundamental value of the asset can drift further from the consensus
price without anyone noticing. This increases the profit potential for people
who assume that they know better than everyone else. Eventually, a few of them
get rich, the consensus breaks down, lots of people lose their shirts, and the
market becomes efficient again. The result is the business cycle. Periods
where people believe in the market's efficiency are bubbles (when the
consensus price is above the true value) and panics (when the consensus price
is below the true value). Periods when they don't are crises, where the
prevailing momentum swings but this change in opinion is unevenly distributed.
Lots of things fundamental to the modern world are unstable. The whole concept
of a financial asset is one of them. I can think of a number of individual
industries that have an unstable dynamic, but I'm not going to name them
because I believe there's profit potential in them. Public opinion is yet
another one.

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nevi-me
Even if participants all have perfect information, I feel like you're
forgetting something fundamental to instruments, at least primary instruments.
If I buy an instrument, I'm expecting returns, I don't buy primarily to
speculate, but to gain returns, which can be fixed or variable. So for say a
sovereign state with little credit risk, why do funds but the state's
government bonds? Because there is contractual income to gain. There will
always be someone wanting to sell and let go off that income, because for most
people money is an utility that is accumulated to be used. On the other side,
even in a perfect market, there will always be someone who has received the
money from the spender, and wants to get income from that instrument.

Or is there something I'm missing?

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yincrash
People trade in ForEx (possibly more than any other market?). Holding currency
doesn't have a contractual return.

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omouse
now if I could only get my company to accept payments in bitcoin...

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bdcravens
Only a good idea if they immediately convert to fiat, at which point they'll
lose out on advantages of a price rise. However, the alternative is worse, as
it's pretty easy to lose percentage points in value on any given day. I'd hate
to be the guy who had to explain why yesterday's $1.00 payment was now worth
$0.97. Perhaps a hedge would be to tie your paycheck to Bitcoin's value at the
beginning of the pay period.

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guiomie
Can you trade an index ?

~~~
crimsonalucard
If I make one hundred pieces of blue paper and I call it a currency and I
start selling it to people, would this type of behavior be questionable?
Bitcoin is just a complicated high tech version of this. It's debateable
whether or not Bitcoin is empty dreams, outright fraud, or an actual currency.
What bitcoin is, is not the point. The point is this "index" you want to buy.

Lets say I make 100 pieces of red paper but this time I say each piece of
paper represents 1/100th of an index fund that tracks the cost of the blue
paper. Also whoever buys a red paper from me has to pay me annual fund
management fees.

You're telling me you want to buy these pieces of paper that ALREADY track a
"currency" that is quite sketchy in nature? If you want to gamble your money,
gamble the right way, buy the blue paper, or in other words just buy bitcoin
straight up.

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bdcravens
> If I make one hundred pieces of blue paper and I call it a currency and I
> start selling it to people

You just described fiat currency. Just change blue to green. (in the US -
others than many other colors, so pretty). Bitcoin is backed by a
cryptographic standard. The USD is backed by the government and a military
force. Both are seen as valuable by someone. Both have little or no true
valuable items behind them, other than confidence. One, the government and the
guns, the other, the anti-counterfeit nature and provability via the global
ledger.

~~~
crimsonalucard
The dollar is backed by culture and tradition, the government has no control
over whether or not you want to use or accept a dollar for goods.

Bitcoin is still new and thus still speculative. Being backed by cryptography
doesn't mean shit. It just means you can't copy it. So what? It still holds
zero intrinsic value. Sure the dollar holds no intrinsic value either. But why
the dollar vs bitcoin vs some other cryptographic currency I pull out of my
ass? The difference is culture and tradition, the dollar has tons, bitcoin...
not as much. This is why the price of bitcoin fluctuates so wildly. Most
people don't buy bitcoin to use as currency... the entire BC market is like a
gambling house where people try to buy and sell paper from each other.

Don't get me wrong, I'm not saying don't buy bitcoin or don't support it...
I'm just saying to be aware of what it currently is, and what it may transform
into in the future...

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dragonwriter
> The dollar is backed by culture and tradition, the government has no control
> over whether or not you want to use or accept a dollar for goods.

The government has control through the legal system which is the ultimate
recourse for dispute over payment of goods, and it exercises this control by
assessing damages, when a dispute is resolved through the courts, in US
dollars.

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crimsonalucard
if bitcoin ever becomes currency, who says courts won't have power to enforce
payment via bitcoin?

The main difference is inflating the money supply. The government cannot
control the supply of bitcoin the way they do with green dollars.

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dragonwriter
> if bitcoin ever becomes currency, who says courts won't have power to
> enforce payment via bitcoin?

Bitcoin _is_ currency.

What it is not is _legal tender_.

Courts in the US have the _legal power_ to enforce payment in bitcoin or Euros
or chickens or hours of service or any other form _now_. They also have well-
established rules that they only do so in manners other than the legal-tender
currency established by the government in certain exceptional cases.

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crimsonalucard
I agree, except for the part where you say bitcoin is currency.

Most people will not accept bitcoin as a medium of exchange. I cannot go to my
local grocery store and buy something with bitcoin. I can, however by
something with dollars. Thus bitcoin is not yet a currency.

