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

[deisik]

There had been plenty of talk about implementing decentralized distributed exchanges over the blockchain, but we are not there yet by any metric. Maybe, Lightning Network will change something with its close to instant transactions

This will never be possible.

1 - Once you sell your btc for USD, your USD will be at risk.

2 - If you have any orders on the exchange will be at risk because the exchange is not going to let you make an order without the coins being controlled by the exchange -- otherwise customers would have the opportunity to not sign a transaction and could potentially delay signing to wait and see if they can repurchase the sold coins at a lower price very soon after they sell

Previously, I also thought along these lines basically

Though, unlike you, I understood that I couldn't know everything, and I assumed that there was a way to make such an exchange irreversible. And yes, some guys have explained to me how a decentralized distributed exchange can be done in an efficient manner. Basically, if you sell or buy bitcoins, you provide collateral in the form of the same bitcoins (say, twice as much the amount you buy or sell), so if you try to welsh on the deal, you lose more. Right now, this system wouldn't be usable for obvious reasons (due to transaction fees and confirmation delays), but with Lightning Network properly implemented it should work flawlessly and reliably

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully exchanged for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in your account are sort of virtual as well since they are not yours but only borrowed

[Quickseller]

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

[deisik]

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

[Quickseller]

I am not sure if you are specifically referring to this, however the system you are describing sounds a lot like bitsquare. With bitsquare, traders are mostly protected against a hack of the exchange, although the arbitrators essentially are bearing the risk of the exchange being hacked, and I don't think there is a way of getting around this. Traders also need to trust bitsquare to the extent that multiple arbitrators are not colluding with each other maliciously. Probably very importantly, users will need to know how to detect fraudulent fiat payments, and dispute the receipt of the payment -- this is a skill that many current bitcoin users do not have, and one that potential new users have in less frequently. This kind of exchange will also result in less liquidity than say bitfinex as traders will need to wait longer to receive fiat funds

No, I don't mean anything such

In fact, I'm not quite familiar with smart contracts (which you mentioned earlier) but if I assume correctly the system that I'm talking about has more to do with them that with the arbitrator system of bitsquare. Basically, the LN network itself running over the blockchain will be an arbitrator here. At a real exchange, when your order is filled your account balance changes, with LN it will be pretty much the same. The difference will be that since there are no, say, genuine dollars as such in the system, they will be represented by bitcoins themselves. If the price changes beyond what you have as "dollars", your bitcoin "dollars" (or some part thereof) will be forcefully sold for "genuine" bitcoins. It may look strange at first glance, but this is how margin trading works in general. With margin trading, the dollars in you account are sort of virtual since they are not yours but only borrowed

I am not quite sure I understand the process of how bitcoin held on LN would be turned into $100 bills with the process you describe. I am also not quite sure I understand how the USD balance would be protected against theft/hacking on the part of the exchange. Wouldn't users need to sign a transaction that results in the exchange controlling all of a users' coins that is part of their USD balance? Or am I missing something?

I am interested....do you have a whitepaper or a blog post or something with more information about this system?

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

I am not sure if you are familiar with how OkCoin.com futures works, but this sounds a lot like how their system works (although OkCoin futures are more like gambling than anything else) -- maybe with much lower leverage. With OkCoin futures, the price is generally kept in line with the market price via the fact that contracts are periodically settled at an index price (that is compiled of prices of exchanges in which actual dollars can be exchanged for actual btc, and vice versa).

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

[deisik]

The exact mechanism had been discussed here a few years ago even before LN was conceived

But with LN and instant transactions, it should work like a charm. As I said earlier, I was also rather skeptic at first and thought that it was not quite possible to do. More specifically, when you buy 1000 dollars for 1 bitcoin, you obviously can't have dollars physically, but it is basically along the same lines as, for example, cash-settled futures work (so there is nothing fishy about that). You should have only 1 bitcoin locked in your account that matches 1000 dollars at the current price. If the dollar rises (say, 1 bitcoin is now worth only 500 dollars), you should have 2 bitcoins in your account to still keep 1000 dollars. If you don't have enough bitcoins, the network forcefully takes some satoshis from the account so that your balance wouldn't go negative. In the latter case, you would get what is called a margin call in trading parlance

I am not sure if you are familiar with how OkCoin.com futures works, but this sounds a lot like how their system works (although OkCoin futures are more like gambling than anything else) -- maybe with much lower leverage. With OkCoin futures, the price is generally kept in line with the market price via the fact that contracts are periodically settled at an index price (that is compiled of prices of exchanges in which actual dollars can be exchanged for actual btc, and vice versa)

No, I'm not familiar with their system. Anyway, if there is some company behind such a system, it should be taken with a grain of salt

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, i.e. the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?
2. You can't unless you transfer the keys from your wallet to someone else in exchange for physical dollars. As I said, this is how cash-settled futures work. For example, you can buy gold futures but if they are cash-settled you can't demand physical delivery of gold after expiration. What's more, such futures make up most of the trading volume on commodity exchanges (e.g. oil and precious metals markets)
3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network does, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

[Quickseller]

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe.

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

[deisik]

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe

There is none, and there shouldn't be any

In fact, this is no more than correlation due to free market laws, not a mechanism (in the sense as you first meant it). On the other hand, you are obviously stretching your "facts" here. While it is certainly true that folks can send bitcoins from one exchange to another (and this remains the same), this is not the case with fiat (say, dollars) due to hefty commissions on both fiat withdrawals and deposits as well as time it takes to process these transactions (which basically renders your "mechanism" irrelevant). In short, it doesn't work the way you pretend it does. Anyway, even if we assumed that what you say were true, it still wouldn't change anything. As I just said, cash-settled futures (which make up the majority of futures traded) work exactly this way. In other words, you can't withdraw gold which you allegedly have

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

What point specifically do you refer to here (there)?

[Quickseller]

I guess I have a few questions about this system:
1 - What mechanisms are in place to force the price on this (hypothetical) exchange to generally match the prevailing market price on other efficient markets?
2 - How do I turn my 1 BTC into $1,100 (or however many dollars 1 btc is worth) in $100 bills/cash?
3 - If those who have a USD balance (secured by BTC) on the exchange, what, from a technical perspective, would prevent the exchange from stealing the BTC that is backing the USD? If nothing, then I think there is still the problem that I described above.

Now to your questions

1. As I understand it, there shouldn't be any such mechanism at all, the price should be determined entirely on the basis of supply and demand existing on this distributed exchange. Apart from that, how many exchanges do you know that index their price to some other exchange?

All the USD exchanges trade at roughly the same price. The reason for this is because users can withdraw dollars and/or bitcoin from one exchange and deposit it into another, this allows traders to engage in arbitrage when the price on one exchange deviates from others. Traders will frequently have both BTC and USD on multiple exchanges, so that they do not need to wait for the withdrawal and deposits to process. For example, if the price on bitfinex rises above the price on coinbase (and there is sufficient liquidity), then a trader will sell BTC on bitfinex, and buy an equal amount of BTC on coinbase, they will then withdraw USD on bitfinex, and BTC on coinbase, and deposit an equal amount on the opposite respective exchange.

I do not see any similar mechanism on the exchange you describe

There is none, and there shouldn't be none

On the other hand, you are obviously stretching your "facts" here. While it is certainly true that folks can send bitcoins from one exchange to another (and this remains the same), this is not the case with fiat (say, dollars) due to hefty commissions on both fiat withdrawals and deposits as well as time it takes to process these transactions (which basically renders your "mechanism" irrelevant). In short, it doesn't work the way you pretend it does. Anyway, even if we assumed that what you say were true, it still wouldn't change anything. As I just said, cash-settled futures (which make up the majority of futures traded) work exactly this way. In other words, you can't withdraw gold which you allegedly have

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price.

3. There is no exchange as such as you come to think of it. It is the network itself that imposes restrictions. In other words, it works in absolutely the same way as the plain vanilla Bitcoin network, i.e. you can't spend more bitcoins that exist on the blockchain and linked to your Bitcoin address

I was under the impression that this type of exchange would be the solution to the problems that I described here?

What point specifically do you refer to here (there)?

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD.

[deisik]

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price

This opens opportunities for arbitrage, but as such it is inconsequential to the principles behind operation of any exchange. And a distributed decentralized exchange fits into this "grand scheme of things" perfectly. To put it differently, there is nothing that would conceptually distinguish such an exchange from any other exchange out there, apart from it being decentralized, of course

But that's an intended feature

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

[Quickseller]

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price

This opens opportunities for arbitrage, but as such it is inconsequential to the principles behind operation of any exchange. And a distributed decentralized exchange fits into this "grand scheme of things" perfectly. To put it differently, there is nothing that would conceptually distinguish such an exchange from any other exchange out there, apart from it being decentralized, of course

But that's an intended feature

But you are not describing any feature that will force the price to be in line with the overall market. With cash-settled futures (as you describe this kind of exchange), the futures price will remain in line with the index price because contracts will eventually be settled at the index price at expiration.

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

I am referring to the exchange, not the "Bitcoin network"

[deisik]

The "round trip" cost -- that is the cost to withdraw from one exchange and deposit in another -- will be under 0.5% in most cases (when you have an economy of scale). As mentioned previously, traders can keep fiat on exchanges, and do not need to wait for a withdrawal (and subsequent deposit) to process to engage in an arb trade due to the fungibility of USD -- they can simply use USD on one exchange, then replenish that USD once a withdraw/deposit cycle is completed from the exchange with the higher BTCUSD price

This opens opportunities for arbitrage, but as such it is inconsequential to the principles behind operation of any exchange. And a distributed decentralized exchange fits into this "grand scheme of things" perfectly. To put it differently, there is nothing that would conceptually distinguish such an exchange from any other exchange out there, apart from it being decentralized, of course

But that's an intended feature

But you are not describing any feature that will force the price to be in line with the overall market. With cash-settled futures (as you describe this kind of exchange), the futures price will remain in line with the index price because contracts will eventually be settled at the index price at expiration

No, I ain't. Because as I said before, there shouldn't be any. It is a free market after all, isn't it?

The fact that USD balances on an exchange will never be safe on an exchange, which essentially means that BTC balances are not safe, and thus LN does nothing to prevent thefts via the hacking of an exchange.

The reason why BTC balances are not safe if USD balances are not safe is because if an exchange is hacked, then the hacker could create a USD balance on their account that was not actually received by said exchange, use that USD balance to buy up the BTC on the order book, and bid up the price on the exchange is higher than other exchanges, traders will wish to sell their BTC on the hacked exchange. The hacker could then withdraw the BTC they just purchased with (fake) USD

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

I am referring to the exchange, not the "Bitcoin network"

You still seem to be missing the whole point of such an exchange

That wouldn't be an exchange like Bitfinex or Coinbase as a separately existing entity (read a third party). A distributed decentralized exchange is not something which runs as a standalone application developed by someone or some company (though there can be clients or frontends just like there are Bitcoin desktop wallets). This exchange would be part of the network itself integrated in it like Lightning Network is assumed to be future development of Bitcoin itself. That's why hacking this exchange would mean hacking the Bitcoin network itself. I hope this clarifies the matter

[deisik]

Is Bitfinex still alive and kicking?

I haven't been trading at Bitfinex for almost a year and a half (last trade in November 2015), but I managed to successfully login to my old account recently. I'm now testing my own trading platform (which includes interface to this exchange) and going to send some funds there. So my question to those of you who are still trading at this exchange, will I be able to withdraw my funds intact and how fast are the withdrawals processed nowadays? I'm afraid that they might confiscate some percentage of my dough and give me their wretched BFX tokens, which I'm obviously not very much interested in. Are there any issues in this regard (i.e. deposits and withdrawals)?

[Sukrim]

Is Bitfinex still alive and kicking?

I haven't been trading at Bitfinex for almost a year and a half (last trade in November 2015), but I managed to successfully login to my old account recently. I'm now testing my own trading platform (which includes interface to this exchange) and going to send some funds there. So my question to those of you who are still trading at this exchange, will I be able to withdraw my funds intact and how fast are the withdrawals processed nowadays? I'm afraid that they might confiscate some percentage of my dough and give me their wretched BFX tokens, which I'm obviously not very much interested in. Are there any issues in this regard (i.e. deposits and withdrawals)?

If this happens (again) this would be (again) under nonstandard circumstances, during normal operations you don't get BFX tokens unless you explicitly buy them. As with every exchange, there's of course a risk associated with having funds there, so act accordingly.

[deisik]

Is Bitfinex still alive and kicking?

I haven't been trading at Bitfinex for almost a year and a half (last trade in November 2015), but I managed to successfully login to my old account recently. I'm now testing my own trading platform (which includes interface to this exchange) and going to send some funds there. So my question to those of you who are still trading at this exchange, will I be able to withdraw my funds intact and how fast are the withdrawals processed nowadays? I'm afraid that they might confiscate some percentage of my dough and give me their wretched BFX tokens, which I'm obviously not very much interested in. Are there any issues in this regard (i.e. deposits and withdrawals)?

If this happens (again) this would be (again) under nonstandard circumstances, during normal operations you don't get BFX tokens unless you explicitly buy them. As with every exchange, there's of course a risk associated with having funds there, so act accordingly

I'm not asking what is going to happen

All I want to know is whether Bitcoin withdrawals are not suspended right now, after the PBoC made Chinese exchanges disallow all cryptocurrency withdrawals for the time being. Bitfinex is a Hong Kong based exchange, and they don't seem to follow the orders issued the PBoC (at least, so it feels). Nevertheless, Hong Kong is still part of China, and I don't want to find myself in a situation where I deposit some coins there and won't be able to withdraw them later. So can anyone tell me the exact situation there at the moment in this respect?

[Sukrim]

They are not Hong Kong based for years by now.

[Bonez0r]

[...]

If the Bitcoin network is hacked, then Bitcoin is essentially dead. And so what?

I am referring to the exchange, not the "Bitcoin network"

As Deisik said, a decentralized exchange is not some third party, it's an integrated feature of the blockchain itself. You are the only one in control of your funds, the "exchange" is just a tool. Compare it to a standalone bitcoin wallet, there's no chance of the wallet stealing your bitcoins from you. As long as the blockchain of that particular coin exists, your funds will be safe (unless of course the blockchain itself is somehow hacked, hence Deisik's remark above).

NXT is an example of a blockchain that has a decentralized exchange built in. The "problem" with NXT is that it has a 1 minute block time, so if i enter a buy order, it takes up to a minute for the order to become visible on the NXT blockchain (the information of my order is transmitted to the blockchain so others can see it. It can't be changed once it's logged, just like bitcoin transactions). All other currencies on the exchange are also secured into the blockchain, so there can be no cheating unless someone hacks the blockchain itself. The downside of the minute block time is that high frequency trading is impossible on NXT. However, last year the team introduced Ardor, or "NXT 2.0" (it will go live this year in July). This works a bit differently in that it's a main blockchain (Ardor) with child chains attached to it. Ardor itself will have only a limited set of features. But a child chain can have any features programmed into it. I'm no expert, but i think it would be possible to make a child chain that has a small enough blocktime to make high frequency trading possible.

[HI-TEC99]

They are not Hong Kong based for years by now.

Where are they based now, I thought it was still in Hong Kong?

The privacy policy gives a Hong Kong address for customers to use for requesting Personal Information held by Bitfinex.


https://www.bitfinex.com/privacy

Accessing Your Personal Information: You may access and verify your Personal Information held by Bitfinex by submitting a written request to: General Counsel, iFinex Inc., 13/F, 1308 Bank of America Tower, 12 Harcourt Road, Central, Hong Kong.

[Sukrim]

They are not Hong Kong based for years by now.

Where are they based now, I thought it was still in Hong Kong?

BVI, they have an office in Hong Kong though.

[HI-TEC99]

They are not Hong Kong based for years by now.

Where are they based now, I thought it was still in Hong Kong?

BVI, they have an office in Hong Kong though.

Thanks, I just found the small print in their terms and conditions. It sounds like they set up two shell companies in the British Virgin Islands, one for US customers, and the other for everyone else.

https://www.bitfinex.com/terms

These Terms of Service constitute the agreement and understanding with respect to the use of any or all of the Services, and any manner of accessing them, between: you and one of the following parties:

a)   where you are a U.S. Person, BFXNA Inc. ("BFXNA"); and,
b)   where you are not a U.S. Person, BFXWW Inc. ("BFXWW").

1.4 Governing Law: These Terms of Service shall be governed by and construed and enforced in accordance with the laws of the British Virgin Islands, and shall be interpreted in all respects as a British Virgin Islands contract

[mayax]

they don't have a real office. HK office belongs to a lawyer and same for BVI