Topic: Bitcoinica: How it works - page 7. (Read 15492 times)

To be clear, I don't think they are either. It was most likely either a browser anomaly or a momentary problem with the server. I just found it odd.

Oh dear, what if bitcoinica is insolvent?

I don't think they are. 

what the heck is this?

https://bitcointalksearch.org/topic/m.669744

do we have another Bullseye event?

No, but I'm glad for a straight answer after her ignored my other posts.  I would prefer to see a fully backed Bitcoinica.

you're happy with that answer?

Amateur Hour Revisited:

since i'm not getting any answers to my last question, let me ask some more, or better yet, let me issue some warnings.


its already happened twice in how many days?  this is the effect of allowing too much leverage with inadequate reserves.


have you ever heard of painting a Big Red Bullseye on one's own forehead?  when "someone" sees this little "*", that someone is gonna jam the market higher with a spike and "execute" all the shorts.  even if they have a stop loss order in place, in a thin market such as this, they might not get that exact price in a vicious spike and you'll be back to issuing alot of refunds trying to revive the zombies or just let them die at their own expense.  and then i'm confident new updates will be uploaded with yet another pause in trading capabilities.


"Please Shoot Me"


again, ethical customers should have the freedom to issue market orders w/o a 4 sec delay w/o the fear of being terrorized by a spike which is the result of that 4 sec rule (which is equivalent to an eternity).

also, i would like an answer to my previous question about Guaranteed Liquidity vs. Mushoz's explanation in regards to limit orders.


Safely?  

a stop loss order would effectively be a limit order. lets take the example of a Big Red Bullseye event and a short seller.  in a vicious spike, what happens if there are no specific asks at the stop loss "buy to cover" price as the price shoots up and the bots withdrawal their asks scrambling to get out of the way?

edit:  these same bots or providers of liquidity (sellers that would allow a short to cover) will see that same "*" and start withdrawing their asks, mark my words.

Thank you for you answer Zhoutong.

the corollary way to look at this is that it punishes the majority of ethical users who sometimes need to use market orders to get out of a bad situation fast. example:

ethical user sees ask displayed @ $4.70.  he's already lost significant money from a short executed @ $4.30.  the market continues to grind higher like its doing now.  he's terrified of a continued climb and wants to cover now but he's even more terrified to place a market order buy to cover b/c of the 4 sec delay rule which may subject him to a vicious spike.  he shouldn't have to continuously place limit orders at the ask which could fail to execute multiple times as the Bitcoinica ask price changes to catch up to gox leaving the customer behind.

is the 4 sec delay implemented more to protect Bitcoinica from slippage exploits at the expense of the avg ethical user who should be able to use market orders when he feels necessary?

edit:  in regards to limit orders:  correct me if i've made a mistake here.  i may be misunderstanding something.  Mushoz in his example above states the 4 sec rule "allows Bitcoinica to catch up to the market price" in the event of a spike thus preventing exploits.  to me this means that a limit order @ the ask may not be executed 4 sec after i push the button if the ask on Bitcoinica is forced to update to a higher price.

OTOH, Zhou has said they guarantee liquidity up to 50 BTC but with the 4 sec delay which implies that a limit order should be executed @ the original displayed ask after 4 sec no matter if there is a spike and a change in the ask as Bitcoinica catches up to gox.

this appears to be an inconsistency.

It's a constant percentage of open positions in a certain direction with an absolute minimum threshold. There are variations such as withdrawals and currency conversions, but I have tested the feature against past data to ensure effectiveness.

The risk is actually very minimal, but we won't publish the exact numbers in order to prevent abuse.

To be clear, I trust what Zhoutong says in regards to Bitcoinica, just not that he is smart enough to foresee all possible problems.  Zhoutong, please answer my question regarding what portion of positions are covered.

As I remember, Mt. Gox' auditor indirectly published the names, email addresses, and hashed passwords of all of Mt. Gox' customer base.

Thanks for not adding anything to my understanding... Only Zhoutong can tell me what I want to know. Essentially it boils down to what percentage of positions are able to liquidate?  Is this percentage constant, or does it vary?  If it varies, how is it calculated?

Let's use the situation that happened previously as an example. Because too many people went long, their USD was depleted, so people weren't able to liquidate their shorts. People that were negatively affected have been repaid out of Bitcoinica's pocket as far as I understand Zhoutong. The thing that changed, is that Bitcoinica will prevent people going long before they run out of USD in the future. This will ensure there is enough USD left for people to liquidate their shorts. There is a _very_ slim chance too many people liquidate their shorts all at once, causing the USD reserved for liquidating to be depleted as well. In the very small chance that this happens, Zhoutong just said they will eat the losses, so in that sense those losses are fully backed by Bitcoinica's funds.

Remember, for this to happen, lots of people will have to liquidate their shorts, and because of that, not many people will be left with open short positions, so the losses for the few people that are affected who still have open shorts, will be trivial for Bitcoinica to repay. Whether or not Bitcoinica has enough funds to cover those losses is anyone's guess, so we'll have to take their word on this matter. The only way to prove they do, would be a full 3rd party audit, but AFAIK Mtgox hasn't had one either, so if you think that is a risk too severe to take, you shouldn't be using Mtgox either. (Please correct me if I'm wrong, I'm not 100% sure Mtgox hasn't had a 3rd party audit.)

So positions are not fully backed by funds, but that's okay because they are backed by your word?  Seriously though, saying I can pretend they are backed because you think it's unlikely does not answer my concern.  You didn't see a problem with the way it was before, why should I trust you now? <- rhetorical.  In what situation would closing a position be restricted?

Well, you can completely ignore this at the moment. We are confident enough to eat all the risk beyond this point.

We set our reserves based on all open positions, but they are not backed. So we basically hook up with our hedging system to efficiently manage all positions. Just like the guaranteed liquidity stuff - we take neutral risk.

Can you please describe what this is so I can make my own decision as to the robustness?  All positions are backed unless we go critical isn't very comforting.  How do you differ from the full setting aside of every position I have described and you continue to ignore?  I honestly would like to come back to bitcoinica as I have been profitable with it, but first I need my concerns addressed.

Order completed ...

112445   BTCUSD   Limit   -50.0   $4.6500   18 minutes ago   Executed @ 4.6674

thx xx

Update

Just now our clock server went down when I was pushing updates when the message queue was just emptied. It turned out to take a much longer time than usual. So all price ticking and order matching were paused.

I apologize for the issue.

Now everything is working fine!

A bug in the algorithm could be preventing orders on both sides? Hmm this is not good. Zhoutong, could you have a look please if everything is working as it should? There's no * next to the sell price, yet some people seem to be unable to sell...