Author Topic: Hangout Questions for Bytemaster (Due Friday @ 10:00am EST)  (Read 2480 times)

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Offline fuzzy

Putting this question in from someone else:
Today I was wondering what would happen to the BitShares ecosystem, should the dollar experience hyperinflation.

If the information that the system will hold as long as BTS does not lose ~60% of value in a few hours is still correct, would this not spell the demise of the system in the case of hyperinflation followed by occasional bouts of deflation?

In other words, is the whole BitShares ecosystem tied to the fate of the contemporary elastic government/central bank paper-issued paper money?

I have my own thoughts, but I'd really like to hear what BM has to say about it.
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zerosum

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Can a black-scholes European option pricing model be incorporated into the blockchain? I think beyond getting a feed for stock prices and implied volatility it seems that there should be a way. You would still have the seller of the contract post collateral and monthly or weekly expirations just as in the case with shorting the current assets. Please look into this. Options are risky but are assets to those who don't have leverage to outright buy something full price.

Have you guys look into options very deep at all?

Why do you need the option pricing model in the blockchain? The option buyer and seller can use whatever model (Black-Scholes  or other) they like to decide for themselves if the option is under/over priced...
Because it sets rules and expectations of past and future performance making probability of worth easier to define. After all, the price of an option boils down to the probability of it expiring how far in-the-money. That is why an option trading at or very near he strike is always at or near a 50 delta. Meaning it has a 50/50 chance of expiring in or out of the money. As you get further in-the-money, delta/probability of expiring in-the-money gets higher based on standard deviation, implied volatility, risk free interest and most importantly the time left before expiration.

In short, the pricing model helps all players understand where the field is.

I firmly believe any pricing model (as a blockchain enforced thing) is a no go. Leaving aside the complexity of this thing to implement, there is a single variable that is a pure subjective judgment (in the Black-Scholes  model in particular) - volatility.
In short who says my estimate of the future volatility  is not a far better variable to feed in than the say historic volatility that the blockchain currently uses.
In other words I see the option implementation (for the collateral by the option seller) something like - current price + say hard fixed  75% (or 100% or 200%).; fall below this and a forced cover is triggered.

Offline NewMine

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Can a black-scholes European option pricing model be incorporated into the blockchain? I think beyond getting a feed for stock prices and implied volatility it seems that there should be a way. You would still have the seller of the contract post collateral and monthly or weekly expirations just as in the case with shorting the current assets. Please look into this. Options are risky but are assets to those who don't have leverage to outright buy something full price.

Have you guys look into options very deep at all?

Why do you need the option pricing model in the blockchain? The option buyer and seller can use whatever model (Black-Scholes  or other) they like to decide for themselves if the option is under/over priced...
Because it sets rules and expectations of past and future performance making probability of worth easier to define. After all, the price of an option boils down to the probability of it expiring how far in-the-money. That is why an option trading at or very near he strike is always at or near a 50 delta. Meaning it has a 50/50 chance of expiring in or out of the money. As you get further in-the-money, delta/probability of expiring in-the-money gets higher based on standard deviation, implied volatility, risk free interest and most importantly the time left before expiration.

In short, the pricing model helps all players understand where the field is.

zerosum

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Can a black-scholes European option pricing model be incorporated into the blockchain? I think beyond getting a feed for stock prices and implied volatility it seems that there should be a way. You would still have the seller of the contract post collateral and monthly or weekly expirations just as in the case with shorting the current assets. Please look into this. Options are risky but are assets to those who don't have leverage to outright buy something full price.

Have you guys look into options very deep at all?

Why do you need the option pricing model in the blockchain? The option buyer and seller can use whatever model (Black-Scholes  or other) they like to decide for themselves if the option is under/over priced...

Offline fuzzy

Can a black-scholes European option pricing model be incorporated into the blockchain? I think beyond getting a feed for stock prices and implied volatility it seems that there should be a way. You would still have the seller of the contract post collateral and monthly or weekly expirations just as in the case with shorting the current assets. Please look into this. Options are risky but are assets to those who don't have leverage to outright buy something full price.

Have you guys look into options very deep at all?

There has been a great deal of this talk on the forums actually. Not sure the bitshares teams' "official" stance though.
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Offline NewMine

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Can a black-scholes European option pricing model be incorporated into the blockchain? I think beyond getting a feed for stock prices and implied volatility it seems that there should be a way. You would still have the seller of the contract post collateral and monthly or weekly expirations just as in the case with shorting the current assets. Please look into this. Options are risky but are assets to those who don't have leverage to outright buy something full price.

Have you guys look into options very deep at all?

Offline speedy

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@Bytemaster

Is it desirable to bring DRIP and margin trading like functionality onto Bitshares?

I dont know what DRIP is, but margin trading will be facilitated by the bond market, which is coming post-1.0

Offline fuzzy

@Bytemaster

Is it desirable to bring DRIP and margin trading like functionality onto Bitshares?
https://www.youtube.com/watch?v=EbV18AGKImw
https://www.youtube.com/watch?v=QRDHB13yAsk
http://www.fool.com/school/Drips.htm

Can you kind of explain in a couple sentences what DRIP is? We do not currently have the ability to stream clips of these vids' audio.
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Offline luckybit

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« Last Edit: April 15, 2015, 03:38:44 am by luckybit »
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Offline fuzzy

Can we do a thought experiment this hangout?  I would like to hear Bytemaster's thoughts on how we could move forward in Crypto without forcing people to give up their real world identities to 3rd parties in order to use blockchain-based services. 

This is a very difficult question, I think, but one that I think should always be in our minds if we truly intend on building a world with more freedom and liberty for all. 
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Offline rgcrypto

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What can you tell us about the affiliate scheme?

Offline speedy

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Whats the plan for ripple-style autobridging to automatically add liquidity? Will it be an atomic operation of the blockchain or a 2 step process in the client?

Offline fuzzy

Ask them below!

And don't forget to join us and never forget...your voice counts. 
WhaleShares==DKP; BitShares is our Community! 
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