I would be surprised if anybody who actually understood Bitcoinica would use them.
The basic problem is that he doesn't have the capital to hedge a significantly imbalanced customer position, at which time Bitcoinica becomes a bucket shop where he is your counter party... add a large move to that and he goes bankrupt (and you with him).
A significantly imbalanced unhedged position can be entered directly: by people opening too many new positions, or indirectly: by people closing existing positions, or by people withdrawing funds. That this doesn't happen and wipe you out is left entirely to chance.
Here's my proposition zhoutong: for a 10,000 BTC consulting fee, I will tell you the solution to this that will reduce the chance of Bitcoinica's collapse to 0. (Payable in advance... and that's at a discount because it makes me smile that a 17 y/o is parting these fools of their money.)
So we have been running the service for over 3 months and we get over 1,800 customers. The redflag issue has proven to everyone that Bitcoinica is not a bucket shop. I wonder how a guy with completely no understanding of this thread can charge 10,000 BTC for consultation. i'm glad you turned off the ignore button. now would you please answer my legitimate questions? |
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Another big dump, spiked down to 4.65 Hope you guys are being careful with your leverage.
Zhoutonging works both ways  |
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but how can good questions lead to FUD? they can only lead to increased transparency and knowledge for all.
Preconceived notions. I agree with a lot of what you are saying. At the same time, I'm rooting for any Bitcoin business that manages to stick through the rough times and succeed. so am i. there are not many more than i who have supported Bitcoin in terms of time spent, posts made, and money invested. i want Bitcoin to succeed and feel an obligation to make sure good businesses serve the community. Is Zhou out to ruin us all or is he just trying to provide a service that wasn't available before?
i don't know what his intentions are. he seems legit and interested in making his business run. but i see it coming at the expense of others who are being liquidated. short sellers being liquidated in a red flag event b/c they couldn't cover even if they wanted wasn't serving the community was it? he only just now addressed that.
He might fuck up. Gox did, right? As long as he doesn't run off with the customers deposits, good.
Maybe his service promotes a lower Bitcoin price? Bet against it if you don't believe it.
i think short selling has hurt the community as a whole. just my opinion.
Isn't Bitcoinica just matching longs with shorts and vice versa? If there are no opposing positions, you can't take the position you desire.
no. he's already said they don't always hedge and it sounds to me that now that they're guaranteeing short covering even in red flag events Zhou is going to be the one taking opposing positions to customers.
In the forex, this doesn't happen, because it's so massive there is always someone else to take the opposing position.
TL;DR
If you don't like the service, don't use it.
i don't and i won't. doesn't mean i can't ask tough questions to help others does it?
P.S. Doc, I enjoy reading your posts. But lets stick to the positive. If Bitcoinica is going to fail, give a warning and move on. Let's focus on the positive.
i have no idea whether if and when they will fail but if enough ppl get discouraged by skewed rules he most certainly can. asking tough but good questions isn't negative; in fact its positive. poking holes in his model is helpful information. he should be thanking me for putting him through the ringer now before some coalition or large player comes thru and starts really playing rough. i am part of the market speaking to him and trying to teach him something useful. in fact why don't you want to know the answers to the questions i've posed? they would help you trade better and thats what we want. |
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No wonder cypherdoc has almost 3k posts, he accounts for almost half the posts in this thread  All hail cypherdoc, king of FUD! if i'm spreading FUD, why don't you step up and answer some of my questions in detail and prove it. i'm just trying to sort out whats going on here so everyone understands what's happening. To prove you are spreading FUD RaggedMonk would only have to prove that you caused fear, uncertainty, or doubt. It has nothing to do with the answers to your questions. instead of just accusing me of FUD perhaps he should step forward and answer what i think are legitimate questions. maybe he'll realize they are good questions? they can only lead to increased transparency and knowledge for all. perhaps you should answer my questions since i can't seem to get exact answers from Zhou. and that by itself should tell you something. |
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Hope Mtgox and TradeHill will bring more funds when they start their future and option trading.
I wish dearly that MT Gox would let us do Stop Loss and Limit Orders, i.e. have Buy and Sell orders transacted for a specific market price. Is that hard to implement? It already does |
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They can't. They are relying on the thief making a mistake. That is why MagicalTux doesn't want to comment, other than to say they won't respond to e-mail. Silence in itself is not incriminating either, but prevents the thief (if the the correct account has indeed been frozen) from making further mistakes.
give me an example of a mistake at this stage of my scenario that would implicate the owner of D. |
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As long as the random object was really worth about 20BTC, that would be plausible deniability IMO.
but D could just make anything up like "i sold him an old radio and i didn't bother with a receipt". edit: i guess what i'm getting at is this; as long as there's one address btwn where the stolen coins are sent and the address at mtgox, how can the authorities prove anything? |
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just theoretically for us technically curious; A>B>C>D, if coins are stolen from A, get transferred to B, then end up at mtgox in D, how can you prove B and D are related?
am i even constructing this question correctly?
Don't follow addresses; follow the money. If the same, exact amount moves from address to address (especially if it is a weird one), it would be hard to come up with legitimate transactions to explain the funds. To truly steal bitcoin and disappear without a trace, you need to not spend them. Not quite as fun. what if 20 btc moved from A>B>C>D and the owner of D, when questioned by mtgox and the police, says he got those 20 btc from a guy off the street (whom he never bothered to identify) who bought a random object from him. |
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Just for information, we have until now shut down only a couple of accounts for stolen bitcoins, after confirming whoever stole the coins was indeed the owner of those accounts and confirming with law enforcement agencies in charge. There have been no suspended accounts for stolen bitcoins in the past 3 months.
can u elaborate a bit on how u make these confirmations? Unfortunately I cannot give much details on this part, however I can confirm the risk of false positive is really low. One of the common points between all the blocked accounts so far is that when we contact the owner of the account by email, we never get any reply. just theoretically for us technically curious; A>B>C>D, if coins are stolen from A, get transferred to B, then end up at mtgox in D, how can you prove B and D are related? am i even constructing this question correctly? |
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Just for information, we have until now shut down only a couple of accounts for stolen bitcoins, after confirming whoever stole the coins was indeed the owner of those accounts and confirming with law enforcement agencies in charge. There have been no suspended accounts for stolen bitcoins in the past 3 months.
can u elaborate a bit on how u make these confirmations? Unfortunately I cannot give much details on this part, however I can confirm the risk of false positive is really low. One of the common points between all the blocked accounts so far is that when we contact the owner of the account by email, we never get any reply. thats interesting. i guess there's no harm in blocking someones acct if they're not going to complain about it. |
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Just for information, we have until now shut down only a couple of accounts for stolen bitcoins, after confirming whoever stole the coins was indeed the owner of those accounts and confirming with law enforcement agencies in charge. There have been no suspended accounts for stolen bitcoins in the past 3 months.
can u elaborate a bit on how u make these confirmations? |
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I think that sooner or later we will start seeing an influx of fiat into the bitcoin community from people whom wants to protect the value of their savings/fortune/investments by hedging. How big a share invested in bitcoins is fair to keep from that point of view?
For now, i would consider bitcoin both volatile and speculative. Keeping only a small share of the high risk/high profit part, which usually is rather small in itself, as BTC would make sense. There is also another part of a complex hedge ment to protect the fortune from total fiat/finacial/stock collapse. Would it make sense keeping BTC in that part too?
If you will, please make a suggestion of how big a share of bitcoins one should hold and make an argument for it. Please dont spam this thread with suggestions without reasoning.
i would estimate i have about 10-15% in Bitcoin. if you poll various gold pundits their recommended % range from 5-40%. some have everything in gold like Eric Sprott. that's way to much and his silver holdings have taken a severe beating. splitting the difference in a speculative asset with great potential like Bitcoin at the % i recommend seems reasonable. i honestly think its going way beyond $32 to gold parity at least. as i've made known, i dumped 95% of my gold and silver right at the top of both in May for silver and August for gold. i honestly don't think they're coming back and i'd rather put those USD's into Bitcoin. |
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i stopped reading after the 2nd paragraph in which you mention "digital drugs" preferentially over other more useful products to be bought with Bitcoin. why does everyone have to always first mention this usage?
"In April 2011, Forbes Magazine’s Andy Greenberg wrote an article describing the qualities of Bitcoin: it cannot be forged or double-spent, controlled or inflated by any government; it is not impeded by international boundaries, and some digital drug-dealers have started accepting it."
even Greenberg in the article cited mentions other uses before talking about drugs. in the paragraph immediately preceding the mention of drugs he says this:
"About $30,000 worth of Bitcoins change hands every day in electronic transactions, spent on Web-hosting, electronics, dog sweaters and alpaca socks."
Good point. Is this better?
fair enough. thanks for putting forth the effort to make this document.
In April 2011, Forbes Magazine’s Andy Greenberg wrote an article describing the qualities of Bitcoin: it cannot be forged or double-spent, controlled or inflated by any government, it is not impeded by international boundaries, and has a geek-friendly economy of $30,000 per day, and some digital drug-dealers have started accepting it.
I don't want to hide the fact that some people are using Bitcoin for illegal purchases. It was a major component of Greenberg's story. I don't think it needs to be the dominant point, but I don't think it should be excised completely. fair enough. thanks for putting this together. |
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I will, once the price is a little more realistic again! If I bought now, I'd just be giving my money directly to you, then be on the losing side once again when the price falls. I won't say it's not torture, but I made 95% profit already, and I'm happy with that. I'll wait, I have faith in the data... i guarantee you won't be buying them from me. i already made it clear i was holding for much higher prices. seriously; i don't trade. Buy and hold isnt a smart trading method. But whatever. thats the prevailing wisdom in todays stock mkt. but i don't think it pertains here with Bitcoin when there's so much potential. that doesn't mean you're not smart enough to trade the swings but for me its just not worth the risk of being left behind. |
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I will, once the price is a little more realistic again! If I bought now, I'd just be giving my money directly to you, then be on the losing side once again when the price falls. I won't say it's not torture, but I made 95% profit already, and I'm happy with that. I'll wait, I have faith in the data... i guarantee you won't be buying them from me. i already made it clear i was holding for much higher prices. seriously; i don't trade. |
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 Supplies on MtGox will be increasing from today onwards, I'll wager.  You can see that on the 31st, the daily bid volume briefly exceeded the ask volume, but it immediately went straight back to the asks greatly exceeding the bids. I honestly cannot understand why so many of you people are buying when it is clear that there is some major cashing out going on at overinflated prices. i know this must be torture: up 22% from 4.3. c'mon over to the good side mj, you're a bull  |
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i think most asks will retreat to much higher ground than that before selling. i know i would. |
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Here's my question for Bitcoinica
Hypothetical: the majority (let's say 90%) of bitcoinica users are long in the market (buying) and are leveraged close to the max (let's say 4 to 1).
From where do the currency funds come to fill those leveraged orders?
Same hypothetical question for large HEAVILY LEVERAGED sell orders that come from the majority of bitcoinica members?
Could you clarify that you do indeed have deep pockets with lots of money and bitcoins to fund these scenarios?
If you don't, then what mechanisms are in place so the market can't leverage past the point of no more funds?
If there are no mechanism and limited funds then the only other option would be for a fractional reserve exchange,
in that case it would be an ethical choice to clarify it to your users.
What does this mean for bitcoinica's users if there are no mechanisms and limited funds?
It means that at some point the leveraged buys or sells do no influence the market the same as a 1:1 buy or sell.
Leveraged buys and sells would merely be "placing your bets" on what way the market will go without really participating.
I would really appreciate if you could address all this.
We can be a half bucket shop and half brokerage, but obviously that's not the right way. Either way will result in criticisms, but I did the best I can do, and the right thing. Why did you repost this exchange without actually responding to the questions? Everyone always claims to do their best and to have done the "right thing". Claiming best effort doesn't establish the adequacy of effort in the eyes of others, and whatever you may have meant by the "right thing" remains completely undefined. For example, not getting your nuts cut off as a warning from a loan shark could be very right for you, but the outcome one way or the other might be of little interest to anyone else. Are you running any of this by your lawyer before you publish it? You might at least get some guidance in avoiding inadvertently digging your operation even deeper into a credibility hole than it already is. You must be new here. True. So far it's just like driving by a serious auto accident, as you approach you can see from the rising smoke and flames that the carnage must be terrible, but you still end up taking a good long look as you pass by. In this case it's not so bad, as it's only another flaming clown car in the internet circus. It will be interesting to see the total number of responses to the poll question once a day or so has passed. Was bitcoin a bigger deal a few months back? So far it looks like it is going the "death by a thousand idiots" route, only that thousand is probably more like a few dozens, tops. Some of the press coverage creates the impression that bitcoin aspires to be some kind of serious alternative or business vehicle. To date the best business idea I've run across on this forum is bringing Mexican style kidnapping for profit to the U.S., and you sure don't need bitcoins to pursue that. does this look like one day wonder to you? thats one helluva lot of burning cars: http://www.blockchain.info/nodes-globe?series=48hrs |
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Never?
Why it should implode? Especially now that it is having huge success?
The fact that you cannot long what you want on them doesn't means they are "broken". It's like saying your internet connection is broken because you are limited in speed and you cannot download faster. Or the hard disk is broken because it only allow you to put 2TB of data on them (it's a 2TB one of course)
You obviously speak from a rich set of metaphors built from a broad life experience. I am awed by your attempt at reasoning. Awed. Never mind that such an act by a licensed broker-dealer in the U.S. or U.K. could result in shutdown by the relevant regulatory agency. Of course, from the viewpoint of an investor in Bitcoinica it could certainly be construed as a technical act of bankruptcy, which would give them some out. I don't know what the equivalent legal requirements would be in Singapore, would the operators of Bitcoinica be caned if they couldn't pay off the right officials? You seem to be confused as to what and whom you are dealing with. This is a BITCOIN forum...you aren't going to find many people to back your demand for regulation and government nannies to protect your pocketbook. What is the point of this thread? Do you want to be cool and troll the hell out of Zhoutong like cypherdoc? Cause you aren't very good at it... If you don't like it, make a better one. No one gives a flying fuck what you think, our only concern is what you do. I think ppl are learning alot from the pointed questions i'm asking, the exploits i'm proposing, and the liquidations (aka ass whuppings) i caused from that 3.5 to 3.9 ramp i executed 12 d or so ago. if thats trolling, the continuous stream of updates (aka changes in the rules) being produced by Zhou don't support your accusation. |
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Can anyone explain these spikes? Why is someone pushing the price down in a spike when he could clearly have sold everything at >5.1 if he had done so in 4 or 6 tranches of less than 5000 instead of one of 20K? It's not even manipulative - the price just bounced back like a rubber ball. That guy just gave away $2000 or so.
thats Bullish. |
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