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

[mjr]

While returns to lenders are relatively high, I'd actually prefer that BitFinex stick to the current rate. Lenders still get good returns, and BitFinex can use the income to increase their reserve capital. Seems like a win/win for everyone.

That way when things go tits up (which they will at some stage), it's more likely that they'll have the reserves to cover any losses.

You actually think Bitfinex is going to cover loses if disaster strikes the bitcoin market? Can we have Bitfinex's official position on this please. I don't think the "insurance" term was ever explained/defined before.
Thanks.

We are working on providing a clear answer to this question. For now, let me say this. We do have systems in place to cover losses, and we have covered losses in the past. I can't, at this point, give you a complete comprehensive answer, but I am working on getting that answer for you.

One thing that should be clarified is that usually, return is correlated to risk. It is safe to say that any investment that offers 50%+ returns is not "risk-free". There is no such thing as a free lunch. That being said, I think that we at Bitfinex take a lot of steps to protect our lenders, and so far, we have done so in every case of severe market conditions. We have been through quite a few big changes, and have always made sure that our customers were protected. I hope that, as you wait for a more complete answer, you give us the benefit of the doubt.

[mjr]

I have read some information in earlier post, but I am unclear on several aspects of the platform.

I am primarily interested in being a liquidity provider and have the following questions:

1. One of the slides on the homepage advertises "Put up your swap offers. Enjoy great and insured return rates on dollars, BTC or LTC paid by other traders willing to short or leverage BTC or LTC."  Insured by whom?

2. Does this 'insurance' protect against a flash crash?

3. Is market data available for what % of leveraged funds are used in long vs short positions?

4. How is client money handled, what sort of separate accounts (if any) are used?

5. Have they had any sort of 3rd party audits?  If so are they publicly available?

Hi climbguy,

These are all very good questions. I can provide some information, but I am working on a comprehensive answer that will serve as a definitive stance on this subject.

Here are some things I can tell you about the lending market. We provide statistics about the total size of the swap market, and we monitor that number very carefully. Ideally, any lender should not be able to lose more than his collateral. We have some pretty cutting edge systems in place to try and liquidate positions that look like they will result in the loss of any money that is not theirs to lose. That could be looked at as the first line of defense. If the market moves too quickly, and we can't react to it in time, we have always so far, covered the losses of the lenders. I am getting more information on exactly what our customers can expect. So far, we have been able to absorb any market turbulence, and lenders have not lost money, to my knowledge. While, as far as I know, there are some doomsday scenarios, we have been working hard to do the best we can.

One thing that I have found interesting, is that since all people trading on margin have to have collateral, when their collateral is decreasing in value, it can be quite difficult to know exactly when to liquidate positions. There is a mix of bitcoins as collateral, as well as dollars. So in a "flash crash", bitcoins would decrease, while dollars stay the same. We are trying to make sure we keep a good ratio of those two assets, so we maintain our exposure at a reasonable level.

The most interesting question you have asked, and one that I am happy to be able to somewhat answer, is whether we have had any 3rd party audits.

From a security perspective, our FAQ says the following:
"Our platform is regularly tested by the company Arcui to detect and prevent any intrusion."

I would like to point out that we are paranoid when it comes to security. In the bitcoin world, it is far too common to hear of "hacks", etc. We take security seriously, and have never lost customer's funds.

We also have undergone a proof of solvency audit by Stephan Thomas. If you login to our platform, and click on the gear icon where your username is, you will see a drop down menu, you can click on "Audit" in order to view the information about our proof of having the funds.

If you would like more information about the audit process, feel free to read over this thread.
https://bitcointalk.org/index.php?topic=560457

I hope that I have been able to provide some answers, trust me, I am working on getting all of this information into one easy to find place.

Let me know if I can help with anything else.

[Sukrim]

...how about publishing audits of your fiat (USD) amounts, as well as LTC and DRK?

[mjr]

...how about publishing audits of your fiat (USD) amounts, as well as LTC and DRK?

That is a good idea. As I said, I am collecting suggestions and relaying them to the other people at Bitfinex. So far, we have shown that we have more than 100% of the funds required to meet our liabilities. We are committed to an ongoing audit process, so that there is never a question as to our solvency. Unfortunately, it requires even more trust when it comes to fiat, but those are the problems of legacy finance.

Hope to have more to report on this soon.

[Sukrim]

Yeah, the BTC solvency stuff is neat (though I hoped you'd do that maybe quarterly, the last and only one was in April - when there were still funds at Bitstamp too), however most people seem more concerned with your fiat balances - so an audit statement from one of the big 4 (http://en.wikipedia.org/wiki/Big_Four_%28audit_firms%29) and not just some random company/person would be really great.

[stevec]

So far, we have shown that we have more than 100% of the funds required to meet our liabilities

Thats not actually true. What you have shown is that back in April you had 100% of the funds required to cover your Bitcoin liabilities.

I don't believe you've ever proved that you also have 100% of the funds required to cover your fiat liabilities (of which you have at least 30m USD).

Btw, are you planning on setting up a better support tool? I've had good experiences with offering support via UserVoice, though there are other options. That would allow you to better track questions, manage FAQ, allow customers to vote on features etc.

/Steve

[PirateHatForTea]

Yes, a lot of questions piled up in the meantime.

- what is the legal structure behind BitFinex?

- how does the 'insurance' work, for whom, to what degree, when? Who will fall through the cracks, when the insurance isn't sufficient?

Josh, feel free to chime in on this at any time :-)
Also, I would suggest every PR guy in such a situation to have a sound system so no questions get lost. The introduction is now six pages ago..

Ente

Hi Ente, I am reading and listening to all these questions, and aggregating them and getting answers. This is my first week, so I am still trying to figure out the answers to all of the great questions that have been asked here.

We are working on getting you answers to those specific questions. I, of course, cannot make any statements without first getting the correct information.

Sorry for any delay, know that we are working behind the scenes to clarify all of the confusing aspects of our platform. I am working, right now, on a new FAQ, which should answer all these questions and more.

Regards,
Josh

P.S. Building a "sound system" as you described is also one of the projects I am working on. This medium, as a way to collect information, is less than ideal. This thread alone is over 200 pages long, so while I have been skimming through this thread, and others, I will probably not be able to know 100% of what has been said before.

I noticed that you also took down the BFX forum, including the Wiki. The forum was barely used so I can understand that decision, but the wiki had lots of useful info that was not replicated anywhere else!

There are loads of existing solutions, many cloud based, for providing support and Q&A - are you considering using some of these? Even something like GetSatisfaction would be a massive improvement, and solve many problems at once (support, feature requests, bugs, with voting, feedback and persistence/sharing of answers!)

About the other questions/responses:

- I presume you meant to say 'trader' not 'lender' here: "lender should not be able to lose more than his collateral"

- The audit was neat-o, but only included BTC so it is inaccurate to describe it as a 'solvency' audit as there are USD liabilities as well.

- To everyone, regarding speculation on the 'insurance' of loans, please stop saying the loans are insured. It is pretty clear: without a contract, what you have is not insurance. Until BFX offer an actual insurance contract, we cannot say that any loans are insured.

[superbit]

Yeah, the BTC solvency stuff is neat (though I hoped you'd do that maybe quarterly, the last and only one was in April - when there were still funds at Bitstamp too), however most people seem more concerned with your fiat balances - so an audit statement from one of the big 4 (http://en.wikipedia.org/wiki/Big_Four_%28audit_firms%29) and not just some random company/person would be really great.

Let's get a FIAT audit as well as what is in the "reserves" to cover lender losses.

[mjr]

So far, we have shown that we have more than 100% of the funds required to meet our liabilities

Thats not actually true. What you have shown is that back in April you had 100% of the funds required to cover your Bitcoin liabilities.

I don't believe you've ever proved that you also have 100% of the funds required to cover your fiat liabilities (of which you have at least 30m USD).

Btw, are you planning on setting up a better support tool? I've had good experiences with offering support via UserVoice, though there are other options. That would allow you to better track questions, manage FAQ, allow customers to vote on features etc.

/Steve

I agree, and we are discussing options for fiat audits, but unfortunately, the big 4 that were mentioned in another post do not have experience with bitcoin firms. We have looked into it, and so far, given the complications of our swap/lending side, none of them were feasible at the moment. We are working on a way to prove it, in a way that will actually assure people, as opposed to simply having a person whose face people recognize say something in front of a camera. We have some possible ways to do this and are still fleshing them out. We definitely have this as one of our priorities for the next few months.

I think that a quarterly audit of at least the crypto side seems reasonable, but I honestly don't know the details and expenses associated with that service.

As far as support tools, that is one of the top items on my plate right now (besides getting caught up with these forums, etc). I have used JIRA in the past, as well as Kayako (JIRA is more for software bug tracking). I will take a look at UserVoice. We are basically trying to upgrade all of those parts of Bitfinex, to provide the best customer service. I was brought on board specifically to find the areas we can improve and hopefully improve them.

I do ask that you be patient, we are a small, but dedicated team, and there are a LOT of things that we can improve. I think that right now we are the best bitcoin exchange in the world, but we can always do better. I honestly don't even hold us to the standard of other bitcoin exchanges, because I think that they have a long way to go. I look at Wall Street, and although they have their fair share of flaws, they have done some things right. So please monitor our site, and this thread if you like, to keep an eye for upcoming changes. We should have a lot of cool features and improvements to show you soon.

-Josh

P.S. By the way, I was doing development at another bitcoin company, and I had to integrate with the API's from all of the major exchanges, Bitfinex is by far the best, and offers the most advanced and useful orders and information. So, I only took this job because I really believe in this company, and yes, I have been on the other side of it too. So hopefully, I can relate to where a lot of you guys are coming from.

[mjr]

Yes, a lot of questions piled up in the meantime.

- what is the legal structure behind BitFinex?

- how does the 'insurance' work, for whom, to what degree, when? Who will fall through the cracks, when the insurance isn't sufficient?

Josh, feel free to chime in on this at any time :-)
Also, I would suggest every PR guy in such a situation to have a sound system so no questions get lost. The introduction is now six pages ago..

Ente

Hi Ente, I am reading and listening to all these questions, and aggregating them and getting answers. This is my first week, so I am still trying to figure out the answers to all of the great questions that have been asked here.

We are working on getting you answers to those specific questions. I, of course, cannot make any statements without first getting the correct information.

Sorry for any delay, know that we are working behind the scenes to clarify all of the confusing aspects of our platform. I am working, right now, on a new FAQ, which should answer all these questions and more.

Regards,
Josh

P.S. Building a "sound system" as you described is also one of the projects I am working on. This medium, as a way to collect information, is less than ideal. This thread alone is over 200 pages long, so while I have been skimming through this thread, and others, I will probably not be able to know 100% of what has been said before.

I noticed that you also took down the BFX forum, including the Wiki. The forum was barely used so I can understand that decision, but the wiki had lots of useful info that was not replicated anywhere else!

There are loads of existing solutions, many cloud based, for providing support and Q&A - are you considering using some of these? Even something like GetSatisfaction would be a massive improvement, and solve many problems at once (support, feature requests, bugs, with voting, feedback and persistence/sharing of answers!)

About the other questions/responses:

- I presume you meant to say 'trader' not 'lender' here: "lender should not be able to lose more than his collateral"

- The audit was neat-o, but only included BTC so it is inaccurate to describe it as a 'solvency' audit as there are USD liabilities as well.

- To everyone, regarding speculation on the 'insurance' of loans, please stop saying the loans are insured. It is pretty clear: without a contract, what you have is not insurance. Until BFX offer an actual insurance contract, we cannot say that any loans are insured.

Right now providing some clarity and transparency on the entire swap system is my number one priority, and I am currently working on a detailed explanation. Expect it within the next few days.

I will look into the wiki, I was not aware that it was down.

There are a lot of different solutions out there, I will look into GetSatisfaction as well. I am curious as to how people feel most comfortable being contacted, and contacting us. This is probably my least favorite way of being contacted, as I have to read through all these posts, many of which are people chatting amongst themselves.

I like using IRC, and I am not sure if people use that, but it usually is a much quicker method of talking. I think we need to move away from this forum as a means of bug reporting and I think we are definitely looking for a replacement solution. We also use email a lot. There is a subreddit as well, and some people have used twitter in the past. So...its a little all over the place right now. A one stop shop for support would probably be a nice improvement from a customer perspective.

As I said before, bear with me as I try to absorb the tons of information that people have posted here in the past, as well as come up with some new systems that help us all have a better time. Keep up the comments though, I am really enjoying the feedback and finding out what you guys want.

[mjr]

If somebody is losing something then it is bitcoin which loses all of its functionality with this kind of harsh regulation. Seriously if this regulation is in place using cryptocurrencies like they are supposed to is more or less a crime. I'm asking this because the regulation states that even oversea exchanges have register or block access for NY citizens. I know bfx is sailing under some some obscure flag but whether they like it or not THIS WILL BE OF IMPORTANCE TO THEM.

Hurray for the United States of Fascism and their view that they are all-mighty and entitled to be a world police using their own narrow little laws.

So now every exchange on the planet has to either block "NY citizens" or follow specific laws for that particular asphalt field? Think about how this will play out if other US states introduce their own little laws. What if other countries get the same ridiculous idea? Suddenly BFX will have to follow laws specific to NY, California, then laws made in London, Oslo, Stockholm, Moscow and so on.

I think Bitfinex should give us a response to this given that the United States of Fascism basically owns the NATO Corporation (which is very profitable and has shown that is has no problem using false-flag terrorism and mass-murder to increase it's bottom line numberous times).

The obvious solution would be to simply deny NY customers access to their platform. Another would be to submit to the new NY regulation (which may or may not hurt all users and most BFX users are not from there). What they simply can not and should not do is to keep on serving NY customers and pretend that it will not cause problems down the line.

I am working on a response for this as well, trust me, it is on our radar. The first thing to do in this case, is read the actual PROPOSAL, and then figure out how it would affect us and our customers. Right now, we still have time to chime in with our suggestions and ways that it could be improved. So we won't just issue a knee-jerk reaction to this, and the one thing I do not want to do is spread FUD. To the extent that it is unreasonable, I will call it unreasonable.

If anyone wants to see (so far) my favorite analysis of the legislation I will post the link.
http://two-bit-idiot.tumblr.com/post/92143258184/bitcoin-at-a-crossroads-tackling-the-bitlicense

I am not saying that I fully agree with everything he says, but I do at least appreciate his method of analysis. He is pretty balanced in looking over it. Let me know what you guys think.

[climbguy]

I have read some information in earlier post, but I am unclear on several aspects of the platform.

I am primarily interested in being a liquidity provider and have the following questions:

1. One of the slides on the homepage advertises "Put up your swap offers. Enjoy great and insured return rates on dollars, BTC or LTC paid by other traders willing to short or leverage BTC or LTC."  Insured by whom?

2. Does this 'insurance' protect against a flash crash?

3. Is market data available for what % of leveraged funds are used in long vs short positions?

4. How is client money handled, what sort of separate accounts (if any) are used?

5. Have they had any sort of 3rd party audits?  If so are they publicly available?

Hi climbguy,

These are all very good questions. I can provide some information, but I am working on a comprehensive answer that will serve as a definitive stance on this subject.

Here are some things I can tell you about the lending market. We provide statistics about the total size of the swap market, and we monitor that number very carefully. Ideally, any lender should not be able to lose more than his collateral. We have some pretty cutting edge systems in place to try and liquidate positions that look like they will result in the loss of any money that is not theirs to lose. That could be looked at as the first line of defense. If the market moves too quickly, and we can't react to it in time, we have always so far, covered the losses of the lenders. I am getting more information on exactly what our customers can expect. So far, we have been able to absorb any market turbulence, and lenders have not lost money, to my knowledge. While, as far as I know, there are some doomsday scenarios, we have been working hard to do the best we can.

One thing that I have found interesting, is that since all people trading on margin have to have collateral, when their collateral is decreasing in value, it can be quite difficult to know exactly when to liquidate positions. There is a mix of bitcoins as collateral, as well as dollars. So in a "flash crash", bitcoins would decrease, while dollars stay the same. We are trying to make sure we keep a good ratio of those two assets, so we maintain our exposure at a reasonable level.

The most interesting question you have asked, and one that I am happy to be able to somewhat answer, is whether we have had any 3rd party audits.

From a security perspective, our FAQ says the following:
"Our platform is regularly tested by the company Arcui to detect and prevent any intrusion."

I would like to point out that we are paranoid when it comes to security. In the bitcoin world, it is far too common to hear of "hacks", etc. We take security seriously, and have never lost customer's funds.

We also have undergone a proof of solvency audit by Stephan Thomas. If you login to our platform, and click on the gear icon where your username is, you will see a drop down menu, you can click on "Audit" in order to view the information about our proof of having the funds.

If you would like more information about the audit process, feel free to read over this thread.
https://bitcointalk.org/index.php?topic=560457

I hope that I have been able to provide some answers, trust me, I am working on getting all of this information into one easy to find place.

Let me know if I can help with anything else.

mjr link thank you for your follow up and attention to my questions.  I did review your audit by Stefan Thomas, while this is helpful, I have to be honest in that I have no idea who that person is.  As I understand the the cryptocurrency auditing process is new and still in development, but some higher authority on the matter would be great.

I too am very interested in how you handle your USD accounts, are client funds kept in a separate accounts from your operational accounts?  Also from what I read the fee on swaps has gone up 50% to 15%, what % of the fee is going towards a segregated 'insurance fund' vs your exchanges bottom line?  How is that separate fund handled, is it invested in anything?

On the flash crash question, you can only cover a position if you have a willing buyer, how many other exchanges are you connected with if there is a need to quickly cover a position?

I reviewed the stats page, and maybe I don't fully understand it, but how is the swap money used?  What % buy vs sell each of the three cryptocurrency you offer?

Finally, I noticed there is a referral code box on your signup page, where can I get the referral code out of my account and what am I offered for referring business to the exchange?

[manfred]

Yeah, the BTC solvency stuff is neat (though I hoped you'd do that maybe quarterly, the last and only one was in April - when there were still funds at Bitstamp too), however most people seem more concerned with your fiat balances - so an audit statement from one of the big 4 (http://en.wikipedia.org/wiki/Big_Four_%28audit_firms%29) and not just some random company/person would be really great.

U dreaming about a proper audit, dream on.

[adaseb]

Hello

I just joined. I have a few questions.

I want to short BTC/USD.


So deposited BTC into my account and when I tried selling it on the "EXCHANGE" column, it gave me an error.

When I sold it on the "MARGIN", it actually worked.

But I am wondering why isn't it letting me use the "EXCHANGE" option since I own the BTC and want to sell it and get USD. Then buy the BTC back with my USD and have BTC again.

[aumusxou]

Hello

I just joined. I have a few questions.

I want to short BTC/USD.


So deposited BTC into my account and when I tried selling it on the "EXCHANGE" column, it gave me an error.

When I sold it on the "MARGIN", it actually worked.

But I am wondering why isn't it letting me use the "EXCHANGE" option since I own the BTC and want to sell it and get USD. Then buy the BTC back with my USD and have BTC again.

You have three different wallets: trading, exchange, and deposit.  To sell for USD, you must move the coins to the exchange wallet.  Click "Manage Wallets" button on lower right-hand column.
By default, coin deposits go into the trading wallet.

[Sukrim]

I agree, and we are discussing options for fiat audits, but unfortunately, the big 4 that were mentioned in another post do not have experience with bitcoin firms. We have looked into it, and so far, given the complications of our swap/lending side, none of them were feasible at the moment. We are working on a way to prove it, in a way that will actually assure people, as opposed to simply having a person whose face people recognize say something in front of a camera. We have some possible ways to do this and are still fleshing them out. We definitely have this as one of our priorities for the next few months.

Sorry, but this is just a cheap excuse.

Yes, I'm quite sure that PwC will not sign an audit stating how many "Darkcoins" you own - however auditing your fiat assets should be a straightforward process and be possible any time (It's nothing special). I'm not asking for an audit of all your crypto assets and fiat at once, I want someone to look into you owning at least as many USD as your customers have deposited. There are no complications with swaps or lending at all, this is a simple matter of looking at bank statements and your internal accounting. You were able to know exactly how many BTC you needed to have at one point to cover your users' deposits, so you can surely tell how many USD you need to own too.

[davidgdg]

Hi
I have dollars on deposit. Some of them are loaned out on swaps but some are not. I want to loan out the balance. But my swappable balance is showing as zero. How is this possible and what can I do about it ? At the moment the balance is just sitting there uselessly.
Thanks
David
Ps I switched off auto renew and I have no open offers but it makes no difference 😞

[davidgdg]

Hi
I have dollars on deposit. Some of them are loaned out on swaps but some are not. I want to loan out the balance. But my swappable balance is showing as zero. How is this possible and what can I do about it ? At the moment the balance is just sitting there uselessly.
Thanks
David
Ps I switched off auto renew and I have no open offers but it makes no difference 😞

It seems I had open swap offers. Thanks to BFX support for helping out very promptly 😀

[Ente]

Feature request:

I'd like to have these +/- buttons



also on "swaps used in a margin position":



That +/- should, when used, combine swaps of similar rate (and/or maybe similar expiration date) to one single line.
This would help a lot with closing/organizing many swaps at once.

And, as the +/- code already is used in other tables, this might be somewhat easy to implement?

This would help me a lot!

Ente

[mjr]

Feature request:

I'd like to have these +/- buttons



also on "swaps used in a margin position":



That +/- should, when used, combine swaps of similar rate (and/or maybe similar expiration date) to one single line.
This would help a lot with closing/organizing many swaps at once.

And, as the +/- code already is used in other tables, this might be somewhat easy to implement?

This would help me a lot!

Ente

Thanks for the suggestion, Ente. Really appreciate all the constructive feedback. We are looking into adding this feature, it looks like it makes a lot of sense. The table that uses those controls is pretty different from this one (from a code perspective), but I believe that we can adapt it. I will keep you posted.

-Josh