Topic: CoinLab News = Price collapse (Read 6928 times)

+1

[citation needed]

Well I'll be honest I'm waiting till I can see a stable point but I'm buying i'm in for the long haul though insider trading selling and rebuying darn foundation

Proof?

Edit: Nevermind, it's useless to ask you for proof. If you had kept your word in this topic: https://bitcointalksearch.org/topic/lol-173558
You would have given the information that created the hash you posted, or you would have left the forums for good. You did neither.

Not only this, but the elite circlejerk known as Bitcoin Foundation KNEW ABOUT THIS IN ADVANCE and are responsible for the recent unloading of coins in anticipation of the crash after this news.

Insider trading at its finest.

In case anyone has missed it: this thread was referring to now old news. The latest news imply the opposite: coinlab has filed a lawsuit against Gox.

Am I to take it that the OP prediction is now to be reversed?

They got the 'two major customers' a month ago.  A viable hypothesis is that is really all they need.  Possibly the 'long tail' is more of a pain in the ass than it is worth at present?

Whatever the case, ~vess has either no interest or no ability to provide an update.  Whichever of those is the case, the silence is deafening enough to raise eyebrows.  Particularly as the guy has a very significant role in the Bitcoin Foundation.  Or did last I heard.

They are still in the lab ... developing the coin?

What's the deal with Coinlab? Why are they so behind schedule?

true, but the point is, shorting wasn't lucrative most of the time for BTC.
Which is reflected in the low BTC loan rates on Bitfinex, when compared with the loan rates for USD

Shorting does not reduce the price at all. It simply reduces volatility. And for bitcoin, that is a good thing.

You should look at their statistics page

Right now the situation is rather moderate bullish (600k USD loans taken) and the trading activity is also just moderate. The low rates on BTC loans mean that only few people seriously intend to short. Which is just sane behaviour -- shorting bitcoin is playing with fire. It almost never pays back, you get out with some scars, if lucky. This was indeed different in fall 2011, but since more than one year, we had some phases of stability but simply never any seriously exploitable downtrend.

looks like we're gearing up for a long squeeze, actually. check out them lending rates on bitfinex.

Uh? For shorts, even without any true leverage, it would still majorly hurt small traders in the volatile market that can drop or skyrocket 10%+ because of random DDOS's. In fact it would probably contribute to even greater volatility due to margin call chains & the subsequent slippage.

A huge 40% margin!  Oh no!!!

That be 2/5ths as bad as just trading without leverage .

Quick question, it seems like allowing people to short bitcoins except through a binary options model is ridiculously risky for both the lender and the shorter.

Why? Because bitcoin is illiquid. Imagine shorting bitcoin, and suddenly the price starts rocketing. On a large short the slippage would be so huge that a margin call would likely not occur fast enough to prevent the borrower from going into potentially huge debt. So the lender is forced to require a huge 40%+ margin. I mean, seriously, on a fast moving btc market just the spread has been 20% or more. On my larger orders (which really aren't that large) the slippage has been huge. Now imagine orders of $1M plus interest. Take the current model supply curve for instance. Oh shit, we went over $150, margin call time... oh woops, it requires $160 plus spread to get those bitcoins back. And thats in the current relatively stable market.

and what the hell would be the point of shorting btc down to $10???

that's rully dum. there's massive support at $50... the price would probably overshoot to the hundreds and they'd suffer huge losses...

fud

This is the dumbest theory ever. They will either charge interest on the shorts, or there will be a spread and a limited holding time which essentially equates to interest, or there will be a bit of both. In any case, the end result is that you end up having to pay back more BTC than you sold. Any noob can tell you that selling BTC then buying more back later will drive the price up, not down. Shorts only drive the price down in the short term or when there is an "inverse-bubble" like scenario in which everybody is borrowing borrowed stuff, which, unless the currency completely dies out, will still drive the price up in the long term.

lol +1

OP, Yes CoinLab news = Price Collapse upwards 

the coins in your trading account dont really exist in your account, most are stored in offline cold wallet. You are only trading imaginary bitcoins. They only become real bitcoins when you withdraw them. If you implement your way then you would have to wait on confirmations to move from your wallet to pending/trading wallet. Sounds like bad and insecure idea to me.

I want to build a trading site, and I've thought a little about the best way to store clients' crypto-funds.  What if you provided your clients with an encrypted private key to their onsite wallet?  Then even if your site goes down, they can recover their funds with their own wallet.dat file plus their PW to unlock it.  The only funds that would not exist in their own wallet would be what you have in escrow on your site for open orders in queue.

How many days of gold supply would you have to sell in an hour to drop it 5%?  More than 6?

You are not forced to use CoinLab through. There are other exchanges, and generally most people would withdraw their bitcoins after a trade.

hm. I don't think your hypothetical situation is comparable to the paper silver game. On some days there's the equivalent of a years worth of silver supply being traded in paper. That would equal 1.3 million BTC (1 year of production). That's just a quantitative comparison. As for the qualitative one: Do you think if I own 1 SLV contract, I could have 5,000 oz of Silver delivered to my door? I don't think so. With BTC on mtgox/coinlab it's different. The buyers of the BTC in your scenario of a massive sell of non-existing BTC might well decide to click on the "withdraw BTC" button, forcing mtgox to come up with "real BTC". This danger of essentially a bank run makes it unlikely for mtgox/coinlab to do this. But maybe I'm misunderstanding?

Important Article: http://silvervigilante.com/coinlab-repatriates-funds-to-us-no-thanks/



"GoldMoney and Bullion Vault use ViaMat for storage. Many of the retail storage facilities, at the end, use ViaMat to store metals.
Although playing right into the hands of the bankers, there is no evidence that this is a backdoor way of mass market drive-by-shooting to occur in Bitcoin, just as it does in silver.
As essentially a new “exchange,” Coinlab can now technically enable just a few individuals or organization to trade and sell on the exchange without Bitcoin backing their trade, since they could, technically, BE the exchange.  So, my concern is that this could be the entrance of 33 Liberty into the Bitcoin market to sell BTC they do not have and, as silver vigilantes will know, tank the price."


"You think Bitcoin price above silver price has not been acknowledged by High Finance? It’s likely, contrarily, they know what’s going on, and they are not pleased with this new p2p currency stealing headlines, allowing the entire world to ignore fiat in real time, now, today. Nothing short of a 51% attack on the network can allow them to control the price.  The dominant financial system must protect itself from $100 Bitcoin prices as large-scale investors move into the market. Marketing this new advent as a bank, the place to store your Bitcoin, the Bitcoin community has to acknowledge that the Powers That Be will need a mechanism (bank/exchange) to control our beloved BTC price. There is merely not enough supply at these new levels to sustain any sort of serial million dollar investments without really moving the price.  Check the Mt. Gox tick chart, the price was knocked from $34.80 to $33.15  off 22,000 BTC sold in around one hour; that means only $748,000 in BTC needed to be moved in one hour to move the price 4.75%. That is 6.1 days worth of BTC supply.
Or maybe I’m just missing the point?"


What im a saying is not a tinfoil hat argument... its a very valid argument that every US Citizen must be aware of. Especially if you refinanced your house to invest the money in bitcoin ;P

That's exactly how these guys do it:

http://www.bullionvault.com/audit.do?startsWith=A

some ppl in this thread dont know what a warehouse house is  a Bitcoin warehouse should apply same rules and principles that grain-elevators start to apply since the speculation bubble in Chicago commodity market

Yes, I think the proposal would be better described as a 'vaulting service' than as a bank.

If your bank only sat on deposits and "secured" them how do you plan to make money? The idea is the bank uses deposits to make investments and has a percentage witholding they keep for withdrawals.

1% per week bitfinex.com on USD had 1% per day and some time per hour

Why you're at it..... ask your dad to come here to protect your ass.

Here, here.  Finally something we agree on (...possibly because I am to some extent abandoning some of my philosophical hopes for Bitcoin...)

In mainstream-land the DTCC and SEC have the backs of 'bitcoinica's in that sphere.  People can be sold a handful of nothing because their computer screen tells them that they have shares of stock or whatever.

In Bitcoin-land there is not a big barrier to taking possession of what one has bought, and any outfit that goes out of their way to erect one will be viewed with rightful suspicion.  Sure, some outfits will be pulling a Corzine and dipping into seg funds, but as they crash and burn customers will be even more inclined to watch their own backs.  Or exit the economy when they have been robbed one to many times.

I'll look forward to some amazing short squeeze actions and will be prepared to (attempt to) capitalize on them.  So ya, BRING IT ON!

This is why BFX forces users to take loans from other users of actual bitcoins and the trades happen directly on gox, although you can choose to route through the smaller BFX order book for much cheaper fees.  This way there arent any 'paper bitcoins' being shorted.  No bucket shop there.

I had a similar thought (create proof-of-concept bitcoin bank). I would also have auditable deposits. However I would give out ripple BTC IOUs and have a transparent reserve ratio. 100% in the beginning, but less later.

No worry at all.. If it implies some bad thing, it also allow big money to get in the experiment.. it should accelerate the developpement of BTC business and accelerate the adoption by the mass.. It will also bring a lot of money in, this is not bad at all.. it's the normal evolution of BTC !

2013 is and will be a historic year for BTC !  fasten your seat belt and enjoy the show

Pretty sure this is exactly what happened with Bitcoinica.  Anyone else remember that?

not to mention the fact that 50k coins would only drop us to the $26-$27 region and i'd bet it would be back up to $30 very quickly.

$10 would take 150k btc without anyone even trying to buy against it. So you'd need a good $5m to get near $10

Yes. The market is still too thin to get a decent hourly rate for pushing it around by a few percent.  And pushing it down by 60% to $10 will get you slaughtered like the hog you are. I tend to agree that the smaller speculators alone would force you back up to $40 by the time you finished covering your shorts. But at some point between $15 and $20 the real buyers will show up. The ones who want their weed from Silk Road, their asthma meds from India, or just their Wordpress fee, which they _could_ pay with fiat.

Many of them could come up with two or three months in advance for a 30% discount, money they can afford to gamble. Small amounts each, but thousands of buyers, and very, very strong hands. Pump and dump only works if you're not dumping below what it's really worth.

DICK, if not scammer. i am going to have my dad look at your code and we will see if you as much of a piece of shit as I think you are. If not sorry for being hasty. Then again you were awful hasty toward me. I trust MoneyPaktrader over this guy for sure.

This is how "shorting" works:

• borrow coins
• throw them on the market
• hope to kill the rates (1)
• buy back at lower rate (2)
• pay back the loan

(2) is where you are taking profit
(1) is where the risk or the catch is hidden

What would happen if someone throws 50k coins on the BTC market as it stands now?
Simple: everyone and my grandmother would rush in to get his hands on the "cheap coins". Thus the manipulator has to compete with everyone and my grandma for buying back, and competing with my grandma will kill 'tem

Awesome, awesome idea.  I'm replying without having really thought through much (and indeed somewhat off-topic from the OP) but that sounds like it would work, right?  Because of the non-fractional reserve, you'd have to pay some kind of fee to store your BTC at the First Bank of Casascius, though.  So basically you're paying a party to securely store your BTC for you.  Which is the whole idea of the original purpose of banks,  except now the fact that they're actually holding on to it is instantly verifiable.  Cool.

You haven't, like, patented that idea or anything yet, have you?  heh.

First of all shorting can only reduce the price on that platform.  Unlike stock markets, actual bitcoins can not be created out of thin air.  If you buy cheap shorted bitcoins and can not withdraw them, it is a 'bucket shop'. 

Second of all, with shorting you get short squeezes.  And unlike the stock market, a bitcoin short squeeze can kill (expose the reality) of a trading platform.  While it is POSSIBLE with paper stocks to withdraw the certificates and have them sent to yourself, NOBODY does this.  With bitcoin many people actually do withdraw from the trading platform and can expose the lack of real bitcoins behind the scenes.

BRING IT ON!

What do you mean?

I don't see how investment firms could "crash the price" as described in OP, but I do see how this latest development may lead to bitcoin becoming more of a speculative vehicle, and less of a trading currency or secure long-term investment. Wild fluctuation in price - in either direction - is disruptive. Oh, well. Not really bad news, but not quite what I was hoping for.

And further. All the ability to short on a market does is provide stability to the market price, because shorters become buyers during a price dip (as they are taking profits).  Stupid politicians think that shorting makes things crash faster, hence the regular bans during recessions.

Bitcoin must be the world's No.1 high-growth financial instrument, with a four-year track record which demolishes even gold's performance. Anyone/corporation attempting a long-term short would be totally insane. They would get more of a kick from sticking an electric eel up their trouser leg (it would be far cheaper!)

It is a great option and I use it regularly; however there are situations where one can make use of the additional liquidity provided by MtGox. I have accounts at both.

if you could prove that your coins were there how does that prove that extra coins aren't there?

Still trying to figure out how this will cause a crash. (i've never played other markets).  If you loan someone 50k BTC plus interest and they have to pay you back bitcoins then how does that involve selling at all? Or are you saying that they loan in bitcoins but expect to be paid in cash?

I would love to see you try.  Most likely, you would have to pay substantially more purchasing the 50500 BTC towards the end than you get for selling the 50000 BTC all at once at the start, and thus would lose a lot of money.  So long as rational market makers outweigh those engaging in irrational herd behaviour in the interim period.  Hint: they probably will.

That must hurt. Scary.

OP is now on my ignore list.

TO GOD I HOPE SO. I NEED CHEAP COINS

good luck finding someone who will lend you $1.5m - $3m worth of btc

If i loan 50k BTC @ 1% interest over the week - e.g. so must pay back 50500BTC, and sell 50k BTC at once time, it'll start a panic / bubble burst.

There's enough people out there looking for "ways" to invest their BTC with viable returns.

As soon as someone makes a nice platform to short, the bubble will burst a lot quicker.  It wont take more than a sell off of say 100k BTC lent to cause a crash.  As soon as it crashes, can easily buy it back in a weeks time to cover the short.

I love this guy.

I actually thought of the same thing recently, great minds think alike   , ahum .  
You could publish the holdings of each user by providing the hash of their username and then the balance that corresponds to that user. EDIT: I see piramida posted a similar idea.
Of course, your users still need to trust you not to elope with the funds, but at least you can prove you are still holding the money.
I was actually thinking of this being used by a bitcoin backed central bank, which could do micro-transactions without clogging the blockchain.  This bank would produce bitcoin-replacement currency that would be created the moment a user deposited bitcoins in a "shared address" (only possible to withdraw with approval of both parties, I don't know the proper term).
The downside is that this bank would be a single point of failure, so it is probably not a good idea until bitcoin is really mainstream and free of governmental crackdown fear.

I would like to remind all Canadians that http://cavirtex.com/ is an outstanding exchange I really feel i can trust them with my money ( and with more security improvements on the way!) .  Keep using cavirtex!

Yeah, not a big problem. You just sign in as user 011010100 and check it there.

This idea requires cooperation between your clients which isn't realistic unless anonymous. So really, you can as well have these coin ranges in a form of a public but anonymous ledger. Anybody who knew his/her id in the ledger would be able to verify quickly that their coins are on display. No overlaps possible. No communication needed A completely transparent bank.

Wow. That is an AMAZING idea. Given the thirst for bitcoin startups by VCs wanting to get in on the action, I think someone should really do this!!

So what? Physical silver prices and paper silver prices routinely diverge. If they aren't actually receiving BTC (like in the paper silver market), they can short and long prices in whatever direction they want.

They might even receive some sort of credit to BTC (without having to actually take possession), but coinlab or the TPTB could be just be employing fractional banking. At least with BTC some red flags will get raised when the total value of contract on the trading plaform go up over BTC1M

I'm sure most of the bulls around here will still be happy with artificially driving the price down in the near term. And the conspiracy theorists will surely have a field day!

I have thought of making a proof-of-concept "Casascius Bank" but where I accept no more than about 1000 BTC in total deposits.

The real goal, though, wouldn't be to become a bank.  It would be to illustrate a proof-of-concept: provably secure depositing.

My "bank" would create cryptographic signatures on a daily basis proving in fact that I have every single bitcoin I say I have on deposit.  Meanwhile, I would break down that 1000 BTC into "ranges" to assert that they are owned by specific depositors (but only in a manner where the depositors themselves can identify their own funds, not the public).  For example, if I held 4 deposits for 4 people, and they were 100, 200, 300, and 400, then I would say that coins 1-100 belong to depositor 1, coins 201-400 belong to depositor 2, 401-600 and 601-1000 belong to depositors 3 and 4.  I would sign and send messages to each depositor, which would allow them to reconcile, catch, and out me if (for example), I told two people they each own the same range of coins.

The real goal would be to help the public know they really can and should demand proof that their deposits are safe and sound and not fractionally pledged, the same way "provably fair gaming" is teaching us by example that we should demand, well, provably fair games.

In turn, this would cut down the number of "paper bitcoins" in existence (or rather, I should say, "bitcoin-denominated promises", because the "paper bitcoins" I have in mind - like bitaddress.org and bip38 - are actually close to the best kind of bitcoins you can have!)

I know, right?!  I once had hope that the bears would come back to Earth once they were proven wrong enough times, but it seems like they just double down and go for even worse theories.  Theories even Alex Jones would be like, "Man, you be trippin'."

The ability to short doesn't magically allow the price to be driven down longer than the term of the loan contract.  They have to rebuy the units they short-sold within the time limit, and if the rest of the market hasn't agreed with them during that period of time, they lose money on the short.

Gentlemen, bayonets out and tin foil hats at the ready!

This is possible when you can create commodities out of thin air (like "paper silver").
With bitcoins this is not possible.

In addition to the news that CoinLab is gonna manage USA/CA funds from Mtgox, they are announcing a professional, safe and licensed trading platform for US Corporations.

Trading platform = shorting.

3 or 4 medium sized corporations with 3 or 4 multimillion shorts puts the prices in $10 or below in no time.