It will be interesting if bitcoin ever gets picked up on the FOREX exchanges, those guys are used to making highly leveraged trades, which isn't directly possible with bitcoin. Until then I wouldn't expect it to trade like a normal currency.
Why aren't leveraged trades possible? I can leverage-trade myself right now by getting a loan in USD and buying BTC with that money. What kind of leverage are you talking about?
I'm just musing about how they'd probably create some kind bitcoin options, similar to the way options trading works for precious metals on the COMEX where the paper markets seemingly exceed the actual physical amounts in existence by several orders of magnitude.
(Not that I have any direct experience with it, but...) Probably everyone knows that there are a *lot* more IOU's for PMs than there are PM's to back pay up. Most people are OK with this because 1) nobody is expecting much delivery, and 2) delivery is a genuine hassle.
An interesting thing about bitcoin is that there is no real reason not to hold the actual coin. So my #2 and thus the reason for #1 vanishes. This, I expect, will manifest itself in significantly different market organization and dynamics than most other commodity or semi-commodity markets.
I would hope for a market which was much more difficult to game by market makers. And even better, captured regulatory agencies would be a thing of the past (since there is no need for such agencies at all!)
My idea which I am working on and off on:
I have some number of bitcoin. As I envision things, I can transfer them to someone else to play with quite easily and safely if I (or and escrow) holds collateral. If there is a margin call (the short lost his bet) then I can have my bitcoin automatically bought in on an exchange and I lose nothing. The level at which the buy-back happens would be proportional to the collateral put up by the speculator.
