Any two-sided market will have prevailing prices at certain volumes (even if internal to a dealer) that are not perfectly matched before the actual trade. Say, SPY at 180.5 X 1000 bid and 181 X 1500 Offer. If that goes on a lot (1000 vs 1500, etc), market makers will adjust prices to stay as even as possible.
What finance people mean, and this is how language works, 'More buyers than sellers [at the prevailing price]'. Good financial journalists are speaking to a sophisticated audience that understands basic market microstructure.
True. Perhaps fundamentally bitcoin really just is cash and not a speculative instrument. And just like cash (as in, like, paper money), there's a huge amount of risk whenever a nontrivial amount of your net worth is tied up in it.
What about the other side of regulation? Not from customers demanding safety but from governments demanding reporting? (E.g. anti-money laundering, tax-evasion laws, commodity markets laws)
I don't know nearly enough about the mechanics of bitcoin to say anything remotely meaningful, but it seems like there is no way that bitcoin won't be regulated like any other commodity. At least in the US, the CFTC will absolutely regulate it by criminalizing anyone for not registering their holdings. Or, even outside of commodities, you could get something like FACTA that forces people/banks to report stores of value in offshore centers where US citizens are involved. This is all US-centric, sure, but why wouldn't it be like this generally? Or, rather, do the mechanics of bitcoin mean you could stay anonymous while not becoming a criminal under the regulation that is going to come?
Interesting (slight?) counterexample is the foreign exchange market 10-20 years ago, just as it was going electronic. Lots of levered investment but lots and lots of fraud as there was almost no regulation. Like this example, you would have brokerages just take customer funds and then just disappear. The move towards foreign exchange trading was, also like bitcoin, driven by the lack of regulation, speculative possibilities, etc. Since then it's become regulated heavily globally and the game-theoretic defection has not held. Probably something similar will happen to bitcoin.
Sure, a company like Google directly does more good than Goldman. (Although, trivially, you could argue a taco stand does something arguably more important than inverse-indexed search) Non-trivially, though, in order for a company like Google to get financed, it needs to have investors. Now, you'd be right that this doesn't necessarily require bankers, but it does present an interesting problem.
When an investor makes an investment, she wants to make more money than she put in. Else, why do it? Ok, so the simplest possible way to get more money than you put in would be to just let the invested business produce cash from profits and receive distributions over time. Ok, great, but what if that takes 20 years and you need the cash sooner?
The other option is to sell the stake to someone else. But the second you do that, in fact, the second you even offer to do that, the person on the buying end has the same worry. The only possible way for this to work is for there to be a bunch of other people who are willing to buy or sell at a certain amount at a certain price. That, my friends, is a market.
But what if there's no one out there to buy or sell your stake? Or what if there's very few? You need a market but there is none. Well, what if a person could somehow make a market for you? Someone, who, because of their deep knowledge of your company, companies like yours, the way markets work generally, and a view of the future state of markets could come in and say, "Hey, listen, I know there's not a lot of people out there right now who are willing to buy or sell, but I'm willing to buy X shares of your company at Y amount and sell X shares of your company at Y + Z amount." You, as the investor, are loving it since you don't have to tell someone upfront, "Hey, I'm saying my entire stake, what's the price?" Because that would be extreme adverse selection and would lower your price. And further, you don't have to say, "I'd like to double my share," thereby hinting you know something and the price should be higher. A market is made: there's a standing price to sell at X, and a standing price to buy at Y.
This actually happens all over the place. Facebook, amazon, google, et al. make money by being platforms for other people to create content. Facebook as a platform is obvious. For google, they are really the platform for the internet itself. No matter what firm w're talking about, the only way for content-creators to be willing to share is if there are enough people to consume/listen. And for there to be enough people to listen, there has to be someone who aggregates. And for someone to aggregate it necessitates a huge amount of upfront investment. Meaning, for example, that Facebook had to build itself before a billion people used it. Yes, this was in stages. But at each stage, it required a huge amount of risk before other people were there to use it. The same with google. Same with amazon. You see, these firms are underwriting the act of sharing content. Their knowledge of the eventual payoff allows them to buy the time, commitment, etc before there is an obvious customer. They have made a market.
Now, while Google, Amazon, and Facebook are doing this for things on the internet. Goldman is doing it for the Googles, Amazons, and Facebooks themselves. Goldman is providing a platform for the businesses in general. And, not only that, for anything that has substantial future cash flows!
It might seem that anybody could do this. Like why not Tim Ferriss on Angellist-Underwrite? That isn't so clear. The only reason Goldman can afford to post a bid and offer (i.e. make a market in cash-flows generally) is to have a better idea of the value of that something than whomever they are transacting with. Goldman has to think, "Ok, we'll buy/sell at x/y price because we know the real price that is z and so we can make money by offering the spread x - y." And guess what? In order to know that, they have to spend what seems like a life-wasting amount of time getting into the minutiae of esoteric financial knowledge. Because, remember, it's not that the market-maker is just connecting buyers and sellers. The market-maker is actually fronting the money--bearing the risk, by posting a bid and offer--in order for there to be a guarantee of the market. So the stakes are huge.
Now, in the future, it will be Tim Ferriss on AngelList-Underwrite. But he will hire 10 guys/gals to help him analyze markets. And then will he will get a lot of software to help aggregate information. And then he will want to be near the action, so he'll get an office in SF. And before you know it, he will be Goldman Sachs in jeans.
In the end, the only way for a platform to exist of any type is for someone somewhere to bear the initial risk on an unconditional (not knowing if a person is buying or selling) basis. It doesn't matter if it's a Facebook, a taco stand, the Hoover Dam or asset-backed securities. Goldman (and the other mega dealer-banks) are facilitating a platform for the entire world to unload cash-flows: the platforms' platform. And if you pick Finance as a career, it will be thankless, often boring, hard and people will likely not understand what you do and will demonize you for it. But you will know that you are doing something special: you are building the platform for everything.
Hey shubb, I've read your posts for a while; like the way you think. Let me buy you a pint next time I'm in London (in US right now, but there often enough). Thoughtful tech people in London good to find.
It's not so much about whether the stance is true or not and whether we should debate that. It's that articles that discredit something as trivially untrue by way of a trivially small statement. In the extreme it would be like discrediting [insert pseudoscience topic] by simply mentioning a copy of Nature. There's some degree here, sure. But tabloid-style takedowns, regardless of whether they are right, seem almost out of place.
I am wrong to say this has no place, though, which is in itself a pretty big claim with no substance behind it.
No matter someone's stance on this, it seems a bit forward to discredit a relatively widely-held theory as something that is weakly argued by providing a few bullet points and then an outright assertion of another competing theory. This kind of thing has no place on Hacker News.
I think you could compare this to sports or other game-like activities where success is by nature relative. There's no 'need' per se for athletes to practice 40 hours a week, but they do it in order to win. And the amount of time needed to win will almost always be right around the theoretical limit of how much a human can physically practice. There's an equilibrium in competitive practice that is very tough to regulate.
Is it just me or does "People who don't need money" seem like it should be in the 'winners' list? If you don't need much money, won't you do well come what may?
Technically, sure. But 'arbitrage' today is interpreted broadly--more along the lines of buying basically the same thing and making the difference at some point in the future. Like stat arbitrage. Merger arbitrage. Capital structure arbitrage. There is an amount of non-simulataneaity in all of these. Buy two of what ought to be the same price, but are not for some reason, and wait. Sameness and waiting. I mean, shoot, in stat arb the entire thing is based on such a murky idea of sameness that two products/instruments/securities might not actually even be the same thing and may never converge. So point being, in the vernacular, yes, 100% what the author is talking about is in fact 'arbitrage.'
Does anyone have any insight into the underlying architecture of these large-scale projects? Like programming languages, project structure, how many software people involved? I imagine it's something along the lines of CERN or NASA projects in terms of size, although perhaps not complexity.
Awesome, although I don't know why you couldn't have it automatically accept the 'honor code.' But then again, perhaps if you're using this instead of just rolling your own solution you might not really need/want that sort of automation in the first place.
Also, and more importantly, isn't it a bit strange that there needs to be tool like this at all? Is it still going on where Coursera pulls old course material off when the course is finished? If it is, can we have a discussion on that?
I think it comes down to who we think the battle is against.
One narrative says that it's murky industrial cooperatives lobbying to stay incumbent that keeps these new startups down. And the resulting laws are/were formed from not-so-good-intentions and are needlessly complicated or antiquated because of that.
But it's worse than that. Some laws are purposely complicated because of special interest pressure, sure, but the big ones--the Goliath ones--are well-intentioned laws passed by regulators concerned mainly how to protect the people. And not only are these on the books, but they've become embedded in common sense. I mean, look at my earlier response, I said it was "obvious" that these laws do in fact protect. The battle is convincing the public that, no, this stuff is antiquated, and that we really do have methods that make this and that regulation obsolete.
But focusing the attention on bad-intentioned industrial groups is the wrong approach and will never win against the regulatory momentum of the democratic state.
But do you see how the conversation we are having is now about simply the regulations and whether they are really protecting people and not about how there are some incumbents trying to protect their turf?
The two concepts are mixed, often, and should not be.
I read this and kept thinking whether the hotel lobby is really the reason why Airbnb runs into trouble. Or, for that matter, even whether the Taxi Lobby is what is really hitting Uber.
Yes, hotel owners and taxi drivers are not exactly pleased about the disruption. And, yes, they have lobbyists to further their causes. But don't think for one second that these people wanted the regulation to begin with. Absolutely not. The regulators wanted to protect the public and put in zoning, licensing, etc. The initial regulation had very little, if anything, to do with turn-of-the-century lobbyists.
For the most part it seems these new companies are facing not some nuanced part of the law, but like basic, prehistoric regulation that is practically universal in the Western world, designed to protect people from surpassingly likely horrible practices--like getting kidnapped by an unlicensed driver. Something not that unimaginable -- at least according to London public service posters everywhere. Some laws have very murky reasoning, I'll give you that. But zoning and licensing in these cases do not. So to say that Cities are stifling innovation by enforcing some of the most basic laws of the modern state, then it's a bit glib.
Incumbents are mad because they are following the rules and some of these new firms are clearly not. But the incumbents aren't the biggest problem, which the article more or less hints as the culprit. No, the problem for 'innovation' is convincing people why they should let the other half of their duplex run a youth hostel without a license. And no, saying your K-nearest neighbor algorithm's got it covered is not going to be enough.
Some might compare this to copyright. And this is where they'd be right. It's not very obvious who copyright protects. No one has ever had a GB of songs cause them to wonder whether their neighborhood is safe anymore. You might even make the same case for fin services. Why regulate those? Well, I'd grant you there too. How many people died from the fin crisis again? Perhaps we are pushing it. Either way, in the land of the physical universe, the universe where Uber and Airbnb are so clearly inhabiting, the reasoning behind the laws is remarkably obvious.
This article and a lot of the articles on the San Jose State are all of over the map when it comes to improving MOOCs: more TAs, more focus on the content, etc. They do, however, share one major thing: that half of the kids failing the SJSU class is, in fact, a problem that we need to fix.
What?
What about the other half of the kids? Think about it. This was an online class, with presumably very little (if any!) vetting of the students, with little or no supervision (they didn't even know a lot of the kids didn't have computers until three weeks in!), and a whole 50% didn't fail? I mean, this isn't a failure, this is a revolution.
Let's face it, these courses aren't designed to signal anything more than competency and --arguably-- the only way to actually display your competency to the world is to have not everyone pass. Because imagine if everyone did pass? You would go to your future employer and say, "Yeah, so, I took this course, online, where not a single person failed, and it's obvious that I'm competent, because they have this, ya know, innovative learning algorithm." If everyone passed than you might as well do MIT OCW. Which, by the way, is the exact same thing as a library, which we've had in every modernized municipality on the planet for 200 years.
No, online education is to regular education as the CFA is to an MBA. What is it, like 30% of people pass the CFA? Yeah, 30%! But no one is clamoring about how the CFA needs to be fixed. Quite the opposite--it's the gold standard. And not only that, it's downright democratic: anyone can take it in the world, and if you are in fact one of the ones that pass, the certification really does mean something. I mean, people put CFA after their name!
That's the future in online education. Not prestige, not A-'s and B+'s, and not feel-good relationships with professors: no, it's cold-hard certifications and frankly it's a godsend.
I have been wondering for a long time why Starbucks and other coffee shops don't simply charge for wifi. 5 USD/3 hours seems like an absolutely great deal. Whenever I do work at Starbucks it's very productive and would be happy to pay for the right to be there. In fact, I wish there were a way to pay for the wifi so I didn't feel this guilt of whether to buy more items.
The people who aren't happy to pay for being there are the ones you don't want. Get this: There's a Starbucks near where I live that literally has a homeless guy in the same chair every day with a laptop. Guess how long he's been doing it? 3 years! It's insane. Have people pay, charge as much as the market will bear, problem solved. How are we even talking about this?
I think there might be an interesting point underneath this. If everyone who feels like the author actually stayed then SF might not have the high rents/excitement/cultural contact that you get with large amounts of young, single, employed, relatively unstable individuals. Part of the reason SF is probably so desirable in the first place is that the type of people who live there are the types that actually think the cultural experience is worth the money.
I don't know though. RapGenius seems to have broken down crowd sourcing of understanding context/word meaning into very small bits. This could be absolutely huge for a machine learning input that you really cannot get with Quora or Answers.com, where the data is just not focused enough. Here it's down to the word. That's nuts and people will do the work for free. Bigger than Google? Maybe not. But bigger than pinterest, sure.
I think this misses the point of minimum wage. The whole point of minimum wage is that the work is not very important and very commodity-like. Minimum wage protects the importance of people, not any particular type of work.
Any two-sided market will have prevailing prices at certain volumes (even if internal to a dealer) that are not perfectly matched before the actual trade. Say, SPY at 180.5 X 1000 bid and 181 X 1500 Offer. If that goes on a lot (1000 vs 1500, etc), market makers will adjust prices to stay as even as possible.
What finance people mean, and this is how language works, 'More buyers than sellers [at the prevailing price]'. Good financial journalists are speaking to a sophisticated audience that understands basic market microstructure.