[ANN] www.vircurex.com - Trade and Lend your Litecoins, Namecoins and Bitcoins

[Kumala]

Vircurex.com is (yet another) Exchange that offers you a wide range of trading facilities for Bitcoin and its most widely used alt-currencies. We will be constantly expanding the range of features, going beyond the typical trading of coins-4-coins.

Currently available features are:
•Trade your coins, be it Bitcoins, Namecoins or Litecoins
•Deposit/withdraw your coins any time
•Loan your coins and earn interest
•Borrow coins from other traders
•Earn with our referral program, discounts and earnings on referrals
•Use the API to retrieve data
 
Additional services planned in the coming weeks:
•Buy/Sell your coins using one of our many supported currencies (planned are: EUR, USD, CNY, HKD, SGD, CAD, JPY)
•Stop-loss orders
•Timelimited trades, sales and purchases
•Additional virtual/P2P currencies: IXCoin, Tenebrix, Fairbrix and others
•Yubikey integration
•Graphs
•Further API features for accesing the orderbook


We just recently released the additional feature of lending and borrowing coins, in addition to our existing trading of LTC/NMC/BTC (in any combination).
•Dont know what to do with your coins, but dont want to sell them? How about lending them and earning interest?
•Want to bet on a dropping coin price, why not borrow some coins, sell them and pay back the loan later (when the price has hopefully dropped).

Try us out.

[panerai]

just joined, very nice, I'll start loading LTC to it.

[MrGaSp]

Is it expected that the security certificate isn't verified?

[Spacy]

Registrant: Domains by Proxy, Inc

Maybe you should provide some proof of identity 

[ripper234]

We just recently released the additional feature of lending and borrowing coins, in addition to our existing trading of LTC/NMC/BTC (in any combination).
•Dont know what to do with your coins, but dont want to sell them? How about lending them and earning interest?
•Want to bet on a dropping coin price, why not borrow some coins, sell them and pay back the loan later (when the price has hopefully dropped).

Can you elaborate on how lending works? Are there any protections against defaulting on a loan? Any rating system for lenders?

[Kumala]

Let me explain the loan based on an example:

You offer to loan 10 BTC at an annual interest of 5%, for a period of 3 months with a deposit of 100NMC for each borrowed NMC
Lets assume I take the loan of 10 BTC, then what happens is:
1. 10BTC get transferred from your account to my account
2. 1000NMC get transfered from my account to the exchange's deposit account
3. You get paid the interest for the period that I chose, assuming 3 months, you get 3/12*0.05*10=0.125BTC

Now 3 scenarios can happen:
a) I decide to pay back the loan
-> You get back your 10BTC, you get to keep the paid interest even if I pay back the loan earlier
-> I get back my 1000NMC
b) I decide to forfeit the loan (in other words, I dont want to or I cannot pay back)
-> You receive the 1000NMC deposit
c) The loan is overdue (3 months later)
-> You get back the 10BTC
-> I get back my 1000NMC

In case I have less than 10BTC in my account (for scenarios a) and c)) then
 -> you get whatever amount of BTCs I have
 -> you get the proportional part of the deposit of the BTCs that I was not able/willing to pay back
 -> I get the remaining deposit

Example: At the end of the loan validity period, I have a mere 4 BTC in my account
 -> You get the 4 BTC
 -> You get 600NMC
 -> I get 400 NMC


Considering all this, the choice of deposit is essential. Obviously the deposit should
a) be higher than the current market price, otherwise I would borrow the coins, sell them and immediately close the loan. I this case you would have been better off by selling the coins yourself
b) chose a deposit value that would be equal to the rate at which you would be willing to sell your coins, thus if the borrower forfeits the loan, you get what you would have expected
c) dont exagerate the deposit, the borrower needs to have the deposit in order to borrow.

I haven't planned a ranking at this point in time. I believe the deposit feature will balance the risks of borrowers not paying back.

[ripper234]

Thanks for the explanation, it's a very interesting system, economy wise ... more like options than a pure loan system (see below)


Two errors:

1.

with a deposit of 100NMC for each borrowed NMC

You mean "for each borrowed BTC".

2.
The interest calculation is not right. It should be based on compound interest calculations, not anual / 12 * months.
E.g. in your example the interest should be 1.05^(3/12)-1 = 0.0123, which in BTC is 0.123 BTC.
I guess you can use your method of interest calculation since the difference is not huge, but the "correct" way to do it is compound interest.


Regarding:

The deposit ... should be higher than the current market price, otherwise I would borrow the coins, sell them and immediately close the loan

This explains why the deposit should not be lower than the current market price, but not why it has to be higher. The reason for it to be higher is market volatility - if I loan, wait 3 months, and pay back, and the BTC/NMC rates haven't changed, no sides would have lost - however, if NMC is worth a lot less BTC after 3 months, then the lender would have an incentive not to pay back the loan.

Actually, when I think about it, a better way to think about it is as a standard loan, combined with a CALL option. The lender buys, for a price equal to the interest, the option to buy the deposit back at the price of the loan, for the duration of the loan.

In this example, the lender simultaneously buys, for the price of 0.125 BTC:
 - A zero interest loan of 10 BTC for 3 months, with a deposit of 1000 NMC
 - The option to buy 10 BTC, to be paid in 3 months, for the next 3 months, for 1000 NMC, where the 10 BTC "are paid back" at the end of the period (in effect negating your 10 BTC debt)

There is a slight difference in attitude between describing this system as a loan system or option system. With pure loaning, default on a loan is considered to be "a bad thing", and will prohibit people in the future from loaning to the individual who defaulted. With the system you described, it's perfectly moral not to pay back a loan, if the BTC/NMC rates make it more worthwhile to keep the 10 BTC, rather than get the 1000 NMC back. The lender should factor this risk into the price, and be aware that he's actually selling options, not just a pure loan.

[ripper234]

Another reason this isn't really a loan system, is because your liquidity doesn't increase after loaning money from someone via this system.
If you need 100 BTC for 3 months, but you predict that you'll be able to give back 110 BTC after 3 months from future income, this loan system will not help you, because in order to get a 100 BTC loan right now, you have to put a deposit that's actually larger in value than the 100 BTC you're getting.

As currently implemented, it's a hedging/speculation tool, not a fund raising tool.

Instead (or in addition) to this "loan" system, why not simply offer standalone options trading? It's simpler, and allows for simpler price calculations.

Example:
1. Seller deposits 100 NMC with the exchange.
2. Seller sells Buyer the option to buy 100 NMC for 10 BTC, for the next three months, for 5 BTC.
3. At any time in the next three months, Buyer can invoke the option, pay 10BTC (or a part of it), and get 100 NMC (or a part proportional to what he paid).
4. During this time, the Buyer can sell his option to a 3rd party, if they so choose.
5. After three months, the option expires and is worth nothing. Seller gets whatever funds are left in the deposit (that any option holder didn't exercise).

You know ... standard options, implementing using the exact same tools ... just cleaner.

[Kumala]

You got me pretty much convinced here, give me a day or two to think it over, shouldn't take long to implement the options solution.
 
 

[ripper234]

You got me pretty much convinced here, give me a day or two to think it over, shouldn't take long to implement the options solution.

BTW, it almost goes without saying, but you will need some other things except options trading to gain trust.

I would start with a better SSL certificate (yours is issued to vps.vircurex.com and not vircurex.com, so it shows up as a broken SSL icon).
Next up are probably some means of identification, place of incorportaion, and in general whatever details you think are "Good Enough" to convince people that you're not planning to disappear with their money.

Of course you don't have to provide any such details, but people are reluctant to trust new BTC services, and with good reason.

[Kumala]

Working on it, I have ordered a "proper" SSL certificate from my hosting provider, hope it doesn't take too long for them to get it installed and configured properly.

[MrGaSp]

Working on it, I have ordered a "proper" SSL certificate from my hosting provider, hope it doesn't take too long for them to get it installed and configured properly.

Alright, i just didn't know if you actually had one already, and red lights went off

Thanks