Bitfinex

[ForumAcc]

Margin Trading and Lending on www.bitfinex.com

The standard rate lend return is 43% per year. I just lent 300 ltc for a 40% for a 30 day stint, seems good.

I joined up had a poke around, and the engine seems good so far, anyone else bitfinex, have buy/sell positions,

Funds transfer seems good and insured loans looks good, the control on the margin trading seem to work on the small bits of 10 btc trades i checked.

What do you guys think of the site?

How would you improve the margin trading and leveraged engine?

[Elwar]

I was lending BTC for a while but getting around 8% return was not worth me having my bitcoins on a third party site that is located in another country that is based on software from another site that disappeared with my money.

40% on LTC may get me to throw my LTC on there...

[Ichthyo]

I know Bitfinex from the very start last fall. Initially it was strikingly similar to another site we all know very well 

But in the following months, the Bitfinex funder reworked significant parts of the platform and especially introduced this system of loans by users, which might help to put this notorious "bucket shop" accusation at a rest. The funder also managed to put together a team of people which overall seems to get along OKish. As a plus, the Bitfinex team was always very responsive, and helpful and quick with fixing bugs (and we beta testers witnessed the nailing out of quite a bunch of bugs). Bitfinex is aiming at operating legally, which will mean KYC and AML compliance soon.

You should note one thing though: the instrument offered by Bitfinex is called "Contract-for-Difference". This is a clever financial construction which has surprising low risk in normal operation; it is not a bet of "the house against its users" (please look up the details in wikipedia if interested). BUT, this instrument has one well-known fundamental risk, which can not be overcome with technology: A sudden and strong market collapse combined with an execution lag (yes, as we have seen it on Mt.Gox) can wipe out the whole business. This risk becomes smaller when the platform has additional reserves as a back up. The risk becomes smaller when the platform tries to tap into a larger pool of liquidity.  But in any case, this is a fundamental counterparty risk, and anyone using such a platfrom should be aware and limit exposure accordingly.

[chufchuf]

is this what they call a binary options trader thingy?

if so, why do they say these things add a lot of liquidity to the market when they're just betting on the price to go up and down? is it only because the platforms have to buy into btc to manipulate the price or what?

[Spekulatius]

The guys behind it seem pretty ambitious and with best intentions. I have to admit though, the system that requires you to keep one currency (LTC or BTC) in the Margin Trading wallet as security for USD loans (which u have to take on) or vice versa, while falling prices in that currency (BTC/LTC or vice versa) mean that you have to wait it out meanwhile your margin shrinks from the exchange risk or else you would loose all your borrowed funds IS a pain in the ass! Didnt understand a thing of what I just wrote? Dont bother, thats how complicated it is and trust me, its also not a very good solution to deal with on a day-to-day basis.

Also, there are some kinks here and there that I came across while using the platform that reveil the Beta status this service is currently in.
So only use with extreme caution pls!

Unfortunately there are not many margin trading services or option trader services based on BTC around, so you may as well give it a shot but pls be aware of the risk u are taking!

[Ichthyo]

the system that requires you to keep one currency (LTC or BTC) in the Margin Trading wallet as security for USD loans (which u have to take on) or vice versa, while falling prices in that currency (BTC/LTC or vice versa) mean that you have to wait it out meanwhile your margin shrinks from the exchange risk or else you would loose all your borrowed funds IS a pain in the ass!

You have a point that it is neither obvious nor simple to handle, but indeed you can exchange your underlying assets while keeping a position around (all you need is a bit of extra liquidity not used in a margin position). I've done it numerous times, e.g. fund your margin with BTC while market moves up, sell your BTC gradually and exchange to USD when market moves down. But I fully agree with you: it can be tricky to handle and there are some things to be aware of.