Topic: Would another shorting site like Bitcoinica crash the price? (Read 1709 times)

I watched the evolution of Bitfinex right from start (disclaimer: not affiliated with the platform in any way). Initially, the similarities to Bitcoinica were striking. Then they reworked the site step by step and added and tweaked functionality. Especially the feature that on Bitfinex you use loans provided by other users (instead of just getting magically some leverage, as on Bitcoinica) was prompted by the user's constant worries about it being a "Bucket shop". Now, after this disruptive change it is pretty much transparent for every trade where the leverage comes from. Another side effect of that change was that the "magical" spread we knew from Bitcoinica was abandoned completely. Now you get just the actual market spread on Mt.Gox, plus the (slightly reduced) Mt.Gox fees, plus you have explicitly to pay for your leverage on a dynamic lending market. Bottom line is, it is not easier to make profit there (you still have to try hard and need a bit of luck and good timing), but at least now you can always see without doubt why you didn't make profit.


Regarding the possibilities to short: just look at the rates achieved for USD loans (needed to go long) and compare them to the rates achieved for BTC loans (needed to go short): Right now, no one really has much incentive to go short, since shorting just didn't pay off in the last months (which is reflected in the way higher demand for USD loans)


Regarding security, I'd say: yes, it is a new service. Thus use play money. It is a centralised entity and any web service can be compromised. But, please recall that Bitcoinica was not ruined by a technical vulnerability, nor was Bitcoinica ruined by an unsound financial construction. Bitcoinica was ruined by classical human mismanagement, the inability to grow a company in a healthy way, to organise a teamwork, the inability to conduct a business transaction for ownership transferral, the inability to speak with one voice, inability to communicate with customers effectively, so basically the inability to run a real company beyond a one-man show.

No, the price meltdown could be attributed to two reasons:

1.The price was already quite low, so a bunch of manipulators could corner the market, and the low liquidity led to high volatility, which caused  more panic.

2. There were still some early adopters who obtained a ridiculous amount of bitcoins at ridiculously low prices around.

Regarding the Bitfinex/Bitcoinica security issue: bitcoin itself is really simple to secure(as in "nearly 100% secure"), you just need to follow a certain procedure, there is no rocket science here.

Bitfinex looks very different from Bitcoinica.  Some of the code might be reused, but the site has very different functionality.  Also they say they rewrote the code.

Since I cannot view it at work I was going to check it out at home. From the reading I did on here I like the idea of being able to loan BTC and trade on margin.

But I do tread carefully as I was burned by Bitcoinica. Though I was fortunate to get most of my BTC out a few weeks before it went away. And I had a sinking suspicion that those running Bitcoinica were behind the "manipulator" factor (the few large trades I did on a 10:1 margin were swung in the complete opposite direction just enough to kick me off my limit before swinging back to where the market was pushing).

oh look a thread about shorting and bitfinex 
i expected this on 2012 but now is a bit late ...... also dont stop posting about this     

Setting aside the trust issues, the Bitcoinica experiment didn't exactly do much to convince me making gambling trading on margin easy for everyone leads to the best results.

Maybe my sarcasm meter is faulty, but just in case it isn't, that probably isn't such a good idea seeing as many people have critisized the security of the Bitcoinica source code. BitFinex say they have got they're own developers to patch all the vulnerabilities, but if they're work is as bad as the new user interface, then I'm not sure it's wise to touch this thing with a 10-foot pole.

Looks pretty decent. I will definitely check it out when I get home.

yeah, right best idea in the world. totally user-friendly. totally not ran by a jackass could disappear any day when he's not having fun anymore.

http://mpex.co/

My mistake. Thanks for the correction.

Code dump

Haha, holy shit I did not know this. Did he buy it from zhou or did zhou dump the code?

BitFinex uses the Bitcoinica source code...soo....yeah...

I don't even found it on google...

And never heard of it before...

BitFinx is the new Bitcoinica and has been operating for quite some time.

So, no.

I doubt it. It's all in the timing of the thing. Bitcoinica contributed to crashing the market because it allowed for shorting when there was a distinct downward trend in the exchange rate due to the MtGox hack and the theft of a huge amount of BTC. Today, those shorting would find themselves in deep debt very quickly, and I don't see who'd stand to win much by dumping the necessary amounts to bring down the market to justify it. If you have that kind of money, right now, it makes much more sense to go long BTC than short.

When Bitcoinica opened its doors, $/BTC was at $8. Within a few months and with more adoption of its use the price plunged to $2/BTC. The price leveled out at around $4-5 before Bitcoinica died.

There are a lot of people who want to make a profit with Bitcoin and are currently doing so by buying and holding. But would another shorting site like Bitcoinica produce a drop in price as people try to profit from the price going down?