The Biggest Bitcoin Arbitrage Ever?
By Tyler Durden
Via Chris at CapitalistExploits.at,
Do you remember when you were growing up and all your friends were allowed Atari game consoles but you weren’t?
Well, I do and the things seemed as foreign to me as Venus. Mostly because the little time I managed to spend on the gaming consoles when my friends weren’t hogging them I found it all a bit silly. I never “got” computer games, and to this day still have poor comprehension of things like Angry Birds.
I suspect that many people around the world view Bitcoin in the same way as I view Angry Birds: with mild amusement and a general lack of understanding as to what the hell all the fuss is about.
I was thinking of this since a buddy of mine recently started taking notice of Bitcoin. Here’s a hedge fund manager who has been known to investigate some of the more out of the box investment opportunities around and Bitcoin is on his radar.
He figured out pretty quickly how to buy, store, and trade the currency. It’s extremely simple and certainly much easier than opening a typical brokerage account. But I wondered if the broader market saw it the same way?
What about Joe Sixpack who’s seen the Bitcoin checkout option on Amazon and thinks it’s another version of PayPal? Or the desk jockey who’s heard about it from his wayward teenage son and thinks it’s the domain of terrorists and crack dealers? What would it take to provide legitimacy to Bitcoin or any cryptocurrency in the eyes of the masses?
To answer my curiosity I googled it and found an article where some know-all was saying that Bitcoin isn’t a “real” currency because it’s not issued by an authority. This may strike a chord but I think the last time someone was so wrong he was standing in front of a tank in Tiananmen Square.
What gives Bitcoin value is largely the very fact that its NOT issued by any such “authority”.
But being an ardent student of history and lover of psychology I understand that there’s a fair few (the majority actually) among us who find comfort in a man in a uniform with a fluttering flag behind him. If it can’t be ISSUED by an authority, then would some such authority ostensibly legitimising it perhaps do the trick? The local government of a Swiss canton perhaps?
Or what about a listed investment vehicle that you can buy through your Roth?
Surely the folks at the SEC who are in charge of what gets to be listed and accessible to mainstream investors wouldn’t allow crack peddling currencies onto their exchange. So if the SEC OKs it then that is authority we can trust, right?
And this is where the intersection between what is available on an authorised exchange and what can be freely bought in the open market collides. And in this collision space lies a simply huge arbitrage opportunity.
A quick search on the Internet reveals an interesting animal: the Bitcoin Investment Trust (BIT). Only …read more
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