Reuters: Our girl, Naomi O'Leary, did it.

[Phinnaeus Gage]

http://www.reuters.com/article/2012/04/01/traders-bitcoin-idUSL6E8ET5K620120401

Employees at almost all the major international banks and numerous trading and investment firms have shown interest.

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[mcorlett]

Ah! I was just thinking about this.

You did well, Bruno.

[Phinnaeus Gage]

Ah! I was just thinking about this.

You did well, Bruno.

I can't believe she mentioned Atlas and Matthew. Still reading.

[Seal]

Great article...

Two questions:

1. Whos Naomi O'Leary?
2. "Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang."

Who is this head of Singapore-based algo trading firm or what is the firm?

[rjk]

Ah! I was just thinking about this.

You did well, Bruno.

I can't believe she mentioned Atlas and Matthew. Still reading.

I saw a mention of what appears to be Bigpiggy01 in there. Very interesting article.

[Eveofwar]

Ah! I was just thinking about this.

You did well, Bruno.

I can't believe she mentioned Atlas and Matthew. Still reading.

I saw a mention of what appears to be Bigpiggy01 in there. Very interesting article.

Awesome read !  They made time for a gigavps section ?!  Was a nice closure.

[Phinnaeus Gage]

Great article...

Two questions:

1. Whos Naomi O'Leary?
2. "Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang."

Who is this head of Singapore-based algo trading firm or what is the firm?

This will answer your question on who is Naomi O'Leary: https://bitcointalk.org/index.php?topic=65827.0

[gusti]

"Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment."

Please someone explain her the leverage concept, nice article anyway. 

[guruvan]

Great article...

Two questions:

1. Whos Naomi O'Leary?
2. "Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang."

Who is this head of Singapore-based algo trading firm or what is the firm?

lulz - he's the lead dev @ Bitcoinica. Forced Liquidation on BTC/USD positions are now referred to as being "zhoutonged"

he's used the word himself. i.e. Forced Liquidation Price is "zhoutonging price"

mwahahaha!

[rjk]

Great article...

Two questions:

1. Whos Naomi O'Leary?
2. "Zhou Tong, who is professionally advised by a forex trader and the head of a Singapore-based algorithmic trading firm, now lends his name to international slang."

Who is this head of Singapore-based algo trading firm or what is the firm?

lulz - he's the lead dev @ Bitcoinica. Forced Liquidation on BTC/USD positions are now referred to as being "zhoutonged"

he's used the word himself. i.e. Forced Liquidation Price is "zhoutonging price"

mwahahaha!

Re read the quote - it says that Zhou Tong is advised by someone, and that that someone is a forex trader and head of the singaporian trading firm. Unless it was a typo on her part.

[grue]

APRIL FOOLS?

[cbeast]

A good read. Facts are fuzzy about a lot of things these days, but overall it seems to be a fair assessment.

[cunicula]

"Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment."

Please someone explain her the leverage concept, nice article anyway. 

She is correct. Your English grammar is wrong, however.

The position is auto-liquidated when it reaches the Zhoutonging price. However, if there is insufficient liquidity to perform liquidation at the Zhoutonging price, then the liquidation price will need to go beyond this boundary. Now, when liquidation occurs, the speculator will be left with a negative balance in their account. They will owe Zhoutong money and will have lost more money than their initial investment. This is impossible without leverage.

[gusti]

"Users can leverage their bets up to a ratio of 10:1 on Bitcoinica, meaning they can lose more than their initial investment."

Please someone explain her the leverage concept, nice article anyway. 

She is correct. Your English grammar is wrong, however.

The position is auto-liquidated when it reaches the Zhoutonging price. However, if there is insufficient liquidity to perform liquidation at the Zhoutonging price, then the liquidation price will need to go beyond this boundary. Now, when liquidation occurs, the speculator will be left with a negative balance in their account. They will owe Zhoutong money and will have lost more money than their initial investment. This is impossible without leverage.

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi. 
negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

[bc]

That may be the best outsider article I've ever read about Bitcoin. She really seems to have done her homework.

Kudos to everyone who helped her.

[niko]

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

[cbeast]

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

It probably means they will scan Canadian dollars and make lots of digital jpegs. 

[bitcool]

The Royal Canadian Mint, for example, is exploring how to issue digital currency in the future. Its chief financial officer Marc Brule said Bitcoin's biggest problem was that it is not backed by anything.

"The system we would bring in would be backed by a fund," he told Reuters.

I heard this argument before, but I don't get it. What does it mean if a currency is "backed by a fund"? A fund of what kind?

Unless its CEF , the gold silver fund of Canada, otherwise its no different from any types of bank credit.

[cunicula]

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi.  
negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

Naomi is completely correct that the opportunity to leverage investments on Bitcoinica makes it possible to lose more than your initial investment.

When you borrow to buy assets, this is called leverage.

If you take a short position you have leverage. You are borrowing the currency you are shorting and the value of your debt can grow to exceed the value of your holdings. This is when forced liquidation occurs.

If you take a long position. You don't need to have leverage. You can buy the currency you are investing in. If you do this, you take on no debt and there is no way for forced liquidation to occur.

Leverage is necessary for forced liquidation to occur. To end up with a negative balance, you need to take on leverage.

If you are heavily leveraged up, then, fixing your initial investment and the degree of illiquidity when forced liquidation occurs, the size of your negative balance will be proportional to your leverage, i.e. if you leverage up 10:1 you will end up with a negative balance ten times as large.

[gusti]

I never said my english was perfect, but surely my spanish is *far* better than yours, you grammar nazi. 
negative balance has nothing to do with leverage, if liquidity is inexistant at liquidation time, you also can go
negative with 1:1, 1:100 or whatever.

When you borrow to buy assets, this is called leverage.

Sure, if you take a short position you have leverage. You are borrowing the currency you are shorting and the value of your debt can exceed your initial investment.

If you take a long position. You don't need to have leverage. You can buy the currency you are investing in (or loan this currency to the market maker), you can take on no debt and then there is no way for forced liquidation to occur. Of course you can take on leverage if you want to and then it is possible for forced liquidation to occur.

Leverage is necessary for you to end up with a negative balance because of illiquidity. If you are heavily leveraged up, then, fixing your initial investment and the degree of illiquidity when forced liquidation occurs, the size of your negative balance will be proportional to your leverage, i.e. if you leverage up 10:1 you will end up with a negative balance ten times as large.

Naomi is completely correct that the opportunity to leverage your investment on Bitcoinica makes it possible to lose more than your initial investment. This is impossible with Mt.Gox, for example, where you are only allowed to buy and sell and not to borrow.

I think you are still mistaken on what is the cause of going negative on bitcoinica. is not the leverage,
it's the illiquidity when your position is forcible closed. but that is a bitcoinica issue, not a leverage issue.
e.g. you can never ever go negative in a forex broker, even with a 400:1 leverage.