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Author Topic: Should a bitcoinica clone be put online ?  (Read 6662 times)
ThiagoCMC
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August 22, 2012, 03:30:55 AM
 #101

Is this the source code used under bitcoinica.com exchange: http://www.reddit.com/r/Bitcoin/comments/w6xen/bitcoinica_press_release/ ?

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August 22, 2012, 07:47:27 AM
 #102

I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
Yes absolutely, in the previous example I assumed there was only one open position, but with multiple open positions it's a different story.

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August 22, 2012, 08:11:56 AM
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I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
Yes absolutely, in the previous example I assumed there was only one open position, but with multiple open positions it's a different story.

if bitcoinica was "just a shady bucket shop", then they'd just pretend to open positions, but in fact they only trade for their own profit and bet against their customers. Many people assume that was the case.

On the other hand, if bitcoinica was a typical Contract for Difference offer, then they would automatically forward the net balance of all positions to the real market. In this case, they would not bet against their customers, rather just earn the spread. Zhou Tong allways claimed that this was the case.

The leaked mails show that this claim seemed to be mostly true, while at times Zhou Toung played with the "hedge factor", i.e. only reflected a fraction of the net position to the market (if I understand correctly). For example, when seeing that the majority of the positions was short, but the market moves up, the operator of the platform could reduce the hedge factor (i.e. start preliminarily to buy back some positions). To that fractional part, this would then be an additional gain of the platform, and go against the own customers. But it could also be a protective means to prevent slippage.
lonelyminer (Peter Šurda)
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August 22, 2012, 04:28:22 PM
 #104

On the other hand, if bitcoinica was a typical Contract for Difference offer, then they would automatically forward the net balance of all positions to the real market. In this case, they would not bet against their customers, rather just earn the spread. Zhou Tong allways claimed that this was the case.
I briefly reviewed the hedging code a couple of days ago. The way it is written it indeed opened sell/buy positions on Mt. Gox if the mismatch between existing Bitcoinica positions crossed a certain threshold.

The leaked mails show that this claim seemed to be mostly true, while at times Zhou Toung played with the "hedge factor", i.e. only reflected a fraction of the net position to the market (if I understand correctly).
There is a hardcoded variable, I think it's called confidence level (too lazy to look at the code now, but it's the same name Zhou mentions in the leaked emails), that influences the threshold for opening a position on Mt. Gox.

The hedging algorithm as well as broader hedging design is very simple and I can understand why it, according to Genjix, might have caused fluctuations in profitability.
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August 22, 2012, 06:47:48 PM
 #105

How about piratecoinica?  You can trade on leverage AND earn 7% per week on deposits!
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