I would also like to see the avoidance of ad-hoc clearing, I see a few options:

1. Do nothing.

2. Guarantee no unscheduled clearing, with no other changes.

3. Guarantee no unscheduled clearing AND increase the frequency of scheduled clearing (e.g. to twice per day).

4. Allow unscheduled clearing, but with additional controls, for example requiring a minimum spot price time above/below threshold price range before clearing is triggered, with plenty of notifications in advance etc.

5. Others... let's hear em

Scenario:  Bitcoin has been widely and globally adopted as the primary trade currency.  But it didn't solve everything, and somewhere a country in the midst of some tumultuous situation is either voluntarily or forcibly severed from the wider internet (easier said than done, but let's assume it is possible).

Does this result in a forked blockchain within which all coins can effectively be spent twice (once in each zone)?

Assuming forks could eventually be re-merged with the larger overriding the smaller, am I correct that double-spent coins on the smaller fork would be invalidated, with recipients incurring the losses as received coins disappear?

How would/will such a scenario be managed?  

I'm sure this scenario will have already been raised so apologies if duplicating.

Hi Chuu,

I think I get the interface, here goes:

You want to hedge, arbitrage, or simply open a leveraged position against BTC price changes.  ICBIT offers leveraged trades through "futures" contracts, which are exchanged as a quantity of units between buyers and sellers.

CONTRACT VALUE

Each Unit represents $10 worth of BTC at the specified price, so:

   > 1 unit at a trade price of $100 represents $10 worth of BTC, or 0.1 BTC in contract value.
   > 100 units at a trade price of $100 represents $1000 worth of BTC, or 10BTC in contract value.

The current trade value of each open futures instrument is not pegged to the underlying spot price, but is instead based on speculation as to what the final settlement value will be.  For this reason it is not guaranteed/expected to rise and fall as the spot price does.  Final settlement value is determined on listed the day of settlement for each instrument (currently 14th Apr, 14th Jun and 16th Sep) and is based on the spot price of BTC/USD on that day.


OPENING A POSITION

Use the Buy/Sell buttons if you want to place an order with specific price conditions, if no corresponding offers exist at the specified price, then the order will enter the order book and become visible to others as an active bid/ask, if another user places an order which meets the specified price, the order will be filled and contract positions activated.

Use the Buy/Sell at Market button if you simply want to purchase at the most favorable currently available price.

To open a position, the following key fields must be populated.

• Quantity  = The number of $10 chunks of Bitcoin you want to bet on.
• Price       = The price you are prepared to buy/sell at.
• Amount   = Calculated field displaying the amount of underlying BTC you are effectively betting on (Quantity * 10 / Price).
• Margin    = Calculated field displaying the amount in BTC which must be "reserved" in the account to cover any potential loss incurred against the position (15% I believe).

CLEARING

The nature of the contracts is such that ongoing profit or loss against open contracts is re-distributed once a day in a system wide clearing process (rather than only being realised when a position is closed).

During Clearing all contract positions are evaluated and the latest trade price is used to determine the relative gain loss between the buyer and seller of each open contract. This difference or "variance" is then transferred from the loser to the gainer, the contract remains active and will be re-evaluated at the next clearing session.

So if trade prices increase from 100 to 110, then the variance will be ((100*10)/100)-(100*10/110) = 10 - 9.09 = 0.91.  
     > Prior to clearing, the sellers account would show an unrealised loss of 0.91BTC, and the buyer +0.91BTC.
     > At clearing the loss of 0.91 would be deducted from the sellers account, and credited to the buyers account.  
     > After clearing:
               > "Unrealised P/L" balance reverts to 0 for both buyer and seller.
               > "Execution Price" for the open position is reset to the trade price upon which the variance adjustment was made.
               > "Margin" will also be adjusted (again, not sure of the precise margin calculation).

So, open a position of 100 units at around $100 and sell after a rise/fall of say 10 bucks, you are looking at just under 1BTC profit/loss (excluding fees).

Clearing currently occurs at 20:00 GMT.

RANGE

Another feature of the contract format is the use of trading range controls, an upper and lower limit on each instrument beyond which trading cannot occur within the current (24hr) session.  The range for the session is set during clearing as the latest trade price plus or minus 10%, so if the last trade price was 100 at clearing, the range for the following session will be set to 90 - 110.

This appears to be a safety feature to prevent exceptional price swings, and limits risk exposure to traders, however the rapid appreciation of bitcoin has on many occasions led to prices quickly reaching threshold levels, resulting at times in cessation of trade as no-one is prepared to sell within session range threshold.

FEES

Fees are calculated in BTC and are chargeable at the point of contract purchase/sale, therefore each position will incur fees twice during it's lifespan.  Fees are charged according to the quantity of contracts being bought/sold, so whilst the fee is not displayed prior to purchase, it can be calculated by multiplying the quantity by the fee (and double if you also need to consider closure fees).

Actual fees are listed on the instrument reference pages (e.g. https://icbit.se/BUU3) and vary per instrument, with lower fees on contracts which are furthest form settlement, current fees as of 01/04/13 are:
      > Apr 2013 (BUJ3): 0.003 BTC / contract.
      > Jun 2013 (BUM3): 0.002 BTC / contract
      > Sep 2013 (BUU3): 0.001 BTC / contract

Note - for a 100 contract trade against the most expensive instrument, current fees for contract open AND close are 100x0.003x2 = 0.6 BTC (also note these fees are incurred by both buyer and seller, so total commission to ICBIT is 1.2 BTC).  Given the rising value of Bitcoin, fees are becoming prohibitive to some smaller margin trades and are likely resulting in wider bid-ask spreads, and Fireball has suggested a reduction in fees may be in the pipeline.

MARGIN CALLS AND FORCED LIQUIDATION

https://icbit.se/margincall

Already spelt out pretty well on the ICBIT site, but many people still ask this, so here is the text:

"Every user's balance is continually checked by the trading engine if that user has any open positions. Margin call (forced close) is issued when his balance (actual money in the account plus total variation margin) is less than or equal to 75% of the total maintenance (initial) margin necessary to keep the positions.

If there are no respective bids/asks in the order book, the worst case scenario begins. The trading engine will go through users holding counter positions and forcibly close them by such a price that the user's balance who has the loss never goes negative."

@Fireball - did I get it about right?

Correction is used to refer to a reversal of recent (usally large) price movement, typically used in reference to tradeable asset prices (stocks, bonds, commodities etc, and yes currency exchange rates).  So from todays price of $93 per bitcoin, a fall back to say $80, or less, might be considered a correction if it were to last more than a few hours/days.

Any investable asset class experiencing the price appreciation we have seen with bitcoin (>500% in 3 months) will have people declaring an imminent price "correction", and they may well be right - but nobody can be 100% sure, that is the nature of investment and risk.