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Author Topic: icbit warning  (Read 6197 times)
akwfleaspirit
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July 13, 2013, 01:25:51 AM
Last edit: July 13, 2013, 02:07:59 AM by akwfleaspirit
 #21

I'll add one point on a less hostile note.

The first time I noticed irregular activities on the site I decided to withdraw what I had and leave but I read through the comments and saw what seemed to be comments of some integrity by staff. Someone said something about using referrals and a staff person, icthy I think said "that's spammy" which struck me as a comment of some integrity. So I thought maybe I was misunderstanding something when I noticed the scam. Then it happened again several times, there was no doubt.

Most of the issues on the site, what most people in most countries in the world would call scam issues, crookedness, may well be a combination of the background of the people running the site, perhaps limited knowledge of basic standards on any financial exchange, limited experience on their part etc.

The site is well designed even if the contracts are poorly thought out, but as it is it has zero chance of success. You cannot run an operation like that and succeed.

Any person who has some knowledge of markets, and is honest, who looks at the examples I give will call it scamming.

On another post, https://bitcointalk.org/index.php?topic=164255.msg2690056#msg2690056 Fireball says "we are constantly improving ICBIT to add transparency, to stick to the rules, etc" and "I am not interested in robbing people for a few hundreds BTCs when this thing could grow into a multimillion US dollars venture. That's the goal I wish to achieve, and our team is putting all efforts to make that happen.".  If his honest intention is to run a straight ship, and he takes real steps in that direction, I'll only be helpful. But first I want half of the bitcoin that were taken from me using dirty tactics. At that point I will consider financial matters square and would be supportive of genuine efforts to make it an honest site.


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boomerlu
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July 13, 2013, 08:54:52 PM
 #22

Boomerlu you are continuing the icbit tactic of "If you can't dazzle them with brilliance, baffle them with bullshit".

You know very well that the contracts on icbit are almost completely disconnected from the bitcoin market. icbit prices are most often the result of a position reacting to a trader who is not aware of what goes on, squeezing the trader and extracting the contracts cheaply. That was done to me several times, with contracts being put down against the movement of spot and apparently with knowledge of my account particulars that only icbit staff would have.

The nonsense about backwardation etc is getting old. You know it very well but I'll spell it out for anyone who might be deceived by you. The price of a contract at icbit moves for a short time with contracts bought by someone landing on the site. Once that person has some bitcoin vested all of the major price moves are artificial pushes deliberately meant to squeeze the client, force margin. There is nothing to do with backwardation, contango or anything else. Those words are used to con people plain and simple.

As far as "nowhere does volatility enter as a factor", that's silly. I've covered this in another post, you cannot have leverage that ignores volatility in valuation. It is the first signature of a scam.

You can use all the big words you want, maybe you will impress someone. I know bullshit when I hear it.
The only reason the contracts are disconnected from the market is a lack of liquidity/market makers. And no they are not completely disconnected, the spread has come in a LOT since I first started trading there.

You can theorize WHY the contract traded away from spot, and indeed there can be many reasons. But, the primary reason for it to trade IN LINE with spot is arbitrage. Buy in one place sell in another, driving the price up in the first place, down in the other. There has to be significant capital/automated strategies in place for that to happen, and that just isn't the case with ICBIT.

I told you when leverage makes volatility a factor and when it doesn't - it all has to do with the option of the contract holder to default (as you pointed out), but both Long and Short can default, so such an effect should only increase the bid/ask spread, not spot-futures spread. Honestly, go pick up a copy of Hull (Options Futures and Other Derivatives), because you clearly have no idea what you're talking about.

I acknowledge ICBIT is being manipulated, but from where I'm sitting, it's most likely not the owners, just traders. It's just a market with orders, people are going to trade around. And besides, recently it's been pretty close to spot - not more than say 10 points off (with a wide spread).

Finally, I am not trying to impress anybody, I am just correcting some really bad misinformation. I have no affiliation with ICBIT except that I trade there and they actually got their contract design correct. I've also given them advice on how to correct some of the more glaringly bad things they do. I would like for there to be more liquidity in their market.
akwfleaspirit
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July 14, 2013, 09:25:25 AM
Last edit: September 14, 2013, 02:31:57 AM by akwfleaspirit
 #23


The only reason the contracts are disconnected from the market is a lack of liquidity/market makers. And no they are not completely disconnected, the spread has come in a LOT since I first started trading there.

You can theorize WHY the contract traded away from spot, and indeed there can be many reasons. But, the primary reason for it to trade IN LINE with spot is arbitrage. Buy in one place sell in another, driving the price up in the first place, down in the other. There has to be significant capital/automated strategies in place for that to happen, and that just isn't the case with ICBIT.

I told you when leverage makes volatility a factor and when it doesn't - it all has to do with the option of the contract holder to default (as you pointed out), but both Long and Short can default, so such an effect should only increase the bid/ask spread, not spot-futures spread. Honestly, go pick up a copy of Hull (Options Futures and Other Derivatives), because you clearly have no idea what you're talking about.

I acknowledge ICBIT is being manipulated, but from where I'm sitting, it's most likely not the owners, just traders. It's just a market with orders, people are going to trade around. And besides, recently it's been pretty close to spot - not more than say 10 points off (with a wide spread).

Finally, I am not trying to impress anybody, I am just correcting some really bad misinformation. I have no affiliation with ICBIT except that I trade there and they actually got their contract design correct. I've also given them advice on how to correct some of the more glaringly bad things they do. I would like for there to be more liquidity in their market.

Here is one issue with volatility and pricing specifically as it applies to the type of contracts on icbit. The contracts are calculate by 1/price1 - 1/price2. If you enjoy math too much you can make a curve with the likelihood of a specific price being reached in the life of a contract on one axis and the profitability of a contract bought at one specific price on the other. x percent chance of the price touching a certain price, y percent profit on a contract at that price etc.

When contracts were priced $70 above spot that calculation was vaguely within an acceptable range. Both buyer and seller could be said to be in a position that made sense. A few weeks after that, the price of contracts went below spot even for contracts traded out to December. In other words someone was betting very heavily that between now and December the price of spot would not rise above the 80s.

It makes no sense unless you look at the trades and notice the unnatural patterns. I've covered this in other posts. Briefly again look at http://www.nonprof.com/bitcoinistan.com/unlikely.jpg Right before the previous clearing someone extracted 325 contracts at the ridiculous price of 104. Then clearing was pushed up to 110. Then an hour 40 before the next clearing someone pushed clearing down to 107 and put a hundred contracts on the block to prevent it being pushed up. Selling December contracts at 107 is beyond suspicious. 104 more so. In the 90s even more so. In the 80s its silly. Again, a person would not sell at those prices based on any market info. Those trades are completely apart from any bitcoin price considerations. Do you deny that? It is funny.

When you say "the primary reason for it to trade IN LINE with spot is arbitrage" you are giving up any credibility you have. You are just making stuff up.

Same when you say "I told you when leverage makes volatility a factor and when it doesn't - it all has to do with the option of the contract holder to default". Uhm "leverage makes volatility a factor"? Volatility, the degree to which the underlying equity is volatile, has to be accounted for in anything that is leveraged.






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akwfleaspirit
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September 14, 2013, 02:36:27 AM
Last edit: September 15, 2013, 06:16:41 AM by akwfleaspirit
 #24

Two and a half months and Fireball has refused to address a single one of the issues himself.

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JamieV
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December 01, 2014, 07:54:43 PM
 #25

seems like the natural state of ICBIT's curve should be contango (in line with the forward curve for USD interest rates).  Since bitcoin pays no interest, but USD does, a future on bitcoin should be worth more than spot, since you would always prefer to buy the future and receive interest on the dollars you kept in the bank.  The right interest rate is probably only about 10 bps, which, if my bond math is correct, works out to about 7 satoshis a day, per contract, from trade date until settlement.  Of course this gets compounded, but at 7 satoshis, why bother...
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