This is pure bullshit - no Bitcoins actually change hands. This is a gambling website, and you are betting against the house. It's called a "bucket shop:"From
http://en.wikipedia.org/wiki/Bucket_shop_%28stock_market%29As defined by the U.S. Supreme Court a bucket shop is "[a]n establishment, nominally for the transaction of a stock exchange business, or business of similar character, but really for the registration of bets, or wagers, usually for small amounts, on the rise or fall of the prices of stocks, grain, oil, etc., there being no transfer or delivery of the stock or commodities nominally dealt in."[1] People often mistakenly interchange the words bucket shop and boiler room, but there is actually a significant difference. A boiler room has been defined as a place where high-pressure salespeople use banks of telephones to call lists of potential investors (known as "sucker lists") in order to peddle speculative, even fraudulent, securities. However, with a bucket shop, it could be better thought of as a place where people go to make “side bets” – similar to a bookie.
Plus500 is a bucket shop and cannot accept U.S. customers (because bucket shops are against Federal regulations):
How to recognize a Bucket Shop broker:
http://ezinearticles.com/?How-To-Recognize-A-Bucket-Shop-Broker---Six-Signs-of-A-Fraud-Brokerage&id=6699723Plus500 Review (indicates that they do not accept U.S. customers):
http://fxbuild.com/plus500-review/ So? You place bets on wether the price will go up or down. What's the problem? Are you against gambling?
This seems like the way speculation should be done in a free market. It's actually a more effective way of speculating since you remove the overhead of dealing with physical products. CFD trading still has an indirect effect on the bitcoin price the same way actual trading of bitcoins would. If there is a lot of buying pressure on the CFD it will drive the price up making it diverge from the real bitcoin price. This would create an arbitrage opportunity, meaning you could short the CFD and buy bitcoins and gain regardless of where the price goes, giving you a riskless* return. Doing this would drive both prices towards eachother again.
So again, what is the problem with this? The only effect of people trading these instruments will be increased volume on regular exchanges from people arbitraging. More people having a say on the price is good since it reduces the power any single individual have.
*There is still the third party risk of a company with your money going bust etc.
