Reuters: Our girl, Naomi O'Leary, did it. - page 3.

gusti

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Quote from: cunicula on April 01, 2012, 11:24:33 PM

Quote from: gusti on April 01, 2012, 10:14:50 PM

I think you are still mistaken on what is the cause of going negative on bitcoinica. is not the leverage,
it's the illiquidity when your position is forcible closed. but that is a bitcoinica issue, not a leverage issue.
e.g. you can never ever go negative in a forex broker, even with a 400:1 leverage.

Wrong again. You can definitely go negative with a forex broker. It just doesn't happen often because the forex markets are extremely liquid.

sure, that's why leverage has nothing to do with going negative if your position is closed properly,
and with enough liquidity at hand. brokers will simply not allow that, margin call will happen first.

paraipan

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Quote from: Nicolai Larsen on April 02, 2012, 04:47:11 AM

A really well-written article!

+1 great read indeed

Technomage

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Affordable Physical Bitcoins - Denarium.com

Really good article. We're starting to get positive coverage for a change. This latest article is big enough to possibly spark a new megatrend for Bitcoin but I guess we'll have to wait and see.

Good times ahead.

kjlimo

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Quote

Before disappearing as an online presence in January 2010, Nakamoto made clear his disapproval of quantitative easing measures and blamed banks for creating credit bubbles.

I thought Satoshi was last heard from in October, Nov, or Dec of 2010? Has it been over 2 years since he disappeared?

kjlimo

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Quote

Users - an odd assortment of uber-geeks, anarchists, libertarians, scammers and forex traders - sent about $4.3 million worth to each other in the last 24 hours.

What supports $4.3 million worth transferring in the last 24 hours? Is that a sum of transactions plus mtgox volume in several currencies plus maybe other exchanges?

Nicolai Larsen

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Earthling

A really well-written article!

Dutch Merganser

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A decent read in that it does present divergent opinions on the viability of Bitcoin and mentions the possibility of alternatives appearing. It is refreshing to see such even-handed coverage.

cunicula

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Quote from: gusti on April 01, 2012, 10:14:50 PM

I think you are still mistaken on what is the cause of going negative on bitcoinica. is not the leverage,
it's the illiquidity when your position is forcible closed. but that is a bitcoinica issue, not a leverage issue.
e.g. you can never ever go negative in a forex broker, even with a 400:1 leverage.

Wrong again. You can definitely go negative with a forex broker. It just doesn't happen often because the forex markets are extremely liquid.

evoorhees

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Awesome article!!! I encourage everyone to leave comments, retweet, and post that shit on facebook.

And I love that "Zhou Tonged" is now in the global vernacular. Makes me feel better that it's happened to me

bitcool

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Quote

Workers at Morgan Stanley and Goldman Sachs in London and New York have been visiting online Bitcoin exchanges as often as 30 times a day, according to documents seen by Reuters.

How did they find out? monitoring employee's Internet traffic? Maybe they happened to see Zhongtong adviser's traffic log Grin

I won't be surprised if some one says: workers at CIA visited bitcoin exchanges 30 times a day, or FBI, or IMF, or World Bank, or the Fed.... the number of employees and contractor working for these agencies is huge.

gusti

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Quote from: cunicula on April 01, 2012, 10:05:25 PM

Quote from: gusti on April 01, 2012, 09:28:35 PM

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi. Wink

negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

When you borrow to buy assets, this is called leverage.

Sure, if you take a short position you have leverage. You are borrowing the currency you are shorting and the value of your debt can exceed your initial investment.

If you take a long position. You don't need to have leverage. You can buy the currency you are investing in (or loan this currency to the market maker), you can take on no debt and then there is no way for forced liquidation to occur. Of course you can take on leverage if you want to and then it is possible for forced liquidation to occur.

Leverage is necessary for you to end up with a negative balance because of illiquidity. If you are heavily leveraged up, then, fixing your initial investment and the degree of illiquidity when forced liquidation occurs, the size of your negative balance will be proportional to your leverage, i.e. if you leverage up 10:1 you will end up with a negative balance ten times as large.

Naomi is completely correct that the opportunity to leverage your investment on Bitcoinica makes it possible to lose more than your initial investment. This is impossible with Mt.Gox, for example, where you are only allowed to buy and sell and not to borrow.

I think you are still mistaken on what is the cause of going negative on bitcoinica. is not the leverage,
it's the illiquidity when your position is forcible closed. but that is a bitcoinica issue, not a leverage issue.
e.g. you can never ever go negative in a forex broker, even with a 400:1 leverage.

cunicula

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Quote from: gusti on April 01, 2012, 09:28:35 PM

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi. Wink

negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

Naomi is completely correct that the opportunity to leverage investments on Bitcoinica makes it possible to lose more than your initial investment.

When you borrow to buy assets, this is called leverage.

If you take a short position you have leverage. You are borrowing the currency you are shorting and the value of your debt can grow to exceed the value of your holdings. This is when forced liquidation occurs.

If you take a long position. You don't need to have leverage. You can buy the currency you are investing in. If you do this, you take on no debt and there is no way for forced liquidation to occur.

Leverage is necessary for forced liquidation to occur. To end up with a negative balance, you need to take on leverage.

If you are heavily leveraged up, then, fixing your initial investment and the degree of illiquidity when forced liquidation occurs, the size of your negative balance will be proportional to your leverage, i.e. if you leverage up 10:1 you will end up with a negative balance ten times as large.

bitcool

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Quote from: niko on April 01, 2012, 09:41:27 PM

Quote

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

Unless its CEF , the gold silver fund of Canada, otherwise its no different from any types of bank credit.

cbeast

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Quote from: niko on April 01, 2012, 09:41:27 PM

Quote

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

It probably means they will scan Canadian dollars and make lots of digital jpegs. Cheesy

niko

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There is more to Bitcoin than bitcoins.

Quote

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

bc

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That may be the best outsider article I've ever read about Bitcoin. She really seems to have done her homework.

Kudos to everyone who helped her.

gusti

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Quote from: cunicula on April 01, 2012, 09:19:30 PM

Quote from: gusti on April 01, 2012, 08:59:11 PM

"Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment."

Please someone explain her the leverage concept, nice article anyway.

She is correct. Your English grammar is wrong, however.

The position is auto-liquidated when it reaches the Zhoutonging price. However, if there is insufficient liquidity to perform liquidation at the Zhoutonging price, then the liquidation price will need to go beyond this boundary. Now, when liquidation occurs, the speculator will be left with a negative balance in their account. They will owe Zhoutong money and will have lost more money than their initial investment. This is impossible without leverage.

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi. Wink

negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

cunicula

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Quote from: gusti on April 01, 2012, 08:59:11 PM

"Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment."

Please someone explain her the leverage concept, nice article anyway.

She is correct. Your English grammar is wrong, however.

The position is auto-liquidated when it reaches the Zhoutonging price. However, if there is insufficient liquidity to perform liquidation at the Zhoutonging price, then the liquidation price will need to go beyond this boundary. Now, when liquidation occurs, the speculator will be left with a negative balance in their account. They will owe Zhoutong money and will have lost more money than their initial investment. This is impossible without leverage.

cbeast

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Let's talk governance, lipstick, and pigs.

A good read. Facts are fuzzy about a lot of things these days, but overall it seems to be a fair assessment.

grue

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Topic: Reuters: Our girl, Naomi O'Leary, did it. - page 3. (Read 6647 times)