Is your site having IT trouble?  On the Futures tab, all my futures are gone (the BTC are still there), and the Funds tab give a Runtime Error - apparently the default error message of your CMS.

So if I buy coins from MtGox, and the guy who sold them to MtGox got them from a guy who got them from a guy who got them from a thief, then my wallet should reject the coins and send them back to MtGox' big common wallet?  No thanks, that sounds like an incredibly bad idea.

Any attempt to "taint" bitcoin will ruin their use as a currency.  Imagine if all US dollar bills with traces of cocaine were invalid.

No, that kind of information would be silly to disclose, of course. 

As for the real bank: Our local bank claims on signs all over the place that their main safe is protected with a time lock taking 10 min to open.  I guess that is also to protect their employees from failed robbery attempts.  But yes: sometimes financial institutions brag about security, but of course never without careful consideration.

Thanks for all your comments.

I guess the real reason is: All of the above

blockchain.info never gets access to your private keys.  They are stored on their server encrypted, but the encryption/decryption occurs in your browser, so they cannot steal your coins.

It is now 10% - but that is of course besides the point.

I don't think this limitation is relevant for the settlement on the final day.  It is implemented as a limitation on how low or high bids you can place every day, effectively limiting the change in price of the futures.  But on settlement day, the official 24h average from "the largest exchange" will be used.

So is the loss if they go down.  The current value should in both cases be the same as the expected value in december.  If the general expectation is that prices are higher in december, then both markets should go north.

Of course if optimists are more likely to seek out icbit than pessimists ...

But why do they then buy the expensive futures instead of the cheap bitcoins :-)

So people pay more for the confusing UI

Joking aside, I could see the UI keeping arbitrageurs away

Hi,

On icbit.se, you can trade futures contracts in bitcoin, to be settled December 15.  Currently, the price at MtGox is 12.3$, but futures contracts at icbit are 13.7$.  Essentially, you are buying bitcoins for delivery in december, why are people willing to pay 1.5$ more for that?

Of course you can use leverage to buy more bitcoins in the future, but in an efficient market both the futures price and the current price should be good indicators of what the market thinks the price should be later.  Only if there are costs of storage should the futures price be above the spot market price (contango).  Are bitcoiners not rational?

And why is the site not swarmed with arbitrageurs?  Buy 100 BTC at an exchange, pay 1230$.  Transfer a fraction of these to icbit as margin, and sell 100 BTC in december.  Then no matter what happens to the bitcoin price, you will have 1370$ worth of bitcoins in mid december.  If the price has gone up, you loose on the icbit account, but that is compensated by the rise in value of the rest of your coins - and reversely if price drops.  An (almost *) risk-free investment returning 11% in three month (or 55% per year).  Pretty good, for a risk-free investment in dollars!

Of course it is only risk-free if you are American.  Us Europeans expose ourselves to fluctuations in the dollar versus euro when doing this.

(*) Only almost risk free.  Your bitcoins could be hacked.  Bitcoin could totally collapse.  The world could end....

Thanks, Fireball, for your reply.

Yes, only keeping a margin account is better than keeping a lot of money.  I tend not to daytrade (since I do not believe that I am better than the market at predicting fluctuations), but to make longterm trading.  Send money to exchange, buy bitcoins, withdraw bitcoins - or reversely; minimizing my exposure to hacking to a short time.  But if I want to hold a long-term position on ICBIT, my margin account is exposed for a longer time.

Well, your reply eased my worries somewhat, in particular the part about cold storage (and steady growth).

The only part I disagree about is the "not bragging about security".  We need a lot more bragging about security to put pressure on the insecure sites.  And if security is weakened by bragging about it, it was not good to begin with.  Solid security can stand scrutiny.

As for having everything in cold wallets and delay withdrawals: That would annoy me too, but less than having my funds stolen
Of course I might come in a situation where I need to access my funds here and now....

No, I would not!  If for no other reason then because every time their site is down for a few hours - or worse misbehave because the backend is down, I get worried that they have been hacked.  They haven't, of course, and even if they had it would be *very* difficult to run with my coins because of the double encryption - but perhaps they could manage somehow to poison the javascript and get the password.  Anyway, I happily use blockchain.info for everyday bitcoining, but would suffer a nervous breakdown every time the site was down if I had that kind of money in it    For that, I recommend an offline wallet, for example Armory.

The problem with placing your money with an anonymous entity on the internet is that there is absolutely nothing you can do when they run away with them.  Perhaps that is not what is happening now, but it could be.   

Intersango are in trouble with their british bank.  bitstamp.net seems to be the big, European exchange right now.  They only work in USD, but reportedly convert your euros at a very reasonable rate.

SECURITY AT ICBIT.

Hi.

I am a little worried about security at ICBIT.  Unlike traditional exchanges, where I pull my btc out as soon as I have bought them, on ICBIT you need to have money in your margin account for an extended amount of time.  That increases the need for good security, both against my account getting hacked and against the ICBIT site getting hacked.

It is very difficult to judge how focussed ICBIT is on security.  But they do not offer two-factor authentication, that is a bad sign!  If my computer is hacked, so will my ICBIT account be.  Two-factor auth should be possible both on login, and on withdrawals, either using yubikeys or google authenticator.

But what about the site security?  The security stuff they mention on the front page appear a bit minimal.  They use https and salt the passwords.  Fine, my password won't be easily recovered if the site is hacked (unlike Linkedin  ).  But all coins will be gone ?

What fraction of the bitcoins are in cold storage?  In my (slightly extreme) opinion, ICBIT should not use a hot wallet at all!  All money should be stored offline, and it should be clearly written on the web page that bitcoin withdrawals take one business day for this reason.  Then I would trust them (more).

Remember, it is not a question of IF the site is hacked, but of WHAT happens when it is hacked! 

Sorry for being so negative, but the bitfloor f***up was a bit scary.   And in some ways ICBIT is the successor of Bitcoinica, hopefully not in too many ways   

Do I understand it correctly that the price used to settle the account every day is the icbit futures market price, and the only time the "average price of the largest market" comes in is when the contracts expire at the end of december?

I often see something like that.  The live update gets messed up, in particular if you suspend the laptop, but sometimes even without doing that.  Refreshing the page often help.

(my emphasis)

Now this sounds like they know what they are talking about.  A paper format based on raid.  :-)

What will be next - a harddisk medium based on cellulose.

(joking aside - one possible interpretation could be some kind of N-of-M storage based on cutting the paper in slices.  Low tech, but undoubtedly very safe.  A more likely interpretation is that he intended to write something else....)

TOR will not solve anything magically, of course.  But the hacker will need to first hack the exchange server, and then (since he cannot get the IP of the backend server) will have to hack the TOR hidden service.  Not knowing the IP will certainly reduce the attach surface.  But of course not eliminate it.

Thanks to you all for your comments!

If he would have accepted payments if he had won, then he is a scammer.  Undoubtedly had he won a lot of people would not have paid.  They now missed their chance of becoming scammers

Waging thousands of bitcoins without escrow is stupid.  Waging *with* escrow is probably also stupid, but that is another discussion....

After yet another exchange being hacked, I can't help asking myself: Why do exchanges need a hot wallet on the server at all?
All the server needs is to know the clients' balances in BTC and in USD/EUR/...

Only when the client wants to withdraw BTC is a wallet needed - but then it does not have to be on the exchanger server.  The USD are stored in a bank, not on the server.  When a client needs to withdraw money, the exchange server contacts a backend server, where the hot wallet is kept.  This could even be done through TOR with the backend as a hidden service,  making it hard for the hackers to find the backend server.  They can still inject false payments into the system if they hack the frontend, but if you require users to register their bitcoin payment address in advance (and perhaps block payments for 24 h when it is changed), then it becomes very difficult indeed for the hacker to run away with the money.

It would still be necessary to keep most of the BTC in a cold, offline wallet, since it is not 100% impossible to first break into the server, and then hack the backend through the TOR network.  So perhaps there should also be a limitation of how many BCT any given user can withdraw without incurring a 24h waiting period.  Waiting periods are annoying, but less annoying than loosing everything.

Just my 5 mBTC.