Topic: Should a bitcoinica clone be put online ? (Read 7547 times)
How about piratecoinica? You can trade on leverage AND earn 7% per week on deposits!
On the other hand, if bitcoinica was a typical Contract for Difference offer, then they would automatically forward the net balance of all positions to the real market. In this case, they would not bet against their customers, rather just earn the spread. Zhou Tong allways claimed that this was the case.
I briefly reviewed the hedging code a couple of days ago. The way it is written it indeed opened sell/buy positions on Mt. Gox if the mismatch between existing Bitcoinica positions crossed a certain threshold.The leaked mails show that this claim seemed to be mostly true, while at times Zhou Toung played with the "hedge factor", i.e. only reflected a fraction of the net position to the market (if I understand correctly).
There is a hardcoded variable, I think it's called confidence level (too lazy to look at the code now, but it's the same name Zhou mentions in the leaked emails), that influences the threshold for opening a position on Mt. Gox.The hedging algorithm as well as broader hedging design is very simple and I can understand why it, according to Genjix, might have caused fluctuations in profitability.
I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
Yes absolutely, in the previous example I assumed there was only one open position, but with multiple open positions it's a different story.if bitcoinica was "just a shady bucket shop", then they'd just pretend to open positions, but in fact they only trade for their own profit and bet against their customers. Many people assume that was the case.
On the other hand, if bitcoinica was a typical Contract for Difference offer, then they would automatically forward the net balance of all positions to the real market. In this case, they would not bet against their customers, rather just earn the spread. Zhou Tong allways claimed that this was the case.
The leaked mails show that this claim seemed to be mostly true, while at times Zhou Toung played with the "hedge factor", i.e. only reflected a fraction of the net position to the market (if I understand correctly). For example, when seeing that the majority of the positions was short, but the market moves up, the operator of the platform could reduce the hedge factor (i.e. start preliminarily to buy back some positions). To that fractional part, this would then be an additional gain of the platform, and go against the own customers. But it could also be a protective means to prevent slippage.
I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
Yes absolutely, in the previous example I assumed there was only one open position, but with multiple open positions it's a different story.
Is this the source code used under bitcoinica.com exchange: http://www.reddit.com/r/Bitcoin/comments/w6xen/bitcoinica_press_release/ ?
Cheers!
Thiago
Cheers!
Thiago
Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.
At $9.5 I am forced to liquidate.
If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.
If the price jumps up to $9.6 then returns to $9 I have zero BTC.
Who gets those 10 BTC when it jumps up to $9.6 then back?
The house simply gets its loan back by buying back when the price rises when liquidating a short.At $9.5 I am forced to liquidate.
If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.
If the price jumps up to $9.6 then returns to $9 I have zero BTC.
Who gets those 10 BTC when it jumps up to $9.6 then back?
Actually, the more money you make, the more money the house makes, there is definitely no incentive to force-liquidate positions.
I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.
At $9.5 I am forced to liquidate.
If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.
If the price jumps up to $9.6 then returns to $9 I have zero BTC.
Who gets those 10 BTC when it jumps up to $9.6 then back?
The house simply gets its loan back by buying back when the price rises when liquidating a short.At $9.5 I am forced to liquidate.
If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.
If the price jumps up to $9.6 then returns to $9 I have zero BTC.
Who gets those 10 BTC when it jumps up to $9.6 then back?
Actually, the more money you make, the more money the house makes, there is definitely no incentive to force-liquidate positions.
Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.
AKA The Manipulator
The house doesn't make more money when the liquidation of a position is forced as opposed to triggered by the user.AKA The Manipulator
Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.
At $9.5 I am forced to liquidate.
If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.
If the price jumps up to $9.6 then returns to $9 I have zero BTC.
Who gets those 10 BTC when it jumps up to $9.6 then back?
Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.
AKA The Manipulator
The house doesn't make more money when the liquidation of a position is forced as opposed to triggered by the user. AKA The Manipulator
Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.
AKA The Manipulator
AKA The Manipulator
If someone is interested in trying out what I've been working on, send me a PM.
You've sure been quiet lately, I'm assuming you have put a lot of hard work into this. Beta testers, let us know how it goes! 
If someone is interested in trying out what I've been working on, send me a PM.
Yes!!! We need a new bitcoinica, because I wanna short these things so I can make some money...
Back to Blitz's original; who is 'we'? You could probably find someone to loan you some BTC if the price is right. If I were to do so, I would want pretty solid protection up to about $100/BTC (where I plan to sell a certain fraction of my holdings anyway) and I don't have any automation set up (to buy in in an emergency) so I'l probably want, say, $10,000 to loan you 100 BTC. Kind of negative leverage if you will. I would be surprised if you jumped on the deal...and disappointed since in reality I have no interest in dealing with all the hassles.
"We" is us, as in Bitcoiners, who would benefit from more efficient price discovery and better liquidity in case a shorting mechanism becomes widely available again with a low barrier to entry. 
I would personally improve on the current system with better ideas.
Go ahead, https://bitcointalksearch.org/topic/bitcoin-exchange-short-sell-margin-trading-cfds-93583
With the leak of the code I'm asking myself whether it would be a good idea to setup a bitcoinica clone.
Pros :
Cons :
Thoughts ?
Pros :
- Would make some good money
- There is demand for
gamblingmargin trading - Half the profits could go to the people who lost money because of Bitcoin Consultancy/Bitcoinica/[insert scapegoat here]
- The app itself has never been broken into (even though it's quite surprising when reading the code)
Cons :
- Needs moar reverse-engineering/fixing
- Needs moar testing
- ...
Thoughts ?
I would personally improve on the current system with better ideas. Most anything online is available to the right person with "abilities". Taking away the temptation is a better idea, to me, anyway.
...
I
believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
...
I
believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
...
There is the potential for leverage any time you sell other people's currency with none of your own to back up the loan.
Example:
Sell 1 BTC @ $9.25 with $10 margin. BTC rises to $12. You now owe 1 BTC (worth $12) and your margin is only $10. You are now leveraged.
I suppose a system could be set up that force liquidated before allowing leverage, but I doubt you would have any customers.
I think:
1) That in a typical trading platform, 'leverage' (and 'margin') is achieved in a much more straightforward manner.
2) That in a typical trading platform, not only is it common for the operator to protect himself/herself against loss by using forced liquidation, it is part and parcel to a successful and profitable design.
2-comment) Bitcoinica had absurd fees in part to (attempt to) achieve #2 given the fierce volatility which appears in the Bitcoin economy from time to time.
I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
Right, because you are borrowing (on margin) in order to use a ratio-based leverage.Anyways, it's what the market wants, so it should be done even if some people don't like it.
FWIW, I personally am fine with any trading platorm/scheme which anyone comes up with. In a non-regulated market (of which Bitcoin is a prime example...and happily so) there is room for significant price manipulation. But I feel that over the long haul, the markets will find their natural place and I happen to be in it for the long haul. In the interim period, a person who is reasonably adept at analysis, has some observation skills, and knows what they want can capitalize greatly on things.
I don't buy the assertion that manipulated value fluctuation detract significantly from Bitcoin's usability as an exchange currency. It just opens possibilities for people to invent platforms which mitigate the impacts.
We need shorting back.
Aye. Could care less for trading on margin and interest on deposits and open positions.Without margin, you can "short" by simply selling into the market.
I am not sure that I would agree with that. Many people may have a desire to have a negative balance of BTC which is perfectly legitimate. In that case, borrowing from your own stash is not possible.
At this point I _want_ to own N BTC. I can short by borrowing (from myself) and selling to the point where I have fewer than N and plan to buy them back when the price falls. If it doesn't fall, I lose...if I my N target remains valid and I buy in to achieve it.
I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
Back to Blitz's original; who is 'we'? You could probably find someone to loan you some BTC if the price is right. If I were to do so, I would want pretty solid protection up to about $100/BTC (where I plan to sell a certain fraction of my holdings anyway) and I don't have any automation set up (to buy in in an emergency) so I'l probably want, say, $10,000 to loan you 100 BTC. Kind of negative leverage if you will. I would be surprised if you jumped on the deal...and disappointed since in reality I have no interest in dealing with all the hassles.
There is the potential for leverage any time you sell other people's currency with none of your own to back up the loan.
Example:
Sell 1 BTC @ $9.25 with $10 margin. BTC rises to $12. You now owe 1 BTC (worth $12) and your margin is only $10. You are now leveraged.
I suppose a system could be set up that force liquidated before allowing leverage, but I doubt you would have any customers.
I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
Right, because you are borrowing (on margin) in order to use a ratio-based leverage.Anyways, it's what the market wants, so it should be done even if some people don't like it.
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