Bitcoin Forum

Perhaps the biggest scam of all; happening every day, is exchanges allowing "market makers" to sell you coins in the hope of buying them back cheaper. If a value of a coin falls hundreds maybe thousands of people in the community lose, but one or a small handful make money.

Exchange owners  allow "market makers", special privileges on their sites. These would include small or no fees and the ability to sell your coins out of the "hot wallet", hoping to buy them back cheaper..
 There are at least 6 of these market making operations globally, who enjoy these special privileges. This came to light if it wasn't known before when an bitcoin company made a back door listing on the Australian Securities exchange. As a listing requirement they had to disclose the particulars of their business which included short selling crypto currencies.3. Exchange owners win, market making firms win, and the community loses.

You will see thins in various markets where "bots", computer trading systems try to drive down the price after already having sold short coins from the "hot wallet".

If this is not in our interest we need to stand up to them

interesting... so what is your source of proof?

They cannot dictate the price the trader is. If they short sell there is a possibility they will also lose.

The only proof I have so far , and I can quote the ASX release when i get back to work (as these disclosures don't seem to be on the website), is that DigitalBtC had to disclose their business practices, which included short selling bitcoin and others coins. So I'd say they must be doing it from the hot wallet with the blessing of the exchange.
The thing that made me think about it was watching a bot pressure down the price of a coin. There is no rationale to design a program that does that unless you are "short". You don't design a program to push the price down if you are a holder.

As we have seen recently in the press with the release of Michael Lewis's new book, greedy exchanges are all too willing to accommodate predatory trading firms, and with cryptos being unregulated we should expect the same greediness and feigned naivety

So how are market makers that provide liquidity are hurting the community?   If you couldn't sell when you wanted to wouldn't that a problem?

True....but algorithmic trading is quite mature now. They don't do it all the time. They have studied markets in depth for years, they know when to act.
So when China makes a negative statement about BTC....they can laugh and sell short. All the BTC  holders lose, and they win.

You would only lose if you sell.   You aren't making any sense.

What is finally coming to light, following the release of Michael Lewis's latest book is that algorithmic traders aren't your friend. They never intend to add liquidity. They are predators

Well if you can't see your coins when you want to, how is that a good thing?   

Not everyone who bought BTC at $1200 USD has the luxury of being able to hold it. Most ordinary people, at some point have to sell. If you have so much money that you never have to sell, but can sit on losing positions for years if necessary, then you are part of a small minority

If you bought BTC at $1200, then that was your choice.   It is your problem.   It isn't the market's problem. 

If you don't mind exchanges allowing other people to sell your bitcoins, then good for you. Do you really think it is Ok for an exchange to let someone else sell your Bitcoins?

First you say the market makers get to sell their bitcoins instead of the someone on the exchange and now are saying the exchange would sell your bitcoins.  You seem confused.     

The fact is short selling isn't anything new and it is a normal part of most markets.   Just because you don't understand how it works, doesn't make it a scam.   If you short sell something you have to cover it at some point and it can be highly risky for the short seller.   

+1

No difference IRL. If you hold your money in a bank account, do you really think they keep it safe? I remember how the financial crisis (pick any of them) happened... Banks use your money to make profit and in worst case you even pay an account fee to them.

BTC Markets are well alive and nobody forces you to sell your *coin for less than it's worth to you.

The fact that there are no lawful regulations doesnt make it a scam.

Short selling is fine as far as backed with real coins. Btw apart BTCe which exchanges openly allow short selling?

No I never claimed this[/quote] You'll have to reword this it makes no sense No, you are still not getting it. I never said the exchange sells anything.

. Did I say it was new? Like I said, no one would randomly short sell anything. Bad news comes out, they can short sell but you cant. They win and the holders lose.

Banks are your friend too. Just ask them.  ;D
I;ve never seen anyone claim a practice was good and fair because it's just like a bank.  ;D

I understand how it works. though I'm not sure you are too familiar with it.
Normally the short seller will have to gain title to the instrument before they can short sell.
Obviously this would not be the case on crypto exchanges.  This is a HUGE difference. Do you understand that?
What I am concerned about is back door deals done by exchanges which allow certain participants to short sell using algorithmic trading systems.
Most people trading on crypto exchanges are "small fis" so it's quite easy for someone with deeper pockets to manipulate the markets.

It's a little naive to think these guys are helping you or even neutral participants.

It's fine if there is a level playing field. What I'm suggesting is there is not one.
Secondly I'm sure you can imagine the potential problems if title is not granted when coins are short sold..
  I don't know. Do you think they will tell you if they are letting people sell your coins?
I'm suggesting it is happening because there is no rational for bots to keep pressuring prices down unless they are short. The way these bots are operating (at times) is the same MO as bots that are designed to see how low they can get the price of this or that financial instrument.
You just have watch the price action.
If you offer to sell they immediately jump in front. I you buy the price up a little, they immediately (and I mean immediately) tick the price down lower. They fill the screen with tiny sell orders. They continually sell small amounts as low as they can.

There is only one strategy this type of algorithm fits. Its the way computer trading systems are programmed to act when they are short. Not at any other time.

Excuse me, I've short sold many times.   I think I understand it very well.   Have you actually ever short sold anything?   Short selling requires borrowing the asset and selling that, then you pay interest on that borrowing and pay back with the asset.   It is pretty simple.   There isn't any gaining title to the asset you sell, at least not with stocks or contracts so I don't see how it is any different with a crypto currency.   

No you are wrong. When you borrow a stock to sell it short you have title to the stock. You may not know this as all you have been doing is executing the sale. A whole lot more is happening in the back office of the organization you are dealing with.
You may think you "know it well', but you're only familiar with what is happening on the surface, not in the back office, where things are reconciled.

Now, large firms may not follow this procedure as, for them, but not for you, it has been a grey area legally. And depending which country you are in the regulators may not have caught up fully yet. though it's been a big area of focus the last few years.

But..without digressing too much, this is different to crypto currencies because of the nature of them. By the nature of the blockchain itself.
But in short, when you deposit your coins with an exchange (or most anyway), they can pretty much do what they like with them. Some go into eh hot wallet. They are no longer yours. this is why "hackers" (not really hackers) were able to to steal coins from several exchanges, out of the "hot wallets".

As the coins are entirely fungible, you just get an equal amount of coins back if you withdraw.

Now because, you as the "owner" of the coins have never entered into a loan agreement, you imagine you still own your coins and can sell them at will. But you can't necessarily. You are relying on a "trusted third party" to not stuff things up.
If the exchange loaned out coins, which were then shortsold then obviously everyone cant sell or withdraw their coins.
But that, my friend, is just one of the problems.
This is a market manipulators dream  :)
Imagine being the only person or organisation who was able to short sell a particular crypto currency. Bad news comes out and you have no competition. Everyone one else is either long or square.

And yes, I have probably done hundreds of thousands of short sales, as I have worked professionally in that business for many years. I'm very familiar with market making, short selling etc...

What I'm concerned about is exchanges and trading firms destroying and profiting from what I think is a tremendous community based project. I don't think they really have the crypto community at heart most of the time

Added in edit: I should have added that the gold market in the west is a notable exception where shorting is concerned, but that is hardly a model that should be emulated.

You clearly have no experience and no idea what you are talking about.  


Bitcoin lacks fungibility, that is a major issue with it as a currency.   Why do you think that things like colored coins can exist?   The blockchain is public and all transactions are public.   Inside an exchange many off the block transactions are done for speed and other reasons but that isn't the same as being "entirely fungible".   Besides fungibiltiy doesn't have anything to do with short selling.

You are just throwing around terms and nonsense.   At this point I don't think you have a point or even a basic understanding of what you are trying to talk about.  

Your coins inside an exchange are entirely fungible. If you withdraw coins do you really think you get the same coins back.  ;D Bitcoins as a currency are fungible.
Why do you think there was such a big issue with the recent USA tax interpretation, that indicated Bitcoins were to be treated as property?
Because this made them non-fungible for tax purposes.
Fungibility has everything to do with short selling, because you don't buy back the exact same coins or stocks or metal that you sell. You don't get the same dollar out of the bank that you deposit.

I'm going to put you on ignore friend, as this is becoming a waste of time.

Ok.... lets break this down to simple practicality. If you are putting up your BTC for sale for USD 500. Then immediately a "bot" comes in and places a BTC for 499. . You then willingly place your next BTC for 498 and so on till its like 496 or something, am I right? So this is when I come in and go "hey look... cheap BTC... let me buy some" and purchase all the 5 or 6 BTC I see selling for less than 500. I don't see where your conspiracy theory of "short selling" and the "invisible hands of deep pockets" driving prices down happening. The market exists because a majority can buy at the prices they see and sell at will for the prices they want. A trade gets executed when two of them makes eye contact and shakes hands. It does not matter if one of them is a bot as long as the other get at the price indicated on screen.

And just so you know, I one up a seller by selling for a few satoshis all the time... hell, I must be imitating a bot then!! You think there is some unseen nod between traders that they won't sell above / below a certain price or something?

Yes inside of an exchange it is possible for bitcoin to appear fungible.   This is the same with any other asset being held by a broker.   However you have totally twisted the concept into something else.   If someone shorts bitcoins, it doesn't mean it is any particular person's coins and the net effect of shorting is zero.   There isn't anything special here.   It also doesn't mean that bitcoin is fungible.

If you want free markets you have to accept short selling as well as options, futures and any other concept can be come up with.  That is part of freedom.   Exchanges can still verify they hold enough coins to cover everyone's accounts.   These trading vehicles are available to everyone.  It isn't a scam.  That is true at least as long a naked positions are not allowed.  

We are moving towards p2p exchanges and there will short selling, options and who all knows what.   That is all apart of a free market place.   Short selling itself is simply a tool.

If you are upset about the use of software, tough.  Bitcoin is only software.  Better get used to it. 
 
If there is any scam here it is in spreading alarmist FUD.   The only thing you have shown so far is that you are against free markets.  

It's happening in smaller crypto's more. In the BTC/USD market they don't have that much advantage (if any). That market is too active and more difficult for a bot.
But as mentioned, algorithmic trading has come a long way over the last 20 years. They know where the opportunities are, and trading BTC against the USD is unlikely to be one.
This strategy has been observed and written about. HFT firms in the stock market make the pretense they are adding liquidity, and most of the time their trading in larger stocks is marginal, but in less liquid stocks their tactics are more predatory

However as mentioned above also the time is probably happens with BTC is when some major negative news comes out. And that would mean it is not a level playing field..

One of the other problems is that if someone is short selling coins out of a hot wallet. then it means that potentially people will not be able to withdraw or sell their coins. Of course an exchange is unlikely to admit what has happened and will more than likely say they are doing an audit, or they are having technical problems and not to worry.

Why is it not a level playing field? That's what I don't understand. You are not really explaining yourself and simply throwing allegations and conspiracy theories around. Can you explain it without Jargons and constantly referring to "algorithmic trading". If possible can you explain without using the word "short" or atleast explain what the process is for "shorting"... like what excatly happens. Can you explain using apples and oranges? Can you explain if to make a 7 yr old understand? There's just too much of dick measuring going on here without any learning experience happening IMO.

Because one group, has the special privilege of being able to short sell from the hot wallet and all the rest don't have that privilege.

Isn't that an unlevel playing field?

Another problem is that if people are short selling from the hot wallet, then eventually a circumstance will arise where not everybody will be able to withdraw their coins, because someone has short sold some coins 

All trading is predatory and there are only level playing fields are in sports.  

You are just throwing random things against short-selling.   It doesn't add any value to your point. 

Exactly... please explain what a short sell and what a hot wallet is? Preferably without using these terms? Please... I am a noob  :)

EDIT: A good way to know if you understand a concept or an idea fully is to see if you can make someone else understand it.

Short selling is simply borrowing an asset and then selling it.  You pay it back by buying the asset back.   You are hoping the asset goes down in value more than your cost of borrowing it.

Hot Wallet is a wallet that coins can be quickly withdrawn from and deposited too.   Cold storage is typically offline and may take more than an hour to access, but it is safer.   A hot wallet is online and ready for use at any time.   When a hot wallet is empty it is typically refilled from a cold storage wallet.   

Cold storage just means it has never been online.   

Note you don't actually have to move an asset to short sell it, it can all be done by accounting.   Since short sold assets have to be bought back at some point, it is a zero sum game to the market in the long term.

When we put our coins into an exchange, most of them should be stored offline in a "cold wallet", As they are offline they can't be stolen.
Some coins however are stored in a "hot" wallet, or an online wallet, where they can be quickly accessed for trading.

But in a hot wallet they are vulnerable to being stolen. Several exchanges have recently had coins stolen. These coins were stolen from the hot wallet, or online wallet. The ones in the cold wallet were safe.

Short selling is selling something you don't own (probably in the hope of buying it back cheaper). It is common in share markets. But selling from a hot wallet is very different. In a share market you arrange to borrow the shares, which means you enter into a contract with the custodian or owner of the shares. So if you have loaned the shares you cant sell them. But the owner or custodian knows this.

If an exchange is allowing one player to sell other peoples shares from the hot wallet, then there is no arrangement involving the actual owner. The "owner" doesn't even know the exchange is doing this.
So if the excahnge allowed someone to short sell from the hot wallet then, if enough people try to withdraw their shares the pool will run dry.
 

So basically every trader's wallet in an exchange is a hot wallet. Its not something exclusive to "deep pockets". Ok.

As for shorting, then basically its like a bet you are doing with the guy who runs the exchange owner. Or am I understand this wrong? Or is it like a loan you are taking out from the exchange owner and putting it for sale for a higher price, then buy it back when its lower and return teh BTC to the owner? So what this fellow's talking about is like a "previlaged" access to the owner's stash of gold coins to play with?

Ok so that basically is how a bank works right?

I mean Im failing to see how the "conspiracy" works... how is someone able to say fix the price of Asia Coin to 1500? How are they able to stop buyers from posting a sell of 1600? How are they stopping a buy of 1600?

Yes. Except we put the coins in. They aren't the "owners coins". Though perhaps in the fine print the owner might have said "if you transfer coins to my site then I own them......suckers"  :)

They can't.

Imagine though, if you were able to short sell any crypto coin. Do you think there would be times when the odds were so much in your favour that you make a profit by doing so?

Imagine say, as an obvious example, that the US government came out and said they were going to prosecute any person who used Bitcoin. You would probably make money if you short sold Bitcoin at that time.

Ya, but what's in it for the exchange owner if he allows someone to do that? Not to mention they need to have access to all the exchanges that particular coin is trading at right? And not just that, how is the "deep pockets" going to make money from this whole thing? If he using other people's BTC to buy Asia coins, its basically visible to others and they too will buy those Asia coins. Eventually, its gotta run out, and there will be others who will start to sell it for higher, but technically it should just disappear from his hot wallet because the deep pockets sold everything right? I mean how does that work? The market price corrects itself because of the other people keeping a watch on the prices.

That's what I'm saying.... the news is not secret right? Everyone gets the news. Everyone is selling. How is this guy making money from that? He will not have other's BTC because all of them would have sold it for other coins or USD.

He is hoping to get more fees. Or he could be cutting a profit share deal.  No. But they do from what I know
Because most crypto players are small fish. Enormous amounts of money have been spent working out when it is most advantageous to sell short by people with very deep pockets. Now those methods are being used to trade coins.
What I'm suggesting is happening is this. They identify a weak coin, lets say AUR. They short sell AUR from the hot wallet, and all the way down short sell then when it falls, buy it back, then when the price pops up they sell again, then buy back when it falls.
This is how one makes money in a falling market...but....but... no one else can do this as they can't sell AUR short.

Everyone else has to buy first and then sell. But if the market is falling you still lose.

No...not all of them would have sold. Not everyone who has BTC in an exchange will sell on bad news. There would still be some left for the short seller to use.
So if the price is going down...the only person who makes money is the short seller.
No one else can make money. Because the price is falling

Not really the same as a modern bank.  An exchange can allow short selling and still maintain 100% reserves.  It does this by limiting how much can be sold short.   A bank though often doesn't maintain 100% reserves.   If it maintains 10% reserves, it can loan out 90% of the money you deposit and then they do some funny accounting counting your 10% as a full 100% deposit and counting the 90% as 90% they had to loan making look like they had 190% of the deposit before they made the loan.   If it sound complex, it is.  Most US dollars are created this way.   With fractional reserve lending, money is created with it is loaded out and when you play back the loan you are actually destroying this created money.  

Short selling doesn't create any new assets.   A bank on the other hand uses fractional reserve lending to create money out of nothing.   If you want to look for scams that is a good place to start.   This robs everyone by inflating the money supply.   Everyone's money is worth less when a new loan is made using factional reserve banking.    

Edit: Here is a video that shows how fractional reserve lending works (about 6 minutes in) plus a whole lot more:  https://www.youtube.com/watch?v=iFDe5kUUyT0
(Hidden secrets of money ep #4)  I don't agree with their gold agenda, but that is pretty limited in this video and it is kind of fun.    

Ya I understand how the Fed and fractional banking works, but I dont understand how it can work for a crypto or a bunch of cryptos, that too when there are multiple exchanges. If someone is selling AUR at low prices and trying to bring the price down, they see that its not budging in another exchange. They will all pull out their AUR from the current exchange. At that point the shit should hit the fan when they get an error saying withdrawal is not possible right?

AUR was an hypothetical example. But its probably as good as any. Go and see the different AUR markets. How many of them are active. Probably only one.
Poloniex for example, which used to have half decent volume, now has  a very wide spread between buyer and seller. There is only one exchange really trading AUR in any size I think, though it is listed on many exchanges. So hypothetically that is a good example.

The part that isn't talked about in this thread is margin calls.   You typically get a margin call when you assets don't cover the loses and you have to make up the deflect or you will be liquated.  Often you get liquated anyway, it is a risk of going short.   However you could also get forced out of your short position if there are liquidity issues.

However, if there are not enough assets in the first place you won't be able to get the coins to go short in the first place.   This happens all the time with stocks, even very large companies.   There is typically a limited amount of shorting that can be done.   The rules very all over the place so I don't know what they would be for coin like AUR.   My guess is that it would be very hard to actually short AUR.   

You have a some experience with shorting stocks, under one specific type of arrangement,where you have to borrow the stock, by way of a contract, and put up a margin.
What I am suggesting is very different.

1. We all deposit our AUR (as an example) with and exchange (or buy them there).
2.Some of these AUR are pooled into a hot wallet.
3. One player, the market maker, is allowed to sell those coins (our coins) on the promise he will buy them back.

It is not difficult as you suggest....but extremely easy for the market maker to short sell. He doesn't have to deal with all the red tape you have to when you short sell a stock. When you short sell a stock you have to deal with all the regulations  from the lawmakers, and the loan provider, and the one who loans the stock.

Here under my scenario the market maker just has to have a deal with the exchange. A deal you are never informed about and which you don't know the details of. Possibly a deal against your best interest and that makes more money for the exchange at your expense.

You clearly have no idea what you are talking about.   Also, I've have shorted a lot more than a stock or two, I once ended up short $250k worth of QQQ (before it was QQQQ) from some options that were exercised early.   Many of my short positions were related to some form of option spread, most of which are far to complex to talk about here.  (Multiple long and short positions)

1) There isn't any red tape or paperwork.  It is simply a order gets filled or not.  Margin requirements are setup in advance and loans are automatic at known rates.  
2) Market makers actually have to follow the same rules, the advantage they have is access to cheaper capital if needed, know how much of an item is available for shorting and they are closely watching the order books  (typically a higher level of data that is show to end users).  They are also forced to take positions as that is their role in the market.  
3) I'm pretty sure there aren't really any market makers in something as tiny as AUR.
4) If shorting in crypto coins happens it won't matter what kind of wallet the coins are in, that isn't a factor.  It is a zero sum game. 

The rules were things like a short position can't be started on a stock with less then a $5 price, etc.  Very basic.  

Of coarse most crypto exchanges are currently unregulated, but in general if they are going to be able to stay in business they are not going to be doing wild things.   The most important measurement is if there is 100% reserve of coins.    There is always scams out there like MtGox.    

(snipping the irrelevant stuff where you try to big note yourself)  But how would you know? You don't have any relevant experience. Despite trying to constantly big note yourself
Again this shows you don't know what you are saying. This rule only relates to one market you have traded a little bit. There are dozens of stock markets around the world with different rules.

Yes...this practice will lead to problems at some point....but not worry you're an expert, and you have safely assured us based on your limited experience, and big noting,  that it can't be happening. ;D

Having experience vs you not have any?


I gave one example rule.   You are doing a good job of proving you don't have any valid arguments.   

How it works IMHO.

1.The computer program identifies a situation where it is likely that there are more sellers than buyers or that there are more people wanting to sell then to buy. Programmers have been studying this stuff for at least 20 years, trying to work out strategies to take advantage of this.

2. Having identified such a situation, they take our coins from the hot wallet and sell some (knowing there are sellers around if they need to cover)

3. If someone else puts a sell order in the screen, they immediately jump in front and offer some coins. Then they often place lots of orders behind that for smaller amounts, trying to put pressure on sellers without risking too much.

4.Then they begin to tick small sales at lower prices. Again creating a fasle impression that there is selling around. And trying to put pressure on other sellers.

If their original "guess" is right (and they don't have to be right always), they continue these tactics, trying to tick sales lower, to never let anyone else be the best seller, and to sel more.

Lower down they put a buy order in, which often enough gets filled as real sellers decide it is too hard to try to be the best seller or to sell higher up.

This strategy is probably one of the most fool proof ones around if you have the exchange owners permission to take other peoples coins from the hot wallet. And they don't have to get it right all the time, just to make more than they lose.

There is no other market in the world where one participant would have such an enormous advantage. This is because in most markets they have to compete with others who also can short sell, but with smaller cryptos (not BTC) they can be the only ones who profit from a coin falling in price.

This really is the greatest scam of all........

I spent most of my working life trading professionally for banks or other financial institutions, and am very familiar with these strategies

I just don't like seeing the crypto community being taken for a ride.

About how the programs work you are probably correct in some cases.    However, there isn't any taking of coins out of a hot wallet.   The wallet is just for deposits and withdrawals, it is all just accounting.   There isn't an moving of coins in/out of the exchanges, that is a very slow operation.   You need to learn how crypto currencies really work.  

As for it being a scam ... Why to you think seats on a real exchanges were worth so much before everything was computerized?  As long as people get the orders they wanted executed at the prices they wanted, it shouldn't be considered a scam to provide liquidity.   The profit margins here are extremely tiny so it is most unlikely this is going on yet with crypto currencies.   It happens all the time with stocks in large companies though.  

What you are saying makes sense if there is only one exchange in the world. Lets imaging this happening with AsiaCoin in polonix. People from Mintpal will flock in to buy the creap coins. The people from Poloniex will see the prices in mintpal are not going down like it is in Poloniex. They will all withdraw their money and go to Mintpal to sell it. That withdrawal cannot technically happen when this guy is "shorting" right? With three exchanges, it is next to impossible to do this unless this fellow is in control of all the exchanges.

It works where there is one exchange that does most of the volume for a coin.

As I mentioned AUR could be a good example as most of the volume happens at 1 exchange. Same with Darkcoin. Most of the volume happens at 1 exchange. Both of these coins are active and popular enough for this strategy to work.
Asiacoin would be marginal at the moment.

For the last 20 years these types of strategies have been perfected. These outfits don't just randomly trade any old coin. They can with their computers analyse every market, and make "guesses" about where any one of dozens of different strategies might work.

If the circumstances suiting this strategy arise WRT Asia coin, the program will notice it.

There is no other reason that "bots" would deliberately try to force a price down. Pressuring a price down is what these programs have been designed to do when one is short....not at any other time.
So the obvious question is..why would a bot be trying to get the price down?

these trading systems are designed to be predatory...they examine all the data...they examine it in the light of what systems have been shown to work over many many hours of trading....then when the ducks line up they initiate the strategy.
If the exchange gives them the capacity to short sell 50,000 AUR...then you wont beat them...their pockets are too deep. They will win enough of the time

Don't be silly. We have seen recently at Mt Gox, C-cex, Poloniex and Cryptorush that coins were stolen out of the hot wallets. If someone can steal coins from that pool of coins then a market maker can short sell them from there too

Yes coins can be taken *OUT* of an exchange from a hot wallet.   That is what a hot wallet is for, deposits and withdraws from an exchange or business.   Moving coins to/from a hot wallet is a very slow operation and wouldn't have anything to do with going short on a coin.   That is all just accounting and even on heavily traded stocks, you can only short a stock if your broker has shares of the stock available for shorting.    It all just accounting and the net sum of someone going short an asset is zero because the owe that asset back.   ( -1 + 1 = 0)  It is really that simple.  

You have made up some fruitcake scenario about hot wallets that is 100% nonsense.

EDIT:
I realize the message is falling on deaf ears ...
 
What coins are in an exchange and what is in hot wallets are not the same thing.   Typically a hot wallet will contain only some tiny amount of coins compared to the total amount of coins in the exchange.  Trading inside the exchange only results in balances being changed, not any actually movement of funds or coins.   Most money would be stored in banks and most coins would be stored in cold storage wallets.   

AUR just broke 0.0015. There has been a bot pushing the price down now for ages. They must be making quite a lot of BTC..if they are short. While the crypto community loses

Either way...there is a computer program employing a strategy that only makes sense if they have already sold short.....
And that means that the crypto community is being shafted.

You might not consider that an issue worth raising but I do.
There are computer programs trading some coins in a way that very clearly indicates that have short sold...and it's not a level playing field

Personally I think you've got this whole "they're watching us" paranoia induced underdog worker vs CEO mentality. It makes everything seem like a conspiracy and be the ever lasting "i-told-you-so" fellow on that scenario that is always just around the corner. By giving the "environment" an impossible standard to live up to, you are fooling yourself info being content with failures and shortcomings. That's complete BS. I started trading with about 0.3 BTC about a month back, and through a series of deliberate moves of profits and losses, I'm holding a portfolio of about 5 BTC now. You just need to work hard on researching and looking for signs and snippets of news that you can use to your benefit. There are no bots pushing the price of AUR down. There are just simple people giving up on their hopes of AUR rising and using whatever BTC they get from selling to buy other alts.

Odds are that no one can short AUR and it is just a problem of too many coins being dumped and not enough buyers.   If there actually are short positions driving the market down, then there will be buying pressure driving the market up when the shorts are covered.  

So far you have only thrown out a wild theory and haven't provided any proof.   Just because you are unhappy with what has happened with AUR doesn't mean there is program trading driving the price down.  

Yes, this is probably true. But this is the perfect environment for a short selling program.
If you watch the market you will see a bot actively pressuring the price down. It's not that hard to see.
But if you haven't even bothered to look and don't believe it then that's up to you . And if you did look then it begs the quesyion of why you sidestepped the points I made.
It's a bit naive to imagine that there aren't bots executing well known and well tested strategies in coin markets. But you are welcome to believe what you wish...even without looking at the evidence.
I gave you very specific information about what this bot is doing. But rather than examine the evidence you dismissed it prior to investigation.
Of course, if you follow the news at all you will see this is what has happened in other financial markets.
1.Experienced people noticed the activity of bots and saw something amiss.
2.They reported what they saw and were dismissed as paranoid.
3.years later regulators have egg on their faces.
 Peace

Odds are????
What are you basing these "odds" on?   "Odds" are a mathematical calculation. How did you decide what the "odds' were.

The point you missed before with yorur "accounting" argument is that...if AUR is being shorted everyone won't be able to withdraw their coins.

Lets say we deposit 100,000 AUR at an exchange. The market maker short sells 50,000 also

That means we should be able to withdraw 150,000 AUR..
But there is only 100,000 there

This can all boil down to a couple of simple questions

1.Has there been a bot active in AUR with a bias towards moving the price down?

2. How this this be accounted for apart from that party having a short position?

Well that is good. :)
And not that hard like you say, if you do the work. Smaller crypto coins are by far  the easiest market to trade I have ever seen, and if you'be been trading things like Asiacoin (which you mentioned) and you get it right it's quite possible to turn $150 into $2500.
But there are a host of reasons why this will be difficult to continue IMHO and to do on any greater scale.

I wont go into all the reasons now (unless you really would like my thoughts :) ), but one will be worth pointing out. Any coin market that reaches acertain threshhold will attract the attention of players who will be a lot more sophisticated, and most likely, you, like nearly everyone else will only be able to play the market from one side, efficiently. The long side.

You and thousands of other players will be trying to buy cheap and sell dear, and unless you are trading small coins where you can't trade in any decent size, you will find that these more sophisticated players will make it a lot harder than you have found it so far IMHO.

And a few special players with special arrangements will be able to sell short, whilst you and the thousands of other wont be able to do it efficiently, or at all (with possibly a few exceptions).
Just my thoughts, but I do genuinely wish you good luck . :)

I have over and over said that shorting in side the exchange is a zero sum game.   If you have 100,000 AUR and 50,000 where shorted you still have 100,000 coins cross the accounts.   100,000 - 50,000 shorted + 50,000 owed = 100,000.   You would never be able to short 50% of an asset, but that is besides the point.   The coins would still be there any you would still have access to withdraw your coins. 

However, it is extremely unlikely that shorting is even going on as it is still complex to take a short position on even bitcoin.   In any case without something external to bitcoin it wouldn't be possible to short bitcoin across exchanges because the transactions can't be reversed.   So even if it is happening it would have to be only internal to an exchange.   

Odds are there isn't any shorting going on with a tiny asset like AUR.   There wouldn't be enough money in it.   With these small assets it probably just plain old pump and dump and you are just on the wrong side of the dump.

YES!!!! You have only 100,000 across the accounts.

BUT!!!....You have 150,000 owed to customers.

You have the original 100,000...and you have the 50,000 that was bought from the market maker, who had no coins, but sold 50,000.

No, you have 150,000 owed to customers, 100,000 across accounts and 50,000 the "market maker" owes.   If there is a run on the bank, the market maker gets liquidated and losses big time.   That is why you could never short 50,000 coins on 100,000 coin balance.    Every one gets their funds unless the whole exchange is a scam in the first place.     

Even in large markets, I've been assigned and partially liquidated when funds were needed.   It happens, it is part of the risk of being short.   

So there are not enough coins.

The problem here is that you are trying to equate new crypto exchanges with some stock exchange or other you have traded on.
You can't take your experience on a stock exchange and assume that a crypto exchange will be the same. If that were the case there would have been no problems at Mount Gox.
You don't know what the arrangements are between the market maker and the owner of the crypto exchange, yet you are trying to tell us it will be the same as on a stock exchange.
You have no basis to make the comparison you have unless you know the arrangements.

Then you have no basis for your claim either!

There should always be enough coins because shorting is limited to the exchange if it exists at all.  The ones at risk of being liquidated are the holders of short positions.   The only scam here is the FUD you are trying to create.  

No. Think this through. Anyone who has coins at the exchange is at risk.
this is an additional risk to the normal riks in putting coins in an exchange.

If the exchange maintains 100% reserves there isn't any additional risk.   If a fractional reserve system is used then there is additional risk.   An exchange isn't a bank and it shouldn't be using a fractional reserve system.   If they are, then you have so many more risks than short selling that it really doesn't matter.    

Anyway if you don't like program trading, you are free to start your own exchange not allow it to happen.  No shorting so bots.   You can set most of the rules you want.    It still won't stop the pump and dumps and you will still have coins like AUR losing value over time.  

Ok...so despite all the problems (such as Mount Gox) and despite the lack of any visibility you want to  trust a crypto exchange and assume it has 100% reserves?  ???

Added in edit: This looks like a good development though.  :)


http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

You don't have to trust.   An exchange can easily prove it has 100% of the coins and procedures are being set up to make that happen.   Some exchanges have already stepped up and proved it.

http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

How did you you turn one exchange, into some exchanges???  

Don't you know anything that going on in the digital currency world?

http://www.coindesk.com/coinfloor-become-first-publicly-auditable-bitcoin-exchange/
http://www.coindesk.com/krakens-audit-proves-holds-100-bitcoins-reserve/

It essentially sounds like you are claiming that exchanges are naked shorting. Well, either the exchange itself or the exchange is allowing a select number of traders to naked short. As previously stated, the concept of a "hot" or "cold" wallet has nothing to do with this discussion.

Unless the exchange has some way of proving they hold 100% of user's balances, this is a possibility. Some exchanges are working towards proving their liquidity or may have already in some fashion.

It's the only conclusion I can come to that explains the evidence I see.
Why else would the computer programs be using strategies designed to be implemented after a short position is established?

I expect the market makers went and said similar kinds of  things they say to other financial exchanges.

"Give us the ability to sell short (in this case) and we will increase your volume ,and you will make more money."  

What evidence?  You have given no evidence.  So far the only scam here is the FUD you are trying to create.   

There is no need to try to make this personal.
I have outlined the specifics of the strategies that have been happeing in AUR.

If you want to try to make your case you need to refute them. At the moment you have not responded to them, The place for you to start is to go back, read them , and respond.
It's not that hard. It's easy...you just go back..read them...then take the time to investigate them,,,as I did , and explain why you agree or disagree.
The ball is in your court.
At the moment you are just digging your heels in, although you, from the evidence here (or lack of)  have made no effort, put no time into investigating, the claims I made. You got personally offended by something and now are determined to oppose what I have said without making any attempt to investigate it.
If you had investigated it you would have made a specific comment about what I wrote...

You have no experience with computer trading programs, as I have over several years on a daily basis. You have a small amount of experience with doing whatever your broker told you and siging whatever he told you to sign, without even understanding it.

Why are you even bothering to come back when you haven't even bothered to investigate what I said?

So you have nothing and are just making up nonsense.   AUR is going down because it was pumped up far higher that it should have been.   Now there is too much supply for the demand.  In fact is still probably priced too high.   Short selling doesn't make things just go down, it has to be covered and that causes buying pressure.   Anyway, no way that program traders would even be interested in something like AUR. 

BTC went through the same types of cycles as AUR.   So do you think it was short traders that cause those when BTC wasn't even trading for a dollar?

I have serious doubts about the sophisticated trading and market making you claim in these tiny alt coins, such as AUR. You do realize AUR's market cap is less then $1 million and has extremely low liquidity right? It seems to me that this is nothing more then a pump and dump, like many of the alt coins out there.

If this was the case, why wouldn't the exchange just naked short themselves? Why allow these "market makers" (using the term loosely here) to naked short, when they can do it themselves and make more profit?

Wrong, you are the one making the scam claims.   It is your task to back up your claims with evidence.   You haven't done that.


Again you are just saying things.   I have actually written a trading program and also used it.   Also you don't seem to have any experience with brokers.   The only time there was ever anything to sign was when opening up an account.  Even that wasn't consistent.

They may...but it's probably not their area of expertise

The whole thing is an experiment. The whole crypto landscape is changing so fast. Why wouldn't someone xperiemnt to see wht works...to see what will happen. To be there in place if the crypto world grows.

I agree. But you still haven't understood. This is exactly the sort of coin a shorter would like to target. The coin went too high. There is an unusual supply due to the airdrop.
This makes it an easy target for "shorters".
Think about it.

You have argued that it's not shorters targeting the coin but that other circumstances make the coin weak. But both can be true.
Why would someone adopt a strategy of shorting a coin if there was lots of demand and a short supply?

Doesn't mean there is any shorting going on.  I doubt it even can be shorted.   There never was enough value in AUR for shorting.

Air went to 0.15 BTC. ...
But you still don't get it. The whole crypto landscape is growing very fast. It makes sense to get in on the ground floor, to see what works.
People are doing this in every conceivable way.

Again you are the one making claims, you are the one that has to present evidence to back up your claims. 

Think about it, exchanges make hundreds of bitcoins through the trades...what do they do with all these coins they made thru profit? I'd say they manipulate the markets. Those 0.50% trading fees add up quick.

short selling is not the real danger for small investor...

im not happy when i loose from it...but im the first to do it when i get the chance...lol

the real danger for small trader is the whales... There is not anough people into cryptocurrency to control this

the whale gonna put a verry large sale to prevent price from going up...

the he would offer small amount of coins at small price(to drive the price down) and buy as much as they can...

then remove the wall(on the sale side) to allow the price going up...

and the coins they got at low price...sale it at top price


we need way more people mining and tradind to stop that

the reason i cant do that is...im too small...lol...people just buy off my wall...

i get your point but...

if you spend time to develop a trading site and take the responsability that goes with it...

you deserve to make money...its just fare

if you want you can start your own...

im happy to pay the fees for the service thoes sites provide.