I will tell you a little story from yesterday: I opened a Bitcoinica account and played with it. Then, suddenly a big spike to 7 occured. My immediate thought: a very good opportunity to attempt a short sale, because 7 is at the moment not sustainable. so i attempted to sell bitcoins @ 7. this is what happened: ( you have to read it from bottim to top) BTCUSD Market 175.0 - Forced liquidation @ 7.4300559927762 Sep 11 04:17 PM
BTCUSD Market -50.0 - Executed @ 6.9769 Sep 11 04:16 PM
BTCUSD Market -50.0 - Executed @ 5.9849 Sep 11 04:09 PM
BTCUSD Limit -25.0 $5.6900 Executed @ 5.9846 Sep 11 03:59 PM
BTCUSD Limit -50.0 $5.6900 Executed @ 5.9846 Sep 11 03:59 The first mistake was i assumed i could actually sell at 7. But the spread was over 1 dollar, so i shortsold at 6. yes, i was the sucker to buy coins at 7.4. the second mistake: had i provided enough liquidity i could have made a nice profit by now. but i underestimated the 1:5 margin. I'm the creator of Bitcoinica. I'm sorry to hear this bad news. The 9/11 spike caused the spread at Bitcoinica to be extremely large, because the liquidity at Mt. Gox is very limited despite the huge increase in price. (There is no time for people to make bids immediately after the $2 spike.) Our responsive algorithm detected this irregularity and set the spread to almost $1. (If you sell 100 BTC immediately after the spike on Mt. Gox, you will surely push down the price by almost $1 anyway.) You're right about "never use margin excessively". A small increase in price may cause your whole position to be liquidated. Because we almost always track the highest price for forced liquidation. (It's only possible to tell a highest point after passing the point.) Also, it's lucky that our system didn't capture the $14.9 price. Because at that single point, there is no liquidity in the market. We immediately paused all the trade for a few seconds until the price recovers. (The quote reads -.---- / -.---- if you were online at that instant.) No customers are liquidated at $14.9. Bitcoinica offers the best possible protection for traders. So as long as you can play it safe and place orders carefully, such fiasco shouldn't happen again. Thank you for your support and good luck in future trading! |
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Bitcoinica will be a short time phenomena. It will last till people realize leverage makes absolutely no sense for trading bitcoins.
It only makes sense in the fiat forex market because is influences inflation. Big players use it there to benefit from micro-trading tactics.
 The ability to short-sell and buy on margin is not a short-term phenomena. Any person who desires leverage will find this service useful. If you KNOW bitcoin will rise or fall, then this offers you a chance to make much more money. Bitcoinica's effect is good both for traders/speculators/investors and also for Bitcoin as it permits a greater variety of pricing means. My point is unless you have significant funds you will get a margin call way too often and if you do you probably have better uses for your money. Actually Bitcoinica has its use for miners, too. For new miners, they probably don't have Bitcoin, but they want to secure the higher price. We can help them secure the high price of BTC to protect their investment. If if BTC continues to rise until they receive margin call, they can sell their mining profits at higher prices and recover this loss. Anyway Bitcoinica should create stability for some people, not remove stability. |
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Why would you trade on a platform where you bet against the platform owner?
We're market maker, yes. But we don't bet against our customers. Why should we take the risk when we can comfortably earn the spreads and hedge the customers' orders elsewhere? You can sign up for an account and see our historical prices. We are completely open about this data. If you want all our 120,000 ticks so far, I can export for you. Then you can compare with Mt. Gox prices. Bitcoinica's price is extremely accurate - our highest on 9/11 is 7, not the ridiculous and non-tradable 15. If you short on Bitcoinica you won't be liquidated because of that. We use an algorithm to manage the prices with absolutely no human intervention. A bit off topic - but have you any plans to create a Mandarin version of your website (and other languages)? I think you are in a strong position to impact on the Chinese uptake of bitcoin (您是中国人吗？） 是的，我现在在新加坡学习。可惜目前我还没有打算把 Bitcoinica 做到国内市场去。中国的银行业和证券业对于投资者的限制是比较多的，如果突然移开这些限制去引入外国的市场模式，可能会引起一些社会问题。虽然目前比特币还没有引起政府的注意，但是估计也快了。 我想先把目标放在国际市场，并且坚持一个货币的制度（目前比特币兑美元和美元兑欧元之间的汇率浮动不是同一个数量级的，转换货币纯属浪费手续费）。一个月内，Bitcoinica 将会有重大改进，到时候对于国际用户来说会更加友好。 当然，如果你想跟 Bitcoinica 合作，在淘宝上做代充之类的业务，我会支持的。 |
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Why would you trade on a platform where you bet against the platform owner?
We're market maker, yes. But we don't bet against our customers. Why should we take the risk when we can comfortably earn the spreads and hedge the customers' orders elsewhere? You can sign up for an account and see our historical prices. We are completely open about this data. If you want all our 120,000 ticks so far, I can export for you. Then you can compare with Mt. Gox prices. Bitcoinica's price is extremely accurate - our highest on 9/11 is 7, not the ridiculous and non-tradable 15. If you short on Bitcoinica you won't be liquidated because of that. We use an algorithm to manage the prices with absolutely no human intervention. |
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If I look at you page for the last 24 hours and also look at clark moodys page with volume for MT.Gox, you/Bitcoinica have right now pretty much the same trading volume. If this is accurate, this is very impressive. Mt.Gox have been around for ever and you like less than one week. This tells me also that you don't hedge your positions in a large way. Or are you hedging some of the positions through Tradehill? But it shouldn't make any difference, because Tradehill have much lower volumes.
What kind of positions have people taken, I mean is this a new gamble site with high leverage (average user)? Or have like miners (a guess) taken low leverage positions to short the market (so they now exactly what they are going to sell their Bitcoins for)?
In order to protect Bitcoin traders, I cannot disclose the overall positions of my customers. However, I can give you a figure: (+/-) 1709.63 BTC. This is the "net positions" after canceling off. I'm not going to tell you which direction it is. If not wrong, Bitcoinica is accounted for about 15% of the trades at Mt. Gox (please note that the 15% means we act as a counter-party in 15% of the trades, which means 7.5% of turnover) in the recent 24 hours. We haven't started hedging at TradeHill yet. We will design an algorithm to fit in TradeHill's thinner order book so that we can technically stabilize both markets at the same time. (Sort of non-profitable arbitrage, purely for the interest of our customers. :-D ) Our hedging volume is twice as much as "net positions" because the distribution of orders is not very even. (Suddenly a lot of long and suddenly a lot of short.) Usually we can hedge a bit less and make a bit more on spreads when the prices fluctuate a lot. (Ironically, our customers are more random when prices move a lot.) |
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What happens when school starts back up?
School already started. I'm still here replying your posts and pushing updates. :-) Time management is crucial. Many of my past projects failed because of this. But I have learned the lessons. |
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How do a I short? I'm new to options trading and don't want to make a costly mistake =)
Currently just put $10 on my account.
How many bitcoins can I short and still be covered if they go to $50?
Your unrealised loss cannot be more than your investment. So to still be covered if they go to $50, considering a price of $6 now: Sell 0.2 coins. That would cost $1.2 and with btc at 50, loss would be 44*0.2 = $8.8 so I guess a bit less than 0.2, at 0.19 to not be kicked out at 50. This is my humble understanding at least. And this not options trading, for me. I would prefer trading in options on bitcoins rather than with the leverage but some situations it can be nice to cover your holdings by shorting. Came online to ask the same thing. If possible, you definitely should incorporate this. I don't want to be the market maker for Options, because the risk involved might be too high. If users exchange options contracts themselves, the volume will be little. Uncovered contracts with extreme strike prices will be very hard to liquidate by force. The exchange will suffer. So currently we're not working on Options trading. But we have a next big thing to announce soon, to fill another big gap in the Bitcoin market. |
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Just now I received an email, reads this:
Dear Mt.Gox user, Your account will be blocked for violating the rules of exchange. Details:https://www.mgtox.com/users/blocked Thanks, The Mt.Gox team
The link will direct you to http://www.mtgzx.tk/users/blocked. It's a frame webpage with inner URL of http://ewf43wef.tmweb.ru/. If you enter your password, it will record it down and redirect you to the real Mt. Gox login page. So you may not have realized the problem if you typed your password again and got in. Do enter your real password. You're welcomed to enter fake passwords!
I have set up a bot to randomly generate real-looking usernames and passwords like: >> username => "brianb" >> password => "HerbertWhite69" OR >> username => "pauljoseph" >> password => "B8LdoTvYquht" (There are ten different formats with a lot of random uncertainty. I'm sure that the attacker can't filter them algorithmically even if I publicize these two examples. So don't worry.) These fake usernames will be sent to the phishing login every few seconds from various IP addresses. I encourage other developers to do the same, using your own random formats. Let's start the phishing-baiting game, and waste their time! |
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How do a I short? I'm new to options trading and don't want to make a costly mistake =)
Currently just put $10 on my account.
How many bitcoins can I short and still be covered if they go to $50?
Less than 0.17 BTC |
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When will the issue with withdrawals be fixed?
I have been unable to withdraw my funds out of bitcoinica for 12 hours.
Thanks!
It has already been fixed. Make sure you don't withdraw your whole balance at once. Because your balanced may be rounded up and you won't have enough for withdrawal. Thanks! That doesn't make sense ... MtGox codes support more than two decimal places. Why are users unable to withdraw the correct amount? Why is it being rounded in the first place? You may have understood it. For example a user has $99.99999999 balance, but our site's sidebar can only fit in limited digits, so it's shown as $100.00. If the user assumes that he has $100.00 and wants to take his money out, he won't be able to do so because he doesn't have this amount of money. So our solution is to show $99.99. If the user explicitly request for the remaining funds, we will be able to check the exact value and fulfill their requests. |
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I hate to say it but once again are people trusting their money with a service that came out of the blue three days ago? when will people ever learn. I'm not saying you are up to no good running this but there has been way too much fraud already. if people are trading money through someone who is 17 I see serious concerns. do you even have an llc or corporation setup? does anyone know your name and can verify your identity? I just can't grasp it.
If you want to identify all these, you can easily find out. But unfortunately you didn't want to do so. Bitcoinica was under xWaylab Inc. My name is Zhou Tong. I have submitted my passport and bank statement to Mt. Gox and waiting for their approval. You can search topics about Bitcoinica on this forum. I have posted a lot of background information here and there. If you really want to know, you can easily find out. We don't want to show testimonials. But established forum members have also shared their recommendation. Lastly, every project has its start. If no people are trusting ANY new service because of fraud, there won't be any new service around. I greatly appreciate everyone's trust, and I show my appreciation by developing the best product and providing the best service. |
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So are you storing money as a float or just displaying it rounded to nearest cent?
We're using Decimal type in our PostgreSQL database. Money are displayed in either 2 d.p. or 4 d.p. There's no rounding in processing of money. Only the displayed value is rounded. I will change the withdrawal system to display rounded-down money instead. (Since a $99.999 customer shouldn't be able to withdraw $100.00, the system shouldn't display it as $100.00. We will display it as $99.99 instead.) Not being able to withdraw $100.00 from a $99.9999999999 account is an indication that we don't use float for money. |
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It has already been fixed. Make sure you don't withdraw your whole balance at once. Because your balanced may be rounded up and you won't have enough for withdrawal.
Thanks!
Floating point numbers are not recommended for storing currency. For calculations, if your float can not store 123456123456789, you probably are not using enough precision. I believe he was referring to minimum account balance for withdrawal. i.e. 100 USD, you withdraw 98 USD and the 2 USD is trapped. -Jonathan Not exactly. If your balance is $99.999, the system will show $100.00. But you can't withdraw $100.00 because you only have $99.999. This is what I mean. It's better to withdraw one cent less. |
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I'll be watching this, I really want there to be a good alternative to MTGox
Bitcoinica uses MtGox. They are not an exchange. that's what bugs me... why do they use a potential competitor as their wallet? Don't worry, I will contact you soon. ;-) |
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When will the issue with withdrawals be fixed?
I have been unable to withdraw my funds out of bitcoinica for 12 hours.
Thanks!
It has already been fixed. Make sure you don't withdraw your whole balance at once. Because your balanced may be rounded up and you won't have enough for withdrawal. Thanks! |
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is it possible to auto-update PL value in the list without reloading? atm i use the browser addon "reload every" but would be nice if you would do this. really nice site  i would love if you'd allow EUR trading (like mtgox: one market) I don't know too much about JavaScript. (I'm a back-end developer.) But I will try to implement features like this to make Bitcoinica even more responsive. |
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Please take his numbers with a bit of caution.
I will note that bitcoinica has ~550 users as of this post.
Your number is right. Margin trading really did increase transaction volume by multiple times. We also have a much higher paid customers ratio because we allow instant deposit/withdrawal via Mt. Gox code. We have no reason to make up the numbers ourselves. You can go around and ask people who signed up for Bitcoinica and ask them how much they are trading. |
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"Third Largest", especially in volume traded, really doesn't mean much. Two or more of the owners could set up accounts and move bitcoins back and forth, commission free.
Owners' trades are not counted. We didn't think this really mean much. But we just want to thank our customers for the active support. There's no reason for self-deception when we're clear what are we making. |
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People should take those numbers with a grain of salt.
They have ~550 users as of writing this.
Yes, that's true. But if you consider the margin trading (1:5), short selling and frequent day trading? Basically you can deposit $1,500 and then long or short 1,000 BTC, and do that several times a day. That's why the volume is so large. |
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I think most people don't trust Bitcoinica if they (he) don't publish more company details/contact infos.
We are applying for Extended Validation SSL certificates, so that everyone can verify our company information. Everything is in process right now. As you know, there are a lot of validation processes and checks, it takes time to have everything up. The real world is very different from the Bitcoin world. So far Bitcoinica's trading performance is extremely good and we will definitely be more transparent in the future. |
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