ICBIT Derivatives Market (USD/BTC futures trading) - LIVE

[Fireball]

Sorry for delay with updates. I'm polishing the user interface (it's a little bit too sleek and uninformative right now), the history trade data exporter is nearly ready too.

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[1713497421]

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[gnar1ta$]

I can see how futures would benefit bitcoin sellers, like miners and merchants, but how does it benefit bitcoin buyers?

[Fireball]

OK, my surprise on which I was working recently is ready to be tested: https://bitcointalk.org/index.php?topic=60548.0

Futures market will come when Currency Exchange sections works best (as the trading engine is universal, it's not much of a difference, but starting from Currency Exchange is simpler because Futures need a certain amount of liquidity in the market in order to work as expected).

[Fireball]

I put up a screenshot here showing an amazing web interface of our current universal trading platform. As it was scheduled, the first milestone is to start a currency exchange market.
Now there is everything ready for it:

• the sophisticated ultra fast trading engine
• web interface based on real time notifications
• bitcoins deposit/withdrawal (support for green addresses for instant depositing from deepbit and mt.gox is in progress)
• an extensive variety of USD deposit and withdrawal options via aurumXchange

I hope you like it, and when all goes good, futures section will be added as the second milestone.

[guruvan]

Looking forward to the futures trading.

Will you be connecting to any of the other exchanges to increase your liquidity?

[Fireball]

Posted a new, latest screenshot of the futures trading platform (in the first post of this thread). Looks tasty, does it?

[EnergyVampire]

Hello Fireball,

Is there anyway for non-registered users to view the ICBIT market?

[Fireball]

Is there anyway for non-registered users to view the ICBIT market?

No, not yet. Market overview will be added when the frontpage overhaul happens, and that's gonna happen after the futures trading platform is launched.

[Fireball]

The count down for the futures trading launch is running. We are doing final preparations right now.

[finway]

You should polish your site, do some UI work.

[Fireball]

You should polish your site, do some UI work.

Indeed, the main website is now getting content written, however the content is not styled yet. However, you can see that the front page improved a bit already

[eurosail]

Any plans to work with GLBSE? I bet a lot of people would love to see these two services integrated into one sleek interface.

[Fireball]

Finally! The futures trading is now live, welcome!
Bitcoin transactions from DeepBit are processed immediately.

[bitfury]

Finally! The futures trading is now live, welcome!
Bitcoin transactions from DeepBit are processed immediately.

Hello, Tycho invited me to test ICBIT. I would like to add few comments about nice features:

1) For incoming BTC payment - it would be nice to see how many confirmations are there and progress of transaction on receiver side;

2) Also as futures concept is new for probably majority of people here, maybe you should set up demo clone with demo database with say 100 BTC / 100 USD initial amount without ability to actually withdraw or add funds. So everybody could get familiar with engine without losing real coins while they not get exactly how things works.

Then - I've read http://habrahabr.ru/post/147258/ - this one in russian and http://www.icbit.se/BUZ2 - instrument description.

I would make you one big case that I am looking in - say I have started accepting pre-orders on ASIC development, but I do not want to wire money out, so I would like that people on blockchain.info could see that their BTC are in place minus margin/security requirements of ICBIT. Probably I would also like to have read-mode access to ICBIT (that's again new feature possibly), that rest of BTC were used to SELL futures contracts.

Say I got 50'000 BTC pre-orders and say that's $300'000 USD. For simplicity consider current exchange rate 6.00 . I sell 30'000 contracts. And put into account 2'000 BTC. So there's 48'000 BTC in secure wallet and 2'000 BTC on ICBIT.

Then - in case if spot market goes high to 6.25 USD per BTC, margin call happens (I am not counting also fees of ICBIT - this is interesting to know to make complete picture), and basically accounts looses all of 2'000 BTC and contracts closed. BUT - 48'000 BTC actually become worth same $300'000.

But - in case if spot market goes down to say 4.0 USD per BTC and it comes to date to start ordering equipment, and I close position, there will be roughly 25'000 BTC on ICBIT balance, right ?

Then - the question is - how ICBIT will get these 25'000 BTC ? Maybe Fireball will correct me, but I see following ways:

a) Allow to trade _only_ when counter-offer exists and matches perfectly. Then -this makes questions whether there will be enough liquidity to trade with any significant amount

b) When 30'000 contracts opened, ICBIT would actually have to BORROW somewhere 50'000 BTC, then SELL them and hold position in USD on SPOT market. This looks actually unfeasible.

Maybe the b) case would be limited by requirement to add to 30'000 contracts say 10% or 25% of amount - say 5'000 or 12'500 BTC additionally. But I do not get how this will help, as if there will be more than say 70% of traders opening position into one or another direction cumulative, this would return to condition of case (b).

Thanks in advance for clarification!

Meanwhile I will try to open one SELL contract, and look how it works.

[bitfury]

1. Added 3 BTC to account;

2. Opened 1 SELL contract - system commission 0.005 BTC per 1 contract, it is withdrawn immediately.
   So now balance looks like: 2.995 total (equity) 0.672345 reserved and 2.322655 available.

   Order details:

    Futures BUZ2   -1.5075 (amount) 0.67 (initial margin) 0 -1 (Qty) 6.6333 (Price).

3. In order book I see that one contract disappeared. So as far as I understand the system reflect case (a) - so there should be perfect balance between sellers and buyers of contracts.

4. Looking for p.3 - it seems that actual contract price could vary totally unrelated to spot price

  If so, then what about liquidity ?

  What will happen when MOST will like to open SELL positions ?

  Price for instrument will rise and shoot even higher than spot price ?

  Would that trigger margin calls, even before spot price rised, so overall effect would be value loss (sum of stored
  in separate bitcoin wallet and on icbit account) ?

Please forgive me if I haven't got into details of futures trading good enough. Hope your answers will clarify everything to me + may help you to explain these use-cases better to other ppl.

5. What about margin call ? It will happen over overall icbit balance or only for RESERVED amount (0.67 BTC per order) ?

Thanks.

[Fireball]

Hello, Tycho invited me to test ICBIT. I would like to add few comments about nice features:

1) For incoming BTC payment - it would be nice to see how many confirmations are there and progress of transaction on receiver side;

Yes, this is in progress now, along with a table of outgoing transactions with their statuses.

2) Also as futures concept is new for probably majority of people here...

Yep, you main questions basically boil down to one: "who pays?". The futures market is open, so unlike Bitcoinica or Forex, a position could only be open (e.g. a contract bought or a contract sold) only if there is a corresponding counter party who is ready to open a counter position at the same price.

However, waiting to find someone else may take some time, so a concept of market making was invented (not by us, but by traditional futures exchanges). So a computer programs takes the spot price, adds some bid/ask spread (like an additional premium for taking risks) and provides market with buy and sell orders.

So for example, one person came at 8 o'clock and bought 10 contracts and other person came at 8:20 and sold 10 contracts. Noone of them needed to wait 20 minutes, and market maker was holding the position for 20 minutes.

In your example with such huge amount of contracts, the market must be very liquid, which means, a lot of people should trade and/or be market makers, while hedging their risks at the spot exchange. We are just in the beginning of a way to set up such market, but eventually it should be possible. That's why I'm telling that it's very important for the futures market to attract as many people as possible. We can go even as far as providing a ready built market making bot which would be able to hedge positions at Mt.Gox and thus bring in some profit for users just for providing liquidity to the market.

Please let me know if something is unclear, I will be glad to answer.

[bitfury]

2) Also as futures concept is new for probably majority of people here...

Yep, you main questions basically boil down to one: "who pays?". The futures market is open, so unlike Bitcoinica or Forex, a position could only be open (e.g. a contract bought or a contract sold) only if there is a corresponding counter party who is ready to open a counter position at the same price.

However, waiting to find someone else may take some time, so a concept of market making was invented (not by us, but by traditional futures exchanges). So a computer programs takes the spot price, adds some bid/ask spread (like an additional premium for taking risks) and provides market with buy and sell orders.

So for example, one person came at 8 o'clock and bought 10 contracts and other person came at 8:20 and sold 10 contracts. Noone of them needed to wait 20 minutes, and market maker was holding the position for 20 minutes.

In your example with such huge amount of contracts, the market must be very liquid, which means, a lot of people should trade and/or be market makers, while hedging their risks at the spot exchange. We are just in the beginning of a way to set up such market, but eventually it should be possible. That's why I'm telling that it's very important for the futures market to attract as many people as possible. We can go even as far as providing a ready built market making bot which would be able to hedge positions at Mt.Gox and thus bring in some profit for users just for providing liquidity to the market.

Please let me know if something is unclear, I will be glad to answer.

Thanks! Everything is clear now. it is (a) variant - transparent.

Basically bot that trades on spot is nice, as it could be nice feature right in icbit's interface - because providing capital here is like getting guaranteed income from buy/sell spread for such investor. I think that there will be many persons who would like to invest their BTC capital that way.

Well - I think that growing this futures trading huge faces biggest problem of every financial system - BUILDING OF TRUST.... This is long process... However - possibly trading could be done with some kind of zero-trust requirements like bitcoin block-chain itself. Then you could expect significantly faster growth rate.

And even with a trust - there are inherent problem with audit. This is applicable to every exchange today, including mt.gox etc - say you have accumulating account in BTC and maybe in USD... and you have cash flow there... Just because of delays people move money in and move money out - you get positive balance... And then you see
that balance is pretty stable month over month and... you could start investing that balance into different operations (say simply botting orders via mt.gox). At first you did everything right, and system works stable. But - there are little chances that Gox fails and then icbit would fail as well if clients' BTCs were invested in such way. So - if one system (including yours) say guarantee 100% liquidity and no fractional operations, then how others will verify it BEFORE ANY CRISIS OR PAYMENT DELAYS HAPPENS ? If you have/get answer for that then you could grow much faster! As trust would grow faster!

Wish you success!

[byronbb]

May I suggest a robust security policy.

[Fireball]

May I suggest a robust security policy.

Please do.

[Stephen Gornick]

Trading is now live for BTCUSD-12.12 futures contract.

I didn't notice initially that to see the details of the BTCUSD-12.12 contract, the link is available only on the ICBIT home page (not from the trading platform):
 - https://icbit.se/futures

then pick USDBTC:
 - https://icbit.se/node/3

The details include:

Lot size: 10 USD.
Type: Settled in BitCoins.
Last trading day: 15.12.2012
Settlement date: 15.12.2012
Settlement: Positions are settled based on the volume weighted average rate of USD/BTC on the exchange [...]

I also didn't notice at first:
"Trade fee: 0.005 BTC per 1 contract"

So my question is, I see that my account can have USDs and BTCs balance.  But I can only use BTCs to buy these futures contracts, correct?

Are the USDs balance considered in calculating my margin?