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

[m5j0r]

Did somebody come up with a good explanation for why BTCUSD is always higher on Bitfinex?
Goxing, security concerns etc.?

I love that you can trade BTCUSD on margin without verification other other crap, just cash out in Bitcoin afterwards. But security is important too...

[Ente]

I really think bitfinex could also start to increase the possible leverage (at least for the more liquid BTC/USD market).
This would really encourage trading volume and also have benefits for the lenders (very likely higher interest rates).

I think the risks outweight the benefits.
The BTCUSD market will have dramatic swings, and I expect that to happen especially in the next two months.
Flashcrashes would come. Avalanches would come.
And with some of the newer users, this would end bad.
And then there's no full insurance for the funds, as icing on the cake.

I really hope the margin leverage won't be risen.
Heck, I would rather suggest to lower it to 1x "leverage" as default, and enable higher leverage for users who know what they do. With them being able to answer a simple test or something.

Ente

[Dalmar]

Did somebody come up with a good explanation for why BTCUSD is always higher on Bitfinex?
Goxing, security concerns etc.?

I love that you can trade BTCUSD on margin without verification other other crap, just cash out in Bitcoin afterwards. But security is important too...

Bitfinex seemingly has more efficient arbitrage ties with China. This is why its price tracks Chinese BTC price more closely than Bitstamp and BTC-e.

[nrd525]

The premium is often very little. Right now $1-$2 over bitstamp.

[nrd525]

Something should be done about this. Notably the $10 million USD swap bid wall (at the flash return rate or above), if fake, should not be allowed to exist.
http://www.reddit.com/r/BitcoinMarkets/comments/28twpj/manipulating_bfx_swaps_for_fun_and_profit_a_howto/

[m5j0r]

This is indeed ridiculous. Would appreciate a comment from the site owners.
They are seen a bit too rare for my taste. We (have to) trust them a lot.

It's good to see the community pointing these things out.

[picobit]

We should always be aware that Bitfinex is not the only site for margin trading, there is also icbit.se, although their futures-based system takes some effort to understand.  It is always worth it to compare the swap rate at Bitfinex with the contango at icbit.  Right now their contango is equivalent to 0.13 %/day.  You need to factor in that icbit has low volume and no stop-loss mechanism, you risk to get caught in an unfavourable position.  On the other hand, the price spikes are smaller (and on purpose limited within a trading period), so they do not have the problem of sudden spikes that can trigger stop-losses in a way you regret later.

I think a bit more competition between the two sites would benefit us all.

[Ente]

Something should be done about this. Notably the $10 million USD swap bid wall (at the flash return rate or above), if fake, should not be allowed to exist.

Only offers backed by funds are possible on bitfinex.
So someone has several mils in his account, and has some fun.
I don't see anything bitfinex should, or could, do. What's the problem?
I though we were the crowd against regulation, and pro free market? :-)

This is indeed ridiculous. Would appreciate a comment from the site owners.
They are seen a bit too rare for my taste. We (have to) trust them a lot.

It's good to see the community pointing these things out.

Uh, I like bitfinex for their transparency and close contact with the community.
You probably never experienced the worse example' companies, right? :-P

Ente

[TwinWinNerD]

Something should be done about this. Notably the $10 million USD swap bid wall (at the flash return rate or above), if fake, should not be allowed to exist.

Only offers backed by funds are possible on bitfinex.
So someone has several mils in his account, and has some fun.
I don't see anything bitfinex should, or could, do. What's the problem?
I though we were the crowd against regulation, and pro free market? :-)

He probably meant demand, and you don't really need millions in your account to post an offer for millions. But that guy risks paying 1 hour of intrest if taken.

[Ente]

That reddit post says that
1) you don't have the mandatory 1h rate when you close used funds
2) you can post unlimited offers, as long as each offer is lower than your swappable balance

This combination makes it possible to create huge walls and eat up all competition, with almost no costs.

Is this correct?
If yes, I vote to change both of these points.
It will harm a few honest traders, I guess.
But as it seems to already be used for illicit manipulation..

edit:
1) is already fixed, as Raphael posted in that reddit thread.
Talk about fast reaction and close contact to the community!

Ente

[m5j0r]

You probably never experienced the worse example' companies, right? :-P

I luckily never had to personally. But I'm always very careful if the company is registered in the BVI, noone knows where their headquarters really are and some of the text on their site seems like it was written by non-native speakers.

Don't get me wrong - BFX is the one and only trading site for me. The pros they have totally outweigh all their cons to me. They are the only exchange with margin trading and no need for verification except for usd deposits/withdrawals. Just the way it's meant to be.

But I always like to point out how the cryptocrowd, while being against regulation etc. and for security, at the same time often trusts random third parties with tons of money.
For all you know a few nerds could copy a site like that quite easily and run off with the funds as it actually did happen before

Trust needs either regulation or some damn good reputation. And that is most easily built by the company being present as much as possible in my opinion.

tl;dr: I'm back to my charts haha

[peeveepee]

That reddit post says that
1) you don't have the mandatory 1h rate when you close used funds
2) you can post unlimited offers, as long as each offer is lower than your swappable balance

This combination makes it possible to create huge walls and eat up all competition, with almost no costs.

Is this correct?
If yes, I vote to change both of these points.
It will harm a few honest traders, I guess.
But as it seems to already be used for illicit manipulation..

edit:
1) is already fixed, as Raphael posted in that reddit thread.
Talk about fast reaction and close contact to the community!

Ente

If the bid wall is considered fake, why don't traders fill the order and try to push down the rate rather than changing how the platform function?

Yup, that's exactly it. I don't lend any swaps myself so i can't test how bad the manipulation is, but the weird movement in the order book tells me it's happening on a massive scale now. Interesting to know you're being effected by it.

This guy (http://www.reddit.com/user/BitcoinIdiotDude) admits he doesn't offer lending yet accusing the platform of allowing interest manipulation. All he has to do is stop borrowing and interest rate will gravitate down naturally by market force.

[arbitrage001]

If the bid wall is considered fake, why don't traders fill the order and try to push down the rate rather than changing how the platform function?

Ralph should ignore the person shouting the loudest and treat both trader and lender equally.

Yup, that's exactly it. I don't lend any swaps myself so i can't test how bad the manipulation is, but the weird movement in the order book tells me it's happening on a massive scale now. Interesting to know you're being effected by it.

This guy (http://www.reddit.com/user/BitcoinIdiotDude) admits he doesn't offer lending yet accusing the platform of allowing interest manipulation. All he has to do is stop borrowing and interest rate will gravitate down naturally by market force.

Should let people trade on interest rate also. Price discovery serves an important function in market.

[dadugan]

This guy (http://www.reddit.com/user/BitcoinIdiotDude) admits he doesn't offer lending yet accusing the platform of allowing interest manipulation. All he has to do is stop borrowing and interest rate will gravitate down naturally by market force.

Why is BitcoinIdiotDude having so much influence over those of us who didn't bother to speak up until now?

Posting crap on reddit and making accusation without any concrete proof and using "feeling" alone.


Seeing how Bitfinex will response to such response, anytime anyone not happy on the platform/policy, all they have to do is post accusation on reddit without any proof and scream as loud as they can to make Bitfinex caves in.


BitcoinIdiotDude is just mad because he lose a great deal of money trading. Go cry me a river.

[PirateHatForTea]

dadugan, your post doesn't make any sense. BitcoinItdiotDude didn't post an accusation, he posted a primer on how to manipulate BFX rates. Which actually works, by avoiding the compulsory 1 hour interest on swaps taken out, by cycling them through a position. What's more, I don't see how him having lost a bunch of money in the past is in any way relevant to whether or not he should post about possible loopholes in the way BFX's lending platform works.

I hadn't realised the 1 hour minimum charge was only for unused swaps and as a lender I would never have been in favour of this rule anyway - it should be a 1 hour minimum charge for any swap taken. This is the change that Raphael has made in response to this potential loophole. This actually benefits lenders as it means you can no longer be stooged by someone taking out a huge chunk of swap and only paying a few minutes interest on it, and then your funds getting dumped back out to be auto-lent (if you're lucky!) or to sit there waiting for you to create a new offer.

[AdamSmith]

Kind of new to lending.

Why isn't the swap rate on "flash" on demand and offer being matched?

If I manually set my rate to flash rate, my offer isn't being taken also.

[PirateHatForTea]

There are two reasons an offer at a bidded rate might not get taken:

1. If the bid duration is longer (eg 30 days) than the offer the offer won't be taken even at the same rate.

2. If the bid is for an amount larger than the offer, ie the offer cannot satisfy the entire loan demand, the offer won't be taken.

I've only started to notice the second one recently, as people put up bids for eg $300,000 in one block, and I can't fill any of it with my piddly few thousand of $s to lend. I'm not sure whether it fills if the sum of all bids at that rate and maturity add to more than the bid, but I guess that would probably fill it. I'm not sure about this though, can someone from BFX clarify?

[Ente]

There are two reasons an offer at a bidded rate might not get taken:

1. If the bid duration is longer (eg 30 days) than the offer the offer won't be taken even at the same rate.

2. If the bid is for an amount larger than the offer, ie the offer cannot satisfy the entire loan demand, the offer won't be taken.

I've only started to notice the second one recently, as people put up bids for eg $300,000 in one block, and I can't fill any of it with my piddly few thousand of $s to lend. I'm not sure whether it fills if the sum of all bids at that rate and maturity add to more than the bid, but I guess that would probably fill it. I'm not sure about this though, can someone from BFX clarify?

2) isn't the case. As soon as a (part of a) bid and a request match in duration time and rate, they are matched.

1) will be the case whenever the orderbook looks like it overlaps: someone requests funds on a seemlingly higher rate than the best offer, but wants that loan for a longer time period than is offered at that rate.

Ente

[PirateHatForTea]

Ente, that has not been my experience. I have definitely placed offers deliberately matched to an existing bid rate and duration and they have not filled. You can easily test this yourself though.

[picobit]

I have the same experience as PirateHat.  I explicitly make a bid that matches an existing offer, and still don't get it.  I suspected that it was rounding errors on the rate, and bid 0.001% more than the offer, still no match.  After a while, the bid was met, though.  I cannot reproduce it on demand, sometimes things work, sometimes they do not appear to work.