Bitcoinica - Advanced Bitcoin Trading Platform

[netrin]

Currently we only support USD. However, BTC withdrawals will be announced soon.

Why? I moved a few BTC to your site. Performed no trades and continue to own entirely BTC.

[1714975246]

1714975246

[1714975246]

1714975246

[zhoutong]

Today, after waking up, I can't access my account of $-950, access denied!
...
I lost around $3500 in two days!

We have blocked your account due to malicious attempt to control prices.
...
In order to protect other Bitcoinica traders from the unexpected and huge fluctuations, we have decided to permanently suspend your account. Your account balance was negative when closed.

To quote Nelson from The Simpsons:  "Ha ha".

I am looking forward to macbook-air coming back here and whining like a baby.

I won't whining like a baby as my balance was already "negative".

It was too easy to make money if you have at least a few hundred coins to "control prices". With a simple python script I can double my balance in minutes. It must be the fault of the system, not the fault of the users. I hope you fix your website since I think it is great, and I would like to come back and do some real trades in the future.

希望周总见谅。

Thanks for pointing out the problem.

Yes, it was the fault of the system. Bitcoinica was designed for small trades. And we guarantee up to 50 BTC of liquidity.

Now I have already refined the algorithm for large trades (up to 1,000 BTC). All the trades won't be executed immediately at the same price like before. Instead, large trades have to go through actual market execution. If any fake bids or asks at Mt. Gox have been canceled, the spread will increase and make any remaining limit orders to remain open.

Closing your account is a concern that Bitcoinica is still small, and deliberate attempts which aim to cheat the system have very bad consequences to other customers. (I don't mind losing a few thousand of dollars because of this. But huge fluctuations are going to harm others.)

We will release a version of Bitcoinica in a month. The new version will be another breakthrough in the Bitcoin market. I will reopen your account after the launch of the new version.

[zhoutong]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

Bitcoinica is not an exchange. We guarantee liquidity based on current orders in the market. If you build a fake bid wall, Bitcoinica will think it's easy to sell.

If you sell on Bitcoinica in large amounts, it's likely that the system will give you a good price since it's easy to sell. However, if you now suddenly cancel all the orders, the system will fall into a trap and make a loss.

We have already pushed some updates to refine the algorithm to prevent cheating like this. But the financial loss is not just affecting the platform itself, but other traders as well.

I don't decide who can or cannot trade. But for any transactions on Bitcoinica, I'm the counter party. I can refuse to offer prices which definitely don't reflect market conditions.

For 99.9% of Bitcoinica traders, blocking malicious accounts will benefit you.

[zhoutong]

Currently we only support USD. However, BTC withdrawals will be announced soon.

Why? I moved a few BTC to your site. Performed no trades and continue to own entirely BTC.

You don't "own" the BTC. In fact, you're holding a long position (contract) at Bitcoinica to bet that BTCUSD will rise.

When you withdraw, you will have to liquidate the position and withdraw in USD.

BTC withdrawals will be available soon.

[macbook-air]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

Bitcoinica is not an exchange. We guarantee liquidity based on current orders in the market. If you build a fake bid wall, Bitcoinica will think it's easy to sell.

If you sell on Bitcoinica in large amounts, it's likely that the system will give you a good price since it's easy to sell. However, if you now suddenly cancel all the orders, the system will fall into a trap and make a loss.

We have already pushed some updates to refine the algorithm to prevent cheating like this. But the financial loss is not just affecting the platform itself, but other traders as well.

I don't decide who can or cannot trade. But for any transactions on Bitcoinica, I'm the counter party. I can refuse to offer prices which definitely don't reflect market conditions.

For 99.9% of Bitcoinica traders, blocking malicious accounts will benefit you.

I don't like you keep speaking of "malicious" accounts. Not at all. No account is "malicious". No one is hacking your site or stealing other users' passwords. Everyone trades at your website by filling in buying or selling orders. You should work hard on improving your website instead of criticizing your users. I have lost lots of money due to the crap algorithms.

[MemoryDealers]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

In a free market,  Zhoutong is not the king of Bitcoin,  but he IS the king of Bitcoinica.

He can ban,  or allow, anyone to use the site for whatever reason he pleases.

Just as the rest of us can decide to use,  or not use, Bitcoinica for whatever reason we please.

This is the only moral and fair system of property rights.

[nrd525]

I'd recommend that everyone starts off with very small trades to learn the system.  You can go as low as 0.02 btc!

[stick_theman]

This is awesome. A 17-year old in Singapore invents and implements a bitcoin bucket shop. I'm truly impressed. Imagine the financial fraud he'll invent and implement when he has at least 10 or 20 years of experience.

Ladies and Gentlemen!

We now have a new Jesse Lauriston Livermore and he lives in Singapore.

LOL, how good are you in reading tapes?

[fcmatt]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

Bitcoinica is not an exchange. We guarantee liquidity based on current orders in the market. If you build a fake bid wall, Bitcoinica will think it's easy to sell.

If you sell on Bitcoinica in large amounts, it's likely that the system will give you a good price since it's easy to sell. However, if you now suddenly cancel all the orders, the system will fall into a trap and make a loss.

We have already pushed some updates to refine the algorithm to prevent cheating like this. But the financial loss is not just affecting the platform itself, but other traders as well.

I don't decide who can or cannot trade. But for any transactions on Bitcoinica, I'm the counter party. I can refuse to offer prices which definitely don't reflect market conditions.

For 99.9% of Bitcoinica traders, blocking malicious accounts will benefit you.

I don't like you keep speaking of "malicious" accounts. Not at all. No account is "malicious". No one is hacking your site or stealing other users' passwords. Everyone trades at your website by filling in buying or selling orders. You should work hard on improving your website instead of criticizing your users. I have lost lots of money due to the crap algorithms.

Sounds like u made plenty before that by gaming the system???, but then throw a fit when the market screwed u with a big sell.
Karma

[nrd525]

I don't understand the spread estimates/averages on the homepage:

Spread* (฿)   0.13286
Spread* (%)   1.303%

0.13 BTC / 5 BTC is 2.6%, not 1.3%

[BitMagic]

2.6%, not 1.3%

Spread is 1.3% above and below market price.

[Nagle]

The problem with Bitcoinica is that it's both a market and a player in its own market.  Those functions are usually separated.  When they're not, you're betting against the house.  See "bucket shop".

Because you're betting against the house, the house can lose. Hence the banning of "manipulative" traders, without any stated rules. Worse things can happen if the house screws up. Because Bitcoinica offers trading on margin, it's possible for Bitcoinca to lose big if the price falls or rises faster than Bitcoinica can liquidate a margined position.

An exchange like Mt. Gox, if they're honest and aren't playing their own market, takes no market risk.  Bitcoinica does take market risk, which means they have to have real assets behind them to cover losses.  Do they?

[zhoutong]

The problem with Bitcoinica is that it's both a market and a player in its own market.  Those functions are usually separated.  When they're not, you're betting against the house.  See "bucket shop".

Because you're betting against the house, the house can lose. Hence the banning of "manipulative" traders, without any stated rules. Worse things can happen if the house screws up. Because Bitcoinica offers trading on margin, it's possible for Bitcoinca to lose big if the price falls or rises faster than Bitcoinica can liquidate a margined position.

An exchange like Mt. Gox, if they're honest and aren't playing their own market, takes no market risk.  Bitcoinica does take market risk, which means they have to have real assets behind them to cover losses.  Do they?

Yes. As mentioned in the interview, we have $1,000 initial risk deposit and 50% of spread profit as risk fund. Usually Bitcoinica will hedge most of the trades, this will make it a honest brokerage, not a bucket shop. There is a pool of orders, not for betting against customers, but for saving transaction costs only.

We never manipulate the prices to gain profit. Our pricing algorithm is independent of users positions. We take market risks, because of responsibility, not desire for profit. We can force you to sign contract with Bitcoinica to ensure negative balance can be paid up, but that's not what Bitcoin should be.

We use technological methods to establish trust and eliminate the need for due diligence.

[zhoutong]

The problem with Bitcoinica is that it's both a market and a player in its own market.  Those functions are usually separated.  When they're not, you're betting against the house.  See "bucket shop".

Because you're betting against the house, the house can lose. Hence the banning of "manipulative" traders, without any stated rules. Worse things can happen if the house screws up. Because Bitcoinica offers trading on margin, it's possible for Bitcoinca to lose big if the price falls or rises faster than Bitcoinica can liquidate a margined position.

An exchange like Mt. Gox, if they're honest and aren't playing their own market, takes no market risk.  Bitcoinica does take market risk, which means they have to have real assets behind them to cover losses.  Do they?

Yes. As mentioned in the interview, we have $1,000 initial risk deposit and 50% of spread profit as risk fund. Usually Bitcoinica will hedge most of the trades, this will make it a honest brokerage, not a bucket shop. There is a pool of orders, not for betting against customers, but for saving transaction costs only.

We never manipulate the prices to gain profit. Our pricing algorithm is independent of users positions. We take market risks, because of responsibility, not desire for profit. We can force you to sign contract with Bitcoinica to ensure negative balance can be paid up, but that's not what Bitcoin should be.

We use technological methods to establish trust and eliminate the need for due diligence.

You tend to think that risk-free businesses tend to stay longer. That's not true. Risk-free business is a scam. Because we take risk, our profits are generally higher. When there are serious issues such as security breaches, we are glad to put our profit in again and continue operation and compensate all customers. Risk-free businesses will just run away because they can't afford to do so.

Personally, Bitcoinica told me a good lesson - word of mouth is important. I know why brand is valuable. I know the established trust should be treasured. Even if there's any unexpected loss, I'll do my best to stay with the customers. And with the risk and profit, i can do a lot more than other exchanges.

[macbook-air]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

Bitcoinica is not an exchange. We guarantee liquidity based on current orders in the market. If you build a fake bid wall, Bitcoinica will think it's easy to sell.

If you sell on Bitcoinica in large amounts, it's likely that the system will give you a good price since it's easy to sell. However, if you now suddenly cancel all the orders, the system will fall into a trap and make a loss.

We have already pushed some updates to refine the algorithm to prevent cheating like this. But the financial loss is not just affecting the platform itself, but other traders as well.

I don't decide who can or cannot trade. But for any transactions on Bitcoinica, I'm the counter party. I can refuse to offer prices which definitely don't reflect market conditions.

For 99.9% of Bitcoinica traders, blocking malicious accounts will benefit you.

I don't like you keep speaking of "malicious" accounts. Not at all. No account is "malicious". No one is hacking your site or stealing other users' passwords. Everyone trades at your website by filling in buying or selling orders. You should work hard on improving your website instead of criticizing your users. I have lost lots of money due to the crap algorithms.

Sounds like u made plenty before that by gaming the system???, but then throw a fit when the market screwed u with a big sell.
Karma

No withdraw, no profit.

[zhoutong]

We have blocked your account due to malicious attempt to control prices.

Who are you to dictate who can and cannot trade?  Who died and made you king of bitcoin?

Bitcoinica is not an exchange. We guarantee liquidity based on current orders in the market. If you build a fake bid wall, Bitcoinica will think it's easy to sell.

If you sell on Bitcoinica in large amounts, it's likely that the system will give you a good price since it's easy to sell. However, if you now suddenly cancel all the orders, the system will fall into a trap and make a loss.

We have already pushed some updates to refine the algorithm to prevent cheating like this. But the financial loss is not just affecting the platform itself, but other traders as well.

I don't decide who can or cannot trade. But for any transactions on Bitcoinica, I'm the counter party. I can refuse to offer prices which definitely don't reflect market conditions.

For 99.9% of Bitcoinica traders, blocking malicious accounts will benefit you.

According to our statistics, you have withdrawn $142 net. We have no intention to disclose your personal information, but it seems that you didn't count the numbers accurately.

If you need full records of deposits and withdrawals, please send an email to support@bitcoinica.com

Thank you!

I don't like you keep speaking of "malicious" accounts. Not at all. No account is "malicious". No one is hacking your site or stealing other users' passwords. Everyone trades at your website by filling in buying or selling orders. You should work hard on improving your website instead of criticizing your users. I have lost lots of money due to the crap algorithms.

Sounds like u made plenty before that by gaming the system???, but then throw a fit when the market screwed u with a big sell.
Karma

No withdraw, no profit.

[genjix]

You tend to think that risk-free businesses tend to stay longer. That's not true. Risk-free business is a scam. Because we take risk, our profits are generally higher. When there are serious issues such as security breaches, we are glad to put our profit in again and continue operation and compensate all customers. Risk-free businesses will just run away because they can't afford to do so.

That's untrue. We've already invested 100k into our bitcoin operations and are continuing strong. I'm personally liable for any lost funds if the company should ever go bankrupt. I'm willing to back that statement up with a legal contract (up to a certain amount that I would be able to realistically pay off working over 2 years).

No business is risk-free. Yes, risky businesses have higher profits, but they also have higher volatility and there's always the sudden chance of them going bust overnight. We're very risk averse for that reason since it scares the shit out of me that we could wake up and have lost everyone's money. Then we'd have no means to pay people back if you look at past examples like bitomat, mtgox, mybitcoin, .etc

[johnj]

Could you label your spread? Such as:




Or some other kind of label. I tend to get numbers backwards, so it helps me to have a visual anchor.

[evoorhees]

In a free market,  Zhoutong is not the king of Bitcoin,  but he IS the king of Bitcoinica.

He can ban,  or allow, anyone to use the site for whatever reason he pleases.

Just as the rest of us can decide to use,  or not use, Bitcoinica for whatever reason we please.

This is the only moral and fair system of property rights.

If only more people understood this principle, the world would be a happier place =)

[BitMagic]

Zhoutong, What's going on with this?

Code:

BTCUSD	Stop	-0.75 	$5.7000	Executed @ 5.3103	1 minute ago
BTCUSD	Stop	-0.5    $5.4100	Executed @ 5.385	12 minutes ago

None of these transaction are huge deal on a $1 investment, and I might understand the last transaction if there was a discrete jump in bid, but this should definitely not be happening on the first order. Explanations, please, both regarding the problem with the first, and the reasons (if no "problem") with the second.

Seriously, if this is a regular possibility, your service just isn't robust enough to trust.