[BETA]Bitfinex.com first Bitcoin P2P lending platform for leverage trading

[urwhatuknow]

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?

Not sure I understand your question.
What is your definition of reserves?
Thanks

[urwhatuknow]

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?

It is a very good idea, but please understand that if the value of Bitcoin drops to zero (as a Black Swan event occurs) there will be little consolation for us all (I'm also a lender on Bitfinex) to be left with a bunch of valueless Bitcoins.
The whole Bitfinex lending community needs to understand that rewards always come with a price.
And the bigger the rewards the bigger the risk.
I believe getting rates such as the ones currently paid on Bitfinex and having the only risk of a sudden Bitcoin death is probably one of the most advantageous proposition that any of us will ever encounter in her/his whole life.
Bitfinex covers for any loss incurred by the lender under normal operations (MtGox lag, flash crash etc) but can't be taken liable for a Black Swan event and I believe we all agree with that.
Whoever is looking for a much safer investment of his liquidity can always opt for a 1% APY on US or German treasury bonds (and we could argue upon the fact that the debt laden United States is a safe borrower in this moment).

A good strategy that I could suggest to every lender that is willing to make a lot of money but is very risk adverse is to take out his money from the table as soon as he comes to doubling the amount lent ( in less than 100 days with current rates ).
He will then play with the banks money and in case something really really really bad happens to Bitcoin he can always keep smiling.

On the other hand everyone of us must find his own strategy, some people are fine with gambling the house everyday, some others are completely risk adverse.
But to be in a position to be aiming to make 1% a day and not to risk anything in case of a Black Swan event is a little utopian in my opinion.

Giancarlo
Customers Relations
The Bitfinex Team

 

[Remember remember the 5th of November]

How likely is it someone to accept a lend of say 0.15 bitcoins or a single bitcoin? And what kind of profits might one expect? Yes, I have only a small amount of bitcoins left.

Make no mistake, I am not an experienced trader. I tried day trading yesterday and lost 0.12 bitcoins pretty fast on btc-e.com.

[BurtW]

How likely is it someone to accept a lend of say 0.15 bitcoins or a single bitcoin? And what kind of profits might one expect? Yes, I have only a small amount of bitcoins left.

Make no mistake, I am not an experienced trader. I tried day trading yesterday and lost 0.12 bitcoins pretty fast on btc-e.com.

I do not understand the phrasing of your question but the current rate being paid for BTC loans is about 7.0399% APR

[superbit]

I no longer see the average rate my loans are getting?

[urwhatuknow]

I no longer see the average rate my loans are getting?

Hi superbit

The APY showing has been temporarily disabled from the deposit page as we work on some implementations.
Don't worry though, the interests are still properly calculated.
This number can be still easily extrapolated by going to the market statistic page and checking the rate from there (please remember that the number displayed there doesn't include our 10% commission, therefore please multiply it by 0.9 in order to see what current VIR rates are  )

Cheers

Giancarlo
Customers Relations
The Bitfinex Team

[superbit]

OK, it also looks like loans aren't auto-renewing as all mine are set too auto-renew and now I have a large lendable balance

[drawingthesun]

It is a very good idea, but please understand that if the value of Bitcoin drops to zero (as a Black Swan event occurs) there will be little consolation for us all (I'm also a lender on Bitfinex) to be left with a bunch of valueless Bitcoins.

Thanks for your reply, and I do agree with you.

However if Bitcoins drop to 10% or 0% because of a market attack, Bitcoins becoming illegal, etc... I still think they will have value. I imagine the Bitcoins would once again gain in value no matter the amount of banning.

However if a sustained 51% occurred, then I do understand the value may never recover.

[GCInc.]

"You can't double click on the transfer button" when attempting to transfer balance from trading to deposit wallet.

[urwhatuknow]

OK, it also looks like loans aren't auto-renewing as all mine are set too auto-renew and now I have a large lendable balance

please try to put the balance on offer again and see what happens, mine are auto-renewing without problems

thanks

Giancarlo
Customers Relations
The Bitfinex Team

[Remember remember the 5th of November]

May I suggest something? Atm some features are not aligned. Like checkboxes and such, they are placed really weirdly and that needs to be corrected.

Also, a notification sound like the one on btc-e on a completed order would be nice.

[Chris Acheson]

Allowing lenders to sell their current loans to other lenders would be a nice feature, in case you need to use money that your currently have lent out.

[myself]

Allowing lenders to sell their current loans to other lenders would be a nice feature, in case you need to use money that your currently have lent out.

we had a thread about this oon BFX forums but i dont get the link now and iirc is on todo list

[BuildTheFuture]

Newbie lender here: Do you earn interest on lending if it is lent for under an hour? I just started out and see my funds got executed/lent in my history a couple of times previously in the last 24 hrs, but my USD funds still show the same amount I started with.

Also wondering is the history page supposed to show when one of your loans is repaid by the borrower? I don't see any entries for that, just the initial executions.

[Ichthyo]

It is a very good idea, but please understand that if the value of Bitcoin drops to zero (as a Black Swan event occurs) there will be little consolation for us all (I'm also a lender on Bitfinex) to be left with a bunch of valueless Bitcoins.

However if Bitcoins drop to 10% or 0% because of a market attack, Bitcoins becoming illegal, etc... I still think they will have value. I imagine the Bitcoins would once again gain in value no matter the amount of banning.
....

For this discussion, I think it could be helpful to consider the full technical process (as far as I we users can figure it out).

Consider users are opening positions. Both short and long. To some amount they are cancelling each other out, so that there is an effective net position. This net position is what is exposed to the backing exchange. Now lets consider that this net position is long. That means, all the USD are gone and the net amount in BTC is sitting in the Mt.Gox account (not counting any additional reserves the platform holds, as e.g. unused lending offers)

Now lets assume the market drops. The trading engine determines the exact price point when a given user's collateral (margin) is no longer sufficient to carry the loss (+fees). At that point a force liquidation must happen. Now this force liquidation changes the overall effective net position. And this difference needs to be forwarded to the exchange. Here the API lag comes into play.

Basically the Bitfinex platform can't know for sure in advance how large the lag for this order will be, nor can it know at what effective price it will be executed. Bottom line is: we can never know in advance, if we have a "Black Swan" event. We'll know only after the fact, when finally the execution notice from the exchange comes back.

When you propose to "keep the BTC" in case of a Black Swan, you're proposing to choose in advance not to reduce the risk, but rather to keep the risk exposure in anticipation of a catastrophe. (Only after the fact we know it really was a "Black Swan")


Having said that, the effective reserves are another story. Let's assume there was a catastrophe, and Bitfinex got destroyed, alongside with most of the Bitcoin economy. Any trading will then be halted. At that point, people will for sure investigate what amount of USD and of BTC is left in the Mt.Gox account of Bitfinex. Plus any other financial reserves the company has. And then, a liquidator will have to decide what to do with these remaining assets.

[bit-fxtrader]

Are the annual 500-600 pct rates posted here compounded or not?

[myself]

Are the annual 500-600 pct rates posted here compounded or not?

no, BFX do not continuously compound interest, the interest is put daily into your deposit account

[Sukrim]

Newbie lender here: Do you earn interest on lending if it is lent for under an hour? I just started out and see my funds got executed/lent in my history a couple of times previously in the last 24 hrs, but my USD funds still show the same amount I started with.

Also wondering is the history page supposed to show when one of your loans is repaid by the borrower? I don't see any entries for that, just the initial executions.

As far as I understood it, interest is calculated/billed by the hour. If someone has a position for 5 minutes and closes it again, you still get interest for a full hour - in the edge case positions are very very short so you might be ale to get paid more than once for the same hour. I'm not 100% sure of this, but it would seem logical to me.

Interest is paid at 00:0x (usually about 2-8 minutes after 00:00) GMT. You can check the History tab for more info on that.

Yes, I agree it would be nice to see times there as well. Also I would really prefer to have the funds credited asap after a position is finalized (or hourly) - why do I have to wait until midnight (or 2 AM in my case) to get credited? Yes, it creates probably a much larger history tab, but in my opinion that's a platform/database limitation that might be worth overcoming.

I have more features I'd like to see (for example a better "cruise control" mode than the current auto-lending feature) but these can be mostly implemented via a small bot and an API that can handle lending offers and would only clutter/confuse the user interface even more if implemented on the site.

About compounded rates: No the rates are not compounded, so a ~405% rate you put up and that's lent out for a day returns 1% per day (considering the 10% fee). The interest which you get daily can be withdrawn, lent out or moved to a trading wallet to trade. Except for lending this is currently not possible to do automatically (well, you could write a website scraper...).

[urwhatuknow]

Newbie lender here: Do you earn interest on lending if it is lent for under an hour? I just started out and see my funds got executed/lent in my history a couple of times previously in the last 24 hrs, but my USD funds still show the same amount I started with.

Also wondering is the history page supposed to show when one of your loans is repaid by the borrower? I don't see any entries for that, just the initial executions.

As far as I understood it, interest is calculated/billed by the hour. If someone has a position for 5 minutes and closes it again, you still get interest for a full hour - in the edge case positions are very very short so you might be ale to get paid more than once for the same hour. I'm not 100% sure of this, but it would seem logical to me.

Interest is paid at 00:0x (usually about 2-8 minutes after 00:00) GMT. You can check the History tab for more info on that.

Yes, I agree it would be nice to see times there as well. Also I would really prefer to have the funds credited asap after a position is finalized (or hourly) - why do I have to wait until midnight (or 2 AM in my case) to get credited? Yes, it creates probably a much larger history tab, but in my opinion that's a platform/database limitation that might be worth overcoming.

I have more features I'd like to see (for example a better "cruise control" mode than the current auto-lending feature) but these can be mostly implemented via a small bot and an API that can handle lending offers and would only clutter/confuse the user interface even more if implemented on the site.

About compounded rates: No the rates are not compounded, so a ~405% rate you put up and that's lent out for a day returns 1% per day (considering the 10% fee). The interest which you get daily can be withdrawn, lent out or moved to a trading wallet to trade. Except for lending this is currently not possible to do automatically (well, you could write a website scraper...).

Thank you for your precious suggestions Sukrim.
You are helping us a lot with your ideas.
Unfortunately I have to ask you to be a little patient as we are now dealing with a lot of new implementations and the exponential growth we are experiencing is adding a lot of new tasks to our already long "to do" list.
We are currently trying to shape up our software developer workforce and we should be able to add a couple of helpful brains before the end of May.

In the meanwhile keep up the good help you are giving us, we greatly appreciate it

Cheers

Giancarlo
Customers Relations
The Bitfinex Team

[acf6996]

Hello BFX team,

So far I still have troubles understanding the statistics you publish.

I understand you don't want to publish the formulas.

Could you please provide a history as CSV or a graph?

Then it would be easy to see the possible values and in what market situations what values are reached. Thus, everyone could develop an idea how to interpret the numbers.

Of course it is also possible to just parse the values from the website. But I imagine you have the history on your server anyway .

Thank you!