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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.
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I apologize for this technical issue. Apparently 3% of global DNS servers couldn't resolve bitcoinica.com properly due to DNSSEC settings.
I have investigated into this issue carefully and found that the problem was with the DNS provider we are using. They stopped signing for DNSSEC after a recent domain transfer out of GoDaddy.
I have fixed the problem now and the domain is being signed again. Comcast users, please verify that you're able to access bitcoinica.com.
Again, sorry for the issues that cause constant troubles. And thumbs up to Comcast, because one of their engineers sent us the detailed problem trace and assisted us in the resolution.
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Fair enough. But what of the OP's question, then? Is there any particular situation currently in play that's preventing payouts? Surely settled client USD aren't counted as part of the reserve...
Mt. Gox withdrawal limit is the only thing right now. Bitcoin withdrawals have always been fine. |
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We lowered the spread temporarily because we had been in asterisk mode for a long time. Just recovered from that and we want some volume to heat up the market again.
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look at it from Z's perspective
folks are screaming to be allowed to go long on margin
and screaming for instant access to their fiat
whats he supposed to poop USD out his ass??
I do not use his service, though the show is amusing, but there is no real indication I have seen that he is a bad actor or is ripping anyone off.
You play in the bucket shop and they get low on funds? Cross your fingers and hope they do not fold up altogether.
I remember him claiming many times, in this forum, that bitcoinica is not a bucket shop, but yeah - why should I believe that? If Bitcoinica is a bucket shop then you'll not see the asterisk and instead we let you buy whatever you want and then dump coins in the market to force liquidate you and pocket all your money. This is not what it happened. So we are not a bucket shop. There's no better way to prove it either. We have already disclosed the daily hedging volume. |
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Hello, Zhou! I've found a bug in API. Try to get active orders by link: https://www.bitcoinica.com/api/orders/active.jsonAnd you'll see that field "created_at" is changing randomly (or almost randomly, not sure about this). For example: "2012-01-18T13:21:47+08:00" "2012-01-18T06:21:47+01:00" "2012-01-18T09:21:47+04:00" ... Thanks for reporting this. It seems that the system gets confused which time zone should be in the output. Currently you can convert everything to UTC since the time zone is given. I'll fix this issue by forcing UTC output. |
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When you go to a bucket shop and lose money, your money goes to the house. But at Bitcoinica, your money goes to the other Bitcoinica user(s), or Mt. Gox user(s). Only the spread goes to Bitcoinica to cover operational costs.
There's no betting at our side.
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Bitcoinica trades 100%. There must be a counter party to every trade. The counter party can be someone at Mt. Gox or someone at Bitcoinica. The counter party is never Bitcoinica itself.
This is how every money changer works, basically.
Hmm... I've been thinking about this a lot. I still haven't figured it out yet. When you match orders on Bitcoinica, great you are a broker. This is good. When you match orders on Gox, you move the market, thus becoming a market maker. Therefor you bet against your customers who are holding the opposite position to your trade at Gox. I don't see any other way to look at it than betting against your customer. If I'm short and you buy Bitcoins on Gox, you've bet against me. Regardless of when I opened the short position. Even if that short position was matched internally. I think Bitcoinica would be much cooler if you only acted as a broker. I don't know if that is feasible or not. All the leveraging in the world wouldn't matter as long as you were only a broker. And you couldn't lose either. What am I missing? It's the same. Just imagine a order book of Bitcoinica and Mt. Gox combined. Then you will understand. We can move the market against you, but only if a customer requests to do so. And we hedge at Mt. Gox because we can't get a better price internally. In other words, if we don't hedge on Mt. Gox, the price will be even higher against you. The difference between Bitcoinica and a bucket shop is, we don't hold positions ourselves. We have no incentive to manipulate the market. Also, we don't set the prices based on the hidden order book, never. |
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I agree betting against the customers should be illegal, but if person A wants to buy 10BTC, and person B wants to sell 10BTC, why should it be traded on Mtgox? It's still being traded, right? Between A and B, although internally (On Bitcoinica). Bitcoinica actually has that 10BTC, so it's not like they are pulling BTC out of thin air to trade with (Which I believe bucket shops do). They could let both trades go through on Mtgox, but that's just wasting 0.25% on fees that weren't necessary in the first place.
I agree it makes sense from a practical point of view: why bother doing a buy _and_ a sell? But there are important differences. When bitcoinica matches order, the two orders would ideally be matched at the halfway point between the buy and the sell price, with an added bitcoinica margin of course. But instead, they pocket the spread based on the Mt. Gox order book. The definition of a bucket shop is one where you're making a bet based upon the market conditions, but without actually trading on that market. That's clearly what's happening here: a side bet/transaction is made based based on the Mt. Gox order book, without actually interacting with the exchange at all. Also, Mt. Gox records & publishes the results of every one of their trades. Bitcoinica does not: it is dark when order matching occurs, hence the title of this thread. Still think it isn't a bucket shop? As I said before, anything <100% hedged is a bucket shop under US law. Bitcoinica trades 100%. There must be a counter party to every trade. The counter party can be someone at Mt. Gox or someone at Bitcoinica. The counter party is never Bitcoinica itself. This is how every money changer works, basically. |
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I want RESTful API for trading (optionally over https with elliptic curve certificates) Sure. REST API is a must-have for me too. |
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Ok I'll bite.
Have you considered how difficult it would be for you to offer payment services?
Why would you enter the thread just to say something negative? As an adult, dont you find it inappropriate to just enter the thread to dispraise a 17 year old in his business venture... As a matter of fact, it seems like mr.Tong is the adult (for not calling you an asshole, which you clearly are) and you are the "kid". hmmm, I did not interpret phantomcircuit's post like that at all I thought he was just urging Z to build a portal out to the fiat economy, which we desperately need That's precisely what I was saying, improved liquidity would benefit everybody, even those of us seemingly working at cross purposes. However a hint of caution is necessary. Accepting wire transfers, bitcoins, and mtgox codes is orders of magnitude simpler than other payment mechanisms. Currently about 10% of the intersango code base is actually about exchanging bitcoins ... the rest is handling idiosyncrasies of various insane payment systems. Thanks for your "hint of caution"! Yes, I'm aware that real-world transactions can be difficult to handle due to non-standard interfaces. But that's not my competitive edge. I'm good at outdoing your 10% codebase. |
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Ok I'll bite.
Have you considered how difficult it would be for you to offer payment services?
I have considered that. Things will be easy soon. |
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Such a thing already exists with Bit-Pay... They hedge every sale, so that they don't lose money on price fluctuations (That's why Bitcoinica is IMO a good thing, they allow hedging! Although they shouldn't allow such a high leverage to prevent shit like what happened today.). They allow merchants to quote their prices in USD and receive USD. Although it requires a 3% fee, it's still a much better than the fees associated with credit cards, and there's no risk of chargebacks!
Ah, got you. Glad bitpay has it down. Regarding Zhoutong's point about adverse selection, I'd guess here's how a transaction would work: Say, the merchant wants 3k. You display an ever-updating (say, once a minute quote) in btc. So far, your quote is good only for 1 minute, not 1 hour. It's when the customer accepts and hits PAY on your quote that the 6-confirmation-guarantee of my quote. Let's say the customer hits PAY, and sends btc. The btc will reach you in 6 confirmations, Once they reach me in 6 confirmations, I owe the merchant 3k. My risk is now that when they reach me, their value could be 2k or 4k. Now, how could the customer misuse it? The only way would be for the customer to wait a few minutes, see which way the btc price goes, and try to reverse a previous send. That is, hopefully, much harder than the simple 3-hour picture painted above. By the time the customer has waited 10 minutes, there has even been a confirmation, making it even harder. And, with all this hard work, the best the customer can do is cancel a car purchase unless it really cost him 2.5k (+/- what happens in another 50 minutes) instead of the quoted 3k. But, if a customer attempts that, even that could be detected, hopefully. - and the customer blacklisted. ---- Regarding bitcoinica, I don't know. Restricting what the customer can or cannot do **for the sake of customer's own good** sounds like the Govt. of UK telling me that vitamins are verboten and not good for me. I mean, may be they are not, but let me decide for myself. The Bitcoinica is part is irrelevant. We don't limit anything. It's just that big customers have to deposit more to enjoy the tradable balance. But well, this is how we can hedge: When the transaction has received without any confirmations, it's already very hard to reverse it. So it's safe to do a short sale on Bitcoinica. After 6 confirmations, liquidate the short position and sell the Bitcoins. The risk is limited to the market movement (only the difference) when the customer reverses it, which is negligible. |
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Bitcoin IS a penny stock in terms of fundamentals. (Market cap is only $550MM.) So how can we expect it to perform like a blue chip?
Without price rising to above $100 (That's about $9 billion market cap), we can never have a stable day.
With or without Bitcoinica, $200K is sufficient to push the price from 4.64 to 6.95 within minutes. And without Bitcoinica, that would happen too (Bitcoinica volume was insignificant during the rally you mentioned).
Current Market Capitalisation is more around 50 Millions and 100$ would make it around 700 millions$ My bad. Math... |
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Can red flag events and Zhou's claim of guaranteed liquidity both exist?
Red flag - one-sided guaranteed liquidity Normal - full guaranteed liquidity If you have a short position when no buying red flag happens - full guaranteed liquidity If you have a long position when no selling red flag happens - full guaranteed liquidity |
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I think it's time to have another poll about a potential change. Honestly we're still exploring options, but we definitely want your opinions!
It's important to note that we are not going to have a formal agreement with any exchange. We will just be their client, until they shut us down (which is unlikely to happen.)
Now it's your time to vote. You have two votes. Please consider the following points when you make decisions:
- Market depth
- Trading fees
- Possibility of wide public adoption (if we plan to abandon Mt. Gox)
- Deposits and withdrawals (and withdrawal limits)
- Public reputation and trustworthiness.
Some facts to note:
- Bitcoinica is the largest Bitcoin trading platform if we exclude the hedging volume from Mt. Gox.
- Bitcoinica's hedging volume can be as high as 200,000 BTC in 24 hours.
- Currently Mt. Gox is the most "official" exchange.
EDIT:
A lot of people have chosen "Bitcoinica Independent Exchange" (it will be renamed to something different), I will simply share my ideas for this:
- Insanely low fees, like 0.1%. (Because we have no profit pressure.)
- Websocket API
- BitInstant support
- TCP-based API
- Rackspace Cloud Co-location (1ms to our server)
- Redis-based trading engine (thousands of orders per second)
- Full access to Bitcoinica's limit order liquidity
- Fully independent (You don't have to use Bitcoinica to use the exchange.)
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How about you just untie yourself from MtGox. You've become a dog wagging tail and while I personally find nothing wrong with it, so long as you advertise very clearly your lack of funds when people deposit money (rather than when they attempt to liquidate), if you want to make people here happy, you're going to need to operate more like a dark pool.
Im glad im not the only one that sees this need.. I will launch a poll about that. |
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Price is only a dollar lower than yesterday, how does that hurt anyone besides speculators and people leveraged on bitcoinica?
Surely you are joking. Bitcoin lost 20% in a single day. That's bad enough - puts it in a league with pennystock in the eye of the beholder. Worse is that it was like an epileptic seizure. I mean going between 4.64 and 6.95 within minutes! Doubt this will inspire much confidence in everyone watching. The good news is that a number of gamblers got bloodied up good. As Vandroiy said before: That's the silver lining. Bitcoin IS a penny stock in terms of fundamentals. (Market cap is only $550MM.) So how can we expect it to perform like a blue chip? Without price rising to above $100 (That's about $9 billion market cap), we can never have a stable day. With or without Bitcoinica, $200K is sufficient to push the price from 4.64 to 6.95 within minutes. And without Bitcoinica, that would happen too (Bitcoinica volume was insignificant during the rally you mentioned). |
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Hi
I would think there is no need for a merchant to take said risk.
Surely, with all the enterprising speculators and arbitrageurs in this market, one of us could take that risk for the merchant.
That is, I am, for example, always willing to quote a buy or sell price, and guarantee it for, say, 3 hours. And do so on an automated basis.
That is, if a merchant desires $3k for a used car, I will quote X btc that the merchant can quote his costumer. The merchant is then guaranteed to get his 3k from me, even if the price of the X btc becomes $2k by the time it reaches the merchant.
Does such a service exist already? If anyone wants to create a web service around this model, I'd love to partner with them and be the risk-taking party at all times.
deego
--
Anyone can actually ask for a quote every 3 hours and take advantage of the market movement while giving up the rest. This is called adverse selection. In the end people will try to get the best quote and abandon the ones that are profitable for you. |
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I feel good enough the reality isn't hurting the honest people, even in a free market. I even questioned myself whether I can justify the profits from a negative-sum game. It's the people who love Bitcoinica that make the project going.
There are a lot of both money-making and value-generating opportunities out there, and I don't want to spend my energy on exploiting other people.
Reality of course hurts honest people all the time. The reason I don't like your service is that it induces volatility, which hurts honest merchants. They may or may not be able to live with it but they get hurt all the same. If volatility is not going down, the future of Bitcoin looks very bleak indeed. If every night were like last night, Bitcoin would be dead in a few months. Your game is bad for almost everyone. I really wish someone with deep pockets stepped in and imposed exchange rates by simply outgunning your service. (Can't belive I am saying that). Because only when vola goes down, businesses who don't care whether Bitcoin is cool but only want to sell their stuff without trouble with payment will be able to step in. On the question of whether gamblers get ripped off, I don't mind at all. They deserve it. Just like online poker players who think it impossible that they play against the sysadmin who knows their hand. They too deserve it. Bitcoin is never stable until we get to at least $100. It's not volatile on one day doesn't mean it's not volatile forever. Bitcoinica has nothing to do with volatility. I admit the correlation is there, but definitely not causation. Bitcoinica doesn't induce volatility out of thin air. If you have $10,000 you can try to buy all you can on Bitcoinica and see what happens. The market never spikes. Any sudden spike must not come from Bitcoinica, because forced liquidation in a quiet market isn't possible. The trigger must be something else. |
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