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For large amount, the best way is wire transfer.
For small amount, use internet banking or paypal etc.
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How much collateral the option sellers have on your exchange?
If I am to buy out all the under price option, what guarantee do I have they have enough btc on your exchange to settle trade (in the unlikely event that bitcoin go up to 600 over night)?
These are cash or nothing binary options. The sellers need have enough margin to cover the maximum possible loss (i.e. 0.01 BTC for each option). So nobody can default. I see. Payout is 0.01 btc regardless of price once reach on settlement date only. Then being a seller is better once the price of the option reach 0.07 or higher as the loss is only 0.03 at most. What is the fee the exchange charge? I just added the option price calculator to the trading interface. So now you don't need to write your own program or build a spreadsheet to price the options. I hope this can help you hunt mispriced options more easily. You can check here for the update https://bitcointalk.org/index.php?topic=821889.msg9323269#msg9323269 |
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In the absolute end they can't and even if it could be proven, they'd still be vulnerable to hacks, people need to learn to stop storing their money online and use a cold wallet.
In the traditional finance world, withdrawals are all processed manually. Although it takes a lot of effort and time, it's secure. Traditional exchanges are also being hacked everyday, but they seldom go bankrupted because of the hacks. I don't know how many bitcoin exchanges failed because their creators ran away, but I guess most exchanges' failure was due to automatic withdrawals. People say MtGox's failure was due to some technical issues of Bitcoin. But surely there are still other issues within either Bitcoin or the exchanges' trading systems. If MtGox manually checked their withdrawals, they wouldn't fail. And to me, if existing exchanges do not check withdrawals, many of them will also fail sooner or later due to some other technical issues. So, maybe bitcoin exchanges should follow the same approach adopted by the traditional finance world and check user withdrawals manually? |
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Thanks for the suggestions. We will add a video soon.
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How can they prove that? I know they can somehow prove that they have money at some point. But that's still not very convincing.
They cannot prove that they will not do that, which is why something like the Mt Gox theft was possible. At best an exchange could give you control over your bitcoins by handing you your private keys. Private keys are used to initiate bitcoin transactions and could be imported into your wallet. Exchanges are no exception to this: any centralized system can run away with your money (including banking systems). If you do not have the private keys you do not control the money. yeah, but if you are the only person who has the private key, it's going to be much more cumbersome to trade, and every trade could take much longer as bitcoin transactions need time to confirm. If you have the time to wait for the confirmations, you can also choose another more intuitive way, i.e. store as little in the exchange as possible and transfer into the exchange only when funds are needed. |
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A simple name will not do it. You need to establish a reputation by legitimate business practices. There are many who expose their name, some real some not, and still run away with money.
Could you elaborate on the "legitimate business practices"? I really want to know that. To me most exchanges such as bitfinex and bitstamp still have no convincing proof that they won't run away with the money, but they have many users trusting them. What's the reason? Is it because they have good looking web interface? Or is it because they have been existing for quite a long time? Or their business model makes them profitable so that they don't have to run away? Both exchanges have audit report from reputable third party. Plus people have send/wire in and send/wire out large amount of btc/money over the course of many months without problem. That is not to say they won't run away with customer money. But rational owner won't do that given how much profit each exchange is generating for the owners right now. We have verifiable weekly audit report. Bitfinex's report was generated long time ago and not updated after that. Other things are just a matter of time, and there is no essential difference between my site and those established exchanges. Bitfinex was offering some insane interest rate to lenders to lend to others. The reward was so high that many decided to give them a chance to proof themselves and many were rewarded nicely for placing trust on them. Many ponzi schemes also offer this kind of incentive and people risk their money on the ponzi operator knowing full well it is a ponzi scheme and cash out as soon as they get enough out of the scheme and stay on sideline. Same reasoning can be said on many alt pump and dump coins. Is your exchange offering any kind of incentive to traders so they are willing risk their their btc on it? We are the only options exchange. So if you want to trade bitcoin volatility, we are the only choice. Although it may not be as attractive as Bitfinex's interest rate, it meets many people's needs. So trust is not always neccessary for an exchange. Security means low risk, but if the profit is high enough, people will be willing to take the risk. So, if you are a good options trader and can make good profit from our site, you will also use it although we are still very new. Of course this's not to say we don't care much about security. |
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No doubt once exchange owners start seeing loses monthly they are going to pull a Gox/Mint and get the money and run.
Why do they run instead of applying for bankruptcy? |
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A simple name will not do it. You need to establish a reputation by legitimate business practices. There are many who expose their name, some real some not, and still run away with money.
Could you elaborate on the "legitimate business practices"? I really want to know that. To me most exchanges such as bitfinex and bitstamp still have no convincing proof that they won't run away with the money, but they have many users trusting them. What's the reason? Is it because they have good looking web interface? Or is it because they have been existing for quite a long time? Or their business model makes them profitable so that they don't have to run away? Both exchanges have audit report from reputable third party. Plus people have send/wire in and send/wire out large amount of btc/money over the course of many months without problem. That is not to say they won't run away with customer money. But rational owner won't do that given how much profit each exchange is generating for the owners right now. We have verifiable weekly audit report. Bitfinex's report was generated long time ago and not updated after that. Other things are just a matter of time, and there is no essential difference between my site and those established exchanges. |
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How much collateral the option sellers have on your exchange?
If I am to buy out all the under price option, what guarantee do I have they have enough btc on your exchange to settle trade (in the unlikely event that bitcoin go up to 600 over night)?
These are cash or nothing binary options. The sellers need have enough margin to cover the maximum possible loss (i.e. 0.01 BTC for each option). So nobody can default. I see. Payout is 0.01 btc regardless of price once reach on settlement date only. Then being a seller is better once the price of the option reach 0.07 or higher as the loss is only 0.03 at most. What is the fee the exchange charge? The fee is 0.00004 BTC for each option. |
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How much collateral the option sellers have on your exchange?
If I am to buy out all the under price option, what guarantee do I have they have enough btc on your exchange to settle trade (in the unlikely event that bitcoin go up to 600 over night)?
These are cash or nothing binary options. The sellers need have enough margin to cover the maximum possible loss (i.e. 0.01 BTC for each option). So nobody can default. |
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Thank you for checking the information. Yeah, we just started the exchange. It takes time to get trust from people. You can know more information from my linkedin profile, academic homepage, facebook, blog etc. I don't mind your checking of them. The more transparent we make the exchange, the better you will trust us.
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Some of the in the money calls are in the money and sell for less than their intrinsic value?
Yeah, you first estimate the volatility and then use a cash or nothing option pricing tool to check the price, and then you could see some of the options are being bought at a higher price than what it should be. If you cannot find a tool, you can make a spreadsheet to calculate using the formulas in http://en.wikipedia.org/wiki/Binary_option#Cash-or-nothing_callRight now, because the site is newly started, you could find many chances easily. Later if the market matures, it will be harder. How will it settle then? The strike price for in the money already get hit. 350 call strike price can be bought for 0.00671 btc. What is the payout for it? They are european style options and thus they will be exercised only at the expiration date. The payout is 0.01 BTC. |
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Some of the in the money calls are in the money and sell for less than their intrinsic value?
Yeah, you first estimate the volatility and then use a cash or nothing option pricing tool to check the price, and then you could see some of the options are being bought at a higher price than what it should be. If you cannot find a tool, you can make a spreadsheet to calculate using the formulas in http://en.wikipedia.org/wiki/Binary_option#Cash-or-nothing_callRight now, because the site is newly started, you could find many chances easily. Later if the market matures, it will be harder. |
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Based on my calculation, there seems a few overpriced buy limit orders on https://coinut.comWhy don't you fill the order then if you think it is overpriced? I build the exchange, and I don't trade by myself for fairness. |
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How can they prove that? I know they can somehow prove that they have money at some point. But that's still not very convincing.
I think multisig could solve that problem. Both you and the exchange need the keys to move the coins. You could also use three or more keys. This would not work as all of the coins are comingled together with the coins of other customers' money. Plus many people use exchanges in order to purchase bitcoin from their marketplace so the customer would not have any kind of associated private key. If you had "three ore more keys" of a multisig address then you would essentially control the bitcoin which would defeat the point of having the bitcoin at an exchange in the first place. Good points. |
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well i found website called investbitcoin.org and was looking legit so i did 0.01 for start but never got it back ??
I really want to know why you think the site looks legit? Is it because the it looks pretty? I am building my own site recently, but people don't trust much. Could you help me check https://coinut.com and tell me whether it looks legit or not? |
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I am a big fan of this actually. Do you have any vids to explain?
We currently have no video. You can read the following page to learn how to trade https://coinut.com/how-to-trade |
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How can they prove that? I know they can somehow prove that they have money at some point. But that's still not very convincing.
I think multisig could solve that problem. Both you and the exchange need the keys to move the coins. You could also use three or more keys. Multisig needs real bitcoin transactions when you try to move funds. So whenever you open an order, you need to wait for several minutes until the transaction is confirmed, during which, the market may have changed significantly. How to address this problem? |
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Based on my calculation, there seems a few overpriced buy limit orders on https://coinut.com |
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