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

[Stephen Gornick]

maybe needs to say that within a 5 minutes window of close, closing can occur, and create a random time of closing everyday, but within that 5 minute window, ie 7:55 to 8:00 closing can occur.

I like the suggestion really, it introduces some useful randomness without hurting integrity of financial operations.

As we saw ..., 8 o'clock Charlie (the clearing price manipulator who drops a BUZ2 bomb right before 8pm GMT every day) only got enough rope to hang himself.    There are reasons there aren't bids for thousands of BTCs up near the BTC/USD spot market price right now (with fewer than 30 days till BUZ2 settlement) and from what I can tell the primary reason is inability to trust.  It is hard to send non-trivial amounts of bitcoins to a financial service which operates anonymously.  Without participation from those willing to put their coins to work removing price inefficiencies means 8 o'clock Charlie has full control to put the clearing price wherever he wants it to be.

If there was the ability to extend that trust, the market would have shot down 8 o'clock Charlie long ago.

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[segabtc]

lol love the MASH 4077  reference, oh wait i might be dating myself! 

[killerstorm]

If there was the ability to extend that trust, the market would have shot down 8 o'clock Charlie long ago.

In theory exchange could require participants to lock their funds in multisig escrow instead of sending those funds directly to exchange.

However this tech isn't commonplace yet. But we can hope that one day...

[segabtc]

i would like to see yubikey (OTP) or something similar implemented for this exchange. I think that might instill some trust. Again this is up to fireball and what can be done within the timeframe of life!

[MPOE-PR]

So I just hallucinated that log entry which I saw at 20:30 UTC and used to report data to several people? </jk>

But seriously, I'm sure I saw a variation margin entry which is not the one currently shown in my logs.

This is starting to sound like dwolla. Fireball, all this sudden change would obviously have nothing to do with the recent write-up on Trilema, right?

Not like you panicked at first and tried to wipe out MP's margin, then thought better of it and actually aligned the fake prices you list with the market BTC/USD rate.

Right?

[smickles]

icbit is now rejecting all my orders

EDIT: Is anyone able to place a buy or sell, at market or specified price w/o it being rejected?
I see the live book updating with new orders...

[segabtc]

just sold some less than minute ago, all is well here

[MPOE-PR]

As we saw ..., 8 o'clock Charlie (the clearing price manipulator who drops a BUZ2 bomb right before 8pm GMT every day) only got enough rope to hang himself.    There are reasons there aren't bids for thousands of BTCs up near the BTC/USD spot market price right now (with fewer than 30 days till BUZ2 settlement) and from what I can tell the primary reason is inability to trust.  It is hard to send non-trivial amounts of bitcoins to a financial service which operates anonymously.  Without participation from those willing to put their coins to work removing price inefficiencies means 8 o'clock Charlie has full control to put the clearing price wherever he wants it to be.

If there was the ability to extend that trust, the market would have shot down 8 o'clock Charlie long ago.

That 8 o'clock Charlie is the site itself.

[Ichthyo]

If there was the ability to extend that trust, the market would have shot down 8 o'clock Charlie long ago.

i would like to see yubikey (OTP) or something similar implemented for this exchange. I think that might instill some trust. Again this is up to fireball and what can be done within the timeframe of life!

yes this would instill some trust,. Likewise a site operator exposing his real name and address can instill some trust, but all of this doesn't solve the fundamental problem. Yes it is a fundamental and long standing problem, but with a system like bitcoin we might indeed come up with a novel solution...

In theory exchange could require participants to lock their funds in multisig escrow instead of sending those funds directly to exchange.

This is the real meat!


The "classical" solution to the problem is:

• for someone running a business, tie his possibility to "exist" within the society to his "reputation"
• create rules to the effect that any misbehaviour ruins that "reputation"
• allow the clients to trigger this happening (only) in a controlled and legaly bound manner

This classical solution will never work satisfactory in a setup, where the entity running the business is out of scope, either being too large for any legal system, or operating just remote or generally out of reach in some way. Now, with the things able to be built on top of bitcoin (or a similar system, I am referring to multisig, coloured coins and/or contracts), we have another, more promising option: mechanisation of trust. Instead of having to trust someone socially, rather install a protective machinery.

PS: ok ok, we aren't there and in the meantime, anything improving the conventional kind of trust would be great

[Ichthyo]

icbit is now rejecting all my orders
Is anyone able to place a buy or sell, at market or specified price w/o it being rejected?
I see the live book updating with new orders...

I can confirm this happens from time to time, seemingly sporadically. I couldn't identify any pattern. It seems to stick until the current rate moves.

Maybe this behaviour is also what gave MPOE the impression or suspicion of manipulations by the platform's operators.
Which might of course be the case, but, honestly, to me this looks more like a bug in the margin calculation.

[smickles]

icbit is now rejecting all my orders
Is anyone able to place a buy or sell, at market or specified price w/o it being rejected?
I see the live book updating with new orders...

I can confirm this happens from time to time, seemingly sporadically. I couldn't identify any pattern. It seems to stick until the current rate moves.

Maybe this behaviour is also what gave MPOE the impression or suspicion of manipulations by the platform's operators.
Which might of course be the case, but, honestly, to me this looks more like a bug in the margin calculation.

Actually, this is a more recent development. But it is unfortunate that I can't participate in the market right now.

[molecular]

Hey guys,

can someone give me a wrapup of what's been going on? I started trading BUZ2 on icbit some months ago with some play money (very little).

By speed-reading the last 2 pages of this thread I determine something fishy has been going on? I've been wondering why the price of BUZ2 was well below market even with the settlement date nearing. My layman explanation was: well, the dudes trading here think the price will go down. Wrong?

[Ichthyo]

can someone give me a wrapup of what's been going on? I started trading BUZ2 on icbit some months ago with some play money (very little).

By speed-reading the last 2 pages of this thread I determine something fishy has been going on? I've been wondering why the price of BUZ2 was well below market even with the settlement date nearing. My layman explanation was: well, the dudes trading here think the price will go down. Wrong?

Since about the time of the last mini-crash of the BTC/USD rate, when also the BUZ2 rate went down below $10 for a short time, we can observe manipulation attempts always shortly before the closure time (20:00). The Intensity of those actions increased over time. They were more aggressive on the Oil futures, which have rather low liquidity. There, the manipulator was even really successful, on one instance he managed to shift the allowed trading range up so much that all of the existing bids were out of range. Since several days, the activities concentrate on the BUZ.

We can only speculate on what actually happened, but a IMHO plausible theory is that some trader(s) went short roughly at $10 (and similarily went long  on the oil futures at about $9), possibly expecting the BTC/USD rate to go way down below $10. This isn't surprising, since this was a common sentiment in the last weeks -- just that plan didn't work out.


Today, MPOE presented a different explanation, accusing the operators of ICBIT to be staging these manipulations.
See this thread and judge yourself: https://bitcointalk.org/index.php?topic=125376.0


PS: I just posted a summary of the events from yesterday evening into this other thread

[molecular]

can someone give me a wrapup of what's been going on? I started trading BUZ2 on icbit some months ago with some play money (very little).

By speed-reading the last 2 pages of this thread I determine something fishy has been going on? I've been wondering why the price of BUZ2 was well below market even with the settlement date nearing. My layman explanation was: well, the dudes trading here think the price will go down. Wrong?

Since about the time of the last mini-crash of the BTC/USD rate, when also the BUZ2 rate went down below $10 for a short time, we can observe manipulation attempts always shortly before the closure time (20:00). The Intensity of those actions increased over time. They were more aggressive on the Oil futures, which have rather low liquidity. There, the manipulator was even really successful, on one instance he managed to shift the allowed trading range up so much that all of the existing bids were out of range. Since several days, the activities concentrate on the BUZ.

We can only speculate on what actually happened, but a IMHO plausible theory is that some trader(s) went short roughly at $10 (and similarily went long  on the oil futures at about $9), possibly expecting the BTC/USD rate to go way down below $10. This isn't surprising, since this was a common sentiment in the last weeks -- just that plan didn't work out.


Today, MPOE presented a different explanation, accusing the operators of ICBIT to be staging these manipulations.
See this thread and judge yourself: https://bitcointalk.org/index.php?topic=125376.0


PS: I just posted a summary of the events from yesterday evening into this other thread

thanks a lot for summing this up, Ichtyo.

Is this an attempt to shake out people by having their margins called? Isn't it futile to try to keep the BUZ2 price low against the nearing settlement and higher BTC/USD value?

I have one more question: what will happen on the settlement date? Can I "cash out" my BUZ2 at that point or will they be rolled over into a new (maybe also suppressed) BUZ3?

[picobit]

According to the site, at expiration all contracts are settled at the avg. price of the largest spot market exchange (i.e. MtGox).

[killerstorm]

Is this an attempt to shake out people by having their margins called? Isn't it futile to try to keep the BUZ2 price low against the nearing settlement and higher BTC/USD value?

Why do you think it is futile?

He does not need to keep price low, he only needs to force counter parties to close at unfavorable price and to close his position.

For example (note that I use terminology somewhat different from what ICBIT uses) suppose there are two parties: I sold 100k BTC @10.00 and other party bought it.

Now I see that spot price went above 10.00, so I'm losing money. But suppose that I have a lot of BTC in reserves.

So I make a massive sell-off, filling all bids from 10.00 to 5.00, and then put by own bid: 100k @5.00.

Counter-party needs 100,000 BTC to cover his position. Why? He is buying 100,000 BTC for 1,000,000 USD. If he sells those 100,000 BTC @5.00, he gets 500,000 USD. So he needs another 500,000 USD in var. margin, and it is 100,000 BTC at 5.00.

Even if counter-party has exactly 100,000 BTC in reserves he needs to close his position because he won't have enough reserves in case futures price will fall even lower.

So he sells 100,000 BTC @5.00, to me.

Now we both got to neutral positions, but I have 100,000 BTC profit and counter-party has 100,000 BTC loss. It won't be affected by settlement because position is already closed.

However, to drive price from 10.00 to 5.00 I had to sell some contracts. But how much I had to sell depends on depth of market at that time, not at size of my main bet, so it can be some small sum, e.g. 1000 BTC.

Moreover, I could close that position through same kind of manipulation.

So, basically,  a person who has more liquidity than the rest of the market combined can totally pwn that market.

https://bitcointalk.org/index.php?topic=15352.msg264503#msg264503

[Stephen Gornick]

i would like to see yubikey (OTP) or something similar implemented for this exchange.

There is Google Authenticator OTP available as a security option now.

It is only used for login though, so there still is the need for another OTP challenge during withdrawal:

A plea to exchanges ... lets do 2 factor right!
 - http://bitcointalk.org/index.php?topic=109424.0

[MPOE-PR]

Hey guys,

can someone give me a wrapup of what's been going on? I started trading BUZ2 on icbit some months ago with some play money (very little).

By speed-reading the last 2 pages of this thread I determine something fishy has been going on? I've been wondering why the price of BUZ2 was well below market even with the settlement date nearing. My layman explanation was: well, the dudes trading here think the price will go down. Wrong?

See here.

[molecular]

Hey guys,

can someone give me a wrapup of what's been going on? I started trading BUZ2 on icbit some months ago with some play money (very little).

By speed-reading the last 2 pages of this thread I determine something fishy has been going on? I've been wondering why the price of BUZ2 was well below market even with the settlement date nearing. My layman explanation was: well, the dudes trading here think the price will go down. Wrong?

See here.

thanks, yeah, found that by myself and read parts of it.

thanks to killerstorm for the detailed explanation.

I've come to the conclusion (be it site op or someone else) that this situation sux.

[killerstorm]

I've come to the conclusion (be it site op or someone else) that this situation sux.

FWIW it looks like extra liquidity have helped to break manipulator's plan.

Also note that if somebody tries to manipulate the market and fails, everybody gets some good extra profit. So it's not always bad.