Author Topic: PM Hedging  (Read 2323 times)

psztorc

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PM Hedging
« on: May 28, 2014, 10:48:30 pm »
With the introduction of Scaled Decisions, one can bet on, for example, the USD/TRU rate and simultaneously the likelihood of an election outcome. For example, by betting that the USD/TRU rate would fall, and betting that Hillary Clinton will win as 2016 US President, you can ensure that you will be paid if she wins, but also that you will be hedged against a falling price of TRU. Essentially you have available to you a Prediction Market in USD.

One can even bet on DJIA/USD, and USD/TRU at the same time, for similar purposes. See tab "MV Scaled" of my excel sheet (https://github.com/psztorc/Truthcoin/raw/master/docs/LogMSR_Demo.xlsx) for a small example of this idea. Notice cell AE30 where I say "This portfolio will be worth return(d1) regardless of what happens to d2."

I will try to expand on this later, when I have more time.
Nullius In Verba

toast

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Re: PM Hedging
« Reply #1 on: May 29, 2014, 01:48:47 am »
This is one of the most exciting applications of PMs and the main reason I joined bitshares (bitshares X is essentially what paul is describing in the OP on a special purpose blockchain).

psztorc

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Re: PM Hedging
« Reply #2 on: May 29, 2014, 11:52:04 pm »
PM advocates have always thrown around the idea of having a market on something a long time in the future, say 50 years or so (the optimal Space Elevator design or something). A criticism was levied that inflation / time-value-of-money would make participants unwilling to speculate financially, and the proposed solution would be that people would "bet" shares of the DJIA or some other long-run store of value.

So I'm happy to announce that such a thing might soon be possible.
Nullius In Verba