BTC crashed to $570 from ~800 a few days ago. It did make me wish we hedged for BTC price drop with our, albeit few, BTC reserve.
What do people think about light weight distributed mini-nuSafe that are held by custodians in USD-tokens on a selection of exchanges? The idea is
Custodian receives BTC from FLOT in exchange account
Cutodian trades the fund to USD and leaves it there
When needed custodian trades USD back to BTC and send to whereever FLOT instructs.
Custodian povides trade history
The difference with a real nusafe is that for the mini ones custodians can put collaterals depending on the risk. Nu used to entrust $20k to custodians w/o collaterals. The fund can be recalled quickly because they are on-line.
The exchanges that I trust for 10BTC/account for 6 months include Poloniex, BTC-e, Bitfinex. Exchange default risk is reduced by spreading the fund.
I throw out this idea now because I think Nu should explore ways to hedge btc volatility, and mini-nusafe doesn’t need software development to try. Starting with 2 btc / custodian now seems OK for me.
The question is whether the exchange default risk is higher than the BTC volatility risk over a period of say 3 months. Using Tether instead of USD is adding even more risk in the form of a failing company.
It is hard to predict what is best. BTC is back again at $685. Let the ones with crystal ball speak up I’m on the fence.
I’m fine to be a custodian for up to 10k USD if there is wide support for this in the community. I would prefer to have it parked on real USD pairs though, e.g. on Bitfinex or BTC-e.
One reason if not the biggest reason that the buyback was supported was that a big amount of btc means big btc volatility risk. So btc risk, or the inability to mitigate btc risk indirectly caused peg break in 7 months.
It’s not hard to find the best when you don’t have a crystal ball. the best is to diversify and to mitigate risk. not doing anything led to sub-optimal decisions that eventually killed the peg.
I’m on the fence.