Spread is inclusive of all fees except those required to get your money in/out of Bitcoinica. Also, slippage.

Both wrong. I can's speak for proudhon, but some of us talk shit about bitcoin because 1) It is entertaining to watch the bull insanity link arms in the face of reason, and 2) to be the face of reason for the few that will bother to listen.

That's because the few people posting about their automatic liquidation knew what to expect with a service they were learning about. They might not be experts in margin trading, but that's why they're trying it out.

The real reason you're seeing what you're seeing, Holliday, is that most bulls around here love to hype price increases while claiming they're just "supporters" of the currency, not speculators. Probably because they've lost a ton in the last few months. And they know short-selling puts downward pressure on prices, which hurts their (slim) chance to recover their losses.

Basically, the existence of Bitcoinica is a problem for recent losers in the crash from $30 to $3, simply because it offers the option to short. In addition, true believers in bitcoin want to see more price stability, and Bitcoinica pulls more speculators into the mix. While that might not correlate exactly with increased volatility, it's attracting the "wrong" kinds of people to their revolutionary currency.

I don't know about you guys, but I made plenty of cash manually liquidating my short position since $6, and I'm brand new to margin trading. Quit with all the complaining and take your losses like adults.


You guys are such idiots. It's like you thought mined coins were free, or something. And working for 2BTC/hour was a good deal.  

You can say this as many times as you like, but unless we can actually see your exchange behavior, there is no way to tell if you're being honest.


Oh, passion. I guess that's good enough for me. (It's not.)

Don't get me wrong, I've been impressed with your service, and I want to trust everything you're saying. But your words are not enough for many who have a lot invested. You provide zero transparency except for your word. My experience with bitcoinica has been exemplary. But nothing stops you from turning on a dime and run for the money.

If I were you, I would probably give up trying to defend Bitcoinica here. It's a waste of your time. Enjoy your current business, and if you feel like trust is a problem for attracting new business, become more transparent with your operations.

I had trouble today withdrawing USD to code, but Zhoutong was on it instantly. I would suggest that if you have issues withdrawing at all, put in a ticket. He's very responsive.

Lol. You've got to be kidding me. You really think they'll enforce that for anything but to increase charges for drug distribution? There is no way in hell they'll risk a massive court battle trying to shut down craigslist, or tell people they are not allowed to have a garage sale anymore. That has to be the dumbest support for projecting bitcoin demand I've ever seen around here.

[/derail]

I know. I'm with you. And the more unidirectional customer positions get, the more trouble he will be in. This is why you assume you're playing with fire in Bitcoinica. This, and the fact that probably 10% of transactions happen on the actual exchanges, we can't be sure of anything that's happening behind the scenes.

Despite this, every business request I've had with Zhoutong has been extremely professional, resolved to 100% satisfaction. If all we have to go on is his personal reputation since beginning on the forums, he's in a great spot, from my opinion. I would like to trust him.

Well either Zhoutong loses and short-sellers win, or vice versa. They're not going to lose at the same time.

Dude, you having a conversation with yourself? Summarize it all and post in a new thread.

You sound like the crazy lady down the street (though I like where it's all going).

You're welcome.

You are really, really, a COMPLETE idiot.

https://bitcointalk.org/index.php?topic=42267.msg517128#msg517128

"Depositing Bitcoins is equivalent to opening a long position of BTCUSD." -zhoutong

He deposited bitcoins, and held a long position, while prices fell. He then got a margin call. Long position. No shorting. None.

I know what I'm doing. I also know you are a complete, complete idiot.

I feel sorry for OgNasty talking about things he has no clue about. You know he's just going to keep posting his idiot position until he loses everything.

There is no shorting if you deposit BTC. You automatically take a long position if you deposit BTC. You're welcome.

If it survives. Take a look at the altcoins. 51% attack is an unavoidable feature. So is low market cap with many eyes (a scenario that did not exist last year). Things have changed, Technomage, and projecting the irrelevant past onto the new future is a losing proposition.

But don't take my word for it. Invest!

Now you're sounding like Atlas. You don't "market" a good currency. If it works better than current options, it will be adopted. The other way is to command it into existence. But you need a monopoly on violence to make that work.


Potentially. As in, if its fundamental problems were solved, it has a few nice features. The point is I can't see a moment where these problems are ever outweighed by its nice features. The first two bullets imply the problems with the last. The third is its own self-defeating issue.

I can't say with any certainty that the third could happen, but I think the lawsuit in France is a good starting indicator about who will care with a large BTC presence. I can't say with certainty that the fourth will happen, but all of the altchains are a nice starting indicator about what could happen with low market capitalization.

This is where I wonder more and more about the cognitive disconnect people have about bitcoin. There are so many pumpers around here, lamenting short-sellers. In any normal market, we would all be saying "great!" to short-selling; it's responsible for the revelation of true prices in the face of overblown hype (longs being the opposite in terms of excessive pessimism). However, the negative sentiment towards shorting around here tells me that people really do know (or at least feel) the risks of low USD/BTC exchange rates: attack vulnerability, failing exchanges, and massive market manipulations by average people. It's kind of like everyone knows that downward price pressure really increases the risk of full-blown failure, and so the opposite "it will never die, (screw short-sellers!)" mentality has to surface for self-preservation by long-position holders.


Well, you're not totally right on that. Effective short-term shorting requires low volatility, and as instant-as-possible trading. Neither of those exist for BTC. In addition, the most convenient way to short is Bitcoinica, and they are a brokerage, so your activities there are not reflected immediately in the exchanges. They could be aggregating all kinds of movements in whatever direction their hedging algorithm dictates at the moment through many small trades, or single large ones.

With that layer of opacity (and market power) between your trades and the exchanges, it's a difficult argument to say that shorting BTC really is improving fundamental price discovery. Mr. Z can state his intentions all he wants, but the fact is he can act as a market maker at any point.

Again, I think most people at least feel this, if not know it explicitly about bitcoin: falling prices are a serious risk for the sustainability of bitcoin.

Yeah, we don't disagree, besides the silly attempt to suggest that tulips were ever conceived of as an actual currency. I guarantee there would be riotous applause around here at the suggestion we all receive our salaries in bitcoin.

In terms of Bitcoin's ability to store value (because that's one thing a currency is for), it has sucked, royally. I don't know if it will ever stabilize, but I see some serious hurdles for wide adoption:

• Volatility has to disappear for a long time before non-speculative people and merchants will trust it for longer than a couple days.
  
• Purchase into and out of BTC needs to remain easy and cheap. It's currently not, even with MtGox. Takes a week, minimum.
• With widespread adoption, you will attract regulatory attention. With attention, you'll get conflict. The US gov't does not want a competitor to the USD that can't be manipulated.
  
• There is a realistic market cap lower limit, given Bitcoin's publicity. Undercapitalization leaves it highly vulnerable to market manipulation at best, attack at worst.

Does anyone bother to even think about these things?

It's already been said, but how can you trust anything about the order book, considering how long you've been here? There is absolutely no reason to believe anything of substance is sitting in that wall.


And long. The direction of the position isn't important here; it's holding on margin. Those swings + spread + how high you let your maintenance get is what makes volatility so dangerous here.

I'm feeling nice. If you bought .5 BTC for $15 in June, you could have bought a DVD with that. If you didn't, and decided to wait around until today, doing nothing with your BTC but sitting it or spending it for goods, or selling goods for BTC (i.e. not ever worrying about USD or fiat dollars or exchange prices or anything), you wouldn't be able to buy a candy bar for .5 BTC. You might not care about the USD/BTC exchange rate, but everyone else does, because it's the only way to compare its value to the goods it can buy.

tldr; If you do nothing with your bitcoins but use them, in June you could get a DVD, today you could get a candy bar for the same exact amount. You did nothing but lose. I promise an 86% loss in value is way, WAY beyond any transaction fees you care about.


Oh, I know.

Agreed.


When you can buy a DVD for .5 bitcoins, and then you can't even buy a candy bar for .5 bitcoins, you've lost "money" (if you could even buy those with bitcoins). Forget USD. If you never switch out of Bitcoins, you will have lost the ability to buy the same things you could have in June by doing nothing but just sitting there with your bitcoins. Seriously, this isn't a hard concept.

But I understand this is what happens when you get "newcomers" who understand nothing of the history of currency, and why it is the way it is today. If you were around in the days (or at least read about them) where discoveries of giant gold caches devalued your currency so much you didn't know what the price of dinner was, you'd understand. If you ever watched speculation destroy markets and lives, you'd understand. But you don't, and you're taking an insanely complex financial system evolved to limit the damage of non-fiat currencies, undercapitalization, etc. and dumping it on BTC without any knowledge of why we have what we have.

I think the awesome part of bitcoin is that it has really surfaced what the whole point of fiat, regulated currency, exchange regulation, reversibility, and non-anonymous transactions are. Sad to say that it had to be all of bitcoin's failings to make it great.

Grod, there is a reason people are unable to grasp your argument. They don't understand the first thing about the relevant calculations for profitability. A large part of this is combined ignorance and hubris; I am almost tired of being infuriated by the obscene lack of basic understanding of profitability. The other part is just plain hubris. They may understand, but they want to believe so badly, they'll happily ignore reality for it.

Technomage, I've seen you write great stuff, in terms of technical understanding. But you're cherry-picking to suit your desires.