I need to go long on BTC, and I would like to do it with a CFD just like I
previously discussed, except this time I'm taking the long side. If you're looking to short BTC, this is for you.
Preferably this will be done with reputable members, without any collateral offered by either party. If sufficient trust cannot be established we will consider collateral or escrow. No money will be transferred when the agreement starts, and only bitcoins (not USD) will be sent when it ends.
For now I'm looking for a 500 BTC contract but this may be extended in the future, either with the original party or another party.
How this works: When we start the agreement, we record the BTC exchange rate $O. When either party wishes to settle the contract, we look at the current exchange rate $C. I will then pay you 500*(O/C-1) BTC (equivalent to 500*(O-C) USD, which is what you would have gained by selling 500 BTC and then buying them). If this is negative you pay me 500*(1-O/C) BTC.
To avoid confusion about the exact time in which the exchange rate is determined, I suggest that we use the opening rate in the charts on mtgox.com at some future time we decide.
Duration: The contract will last until one party decides to settle it, which it can do with 2 days notice. This should be enough time to prepare the settlement payment, but a leniency of a few days in actual payment will be allowed. The minimum duration is 2 weeks and the contract can't be ended before this time elapses. These terms are negotiable.
Contract refreshment: To avoid either party being in too much debt to the other, the contract should be occasionally refreshed (for example, whenever the exchange rate moves by $1). To do this, I will pay 500*(O/M-1) BTC where $M is the current exchange rate, and then M will be assigned as the new value for O. (The exact value of M isn't as critical as the initial O and the final C).
Alternative method: I'll lend 500 BTC and receive a loan of $6500 Mtgox USD. The loans will act as collateral for each other and carry no interest. You can sell the bitcoins to take a short position, or use them without needing to have a long BTC position.
