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Comment by mrb | Hacker News Reader

You are off by an order of magnitude. It would take $9M of FPGAs to have a clear probability of performing a majority attack https://bitcointalk.org/index.php?topic=67969.msg821634#msg8... This is without even counting hosting costs: power, cooling, space.

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It isn't a majority attack. Infact, today, it would probably be cheaper since bitcoins are a third of what they were when I found it. All you need to do is crash the market and buy put options against it, you don't need to create nonvalid transactions.

Why would you call this a "mathematical" flaw? Your original post implied there was some algorithmic issue, when you're really just proposing dumping the exchange market -- which is a completely independent mechanism of trade.

> Also the only way to get bitcoins securely is to buy and sell them for cash. And even then there are ways of figuring out who is who.

This is ridiculous. The psuedoanonymity of bitcoin allows for laundering services which enhance your plausible deniability. You can't practically figure out "who is who" if I send a delayed transaction through a popular laundry service.

I buy and sell bitcoins for cash from people on craigslist. No identifying information is given. Guess its not the "only way."

Why does this make Bitcoin "mathematically flawed" and different from other markets? If you find a way to crash any market, be it a penny stock or a type of commodity, for example by spreading terrible rumors, you can always profit with put options.

Is your point that the Bitcoin market is still very small and can be manipulated?

Put options? On Bitcoins?? Who is going to be the counter party to those options?

The reason why options work is because there are clearinghouses that will guarantee the transaction. Without a regulated clearinghouse, you're subjecting yourself to counterparty risk, which as we discovered in 2008, is a significant risk especially during market crashes.

Who exactly will sell me put options on BTC?

You could probably find a willing "I'm putting all of my life savings in Bitcoin because it is rapidly appreciating" type to do the deal, it's free money as far as they see it.

I've looked and I could not find anyone like that.

You could try following up with this guy: http://falkvinge.net/2011/05/29/why-im-putting-all-my-saving...

(for reference, HN discussion was here: http://news.ycombinator.com/item?id=2596475)

That guy is just buying bitcoins, he's not interested in writing put options.

Right. I'm taking the piss out of bitcoin as a whole here, I don't actually think the bitcoin market is mature enough to make shorting on a large scale feasible nor any individual put transaction advisable given the lack of clearinghouses and counterparty risk mentioned by steve8918.

But... the guy has made it clear he believed bitcoin's value would rise, so selling a put option at - say - current value would be advantageous to him. Offer a low enough strike price, high enough premium, and word your offer in layman's terms ("you get money now and might get money later if bitcoin rises or might have to pay money if it falls") and he could be tempted to enter in an appropriate contract.

Producers and merchants trying to hedge their cash flow.

It would actually be very useful to have a liquid options market to help producers and merchants overcome the current volatility.

Could you name one? I've never heard of anyone selling a put option on BTC.

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