Selling short in an exchange...the biggest scam of all

[dyask]

Either way...there is a computer program employing a strategy that only makes sense if they have already sold short.....
And that means that the crypto community is being shafted.

You might not consider that an issue worth raising but I do.
There are computer programs trading some coins in a way that very clearly indicates that have short sold...and it's not a level playing field

Odds are that no one can short AUR and it is just a problem of too many coins being dumped and not enough buyers.   If there actually are short positions driving the market down, then there will be buying pressure driving the market up when the shorts are covered.  

So far you have only thrown out a wild theory and haven't provided any proof.   Just because you are unhappy with what has happened with AUR doesn't mean there is program trading driving the price down.  

[adhitthana]

 There are just simple people giving up on their hopes of AUR rising and using whatever BTC they get from selling to buy other alts.

Yes, this is probably true. But this is the perfect environment for a short selling program.
If you watch the market you will see a bot actively pressuring the price down. It's not that hard to see.
But if you haven't even bothered to look and don't believe it then that's up to you . And if you did look then it begs the quesyion of why you sidestepped the points I made.
It's a bit naive to imagine that there aren't bots executing well known and well tested strategies in coin markets. But you are welcome to believe what you wish...even without looking at the evidence.
I gave you very specific information about what this bot is doing. But rather than examine the evidence you dismissed it prior to investigation.
Of course, if you follow the news at all you will see this is what has happened in other financial markets.
1.Experienced people noticed the activity of bots and saw something amiss.
2.They reported what they saw and were dismissed as paranoid.
3.years later regulators have egg on their faces.
 Peace

[adhitthana]

Odds are that no one can short AUR .  

Odds are?
What are you basing these "odds" on?   "Odds" are a mathematical calculation. How did you decide what the "odds' were.

The point you missed before with yorur "accounting" argument is that...if AUR is being shorted everyone won't be able to withdraw their coins.

Lets say we deposit 100,000 AUR at an exchange. The market maker short sells 50,000 also

That means we should be able to withdraw 150,000 AUR..
But there is only 100,000 there

[adhitthana]

This can all boil down to a couple of simple questions

1.Has there been a bot active in AUR with a bias towards moving the price down?

2. How this this be accounted for apart from that party having a short position?

[adhitthana]

That's complete BS. I started trading with about 0.3 BTC about a month back, and through a series of deliberate moves of profits and losses, I'm holding a portfolio of about 5 BTC now. You just need to work hard on researching and looking for signs and snippets of news that you can use to your benefit.

Well that is good.
And not that hard like you say, if you do the work. Smaller crypto coins are by far  the easiest market to trade I have ever seen, and if you'be been trading things like Asiacoin (which you mentioned) and you get it right it's quite possible to turn $150 into $2500.
But there are a host of reasons why this will be difficult to continue IMHO and to do on any greater scale.

I wont go into all the reasons now (unless you really would like my thoughts ), but one will be worth pointing out. Any coin market that reaches acertain threshhold will attract the attention of players who will be a lot more sophisticated, and most likely, you, like nearly everyone else will only be able to play the market from one side, efficiently. The long side.

You and thousands of other players will be trying to buy cheap and sell dear, and unless you are trading small coins where you can't trade in any decent size, you will find that these more sophisticated players will make it a lot harder than you have found it so far IMHO.

And a few special players with special arrangements will be able to sell short, whilst you and the thousands of other wont be able to do it efficiently, or at all (with possibly a few exceptions).
Just my thoughts, but I do genuinely wish you good luck .

[dyask]

Odds are that no one can short AUR .  

Odds are?
What are you basing these "odds" on?   "Odds" are a mathematical calculation. How did you decide what the "odds' were.

The point you missed before with yorur "accounting" argument is that...if AUR is being shorted everyone won't be able to withdraw their coins.

Lets say we deposit 100,000 AUR at an exchange. The market maker short sells 50,000 also

That means we should be able to withdraw 150,000 AUR..
But there is only 100,000 there

I have over and over said that shorting in side the exchange is a zero sum game.   If you have 100,000 AUR and 50,000 where shorted you still have 100,000 coins cross the accounts.   100,000 - 50,000 shorted + 50,000 owed = 100,000.   You would never be able to short 50% of an asset, but that is besides the point.   The coins would still be there any you would still have access to withdraw your coins. 

However, it is extremely unlikely that shorting is even going on as it is still complex to take a short position on even bitcoin.   In any case without something external to bitcoin it wouldn't be possible to short bitcoin across exchanges because the transactions can't be reversed.   So even if it is happening it would have to be only internal to an exchange.   

Odds are there isn't any shorting going on with a tiny asset like AUR.   There wouldn't be enough money in it.   With these small assets it probably just plain old pump and dump and you are just on the wrong side of the dump.

[adhitthana]

I have over and over said that shorting in side the exchange is a zero sum game.   If you have 100,000 AUR and 50,000 where shorted you still have 100,000 coins cross the accounts.   100,000 - 50,000 shorted + 50,000 owed = 100,000.   

YES!!!! You have only 100,000 across the accounts.

BUT!!!....You have 150,000 owed to customers.

You have the original 100,000...and you have the 50,000 that was bought from the market maker, who had no coins, but sold 50,000.

[dyask]

I have over and over said that shorting in side the exchange is a zero sum game.   If you have 100,000 AUR and 50,000 where shorted you still have 100,000 coins cross the accounts.   100,000 - 50,000 shorted + 50,000 owed = 100,000.   

YES!!!! You have only 100,000 across the accounts.

BUT!!!....You have 150,000 owed to customers.

You have the original 100,000...and you have the 50,000 that was bought from the market maker, who had no coins, but sold 50,000.

No, you have 150,000 owed to customers, 100,000 across accounts and 50,000 the "market maker" owes.   If there is a run on the bank, the market maker gets liquidated and losses big time.   That is why you could never short 50,000 coins on 100,000 coin balance.    Every one gets their funds unless the whole exchange is a scam in the first place.     

Even in large markets, I've been assigned and partially liquidated when funds were needed.   It happens, it is part of the risk of being short.   

[adhitthana]

No, you have 150,000 owed to customers, 100,000 across accounts and 50,000 the "market maker" owes.   .    

So there are not enough coins.

Even in large markets, I've been assigned and partially liquidated when funds were needed.   It happens, it is part of the risk of being short.

The problem here is that you are trying to equate new crypto exchanges with some stock exchange or other you have traded on.
You can't take your experience on a stock exchange and assume that a crypto exchange will be the same. If that were the case there would have been no problems at Mount Gox.
You don't know what the arrangements are between the market maker and the owner of the crypto exchange, yet you are trying to tell us it will be the same as on a stock exchange.
You have no basis to make the comparison you have unless you know the arrangements.

[dyask]

No, you have 150,000 owed to customers, 100,000 across accounts and 50,000 the "market maker" owes.   .    

So there are not enough coins.

Even in large markets, I've been assigned and partially liquidated when funds were needed.   It happens, it is part of the risk of being short.

The problem here is that you are trying to equate new crypto exchanges with some stock exchange or other you have traded on.
You can't take your experience on a stock exchange and assume that a crypto exchange will be the same. If that were the case there would have been no problems at Mount Gox.
You don't know what the arrangements are between the market maker and the owner of the crypto exchange, yet you are trying to tell us it will be the same as on a stock exchange.
You have no basis to make the comparison you have unless you know the arrangemants.

Then you have no basis for your claim either!

There should always be enough coins because shorting is limited to the exchange if it exists at all.  The ones at risk of being liquidated are the holders of short positions.   The only scam here is the FUD you are trying to create.  

[adhitthana]

Then you have no basis for your claim either!
There should always be enough coins because shorting is limited to the exchange if it exists at all.  The ones at risk of being liquidated are the holders of short positions.    

No. Think this through. Anyone who has coins at the exchange is at risk.
this is an additional risk to the normal riks in putting coins in an exchange.

[dyask]

Then you have no basis for your claim either!
There should always be enough coins because shorting is limited to the exchange if it exists at all.  The ones at risk of being liquidated are the holders of short positions.    

No. Think this through. Anyone who has coins at the exchange is at risk.
this is an additional risk to the normal riks in putting coins in an exchange.

If the exchange maintains 100% reserves there isn't any additional risk.   If a fractional reserve system is used then there is additional risk.   An exchange isn't a bank and it shouldn't be using a fractional reserve system.   If they are, then you have so many more risks than short selling that it really doesn't matter.    

Anyway if you don't like program trading, you are free to start your own exchange not allow it to happen.  No shorting so bots.   You can set most of the rules you want.    It still won't stop the pump and dumps and you will still have coins like AUR losing value over time.  

[adhitthana]

If the exchange maintains 100% reserves there isn't any additional risk.    

Ok...so despite all the problems (such as Mount Gox) and despite the lack of any visibility you want to  trust a crypto exchange and assume it has 100% reserves?  

Added in edit: This looks like a good development though.  


http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

[dyask]

If the exchange maintains 100% reserves there isn't any additional risk.    

Ok...so despite all the problems (such as Mount Gox) and despite the lack of any visibility you want to  trust a crypto exchange and assume it has 100% reserves?  

You don't have to trust.   An exchange can easily prove it has 100% of the coins and procedures are being set up to make that happen.   Some exchanges have already stepped up and proved it.

http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

[adhitthana]

You don't have to trust.   An exchange can easily prove it has 100% of the coins and procedures are being set up to make that happen.   Some exchanges have already stepped up and proved it.

http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

How did you you turn one exchange, into some exchanges  

[dyask]

You don't have to trust.   An exchange can easily prove it has 100% of the coins and procedures are being set up to make that happen.   Some exchanges have already stepped up and proved it.

http://www.coindesk.com/vault-satoshi-announces-proof-solvency-service/

How did you you turn one exchange, into some exchanges  

Don't you know anything that going on in the digital currency world?

http://www.coindesk.com/coinfloor-become-first-publicly-auditable-bitcoin-exchange/
http://www.coindesk.com/krakens-audit-proves-holds-100-bitcoins-reserve/

[Keyser Soze]

It essentially sounds like you are claiming that exchanges are naked shorting. Well, either the exchange itself or the exchange is allowing a select number of traders to naked short. As previously stated, the concept of a "hot" or "cold" wallet has nothing to do with this discussion.

Unless the exchange has some way of proving they hold 100% of user's balances, this is a possibility. Some exchanges are working towards proving their liquidity or may have already in some fashion.

[adhitthana]

It essentially sounds like you are claiming that exchanges are naked shorting. Well, either the exchange itself or the exchange is allowing a select number of traders to naked short.......

Unless the exchange has some way of proving they hold 100% of user's balances, this is a possibility.

It's the only conclusion I can come to that explains the evidence I see.
Why else would the computer programs be using strategies designed to be implemented after a short position is established?

I expect the market makers went and said similar kinds of  things they say to other financial exchanges.

"Give us the ability to sell short (in this case) and we will increase your volume ,and you will make more money."

[dyask]

It essentially sounds like you are claiming that exchanges are naked shorting. Well, either the exchange itself or the exchange is allowing a select number of traders to naked short.......

Unless the exchange has some way of proving they hold 100% of user's balances, this is a possibility.

It's the only conclusion I can come to that explains the evidence I see.
Why else would the computer programs be using strategies designed to be implemented after a short position is established?

I expect the market makers went and said similar kinds of  things they say to other financial exchanges.

"Give us the ability to sell short (in this case) and we will increase your volume ,and you will make more money."

What evidence?  You have given no evidence.  So far the only scam here is the FUD you are trying to create.   

[adhitthana]

What evidence?  You have given no evidence.  So far the only scam here is the FUD you are trying to create.  

There is no need to try to make this personal.
I have outlined the specifics of the strategies that have been happeing in AUR.

If you want to try to make your case you need to refute them. At the moment you have not responded to them, The place for you to start is to go back, read them , and respond.
It's not that hard. It's easy...you just go back..read them...then take the time to investigate them,,,as I did , and explain why you agree or disagree.
The ball is in your court.
At the moment you are just digging your heels in, although you, from the evidence here (or lack of)  have made no effort, put no time into investigating, the claims I made. You got personally offended by something and now are determined to oppose what I have said without making any attempt to investigate it.
If you had investigated it you would have made a specific comment about what I wrote...

You have no experience with computer trading programs, as I have over several years on a daily basis. You have a small amount of experience with doing whatever your broker told you and siging whatever he told you to sign, without even understanding it.

Why are you even bothering to come back when you haven't even bothered to investigate what I said?