The awkward mathematics of booms and bubbles

When short and long aren't opposites.

One of the most common responses in the many, many comments to my pieces on Bitcoin over the last couple of weeks has been to ask me why, if I'm so sure it's a bubble, I don't short it.

The simplest answer is that journalism isn't a career which leaves a huge amount of money left over after the bills are paid with which to gamble, and that I'm not entirely sure it's ethical anyway. There's also the fact that the two main Bitcoin meta-exchanges aren't particularly liquid, which leaves me doubtful that I'd get the best value for money on any shorting contract,

Then there's the problem that being pretty certain the bubble is going to pop doesn't leave me any surer about when it's going to pop – something which most methods of shorting require you to know.

Shorting usually involves borrowing the thing you want to short for a fixed amount of time, selling it straight away, and then buying it back just before your loan is up. Ideally, the commodity has dropped in value, and so you make a profit by you pocketing the difference.

In a normal commodity, going short and going long – buying the commodity to sell at a higher price – are roughly symmetrical. If a share in Apple goes up $1, the people who are long make a dollar a share; if it goes down, the people who are short do.

But that symmetry breaks down when you're dealing with a commodity on the sort of parabolic trend that Bitcoin is shooting along now.

If I spend £100 on Bitcoin, then the most I can lose is £100. Conversely, if the trend continues, I could have £1000 in a month. And the maximum possible payoff is basically uncapped. Suppose I'm catastrophically wrong, and Bitcoin becomes the world currency by the end of the year – anyone who'd bought in to it, even at today's inflated prices, would be a millionaire.

But what if I short it, by borrowing £100 of Bitcoin? Well, then the most I can earn is £100, if the price drops to zero. But the amount I could lose is potentially uncapped, for the exact same reasons that make buying in to it so appealing.

That lack of symmetry – which is an innate feature of, well, maths – serves only to goose the bubble higher and higher. And at the other side, when the down swing comes, it will be vicious; with no shorters ready to step in and buy the coins of people trying to cash out, the volatility will have nothing dampening it.

So that's why I'm keeping my money where it is. But don't think I'm not pretty damn confident when I say that if I had any extra, it still wouldn't be in Bitcoin.

Alex Hern is a technology reporter for the Guardian. He was formerly staff writer at the New Statesman. You should follow Alex on Twitter.

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Doing a Radiohead: how to disappear online

The band has performed an online Houdini in advance of its ninth album – but it’s harder than it looks. 

At the beginning of May, the band Radiohead’s web presence – well, its Twitter, Facebook, and website, at least – went offline.

Lead singer Thom Yorke has repeatedly criticised streaming, and the future of online music in general, and it's clear that his opinion fed into this month's decision to reject social media in favour of sending individual cards to the band's fans in the post. 

However, it’s also a clever publicity stunt in the run up to the rumoured release of the band's ninth album, since it plays into a growing paranoia around the lives we live online, and quite how permanent they are. In reality, though, Radiohead has done a pretty terrible job of disappearing from the internet. Its Facebook and Twitter accounts still exist, and widely available caching services actually mean you can still see Radiohead.com if you so wish. 

These are the steps you’d need to take to really disappear from the internet (and never be found).

Delete your acccounts

Radiohead may have deleted its posts on Facebook and Twitter, but its accounts – and, therefore user data – still exist on the sites. If this was a serious move away from an online presence, as opposed to a stunt, you’d want to delete your account entirely.

The site justdelete.me rates sites according to how easy they make it to delete your data. If you only hold accounts with “easy” rated sites, like Airbnb, Goodreads and Google, you’ll be able to delete your account through what justdelete.me calls a “simple process”. JustDelete.me also links you directly to the (sometimes difficult-to-find) account deletion pages.

Failing that, delete what you can

If, however, you’re a member of sites that don’t allow you to delete your account like Blogger, Couchsurfing or Wordpress, you may be stuck with your account for good. However, you should at least be able to delete posts and any biographical information on your profile.

If this bothers you, but you want to create an account with these sites, Justdelete.me also offers a “fake identity generator” which spits out fake names and other details to use in the signup process.

Go to Google

Search results are the hardest thing to erase, especially if they’re on sites which published your details without your permission. However, thanks to the European Commission “Right to be forgotten” ruling in 2014, you can now ask that certain search results be deleted using this online form.  

Ditch your smartphone

Smartphones tend to track your location and communicate with app and web servers constantly. For true privacy, you’d want to either disconnect your phone from all accounts (including iCloud or Google) or else get a basic phone which does not connect to the internet.

Give out your passwords

The artist Mark Farid decided in October 2015 to live without a digital footprint until April 2016, but was aghast when he realised quite how often our data is collected by our devices. As a result, he decided to live without bank accounts, use a phone without internet connectivity, and use an unregistered Oyster.

When I saw him speak at an event just before his off-grid experiment was due to begin, he announced that he would also be handing out the passwords to all his online accounts to the public. The kind of “bad data” which randomly hacked accounts would show would actually make him less traceable than a radio silence – a bit like how words written over other words mask them more than simply erasing them or scribbling on them would.

Accept that it probably won’t work

Even if you managed all this, the likelihood is that some of your daily activities would still leave a trace online. Most jobs require internet activity, if not an internet presence. Bank accounts are, let's face it, fairly necessary. And even Radiohead will, I’m willing to bet, reappear on the internet soon after their album arrives.

Barbara Speed is a technology and digital culture writer at the New Statesman and a staff writer at CityMetric.