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

[exxe]

Though I appreciate exxe's desire to provide a CFD service, and getting in or out of a position may indeed be very easy there as long as the usage is small. With the increasing usage and demand, it would become harder and harder to "make the market" (provide users the ability to buy and sell CFDs as easy as now). This is usually regulated by increasing the spread level.

No, it won't become "harder and harder" and there are no plans to increase the spread.

For example, if you look carefully at their website, there is absolutely no promise about the spread values. It just reports "current spread". There is no such thing as max. spread value, max buy/sell volume or any other similar figures.

This is not intentional and a good idea. Displaying the max/average spread and limits could be implemented. (Added to the TODO list).

I really don't want to advertise here, I just want to answer on the rumors.
As I said, futures and CFDs both have advantages and I wish you great success with icbit, Fireball. 

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[picobit]

There is of course no guarantee for a max spread on a futures trading platform either.  I do not understand the argument about why it would be harder to get out of CFDs when the volume goes up (but of course that does not mean that it is incorrects), however right now it might be pretty difficult to get out of some of the futures contracts.  Anyone being long on gold on icbit would have had a hard time getting out of those contracts these last weeks - although the events currently unfolding on mtgox might change that

As a "customer", I must say that I find that futures and CFDs supplement each other.  Diversification is good!

[Fireball]

There is of course no guarantee for a max spread on a futures trading platform either.  I do not understand the argument about why it would be harder to get out of CFDs when the volume goes up (but of course that does not mean that it is incorrects)

I will explain, what I mean when I'm saying it becomes harder. I see that exxe offers 1:5 max. leverage to BTC/USD currency pair (the lowest compared to other securities).

So far when a few people put in their 50 BTC, and majority goes long, it's no problem, owners probably have enough US Dollars to cover this position on Mt.Gox.

Now imagine N persons come who want to make quick bucks bitcoins, and put, say, 1000 BTC each, and go long (very probable scenario). This effect scales perfectly, and now the forex broker needs to cover these users long position by buying N*26000*5 = 130000 USD minus short positions traders opened. Amount of such people can very easily go to the moment, when forex broker needs to posess something like 1 mln US Dollars on the account in MtGox to start with, or otherwise the desk goes bankrupt when enough people start trading.
If BTC rate would be crashing, again majority goes short, and forex broker needs to have enough of bitcoins to cover the short position on MtGox with 1:5 leverage.

In futures contract market, ICBIT does not need to be (the only) market maker: this effect could be scaled down to another N traders who want to hedge, arbitrage and speculate, as there is a self-regulation of the market which we see in action already: if there are too many traders opening long position, the contango appears, and makes futures contract less appealing to buy, but more appealing to short sell. And vice versa, if the traders are pessimistic and majority goes short, backwardation appears, and it becomes appealing to open long positions.

[hazek]

Is there any way to see the 30d, 7d, 24h volume ICBIT is experiencing?

[Fireball]

Is there any way to see the 30d, 7d, 24h volume ICBIT is experiencing?

Bitcoincharts still didn't have time to add futures support

Ok, I will add my own volume charts then (as the HighCharts engine, alas, is buggy and does not show proper volumes neither on ICBIT nor on MtGox), along with recent trades log.

[Ichthyo]

Now imagine N persons come who want to make quick bucks bitcoins, and put, say, 1000 BTC each, and go long. This effect scales perfectly, and now the forex broker needs to cover these users long position by buying N*26000*5 = 130000 USD minus short positions traders opened. Amount of such people can very easily go to the moment, when forex broker needs to posess something like 1 mln US Dollars on the account in MtGox to start with, or otherwise the desk goes bankrupt when enough people start trading.

In futures contract market, ICBIT does not need to be (the only) market maker....

Icidentally, thats why I find the development on Bitfinex quite interesting. There, instead of displaying just an opaque CfD mechanism and "some" sperad, they have made everything completely transparent and allow users to provide the necessary loans on an integrated loaning market. The results are sometimes weird, but this is also a self regulating market.

[picobit]

The results are sometimes weird, but this is also a self regulating market.

Too weird for my taste

When they started they really did not give the impression that they knew what they were doing.  But following the discussion is interesting, they are clearly experimenting and trying to find a good way to run it, learning a lot in the process.  It will be interesting to see where it ends, their platform might end up being an attractive place to trade (though I have my doubts).

But until then I will stick with ICBIT.  I tend to do better on markets that I understand, and futures are not that hard to grasp. :-)

[xeverse]

No wonder it has already become virtually untradeable..

The trade fees must be fixed in minimal price steps..

The futures are supposed to be linear securities
here we can see highly non-linear behavior instead..

[Fireball]

The futures are supposed to be linear securities
here we can see highly non-linear behavior instead..

BTCUSD is a non-linear futures, all other (GOLD, OIL and upcoming S&P500) are linear futures contracts.
Non-linearity appeared from the fact that the contract's quoting price: the trading community is very familiar with prices like $28 (USD per 1 BTC price), rather than 0.03571428 (BTC per 1 USD). If it would be quoted in BTC per 1 USD, then the futures contract would be linear.

[Fireball]

Minor thing: front page's news block in the left sidebar was broken (it used to show latest @icbit_se twitter feed). Now I fixed it, and reworked to be asynchronous, so now page loads much faster, without the annoying lag which happened before.

[Stephen Gornick]

Minor thing: front page's news block in the left sidebar was broken (it used to show latest @icbit_se twitter feed). Now I fixed it, and reworked to be asynchronous, so now page loads much faster, without the annoying lag which happened before.

The price charts for GDJ3 and CLJ3 are borked, ... no updates in many days.

[Fireball]

The price charts for GDJ3 and CLJ3 are borked, ... no updates in many days.

I will check, thanks!

[Stephen Gornick]

The BUH3 futures contract (BTC/USD), started some 10 days ago already has had over $100K USD worth of trades (which is 1/5 of total BUZ2 volume which was trading for months!).

BUH3 is now over half million USD worth of trades -- which is the level BUZ2 was at when it reached settlement, except BUH3 hit it in about 70 days I believe.
 - https://plus.google.com/u/0/117990284188664727142/posts/9FZNsGd2MBz

[picobit]

BUH3 is now over half million USD worth of trades -- which is the level BUZ2 was at when it reached settlement, except BUH3 hit it in about 70 days I believe.
 - https://plus.google.com/u/0/117990284188664727142/posts/9FZNsGd2MBz

21 days, actually!  Which is important, since it means that the current contango is three times more expensive. 

[Fireball]

We're glad to present you the new futures contract available for trading at ICBIT. It's one of the most popular contract type throughout the worldwide exchanges.

The S&P500 futures, optimized for bitcoins. Very easy to understand and trade.

Features:
a. Price corresponds to the S&P500 index value. Minimum price step is 0.25 points. No need to recalculate anything. Just trade.
b. Small contract size: 0.01 BTC x index value. That's substantially lower than e-mini's $50 x index value, and allows for more liquidity available on the market
c. Low fees oriented toward scalpers and high frequency traders: The smallest possible price difference of 0.25 points can still result in a profitable trade!

I hope you enjoy that. As usual, let me know if something is not allright, and I will do my best to solve these issues.

[toffoo]

While I applaud this move and look forward to trading this interesting new contract, I fear this may be a step closer toward the fate of the GLBSE.

The gold and oil futures we've been trading here for a while now aren't really owned or regulated by one person or entity, but the S&P Index is.  World futures exchanges pay hefty licensing fees to trade contracts on indexes like the S&P 500.  I presume the ICBIT isn't paying The McGraw-Hill Companies a licensing fee to trade this?

We all know that running a virtual currency-based futures exchange is in a legal grey area right now.  There are two ways forward: one would be the "Mt.Gox model" of trying to be legit and follow everybody's rules, the other being the "Pirate Bay/WikiLeaks/MPEx model" where you use good cryptography, redundant backups, and setup shop in someplace like Romania and say "fuck it, try and stop us!".

I'm afraid the ICBIT seems to be drifting toward the latter.

Again, I will personally support and trade this new contract, but in the back of my mind there will always be the lingering fear that it could all go "poof!" with one ugly phone call (just like all my holdings at the GLBSE).  Trading an S&P 500 contract gets us significantly closer to going away in a poof of smoke.

[picobit]

I must say that I tend to agree with toffoo here.  AFAIK noone has tried to shut down icbit so far, but then noone has had an incentive to do so.  Piggybacking on S&P500 may be like waving a red cloth at the face of some pretty resourceful people.  If they truly earn money on licensing the right to trade such futures, they are almost sure to have people employed to look for people that are not paying.  McGraw-Hill are know to be a bit aggressive when it comes to protecting their rights.  While interesting, it this worth the risk?  Well, that is of course Fireball's call, he is the one who could get in trouble.

[Fireball]

While I applaud this move and look forward to trading this interesting new contract, I fear this may be a step closer toward the fate of the GLBSE.

-= skip =-

Again, I will personally support and trade this new contract, but in the back of my mind there will always be the lingering fear that it could all go "poof!" with one ugly phone call (just like all my holdings at the GLBSE).  Trading an S&P 500 contract gets us significantly closer to going away in a poof of smoke.

Thanks for your support! I will provide my colleague's comments about this issue here later today, as he has more knowledge in the legal side, and I have more knowledge in technical side of the question.

However, two points about what you said:
1. Phone call is not really a legal action. So if GLBSE explained their shutdown with a "phone call", it sounds like a lie. At the very least, email complain would better describe situation, the person in charge of the claim, date, message headers and address would confirm the identity of the person, etc. Phone call is  nothing.
2. In the worst case, if ICBIT gets a notification that the S&P500 bitcoin futures trading requires paying licensing fees, it does not mean ICBIT is going to shutdown. It just means that we would have to stop trading this specific futures until legal problems are resolved, or just stop trading S&P500 and move to another interesting index futures contract.

[Fireball]

I must say that I tend to agree with toffoo here.  AFAIK noone has tried to shut down icbit so far, but then noone has had an incentive to do so.  Piggybacking on S&P500 may be like waving a red cloth at the face of some pretty resourceful people.  If they truly earn money on licensing the right to trade such futures, they are almost sure to have people employed to look for people that are not paying.  McGraw-Hill are know to be a bit aggressive when it comes to protecting their rights.  While interesting, it this worth the risk?  Well, that is of course Fireball's call, he is the one who could get in trouble.

Ok, I got information.

ICBIT organizes trading of its own futures contract, which settles as 0.01 BTC multiplied by value of the S&P 500 index by the moment of settlement. We do not calculate S&P 500 index ourself, we do not pretend to be substituting CME's S&P 500 futures contracts, or e-mini S&P 500 futures contracts settled in either US Dollars or Euros.

If absolutely necessary, to avoid legal problems, we are ready to:
1. Change name of ICBIT's futures contract to avoid direct relation to either e-mini or CME's full sized S&P 500 futures contract settled in USD or EUR.
2. Change settlement formula by adding a fixed offset. For example, our contract's tick size would be 0.01 BTC x (S&P500 index value + 1 point).

So, it's nothing to worry about (yet).

[Fireball]

An important server side update was just deployed.
Most noticable improvement: Now multiple connections from the same user is possible, and notifications will be automatically routed to every connected client. So you can open S&P500-index futures in one browser tab, BTCUSD in another tab, and Exchange in the third tab, and all of that will work and autoupdate as expected.
You can run your trading bot software, and watch the orders it places in real time in the web browser.

Another noticeable improvement is for IE users. Sometimes, autoupdates did not work and user had to force page refresh to see updates to his orders list. Now, this is also fixed.