Here is a hypothetical situation: You are Bitcoinica. You have reserves of $100 and 100 BTC. Dollars/bitcoin price is at par ($1=1BTC) and you are lending at a 10:1 leverage. Alice deposits $10 to leverage at 10:1 short and Bob deposits 10 BTC 10$ to leverage at 10:1 long. What happens if Charlie comes along and also wants to open up a position? You are out of reserves both ways. If you took any new position, you would be betting the house against Charlie.
Changed your example slightly, to make the situation a bit more simple (Going long 10:1 with BTC backing it, is equal to going long by 11:1 with USD backing it). Having that out of the way, as explained in my earlier example, Bitcoinica won't trade for Either Alice or Bob, since they cancel each other out. That allows Charlie to use the reserves, because they still have those. |
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Shorts and longs should cancel each other out. There's no possible way for them to run out of both USD and BTC. This is either a bug, or a huge problem. I think/hope this is a bug and will be solved soon enough.
I can see how they cancel out when leverage is 1:1; but not when it's 1:x. To short, you have to sell BTC, and you need x times the deposited BTC to do that. To long, you have to buy BTC for dollars, and you need x times the deposited dollars to do that. I think. When 2 persons deposit 100$. And one goes long for 10BTC, while the other shorts for 10BTC, Bitcoinica doesn't trade anything on Mtgox. If the market goes up by 10 cents, the guy who was long gets 1 dollar profit, while the other guy gets a 1 dollar loss. When 2 persons deposit 100$. And one goes long for 100BTC, while the other shorts for 100BTC (So they are both using leverage), Bitcoinica doesn't trade anything on Mtgox either. If the market goes up by 10 cents, the guy who was long gets 10 dollar profit, while the other guy gets a 10 dollar loss. If one persons liquidates (Either forced or manually), Bitcoinica does trade on Mtgox since they can no longer cancel each other out, unless someone else takes the opposing position again. |
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I'm not sure if I understand how this all works, but couldn't the risk from the bulls be offset by the risk from the bears? I thought Bitcoinica's "fund" is meant to correct an imbalance. When the price moves, somebody's going to win, and somebody's going to lose, and the losers pay the winners, right?
Balancing the bulls against the bears would be risky, because what if one side suddenly decide to close their positions? If you don't have the reserves to cover those closes, you will be out of money. I think that the fact that Bitcoinica records profits in dollars might skew the risk towards one side, but still each position should be independently leveraged. Maybe some fractional reserve could be pulled off, but then it becomes a risk that at some point someone will want money that isn't there because it's being loaned out to someone else. They leave sufficient funds for all parties to liquidate positions. That's why they run out of funds sometimes for new positions, yet it is still possible to close old positions. Them running out of both reserves simply shouldn't be possible though. Either a major bug, which should be fixed ASAP or a deeper underlying problem. Let's hope it's a bug. |
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Perhaps I've not understood Bitcoinica (I've tried hard and I can't explain it to myself satisfactorily any other way): The leveraged part has to be borrowed from somewhere, it can't just be matched up. I assume that comes out of the reserve too. I guess this from this reasoning (assume a $5 BTC price): - Alice has $100; and leverages at 1:3. She shorts against her $100 margin, meaning she needs to borrow (100*3/5) = 60 BTC (which she then instantly sells of course)
- Bob has 10 BTC; and leverages at 1:6. He goes long against his 10 BTC margin, meaning he needs to borrow (10*6*5) = $300 (which he then instantly buys BTC with of course)
Where does the missing 50 BTC come from that it can be sold? Where does the missing $200 come from that it can be used for purchases? The answer must be Bitcoinica's reserves. Presumably they've now been used up, and "*" is showing for both sides. (I'm happy to be corrected, I don't claim to be any kind of expert). Shorts and longs should cancel each other out. There's no possible way for them to run out of both USD and BTC. This is either a bug, or a huge problem. I think/hope this is a bug and will be solved soon enough. |
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They get executed at any price as soon as buying becomes possible. Therefor you have to be very careful when using market orders when the asterisk is active, but even without it you have to be very careful. As you already noted, there's a 1-4 second delay on orders executing depending on a lot of things, so you might not get the price that you want to pay. Therefor I suggest you use limit orders to make sure your prices don't pass a certain limit.
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The rise wasn't simultaneous in magnitude. It went down about 10k, and then up about 2k.
Doesn't have to be. It could be they are reserving extra USD for the shorties, so they can still liquidate if they want. It isn't far fetched those supplies were a little bit drained as well from shorties liquidating their positions. That's why the up-spike wasn't as big volume-wise. |
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Let me see your history data  your explanation has hardly to do with the simultaneous rise in equivalent magnitude. Well IF he really got liquidated on a big position, it might bring in enough USD to Bitcoinica. It wouldn't surprise me if they have loads of pending buy orders waiting till the asterisk leaves the buy button, which it would once fresh USD comes in. That would cause an upward spike immediately after the sell-off. |
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Myself, how much did you deposit, and how long did it take to generate those 10 BTC? Thanks  |
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today i got the first 10 btc from them (9.8 after the tax)
How much did you deposit? And how long did it take to generate those 10BTC? |
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I think it's crucial this gets released ASAP though. But of course, not without being sure there aren't any major bugs in this release. The thing is, the downloads for the client are picking up, most likely because of the The Good Wife show. Loads of new people might get turned off by the hours long blockchain synchronization. Decisions, decisions...
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Going to ask them as well, the more people ask, the bigger chance we have of getting noticed.
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The ability to short is what will prevent the next bubble. A bubble is caused by positive feedback. Buy and the price goes up; that meant your buy was sensible. Therefore buy more and the price goes up more... yay, more profit. Positive feedback always results in unstable systems.
Last June, there was no way to short. The price was going up and up. Those who thought that bitcoins were overpriced, but held dollars, could express that opinion by... not buying. The absence of a bid is not the same as the presence of an ask; it's neutral. Dollar holders couldn't profit from the overpriced market.
This time... shorting is possible. As the bubble gets more and more out of control, those who see that can supply a downward pressure. Profit is a healthy motivator, so they will want to short. The more overpriced they become, the more profit to be made from shorting. This is negative feedback. Negative feedback results in stable systems.
The downward pressure from shorting will meet the upward pressure from the bubble and find a balance point. That point will be a (more) stable price. Who knows what that price is, but shorting helps the market find it and stick to it.
Shorting makes markets less volatile, not more volatile.
I think the results are already obvious; the growth rate this time around is much slower. There are repeated pushes back down from $7.2. It's much healthier in the long run.
Very well said! |
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Because they are out of USD reserves. That's why there's a * next to the buy price. You won't be able to open new positions as long as that asterisk is there. You can close shorts however |
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What's the ETA on the official release? It's looking good so far! |
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Well I got out my 150 BTC with a profit of 7 BTC (10 - 3 for withdrawal) Can't complain about a free $50  still making money too, either the site is bugged and the guy's losing money or some sort of ponzi thing is still going on Hmmm sounds like an interesting bug. Maybe everyone should withdraw and see what happens/ I already emailed them about it. If they are legit, they should know. If they aren't, well then there's not much we can do anyway. They will win in the end, because they can just start refusing withdrawals. To me this looks to good to be true, but I'm not going to call them anything without proof. In the mean time, I'm playing around with some change on the site We already found out the bug and fixed it. It should be working fine now. I received a response really quickly, and they even offered me a donation for reporting the bug! Great customer service ! |
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Yes, in your eyes you might be being nice to her because of those negative energies she is dealing with, but in her eyes you might just be being nice. It doesn't really matter why you act the way you do, but if you trying to be nice because of those energies, she can benefit from you being nice just because you're nice (Which is of course a good thing!) and get back to normal quicker. It doesn't really matter what caused it, but in my opinion it's just so far fetched to seek a reason in the stars, when there's a bazillion other things that could have caused her behavior. Humans are complex creatures after all!
What about the moon? Look at hospital records for full moons compared to normal nights, there are way more accidents. Can you please give me a source? I'd be interested to read it. I've done a few quick google searches, but I'm finding things pointing out there are no such correlations. Thanks! Here's a scientific article, which found no such correlation: http://www.ncbi.nlm.nih.gov/pubmed/15166467 |
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Can we get ghostlines on these? Like from 24 hours ago?
Ooooh, that would be interesting! Great idea! |
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Well I got out my 150 BTC with a profit of 7 BTC (10 - 3 for withdrawal) Can't complain about a free $50 still making money too, either the site is bugged and the guy's losing money or some sort of ponzi thing is still going on You got that money by mistake. There's probably another bug i did not catch. I'll look into this immediately. Kudos for the quick response! |
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