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Author Topic: [BETA]Bitfinex.com first Bitcoin P2P lending platform for leverage trading  (Read 134420 times)
unclescrooge
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April 06, 2013, 07:02:28 PM
 #661

Hi 2112,

While participating in Bitfinex they can learn with their own lunch money about the basics of finance, e.g. capital cannot be simultaneously safely stored in a cold wallet and profitably invested in an exchange trading.

Did someone said that? I think it read pretty well: money is stored on a watch-only wallet AND on Mtgox. We never lied about that. The proportion depends on the percentage of trading volume we have internally (BFX to BFX) and externally (BFX to Mtgox).

Bitfinex will also teach people how to be their own bank and their own accountant, e.g. how to reconcile the statements like "676.52 bitcoin borrowed" and "500k active loans".

There is 676 bitcoins AND 500k USD borrowed. The two are unrelated. If you read how margin trading works on Bitfinex, you'll see that bitcoins are borrowed to go short, and USD to go long.

Seriously, you have a question, just ask, I think we are pretty transparent and never hide any facts.

Best regards
Raphael
Bitfinex Team

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2112
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April 06, 2013, 07:28:02 PM
 #662

Did someone said that?

Cold wallet:
 
Your bitcoins are stored in cold wallet only, and the servers only use watch-only wallet, powered by Armory, to monitor deposit and balances.

There is 676 bitcoins AND 500k USD borrowed. The two are unrelated.

Seriously, you have a question, just ask, I think we are pretty transparent and never hide any facts.
Likewise, I'm not interested in doing free financial auditing over the web forum. As just a numbered account on a web forum I have absolutely no credibility. On the other hand financial auditing is performed by independent professionals that are getting paid for that service by the very subjects of their audit.

I'm looking forward to the discussion after the current class of Bitfinex.com students graduates. The class of MyBitcoin.com and the class of Bitcoinica.com have already graduated from their schools and a way more interesting interlocutors.

Please comment, critique, criticize or ridicule BIP 2112: https://bitcointalk.org/index.php?topic=54382.0
Long-term mining prognosis: https://bitcointalk.org/index.php?topic=91101.0
unclescrooge
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April 06, 2013, 08:21:39 PM
 #663

Did someone said that?

Cold wallet:
 
Your bitcoins are stored in cold wallet only, and the servers only use watch-only wallet, powered by Armory, to monitor deposit and balances.

My bad, this is a misundestanding. I meant "only" in the sense "there is no hot wallet", not in the sense "all of our bitcoins are on a cold wallet". Hence why I later speak of Mtgox and "trade-only" API key.

Thanks for pointing that out. I'll see how to reformulate that.

There is 676 bitcoins AND 500k USD borrowed. The two are unrelated.

Seriously, you have a question, just ask, I think we are pretty transparent and never hide any facts.
Likewise, I'm not interested in doing free financial auditing over the web forum. As just a numbered account on a web forum I have absolutely no credibility. On the other hand financial auditing is performed by independent professionals that are getting paid for that service by the very subjects of their audit.

I'm looking forward to the discussion after the current class of Bitfinex.com students graduates. The class of MyBitcoin.com and the class of Bitcoinica.com have already graduated from their schools and a way more interesting interlocutors.


Ok. I won't make you waste your time, you know probably better than us how our platform work, how risk is managed and who are the people behind Bitfinex. You don't need to ask questions, you already know the answer.

Have a nice day
Raphael

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April 07, 2013, 05:52:35 AM
 #664

Ahha, Seems that you have a new guy in the team? Hello Giancarlo, maybe you can advise me on the kind of things I can go to ask you instead of pestering Raphael on a day-to-day basis? Thanks. Cheesy

https://tlsnotary.org/ Fraud proofing decentralized fiat-Bitcoin trading.
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April 07, 2013, 06:51:24 AM
 #665

Ahha, Seems that you have a new guy in the team? Hello Giancarlo, maybe you can advise me on the kind of things I can go to ask you instead of pestering Raphael on a day-to-day basis? Thanks. Cheesy

Raphael will be answering all the software related questions, such as new implementations, how to make bitfinex user interface working better and so on.

Myself will be in charge of all the financial related questions, such as strategies, technical analysis etc.

I will on the other hand take care of all the other questions, which are normally distracting Raphael and Myself from their main activity.

We are taking your questions in serious consideration and we understand that with your support we can make our idea a profitable business for everybody.

Traders make more money
Lenders make good interests on their deposits
We wlll prosper only by sharing your happiness
 
Peace and love Smiley

Giancarlo
Customers Relations
The Bitfinex Team

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Sukrim
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April 07, 2013, 01:50:12 PM
 #666

I put up some lending offers at 2400% as a joke and they really get taken!  Shocked
Seems like there are people really believing in a high success rate.

Are you sure the average is "only" about 340%? Currently over all my loans I have north of 600% per year after the 10% fee.

Another question: if I fill a loan demand, does the lendee have to keep the loan for the advertised amount of time? E.g. there's a demand for 50k USD at 200% apr for 1 year. If I fill this demand, can this be canceled early by the lendee or not?

https://bitfinex.com <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with this refcode: x5K9YtL3Zb
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April 07, 2013, 02:10:12 PM
 #667

Another question: if I fill a loan demand, does the lendee have to keep the loan for the advertised amount of time? E.g. there's a demand for 50k USD at 200% apr for 1 year. If I fill this demand, can this be canceled early by the lendee or not?
Same question here + If the lendee cancels the loan, how is the user credited for that day?

Just lend some money at 1750%, 4.79% per day. Why would one borrow at that rate? Bitcoin doesn't rise 5% every day?

My BTC-address: 1JtgnB6UC5j9gMYzLftVaCmwdPL4PrWeYB
unclescrooge
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April 07, 2013, 02:10:27 PM
 #668

I put up some lending offers at 2400% as a joke and they really get taken!  Shocked
Seems like there are people really believing in a high success rate.

Are you sure the average is "only" about 340%? Currently over all my loans I have north of 600% per year after the 10% fee.

Another question: if I fill a loan demand, does the lendee have to keep the loan for the advertised amount of time? E.g. there's a demand for 50k USD at 200% apr for 1 year. If I fill this demand, can this be canceled early by the lendee or not?

Hello Sukrim,

The VIR is pondered by the past VIR to avoid spiking.

For the other question, yes the lendee can cancelled a loan at any time. There is no fixed time loan yet.


Have a nice day Smiley
Raphael
Bitfinex team

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April 07, 2013, 02:25:16 PM
 #669

I put up some lending offers at 2400% as a joke and they really get taken!  Shocked
Seems like there are people really believing in a high success rate.

Are you sure the average is "only" about 340%? Currently over all my loans I have north of 600% per year after the 10% fee.

Another question: if I fill a loan demand, does the lendee have to keep the loan for the advertised amount of time? E.g. there's a demand for 50k USD at 200% apr for 1 year. If I fill this demand, can this be canceled early by the lendee or not?

Yeah, I have lent 2.5 dollar at 1700%  Grin.  Wish the rest of my money wasn't loaned out already  Smiley.  Then again, people who loaned out at 2400% today (provided they took the loan at the start of the day) actually still made a decent profit...

PS: over 600%?  Damn, perhaps I should be more aggresive in my demanded percentage.  Are your funds not-lent a lot of the time?
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April 07, 2013, 02:31:27 PM
 #670

Love the new platform. Great job Bitfinex team!

You had mentioned that there was some money loss.

This is something that really concerns me:

Having margin accounts is never without risk to the exchange.
It's obviously a calculated risk, but I'm very concerned that you
may be stretching it a bit. How much are lenders exposed to this
same risk is yet to be seen?

There is some very real scenarios where Bitcoin prices drop (for a bull market)
or spike (in a bear market) which could coincide with a communication
failure that would put a lot of people in the red. Someone has to pick up
the tab.

MTGOX still owns a large majority of the trading volume. This is a risk for
margin trading if you are not the MTGOX! They could even use their
influence fraudulently in the market to weed out exchanges like bitfinex.

Prices are extremely speculative right now! Yet another risk if margin calls
cannot be executed in a timely fashion when it matters most.

I'm not saying I'm against margin, because it is ingenious and very needed.
I'm just saying that a 5 to 1 margin availability in the current market conditions
is really pushing it IMO. Please consider doing another risk analysis and
adjust the margin availability until condition are more favorable.

Thanks,
    Allten



[...]

On the other hand there is something that we all need to know, which is the real black swan event.
We all understand that money given by a lender is going to be invested into bitcoins by a borrower and the value of bitcoin is obviously related to the capacity of liquidate the position.
This is always possible under normal conditions, but the value of bitcoin could go down to zero in the very unlikely (but still possible) event that cryptocurrencies would be declared illegal by the United States, or any other catastrophic event.
In this case the Bitcoin price would drop to zero instantaneously and it would be impossible to liquidate any position.
In other words do not bet the house on bitcoin and be aware that the money you lent out are somehow exposed to a black swan event (i.e. the sudden death of Bitcoin).
But in this case the problem will be much bigger than the loss occurred on the lending side.
In this case it will be the end of our dream.

[...]

This quote concerns me somewhat. Are you saying that lending is not completely insured by you? You give the extreme example of bitcoin dropping to zero, but what about a sudden drop of 90%, 50%, 10%?

In my opinion, if you admit that lending performed via your site is not completely insured by you, you need to specify exactly what the limits of this insurance is; how much can the market drop before you call it a "black swan" event and lenders are uninsured?
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April 07, 2013, 02:36:27 PM
 #671

This quote concerns me somewhat. Are you saying that lending is not completely insured by you? You give the extreme example of bitcoin dropping to zero, but what about a sudden drop of 90%, 50%, 10%?

In my opinion, if you admit that lending performed via your site is not completely insured by you, you need to specify exactly what the limits of this insurance is; how much can the market drop before you call it a "black swan" event and lenders are uninsured?

If the price drops or rises so rapidly and with such low liquidity that the liquidation orders are unable to recover the lenders money (speculators net worth goes negative), and the total loss from such changes is bigger than the reserves bitfinex has for this, then people who have their money on bitfinex will have to make up for the difference.
As a lender, you don't get 200% yearly without taking risk...

They are currently working on insurances and increased liquidity through other exchanges.
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April 07, 2013, 03:42:08 PM
 #672

Yeah, I have lent 2.5 dollar at 1700%  Grin.  Wish the rest of my money wasn't loaned out already  Smiley.  Then again, people who loaned out at 2400% today (provided they took the loan at the start of the day) actually still made a decent profit...

PS: over 600%?  Damn, perhaps I should be more aggresive in my demanded percentage.  Are your funds not-lent a lot of the time?
Actually I got in about 1000 times your amount at 2400...  Kiss
I doubt that that position will stay open for very long though. Still a nice thing to have, after all that alone will give more return in a few hours than a bank account in a year!

I tried vir and then after the last sudden rally up to 130 I just put in loans at double the amount of vir and since then I kept just doubling the rate every day in autolend. Still I did not see a USD loan offer of mine open for more than 1 hour until it is snatched, I check the page maybe every 6 hours or so.
Interestingly this even worked with 800% loan offers when there were plenty of lower offers on the market too... I however consider my USD superior to others and am happy that traders seem to think so as well Wink

I didn't really expect my ridiculous offer of 2400% really to work out, now I'm aiming for the large pot and will try 40000% until tomorrow... Grin

https://bitfinex.com <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with this refcode: x5K9YtL3Zb
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April 07, 2013, 05:10:52 PM
 #673

I've found that my "really stupid" rates of 1000% plus get taken then paid off then taken, constantly.  Probably end up lent out less then 50% of the time, but if I put them out at 400 - 600 for 60 days they tend to stay lent out which in the long term is much easier and possibly a better return.  Now let's all get together and make the floor 300% Wink


It would be really great for the following 2 features and I'm sure they have been brought up:

1.) Allow you to set a percentage of your interest income to buy bitcoins on your exchange when they are deposited
2.) Be able to auto-lend out a percentage of your interest income automatically

I'm not always able to login to my account daily so this would be great.  Maybe even be able to automatically send your bitcoins just purchased from interest to another address.  I'm going away for a month so won't be able to login and do anything.

https://bitfinex.com/?refcode=UInJLQ5KpA <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with the refcode
My feedback thread: Forum thread
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April 07, 2013, 05:23:00 PM
 #674

The lendee cancels the loan on the first day, will he pay interest for the hours he borrowed, for an entire day or no interest at all?

My BTC-address: 1JtgnB6UC5j9gMYzLftVaCmwdPL4PrWeYB
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April 07, 2013, 07:25:23 PM
 #675

The lendee cancels the loan on the first day, will he pay interest for the hours he borrowed, for an entire day or no interest at all?

per hour
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April 07, 2013, 10:58:24 PM
 #676

Well, my 2400 loan is still in use... as are all my others. I track my earnings daily by the way, including charts and Apr calculations. Yesterday for example was my best day so far with 540% Apr realized over the day. This includes times of not lending out some amounts, different amounts at different rates etc. (Interest that day divided by open balance times 36500)

About wish nr 2: auto lend already automatically lends out all of your interest. The cruise control mode for holidays would probably be vir loans plus autolend.

Edit: the next morning (now) I tried 4k instead of 40k apr and voila: after 1 hour already 400 USD lent out!  Shocked

https://bitfinex.com <-- leveraged trading of BTCUSD, LTCUSD and LTCBTC (long and short) - 10% discount on fees for the first 30 days with this refcode: x5K9YtL3Zb
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April 08, 2013, 06:35:18 AM
 #677

This quote concerns me somewhat. Are you saying that lending is not completely insured by you? You give the extreme example of bitcoin dropping to zero, but what about a sudden drop of 90%, 50%, 10%?

In my opinion, if you admit that lending performed via your site is not completely insured by you, you need to specify exactly what the limits of this insurance is; how much can the market drop before you call it a "black swan" event and lenders are uninsured?

If the price drops or rises so rapidly and with such low liquidity that the liquidation orders are unable to recover the lenders money (speculators net worth goes negative), and the total loss from such changes is bigger than the reserves bitfinex has for this, then people who have their money on bitfinex will have to make up for the difference.
As a lender, you don't get 200% yearly without taking risk...

They are currently working on insurances and increased liquidity through other exchanges.
Thank you for being straight-forward and clarifying this.

What is the size of the reserves that Bitfinex controls?
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April 08, 2013, 07:40:14 AM
 #678

You highlighted the root of my concern discussing a black swan event.
I don't believe it will ever go to 0, but it appears that big money has
entered the Bitcoin market and that big money is under control of the few and
not the majority. It only takes some fraudulent news, DDOS attacks, and few of
these individuals to cash out and we have a 50 to 75% drop in very short period
of time by my guestimations. Sure, this is borderline "conspiracy theory",
but I think it is a very real possibility with the current Bitcoin weather that I hope
you consider in your risk analysis.

Thanks again!


Ok, so I lend my USD and traders use this to buy BitCoin.

If Bitcoin drops to 10% or 0% in a few hours and the positions are not closed quick enough, fair enough my USD isn't coming back.

However, those Bitcoins still exist don't they? The margin traders bought them right? So if my USD becomes worthless, isn't it fair that we are reimbursed the Bitcoins they are still owned by the trader, so they we can then sit on our worthless coins until they recover value after a few years.

I don't think its fair that our USD gets used, the values drops and the positions get closed too slow, that we should be left with nothing.

How about that if the rate drops to quick to close the position, the Bitcoins get kept and slit to the lenders.

Does this sound like a good idea?
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April 08, 2013, 10:18:35 AM
 #679

@ all BFX user check your email there needs to be a invite+activation code for https://community.bitfinex.com

Los desesperados publican que lo inventó el rey que rabió, porque todo son en el rabias y mas rabias, disgustos y mas disgustos, pezares y mas pezares; si el que compra algunas partidas vé que baxan, rabia de haver comprado; si suben, rabia de que no compró mas; si compra, suben, vende, gana y buelan aun á mas alto precio del que ha vendido; rabia de que vendió por menor precio: si no compra ni vende y ván subiendo, rabia de que haviendo tenido impulsos de comprar, no llegó á lograr los impulsos; si van baxando, rabia de que, haviendo tenido amagos de vender, no se resolvió á gozar los amagos; si le dan algun consejo y acierta, rabia de que no se lo dieron antes; si yerra, rabia de que se lo dieron; con que todo son inquietudes, todo arrepentimientos, tododelirios, luchando siempre lo insufrible con lo feliz, lo indomito con lo tranquilo y lo rabioso con lo deleytable.
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April 08, 2013, 12:30:44 PM
 #680

^ I've gotten it, but I prefer to discuss it here.
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