I’ve never been much for trading, preferring the duller and steadier buy and hold, but something’s changed recently.i
Before, I always figured that the proposition of following a stock from 9-5, trying to sneak in entry points and exit points by the narrowest of margins through the narrowest of opportunity windows, somehow distinguishing the faintest signal from amongst the tsunamis of noise while swimming with the Wall Street whales and sharks in waters so bloody that not even Vlad The Impaler would drink it was, well, entirely too risky, too time-consuming, and an almost impossible environment from which to eke out anything resembling minimum wage given the sky-high transaction costs that serve only to fatten the pockets of brokers and impoverish those who, as TLP once remarked, want to feel like traders more than actually get paid.ii This wasn’t just my overactive imagination either ; all of this was true and is true in fiat stock markets.
Bitcoin stock markets – or should I say The Bitcoin Stock Market: MPEx – is a little different.iii In case you haven’t heard, MPEx is sort of in a field of one. While trading on MPEx still bears risks and uncertainty, for it could hardly be called a “market” otherwise, on the pragmatic side, whether you’re an investor or a trader, it shines.
Sure, MPEx still has fees,iv but it doesn’t have and what it isn’t susceptible is even more important, namely 1) billion-dollar high-frequency trading bots, 2) goddam lasers shooting freaking laser beams from rooftop to rooftop for speedier trades, and, perhaps most importantly of all, 3) useless fucking Soviet-style nation states impotently diddling the market’s twat.v Quite the opposite, in fact.
With this in mind, the main attraction at MPEx is the Mircea Popescu Options Emporium stock,vi abbreviated S.MPOE, which is an asset that formerly profited principally from options tradingvii but current yields revenue exclusively from the greater exchange’s trading fees and new account registrations. Still, S.MPOE represents 99.9% of the traded volume on the most highly traded and most profitable Bitcoin business of any description, and therefore acts as a sort of pulse for Bitcoin, TMSR~.
With the tumultuous see-saw of the past 14 months, starting with when I (coincidentally?) decided to hop aboard the S.MPOE bandwagon, the stock had lost 80% of its value before recovering about half that loss in just the past 60 days, and with daily variances of 5-10% being a fairly regular occurrence, it makes for one hell of a rollercoaster. I’m not sure how this level of thrills compares with, say, Euloraviii – what with its crafting, disruptive economy, and regular events – but I’m nonetheless fairly hooked. Maybe this is just my desire to gamble looking for a new home, but until there’s a WoT poker, there’s no better ride in town !
What makes trading S.MPOE so compelling, at least for me, is not only the opportunity for profit and loss, but the trading environment itself : not too fast, not too slow, open 24/7,ix and with a market designed around price instead of speed.
As Alvin Rothx recently pointed out regarding market design, bezzle markets have almost completely replaced price signal with algorithmic and trade execution speed.xi And that’s precisely the point of the bezzle, isn’t it ? Fiat stock markets have traded any attempt to measure the value of the underlying asset for a million quadrillion ultra-quick jabs to the sides of their opponents (you) because it’s so absolutely essential to the entire regime of sublimated violence that it really couldn’t be otherwise, y’know ? With fiat, you slow down for a split second, if the Fed’s printing press jams for even a fraction of moment, if you trip and fall on your face because you thought to yourself “Eh, what’s the worst that can happen if I don’t tie up my shoelaces and get a better paying job ?”, you’re as good as dead. There’s no coming back from the kind of beat-down that comes with standing still while inflation turns your prime rib into ground beef. The bezzle with literally make your face look like it’s been through the meat grinder. Because it has been.
MPEx, on the other hand, is a human-paced, even aristocratically-paced free market that leverages the latest encryption technologyxii in a secure and intuitive-to-use manner that does away with HFT and eschews fiat, not to mention geography, thus allowing for more methodical and reasoned minds – the type, not coincidentally, generally favoured by sound money – to probe the depths of the asset’s underlying value. To paraphrase
Asimov Clarke, it works so well that it’s indistinguishable from magic, so if you’re a human trader, there’s really no place like it.xiii
In any event, if trading’s your jam and you’ve already figured out how to buy bitcoin, S.MPOE is the best thing going. I guarantee it.
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- Well, as of 2011.↩
- To quote Mr. Ballas :
It’s said that most at home traders fail, but this is incorrect: they fail at making money, but they are successful at feeling like a trader. That is the goal; the money is secondary, which is why they fail at making it. The buy/hold/reinvest the dividends strategy of Buffet is totally opposite to what’s desired, because the strategy does not involve market timing or status updates, it is on autopilot, and there’s no “i” in autopilot. Well, there’s one, but it doesn’t stand out.
The trading activity itself– the frantic activity– keeps the rest of reality away. You’re not your job– you’re something else. You’re not your family, you’re more than that. Things have the potential of possibly happening someday, and no work will have been necessary to accomplish it. Just you wait.
- The other “Bitcoin stock markets” aren’t appreciably different from fiat stock markets and are therefore as uninteresting to me as they are festooned with criminals of every description.↩
- MPEx fees are only 0.2% per trade when dealing directly, or 0.5% when using CoinBr as your broker, as I do. Whereas fiat stock market brokers (e-trade, etc.) have fees of 0.03 – 0.1 BTC ($10 – 30) per trade regardless of the size of the trade, a mid-size (10 BTC) trade on MPEx would only run you 0.02 BTC, assuming you’ve purchased the 50 BTC seat from Mircea, or only 0.05 BTC if you’ve opted for CoinBr’s 0.019 BTC/month plan.↩
- See China right now for a prime example of this. As I type this, fully half of the assets listed on the Shanghai and Shenzhen Stock Exchanges have been suspended from trading. No buying, no selling, no nothing, except for maybe taking some of the free PBoC bucks that are trying to prop up the market like a wet noodle trying to hold up a circus elephant. Because bolting the doors when the theatre is burning down will totally get people to relax. Mhm. I’m sure.
It’s really no wonder that the Shanghai Composite Index is down, get this, a full third of its value since June 12 and that there’s still no end in sight as delirious margin traders try to stem the arterial bleeding. Stairs don’t get much steeper than what we’re seeing in China right now, and those crazy yellow bastards are smashing their skulls on every single step on the way down. Sorta like they did with that SPV Mining nonsense, really.
Isn’t it awful how much schadenfreude I derive from this ?↩
- Though BitBet and Qntra are valuable properties in their own right, they trade irregularly at best and therefore hold little appeal for traders. But for investors ! For investors !!↩
- The “O” in MPOE was ended in February 2014 after the spectacular death of Mt. Gox and the loss of a meaningful BTC-USD price signal. In its wake, BitBet has picked up the slack admirably.↩
- Not that MMPORGs are usually my thing, but if some lovely Contravex reader were to pick up the 0.5 BTC bounty for compiling a Mac OSX version, I’d consider it a nudge in the right direction.↩
- Because as the recent discussions in channel have well illuminated, wtf is time anyways ?↩
- Alvin E. Roth is the Craig and Susan McCaw Professor of Economics at Stanford University and the Gund Professor of Economics and Business Administration Emeritus at Harvard University where he focuses his research on market design, game theory, and experimental economics. He shared the 2012 Nobel Prize in Economics with Lloyd S. Shapley for the theory of stable allocations and the practice of market design, which primarily aims to address allocation deficiencies in three markets: doctors, students, and kidneys.
As far as fiat economist go, he’s one of the more interesting thinkers out there.↩
Let me point out that market design is important even in getting price signals to do the work that they should be doing in commodity markets. So, I have a student at the U. of Chicago, a former student named Eric Budish, who has been studying high speed trading -algorithmic trading in financial markets – and lots of money is spent on making data flow very fast between the New York Stock Exchange and the Chicago Mercantile Exchange. So, billions of dollars a year have been spent on very fast transmission lines. Because both of those markets are designed to run by continuous double auctions, which means that the first person to take a trade, gets it. And right now, the time for a price signal to from New York to Chicago is about 8 milliseconds. And it takes you hundreds of milliseconds to blink your eyes. As a result, competition by speed has to some extent displaced competition by price. Because the markets become very thin at the millisecond level.
What Eric and his colleagues have proposed is that it might restore some price competition rather than speed competition to have call-markets once a second, for example, so that all the bids and asks that accumulated in a whole second would be accumulated and traded at the price at which supply equaled demand. And that would give the trades to the person who offered the best price rather than to the one who came at the earliest millisecond. So, thinking about how markets work doesn’t necessarily interfere with competition by price to send price signals. Because playing by the rules and doing things that are allowed with the current market, people are substituting one kind of competition for another.
- Namely PGP from 1991 and Bitcoin from 2009.↩
- Which brings us to the natural question : what’s the value of S.MPOE ? Arguably, its security, its liquidity, its option value on the success of both current and future listings, and whatever value might be imparted by the knowledge that you’re a man trading against other men. And what’s that worth ? Well, about 57,000 satoshis today. This we know. And we also know that the gnats on Bitcoin’s back have nothing to do with this, so who asked Janet Yellen or Yanis Varoufakis to open their fat fucking mouths in the first place ?
Trading S.MPOE also has the advantage of turning the political and financial puppets on the world’s stage and in the mass market media from obtuse noise machines into laugh-a-minute lulz machines. Such alchemy !↩