Topic: [OFFICIAL]Bitfinex.com first Bitcoin P2P lending platform for leverage trading - page 217. (Read 723903 times)

I would much, much more prefer leverage back to 4, no insurance whatsoever for standard swaps and building up of an sufficient insurance fund for those who want to pay 30 % to insure their loan. That would feel like engaging in a total return swap and not like putting your money in a savings account. Let's see how many people were willing to lend out their money at 0.0842 % after one or two flash crashes in which they lose 10 % of their deposit.
The insurance was a bad idea. In a serious market you would have something like call liability for the traders which a hong kong magic internet money trading company would unfortuantely not be able to realize though.

What you might want to take into account is the opportunity costs. As a lender, the money you have at BFX are "stuck" there, compared to let's say an FX platform where you can trade any of the many, many pairs or CFDs. With BFX you have a binary choice: lend at the prevailing market rates or don't lend at all. As such, in the short term, the logical (and financially optimal strategy) is to always lend your money, even at very very low rates. 1$ pe day is better than no dollar at all.

Sure, some people will kid themselves that instead of lending at 0.05%/day it's better to wait for a few days and then lend at 0.2%/day. You do the math and see that you can wait up to 4 days without lending and you'll still do the same benefit (actually a bit less if you're compounding). But, that is speculation on the interest rate movement so an identical behavior to trading, and something that i would venture to assume lenders don't want to do as a principle (otherwise it makes more sense to just trade on margin with your funds).

Yes, in the long term, if rates drop dramatically, the lenders will pull out their money and move them somewhere else. But, for the money that are in BFX at any point in time, the optimal financial strategy is to lend them out at whatever rate you can. Thus the reason for "auto lend" option and the prevailing use of the Flash Rate rate to auto-lend the money on a recurring basis.

If you take all that i've said before into consideration, you will see why very low lending rates are possible and even probable, and such a situation can only improve/reverse if BFX takes active steps in limiting the minimum rate.


But i would worry less on the above and more on the fact that the lending cost is being hiked by 50% whenever desired....curious how many of the lenders did the math on that one. Not that it matters anyways

What you might want to take into account is the opportunity costs. As a lender, the money you have at BFX are "stuck" there, compared to let's say an FX platform where you can trade any of the many, many pairs or CFDs. With BFX you have a binary choice: lend at the prevailing market rates or don't lend at all. As such, in the short term, the logical (and financially optimal strategy) is to always lend your money, even at very very low rates. 1$ pe day is better than no dollar at all.

Sure, some people will kid themselves that instead of lending at 0.05%/day it's better to wait for a few days and then lend at 0.2%/day. You do the math and see that you can wait up to 4 days without lending and you'll still do the same benefit (actually a bit less if you're compounding). But, that is speculation on the interest rate movement so an identical behavior to trading, and something that i would venture to assume lenders don't want to do as a principle (otherwise it makes more sense to just trade on margin with your funds).

Yes, in the long term, if rates drop dramatically, the lenders will pull out their money and move them somewhere else. But, for the money that are in BFX at any point in time, the optimal financial strategy is to lend them out at whatever rate you can. Thus the reason for "auto lend" option and the prevailing use of the Flash Rate rate to auto-lend the money on a recurring basis.

If you take all that i've said before into consideration, you will see why very low lending rates are possible and even probable, and such a situation can only improve/reverse if BFX takes active steps in limiting the minimum rate.


But i would worry less on the above and more on the fact that the lending cost is being hiked by 50% whenever desired....curious how many of the lenders did the math on that one. Not that it matters anyways

In which case people may very well stop lending until rates go up again, apparently lenders find these rates attractive enough for now. I'm curious as to how removal of the flash rates would affect rates though.

Obviously restoring the higher leverage levels would massively increase rate volatility.

If US lending rates really go that low as 5-10% APR in the future, then it is not much incentives for people to lend rates here.

Lending (aka CFD) rates are trending down as I predicted earlier.

The trend will reverse in the short-term if there is high volatility (or as lenders withdraw funds), but I think we are on a long-term downward trend to approximately 20% APR (or 0.005%/day).

If you look at the history of the BTC rate (historically as low as 2-5% APR), it is possible that US lending rates could drop as low as 5-10% APR.

I don't think Raphael or Giancarlo actually live in HK. Still, a vibrant city, so it wouldn't be a bad choice ;-)

Ente

please PM your CV,

thanks

Giancarlo
Bitfinex Team

This thread surely got a funny turn..

Ente

Well,

As for the service,

I have to admit there is not much better out there to be had at the moment,

Guess he knows that and it affords him the luxury of being "Asinine" at will,

Their excuse for charging us more fees was,

Hey  "Bitcoin is a Volatile market, not a Bond yielding 3% a year"

Great, that's all the reason in the world, charge us more why don't you.

If it's that great, then invest in a Professional Customer Service staff whereas

we can get answers to questions when asked and not have to deal with "Arrogance".

Words to the Wise !

People like you are the reason why I don't apply...

Agree, though I am a Hong Kong resident and do not have a full time job actually.

People like you are the reason why I don't apply...

People like you are the reason why I don't apply...

The APR (http://en.wikipedia.org/wiki/Annual_percentage_rate) is even with these low lending rates vastly superior to any traditional investment.

Besides, the whole exchange works very smoothly and I think the majority of users consider the site very safe and are
fine with keeping huge amounts of fiat or BTC/LTC on there.

Apart from the innovative features (margin trading, Total Return Swaps (I try to avoid the term lending   )) in my opinion security is
the unique selling proposition of Bitfinex.
Very few Bitcoin-related startups focus that much on security (except Coinbase?).



On an unrelated note:
Are there any vacant positions at Bitfinex? I would really be interested in working for you (customer service rep?) and would also
be willing to relocate to HK if necessary (I´m very young and don´t have much responsibilites )

I just want to leave that here:

Bitfinex you´re offerin by far the best trading engine/interface for Bitcoin, especially with all your improvements in the last weeks!
Keep up the good work!

On an unrelated note:
Are there any vacant positions at Bitfinex? I would really be interested in working for you (customer service rep?) and would also
be willing to relocate to HK if necessary (I´m very young and don´t have much responsibilites )

Seriously guys, what is up with the lending rate? It's well under 0.1 % occasionally dipping to 0.08xx % and this with the price constantly rising? The rise from 550 to 590 didn't even take the rate up to 0.14 %....I refuse to lend any money at that rate. But this is exactly what I mentioned in my earlier post. With pseudo-insurance people are gonna give away their money for free while more and more are leveraging. You'll see how this is going to turn out in a flash crash.

Security

When it comes to security, we're always paranoid. We have unique security features in the bitcoin world, which are:

    A watch-only wallet (cold wallet) on the production server, to monitor bitcoins transactions without giving keys to spend them
    API keys
    Automatic backup of the database once a day
    Duplication of backup data automatically across 3 servers
    Paper backup of wallet and exchanges keys and passwords
    Incorporated in a business-friendly place

I've read the announcement and have to admit that these are potentially very dangerous changes in my opinion. I even start to feel uneasy trusting Bitfinex with the sums I have deposited there.
Let me explain in detail why I feel these changes are not positive at all in my opinion.

1. The fee structure for trading seems fine. It's a popular model although I think offering something like the Vault of Satoshi "flatrate" would have been even more attractive.

2. Previously unannounced percentage fees for fiat withdrawals. Bitfinex, are you kidding me? With this changed you have just stated that our money is basically trapped at Bitfinex. I chose BFX because it had NO percentage withdrawal fees with a reasonable fixed fee which was just doubled as well. What if you suddenly announce tomorrow that the withdrawal fee is one percent? Considering the already obscure international wire transfer system this makes fiat withdrawals extremely unattracitve closely to obsolete.

3. Change in the swap fee structure and insurance: This is by far the biggest and most dangerous change. You have just increased the fees by 50 % for the removal of a feature that was basically never available and not thought out at all. If you had provided completely transparent insurance I would have gladly taken it for 30 % but insurance was always a mirage.

Quote from: oyvinds on March 16, 2014, 04:26:30 PM
"Another reason for removing swap insurance is that we have decided to effectively insure all swaps on the platform."

I take this to mean that all swaps are now ensured by BFX and that the enormous total scandal fee hike for lenders is meant to cover this. I'm not sure why the word "effectively" is there, though. It's really binary, either swaps a) are insured OR b) swaps are not insured.

I can tell you what that means. It means that BFX tries to make lenders believe that their swaps are insured when there are actually no sufficient funds to insure the swaps in case of a serious crash. They just assume they will be able to halt (manipulate) trading fast enough for nobody to be able to close their shorts in time.

This is extremely dangerous as it basically takes the "indifferent for BFX p2p lending" away from the platform making it BFX the liquidityp provider who borrows the money to lend it out. We have seen how BTCe has handled the flash crash and why this change adds serious counterparty risk.

On top of that the illusion of insured loans will lead people to offer more swaps hereby increasing the supply of swaps and mutually decreasing the lending rate. The decreased lending rate will encourage people to more reckless margin trading and actually increase the risk for flash crashes.

"effectively insured" is a really dangerous term and I just can repeate that these changes have made BFX a whole lot more untrustworthy for me.