This does not do much to explain the common case at bitcoinica, as you conveniently choose scenarios where Bitcoinica always has a higher balance than the customer's trade, (and the customer uses 1:1 margin).
For example:
If Bitcoinica has a $1000 balance, and the customer executes a $1000 trade at 10:1 margin (which Bitcoinica allows), then bitcoinica does not have the funds available to fully equalize this trade against mtgox.
The trade would then require $10000 but bitcoinica only has $1000. If that trade is very profitable, Bitcoinica will have to pay the customer his earnings, or prevent him from liquidating his position until it is either not profitable, or until another customer opens an opposing position.
In all of your scenarios you say "Bitcoinica has lost money! Wrong!". It is in fact very possible for Bitcoinica to lose money -- the fact that you conveniently avoid this scenario is rather suspect.
precisely. which brings up another objection; for those with accts at Bitcoinica and who were not privy to Zhou's "alert" last nite about his internal market imbalance and his "recommendation" to sell or go short, how is that favorable to them? giving a select group "insider" information is wrong. |
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if i were to have designed Bitcoinica from the beginning, i probably would have only allowed funding in USD's upon which you could then buy, sell, or short bitcoin just like regular brokerages do with their paper assets.
by allowing btc to leverage up more btc, its almost like building a derivatives tower on paper. the volatility kills you and the demand for USD is just too great.
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We are talking about running out of USD reserves.
that means you're broke. Nah, it just means existing shorts are screwed unless they get out (which they probably can't all do) and no one with half a brain will go short until this is fixed. We'll be back to no shorting and we'll bubble again unless they can come up with the USD reserves to cover all shorts. I have removed all my funds from Bitcoinica until this is sorted out. This is a temporary issue and we have already resolved this. As I understand it, you will not use the BTC belonging to long positions to allow shorts to cover themselves but you will allow the USD belonging to the short positions to allow longs to cover themselves. If this is incorrect, please explain where I went wrong. If it is correct, it is an unresolved issue. lets clarify terms. "cover" means "buy to cover" and is a term reserved for short positions, not longs. longs don't get "squeezed" per say but shorts do. |
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Alright, your words proved to me that you didn't understand Bitcoinica since day seven (not day one).
well, that certainly may be so since its so hard to tell exactly what you're doing behind the curtains. but nevermind me. i'm not so sure you know what you're doing; otherwise why are there so many problems (revisions to the code and reversing of trades) and why no USD reserves? what was the magic solution, BTW? |
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We are talking about running out of USD reserves.
that means you're broke. Nah, it just means existing shorts are screwed unless they get out (which they probably can't all do) and no one with half a brain will go short until this is fixed. We'll be back to no shorting and we'll bubble again unless they can come up with the USD reserves to cover all shorts. I have removed all my funds from Bitcoinica until this is sorted out. Zhou claims that when ppl buy or sell btc on bitcoinica he just buys or sells for them on mtgox and collects the fees on the pass through. what did he do when all the shorts shorted btc on bitcoinica since mtgox doesn't allow shorting? sounds to me he exposed himself by actually buying the shorted btc with his USD reserves? |
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We are talking about running out of USD reserves.
that means you're broke. |
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If someone put in a long position for 10K BTC at $3.50 and Bitcoinica bought 10K BTC at $3.50, as long as no one is putting in a short position to counter that they will not sell the 10K BTC that they purchased. The reason they were liquid before is because lots of people were taking up contrary positions, but if everyone starts going the other way then they would stop allowing people to go long until/unless they get more actual USD with which to buy additional BTC.
Now, that doesn't explain why someone who took a short couldn't liquidate at a loss, which is the more confusing/problematic issue at hand. If Bitcoinica is out of USD because everyone goes long and I come along and put in a short at $4.30 or whatever, then if I chose to liquidate that short at a loss right after taking the position there's no reason to not allow that.
If you liquidate your short position, you are still buying. It's the same as opening a long position. Practically, this is a problem, and I don't really know how real world brokerages resolve this problem. I only know that some forex brokers actually trade against their clients. This is the real issue, and has unfortunately been drowned out by cypherdoc. I believe it solution is to treat a short position like you are treating a long position.... You won't sell the bitcoins out from under the longs, don't sell the USD out from under the shorts. They are effectively holding dollars, and you sold their dollars. he will have to if the price keeps rising. |
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy and when you hedge on mtgox puts you into a losing position. We delay the execution of all orders by 1-2 seconds. When the orders are executed, we always have the latest price. if this were the case, you wouldn't be having reserve problems with btc and you'd let those buys and short cover orders through. if you had 10,000 in stock you'd always have 10,000 in stock with perfect execution and hedging. but you don't so there is slippage somewhere that you're telling us. If someone put in a long position for 10K BTC at $3.50 and Bitcoinica bought 10K BTC at $3.50, as long as no one is putting in a short position to counter that they will not sell the 10K BTC that they purchased. The reason they were liquid before is because lots of people were taking up contrary positions, but if everyone starts going the other way then they would stop allowing people to go long until/unless they get more actual USD with which to buy additional BTC. Now, that doesn't explain why someone who took a short couldn't liquidate at a loss, which is the more confusing/problematic issue at hand. If Bitcoinica is out of USD because everyone goes long and I come along and put in a short at $4.30 or whatever, then if I chose to liquidate that short at a loss right after taking the position there's no reason to not allow that. If you liquidate your short position, you are still buying. It's the same as opening a long position. Practically, this is a problem, and I don't really know how real world brokerages resolve this problem. I only know that some forex brokers actually trade against their clients. well at least you admit, Zhou. they co-locate onto the exchange to limit slippage. This has nothing to do with slippage. We are talking about running out of USD reserves. and thats a problem in the sense that the shorts can't get out if the price keeps rising. |
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy and when you hedge on mtgox puts you into a losing position. We delay the execution of all orders by 1-2 seconds. When the orders are executed, we always have the latest price. if this were the case, you wouldn't be having reserve problems with btc and you'd let those buys and short cover orders through. if you had 10,000 in stock you'd always have 10,000 in stock with perfect execution and hedging. but you don't so there is slippage somewhere that you're telling us. If someone put in a long position for 10K BTC at $3.50 and Bitcoinica bought 10K BTC at $3.50, as long as no one is putting in a short position to counter that they will not sell the 10K BTC that they purchased. The reason they were liquid before is because lots of people were taking up contrary positions, but if everyone starts going the other way then they would stop allowing people to go long until/unless they get more actual USD with which to buy additional BTC. Now, that doesn't explain why someone who took a short couldn't liquidate at a loss, which is the more confusing/problematic issue at hand. If Bitcoinica is out of USD because everyone goes long and I come along and put in a short at $4.30 or whatever, then if I chose to liquidate that short at a loss right after taking the position there's no reason to not allow that. If you liquidate your short position, you are still buying. It's the same as opening a long position. Practically, this is a problem, and I don't really know how real world brokerages resolve this problem. I only know that some forex brokers actually trade against their clients. well at least you admit, Zhou. they co-locate onto the exchange to limit slippage. |
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy and when you hedge on mtgox puts you into a losing position. We delay the execution of all orders by 1-2 seconds. When the orders are executed, we always have the latest price. if this were the case, you wouldn't be having reserve problems with btc and you'd let those buys and short cover orders through. if you had 10,000 in stock you'd always have 10,000 in stock with perfect execution and hedging. but you don't so there is slippage somewhere that you're telling us. which is precisely why he can't buy any btc on mtgox to hedge sales to you. if you're trying to cover a short position but can't and the market goes to $8 tomorrow, you'll be liquidated. |
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ok Zhoutong, prove it to me.
OPEN UP ALL BUYING AND SHORT COVERING RIGHT NOW.
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy and when you hedge on mtgox puts you into a losing position. We delay the execution of all orders by 1-2 seconds. When the orders are executed, we always have the latest price. Which is why there's that thing called spread... so anyone who thinks Bitcoinica is losing a lot of money by the price going up, I don't think that's the case. They're probably making a ton of money is all, as they take about 1-2% out of every transaction. if he were, he wouldn't have halted trading. |
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy and when you hedge on mtgox puts you into a losing position. We delay the execution of all orders by 1-2 seconds. When the orders are executed, we always have the latest price. if this were the case, you wouldn't be having reserve problems with btc and you'd let those buys and short cover orders through. if you had 10,000 in stock you'd always have 10,000 in stock with perfect execution and hedging. but you don't so there is slippage somewhere that you're NOT telling us. |
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When Bitcoinica customers buy Bitcoins, we will hedge on Mt. Gox to buy for them, and they will have positions.
i think this is where the problem lies. when the market goes straight up, the delay btwn when your customers buy from you and when you hedge on mtgox puts you into a losing position. |
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sure. you have thousands of bitcoins on hand but you won't sell them or allow ppl to cover b/c you THINK there are too many long positions? LOL.
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wow, how many contradictions lie within those statements and the ones before. i would stop talking if i were you...
It seems to me that you are spreading FUD and coming to conclusions based on the fact that Z doesn't 'speak' perfect english. i think his English is excellent and there can be no confusion as to his terms. they just contradict themselves. |
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LOL! please think of a fix that will make everyone money.
Well, the best way for you to make money right now is to take advantage of the imminent long squeeze. Why do you believe there will be a long squeeze? IMO, it's the other way around: -Because you can't buy BTC on Bitcoinica, anyone who wishes to buy BTC will need to buy them on on MtGox, leading to higher prices. -Because you can't buy BTC on Bitcoinica, any bull with BTC will be LESS likely to sell because they can't re-buy them if they sell too low. I don't see your logic. If something is in short supply, its price goes up, not down. Am I missing something? no, you are not. this prolonged rise in the market has placed Zhoutong in an untenable position IMO. when you go long, he has to go short. IMO he is caught in a massive short squeeze and is desperate to get you guys to either sell or go short to provide btc liquidity so he can cover his losing positions. i think the dam has broken and his advice smacks of manipulation in the name of self preservation. when are you guys going to learn? problem after problem after problem keeps cropping up. Bitcoinica is doomed. Bitcoinica never trades against its customers. Price movements have almost no effect on my profits. However, our system couldn't process too many buy orders when our reserves were depleted. This has been fixed now because more people start selling. I don't have to cover any losing positions. It's just a precautionary procedure to ensure that we don't have any losing positions when people are trading in one direction. Same thing can happen on the selling side too. wow, how many contradictions lie within those statements and the ones before. i would stop talking if i were you... Sorry, it's only you with some terrible assumptions. I can't see any contradictions. I'm always asking myself, could be cypherdoc never understands how Bitcoinica exactly works? but i am observant. and i see problem after problem after problem. |
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I hate to say I told you so. Actually, no... I love it.
Get your bitcoins out of this bucket shop now, while you still can.
you did say so. |
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I'm going to tentatively say that we might see something interesting at 8 PM EST. Don't be disappointed if this doesn't play out the way I expect it to, but something might happen.
Today's been an interesting day... I swear I didn't have insider knowledge xD didn't you say something was going to happen at 8pm? you didn't say the price was going UP! |
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can everyone see that massive $236,000 @ $3.90?
soon that is going to tumble over to the right and crush all the asks. they are getting impatient.
And what about the invisible 200,000 bitcoins that have been mined over the past couple of months but not yet made it onto the exchanges? They could be insane bulls, I'll grant you, but I am of the opinion that they are being greedy. i am an insane bull but i am not greedy. i will sell when the time comes at MUCH higher prices. |
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