OP made a fundamental mistake by assuming there are no reserves. In normal situation (without asterisk), Bitcoinica's reserves are able to cover all open positions. That means, Bitcoin price can go to $10,000 or $0.01 and we don't have to take any market risk out of this.
When there is asterisk, we can still cover all existing positions, but we can't cover more. That's why you can always reduce your positions without worrying too much.
I have run through many simulated market moves before I release the algorithms to the public, and our financial situations are much better than expected.
Why did you lose money? Just because the price swings were so violent that you weren't able to liquidate positions at the proper price points? This... the term is slippage. He couldn't liquidate fast enough. Anyone else think it's odd Zhoutong's reply is essentially ignored? Why pay attention to facts when you can guess about how things work? Given that you know what the liquidation threshold is well in advance, why is "speed" a factor? You could have the order sat on Mt.Gox's books from the moment the position is established. The market then couldn't move to a "slippage" price without passing through your order. Let's do a very basic scenario. Someone is long with a base of $5 and liquidation at $4. MtGox has open buy orders of $4.50 and $3.50. The $4.50 buys are filled, and the "price" suddenly drops to $3.50, because there is nothing at $4.00. The person gone long is liquidated, but zhout has no choice but to liquidate the Bitcoins at $3.50 instead of $4.00, because that is the going market price. Normally, the spread between bids is very small, so $4 would be liquidated at $3.995 or something, and zhout makes the money off the maintenance fee (if the liquidation is $4.00 to the user, then the "true" liquidation is actually $3.75 or $3.90 or something). But with large price movements and lots of liquidations in a short period of time, not enough buyers can be found on MtGox to sell all of the liquidations at their liquidation prices, and they slide the price even further beyond the maintenance fee, causing a loss. Anyone feel free to correct me if I am wrong - this is all just guessing based on the way I would set it up. |
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Me: I saw on The Good Wife that Amazon accepts bitcoins, but I can't find your bitcoin address anywhere.
Roger:I'm sorry, I haven't heard about that. I will check with my supervisor.
Me: Great, thanks.
Roger: Hi, apparently the tv show made a mistake. They were meant to say "You can spend bitcoins on Amazon through spendbitcoins.com."
Me: Ah, but that page looks a bit difficult to navigate.
Roger: Let me check with my supervisor.
Me: Okay.
Roger: My supervisor says it's not as hard as it looks, but that they are bringing out a new design & browser extension in mid-February which will make it even easier than using a credit card on Amazon. Is there anything else I can help you with?
Me: nope not at the moment, thanks for your time!
Roger: Have a great day
Oh, the irony. That's killer.  Is the rumor of a new site design and browser extension true? Haha. The above conversation was completely made up. And yes, the new site design and browser extension are coming very soon. With the browser extension you'll just go straight to Amazon et al and not need to go back and forth to spendbitcoins.com.  Haha, and I fell for it too! Glad to hear you're continuing to work on improving the site/service though. |
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Me: I saw on The Good Wife that Amazon accepts bitcoins, but I can't find your bitcoin address anywhere.
Roger:I'm sorry, I haven't heard about that. I will check with my supervisor.
Me: Great, thanks.
Roger: Hi, apparently the tv show made a mistake. They were meant to say "You can spend bitcoins on Amazon through spendbitcoins.com.
Me: Ah, but that page looks a bit difficult to navigate.
Roger: Let me check with my supervisor.
Me: Okay.
Roger: My supervisor says it's not as hard as it looks, but that they are bringing out a new & design browser extension in mid-February which will make it even easier than using a credit card on Amazon. Is there anything else I can help you with?
Me: nope not at the moment, thanks for your time!
Roger: Have a great day
Oh, the irony. That's killer. Is the rumor of a new site design and browser extension true? |
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Your only option would be to actually buy every customers position. So if I go long at 100 BTC 1:1; you have to buy another 100 BTC. But then if someone goes short for $100 you have to find another $100 to match them (it is not sufficient to sell BTC to cover it; since you would then not have enough BTC to cover the long).
My understanding is that is exactly what is happening. Why would you think otherwise? |
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Indicators stop indicating once they become known.
The truth is, many of the well-known indicators do work in practice, even though they're "known." This is a common myth about technical analysis. In fact, the fact that many people follow them makes them self-perpetuating, which serves to reinforce their usefulness. One need only look at Goomboo's backtesting of the 10/21 EMA rule in order to see that simple and well-known things can still work. I guess "followed" would be a better way to put it. If I write a bot that follows the 10/21 EMA rule today, I'll get clobbered, because now people are following it, and their act of following it will cause the indicator to not work any more. Just because it is an old and well known indicator in the real world isn't really the problem, but now that it is a known indicator here it will no longer work here. That doesn't make any sense. If everyone used it, and everyone received a "Buy" signal, then everyone would buy, and the price would shoot up. Similarly, if everyone used it, and everyone received a "Sell" signal, then everyone would sell, and the price would drop like a rock. The only fools would be the ones NOT using it. That's what ineed is talking about when he says it is self-perpetuating. Heh. Try it then. Also, Buy and Sell are opposite views of the same thing. You can't have one without the other. It would only work if a large number of people followed it, which, AFAIK, we don't have a large number of people following this particular regression. |
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Indicators stop indicating once they become known.
The truth is, many of the well-known indicators do work in practice, even though they're "known." This is a common myth about technical analysis. In fact, the fact that many people follow them makes them self-perpetuating, which serves to reinforce their usefulness. One need only look at Goomboo's backtesting of the 10/21 EMA rule in order to see that simple and well-known things can still work. I guess "followed" would be a better way to put it. If I write a bot that follows the 10/21 EMA rule today, I'll get clobbered, because now people are following it, and their act of following it will cause the indicator to not work any more. Just because it is an old and well known indicator in the real world isn't really the problem, but now that it is a known indicator here it will no longer work here. That doesn't make any sense. If everyone used it, and everyone received a "Buy" signal, then everyone would buy, and the price would shoot up. Similarly, if everyone used it, and everyone received a "Sell" signal, then everyone would sell, and the price would drop like a rock. The only fools would be the ones NOT using it. That's what ineed is talking about when he says it is self-perpetuating. |
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OP made a fundamental mistake by assuming there are no reserves. In normal situation (without asterisk), Bitcoinica's reserves are able to cover all open positions. That means, Bitcoin price can go to $10,000 or $0.01 and we don't have to take any market risk out of this.
When there is asterisk, we can still cover all existing positions, but we can't cover more. That's why you can always reduce your positions without worrying too much.
I have run through many simulated market moves before I release the algorithms to the public, and our financial situations are much better than expected.
Why did you lose money? Just because the price swings were so violent that you weren't able to liquidate positions at the proper price points? |
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This thread is kind of depressing!
Oh well, you know what they say: 90 out of every 100 new businesses started fail within the first year, and 99 out of 100 fail within the first five years.
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Fourteen days of Christmas, Thirteen floors of terror, 12-pack of Pepsi, Eleven 7-11's, ten gram chee-burger, nine blown circuit breakers, eight buckets of gone-bad-blubber, seven fathoms of water, six 5770 GPUs, five double cheeseburgers, 4.5-billion-year-old-planet, 3.14159265 BTC registered in the Blockchain, two curious alpacas and one bent tuba.
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Rofl, my mistake!
I'll send you both a PM.
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I got into bitcoin last year, took some time off and got interested when we broke $5 again. This authentication system is stupid.
What authentication system? |
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At current BTC price of $6.21, I sent 1.12721417 for $7.00.
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Woohoo! I'll send payment to your sig address, 1PczDQHfEj3dJgp6wN3CXPft1bGB23TzTM.
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until a transaction is in the blockchain nothing is certain . I might to a ddos attack against the merchants node, so the transaction never gets to the network and/or show him a fake bit coin client on my side of the transaction. 1 confirmation is a bit better since it requires a block to be generated, but i am still not sure it is enough. most people now wait for 6 confirmations - i am assuming there is a reason behind it...
the thing with credit cards and USD is that the merchant or you can sue each other or report to the police about the fraud.
So although the method itself might be less secure , its enforcement is (supposed to be) strict. As long as countries do not recognize bitcoin as a valid currency you will not have this protection from the authorities in bitcoin transactions, and will have to rely on the technical difficulty of "forging" a transaction.
I agree - merchants can't really start accepting 0 conf, or people will find ways around it to trick them. There will be modded bitcoin clients available to buy (similar to hacks for games), and those modded clients will automatically do the required shenanigans to automatically make it look like the merchant is receiving the monies. One way it could do this (I believe) is by creating a transaction that will take a long time to go through for the merchant, then, shortly afterward, creating another transaction that would go through very quickly. The first transaction, make sure that it will require a fee, but don't send it with a fee. The second transaction just spends all the money from the address(es) used in the first transaction to a different one of your own addresses. Anyway, the only solution I see is similar to what is used now - debit cards that indicate a promise to pay Bitcoins. |
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"proof of work is a waste" - a common argument advanced by numerous people in their first ten posts.
The proof of work IS the leap that makes it all work. Without an understanding of why the proof of work is important, there is absolutely no understanding the fundamentals of bitcoin.
Without proof of work, there is nothing stopping from someone creating thousands of virtual validators that look identical to a thousand real ones, similar to how a computer can look like ten computers through the magic of virtualization. What good is 2/3 of the vote, if I can have as many votes as I want?
Well, if you think about it, it'd just turn into more of the same. You can't have as many votes as you want, but you could have many millions, billions, or trillions of votes. But at some point, you'll max out hardware. And then, you're back to having proof of work, or voting by power level of hardware. It'd be the same amount of "work" for farms of computers around the world, just executed in a worse, different manner. FWIW, I still believe Bitcoin isn't quite right. I think block rewards should go on forever, and I have advocated that since very early on. I see a currency that just stops growing causing deflation and hindering economic growth. An ideal currency would have no inflation or deflation, and that only happens if you have a constant minting that will eventually equalize with the amount of coins lost on accident + the growth of the world's population. But, I still think Bitcoin is a great project, and fully support it. It's still the best that is available. |
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movie computer needs to be as silent as possible.
mining computer is about as noisy as it gets.
seems strange to me that anyone would attempt watching a movie while mining.
I'd rather make money watching a movie than lose money watching a movie. I can deal with a little extra background noise while watching my wallet grow larger.  This. Speakers on max = win depends on the movie "I am Legend" comes to mind, where he's looking for his dog in the dark concrete building... it's supposed to be almost dead silent in those scenes. no flashing LEDs either! In those sorts of scenes, I appreciate the extra noise!  |
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Thanks. |
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Can someone give a quick explanation of short squeeze vs long squeeze? Does a long squeeze mean that everyone who is long gets liquidated?
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Could you just tell us how much it cost you, I'm always interested in hearing more about peoples setups
3.73kW would cover basically all of our household usage, course, your system also cost in the 1-10k range, which we don't have the money for
It'd only cover you in the daytime. I have yet to see any sort of solar panel system that would allow for less than a 20 year payback on the original cost (assuming it wasn't subsidized). They need to find a way to make them cheaply enough that payback is 5 years or less, then I'll buy into the fad. |
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