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Author Topic: Should a bitcoinica clone be put online ?  (Read 6675 times)
davout
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July 18, 2012, 04:02:45 PM
 #81

Of course the Bitcoinica name would be changed for a clone to come online, but first I want to :
 - finish the reverse-engineering completely (which means understand every subtlety in the algorithms),
 - understand exactly how it can be properly monitored (the business side, not the technical side),
 - do an actual security audit (the things I tweaked already were pretty obvious, now I need to go more in depth),
 - have a solid plan for a GLBSE IPO,
 - have a plan for the C&D letter case,
 - start writing my own platform (because the code is not written in a maintainable way, and because I'd have a good incentive to write a fuckton of tests)






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Blitz­
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July 18, 2012, 04:06:32 PM
 #82

If you think you can manage the financial exploit side of things (not allow anonymous accounts to have up to 10:1 leverage [leaving them with negative acc balances in some cases], and forbid 5:1 and 10:1 in general), then I am all for it. Please do it.

We need shorting back.

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
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July 18, 2012, 04:53:24 PM
 #83

We need shorting back.

Aye. Could care less for trading on margin and interest on deposits and open positions.

How come mt-gox does not allow short selling? Financial regulations?



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July 18, 2012, 05:10:12 PM
 #84

We need shorting back.
Aye. Could care less for trading on margin and interest on deposits and open positions.
Uhhh, shorting in this sense is trading on margin. Interest was there to attract capital, but it shouldn't be needed for a well-funded setup.
Without margin, you can "short" by simply selling into the market.

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July 18, 2012, 05:44:39 PM
 #85

We need shorting back.
Aye. Could care less for trading on margin and interest on deposits and open positions.
Uhhh, shorting in this sense is trading on margin. Interest was there to attract capital, but it shouldn't be needed for a well-funded setup.
Without margin, you can "short" by simply selling into the market.

I am not sure that I would agree with that.  Many people may have a desire to have a negative balance of BTC which is perfectly legitimate.  In that case, borrowing from your own stash is not possible.

At this point I _want_ to own N BTC.  I can short by borrowing (from myself) and selling to the point where I have fewer than N and plan to buy them back when the price falls.  If it doesn't fall, I lose...if I my N target remains valid and I buy in to achieve it.

I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.

Back to Blitz's original; who is 'we'?  You could probably find someone to loan you some BTC if the price is right.  If I were to do so, I would want pretty solid protection up to about $100/BTC (where I plan to sell a certain fraction of my holdings anyway) and I don't have any automation set up (to buy in in an emergency) so I'l probably want, say, $10,000 to loan you 100 BTC.  Kind of negative leverage if you will.  I would be surprised if you jumped on the deal...and disappointed since in reality I have no interest in dealing with all the hassles.


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July 18, 2012, 05:48:36 PM
 #86

I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
Right, because you are borrowing (on margin) in order to use a ratio-based leverage.

Anyways, it's what the market wants, so it should be done even if some people don't like it.

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notme
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July 18, 2012, 05:51:39 PM
 #87

We need shorting back.
Aye. Could care less for trading on margin and interest on deposits and open positions.
Uhhh, shorting in this sense is trading on margin. Interest was there to attract capital, but it shouldn't be needed for a well-funded setup.
Without margin, you can "short" by simply selling into the market.

I am not sure that I would agree with that.  Many people may have a desire to have a negative balance of BTC which is perfectly legitimate.  In that case, borrowing from your own stash is not possible.

At this point I _want_ to own N BTC.  I can short by borrowing (from myself) and selling to the point where I have fewer than N and plan to buy them back when the price falls.  If it doesn't fall, I lose...if I my N target remains valid and I buy in to achieve it.

I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.

Back to Blitz's original; who is 'we'?  You could probably find someone to loan you some BTC if the price is right.  If I were to do so, I would want pretty solid protection up to about $100/BTC (where I plan to sell a certain fraction of my holdings anyway) and I don't have any automation set up (to buy in in an emergency) so I'l probably want, say, $10,000 to loan you 100 BTC.  Kind of negative leverage if you will.  I would be surprised if you jumped on the deal...and disappointed since in reality I have no interest in dealing with all the hassles.



There is the potential for leverage any time you sell other people's currency with none of your own to back up the loan.

Example:
Sell 1 BTC @ $9.25 with $10 margin.  BTC rises to $12.  You now owe 1 BTC (worth $12) and your margin is only $10.  You are now leveraged.

I suppose a system could be set up that force liquidated before allowing leverage, but I doubt you would have any customers.

https://www.bitcoin.org/bitcoin.pdf
While no idea is perfect, some ideas are useful.
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tvbcof
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July 18, 2012, 06:03:19 PM
 #88

I believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.
Right, because you are borrowing (on margin) in order to use a ratio-based leverage.

Anyways, it's what the market wants, so it should be done even if some people don't like it.

FWIW, I personally am fine with any trading platorm/scheme which anyone comes up with.  In a non-regulated market (of which Bitcoin is a prime example...and happily so) there is room for significant price manipulation.  But I feel that over the long haul, the markets will find their natural place and I happen to be in it for the long haul.  In the interim period, a person who is reasonably adept at analysis, has some observation skills, and knows what they want can capitalize greatly on things.

I don't buy the assertion that manipulated value fluctuation detract significantly from Bitcoin's usability as an exchange currency.  It just opens possibilities for people to invent platforms which mitigate the impacts.


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July 18, 2012, 06:09:37 PM
 #89

...
I
 believe that 'margin' commonly implies 'leverage' (using fewer notional value of one asset to control a higher value of another) but I am not certain of that.

...


There is the potential for leverage any time you sell other people's currency with none of your own to back up the loan.

Example:
Sell 1 BTC @ $9.25 with $10 margin.  BTC rises to $12.  You now owe 1 BTC (worth $12) and your margin is only $10.  You are now leveraged.

I suppose a system could be set up that force liquidated before allowing leverage, but I doubt you would have any customers.

I think:

1) That in a typical trading platform, 'leverage' (and 'margin') is achieved in a much more straightforward manner.

2) That in a typical trading platform, not only is it common for the operator to protect himself/herself against loss by using forced liquidation, it is part and parcel to a successful and profitable design.

2-comment)  Bitcoinica had absurd fees in part to (attempt to) achieve #2 given the fierce volatility which appears in the Bitcoin economy from time to time.


mobile4ever
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July 18, 2012, 06:38:56 PM
 #90

With the leak of the code I'm asking myself whether it would be a good idea to setup a bitcoinica clone.

Pros :
  • Would make some good money
  • There is demand for gambling margin trading
  • Half the profits could go to the people who lost money because of Bitcoin Consultancy/Bitcoinica/[insert scapegoat here]
  • The app itself has never been broken into (even though it's quite surprising when reading the code)

Cons :
  • Needs moar reverse-engineering/fixing
  • Needs moar testing
  • ...

Thoughts ?

I would personally improve on the current system with better ideas. Most anything online is available to the right person with "abilities". Taking away the temptation is a better idea, to me, anyway.
Andrew Vorobyov
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July 18, 2012, 08:27:51 PM
 #91

I would personally improve on the current system with better ideas.

Go ahead, https://bitcointalk.org/index.php?topic=93583.0

Blitz­
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July 19, 2012, 05:37:49 AM
 #92

Back to Blitz's original; who is 'we'?  You could probably find someone to loan you some BTC if the price is right.  If I were to do so, I would want pretty solid protection up to about $100/BTC (where I plan to sell a certain fraction of my holdings anyway) and I don't have any automation set up (to buy in in an emergency) so I'l probably want, say, $10,000 to loan you 100 BTC.  Kind of negative leverage if you will.  I would be surprised if you jumped on the deal...and disappointed since in reality I have no interest in dealing with all the hassles.
"We" is us, as in Bitcoiners, who would benefit from more efficient price discovery and better liquidity in case a shorting mechanism becomes widely available again with a low barrier to entry.

"Bitcoin had been transformed from an anarachistic challenge to the financial status quo, to the crypto spawn of Satan, fuelled by cut-throat greed and delusions of avarice." - MatTheCat
"these people don't seem to want to stop till Bitcoin is completely destroyed and left like an old cum rag in the corner of the room." - ShroomsKit
mystery2048
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July 19, 2012, 07:40:47 AM
 #93

Yes!!! We need a new bitcoinica, because I wanna short these things so I can make some money...

Important: https://bitcointalk.org/index.php?topic=92424.0;all

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davout
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August 21, 2012, 05:57:21 PM
 #94

If someone is interested in trying out what I've been working on, send me a PM.

rjk
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August 21, 2012, 06:06:46 PM
 #95

If someone is interested in trying out what I've been working on, send me a PM.
You've sure been quiet lately, I'm assuming you have put a lot of hard work into this. Beta testers, let us know how it goes! Grin

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August 21, 2012, 06:20:56 PM
 #96

Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.

AKA The Manipulator

http://www.bitpools.com
Pool your bitcoins with others. Vote on solutions using the Bitcoin blockchain. Keep your bitcoins in your cold storage until you find a solution you like.
Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
davout
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August 21, 2012, 06:24:24 PM
 #97

Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.

AKA The Manipulator
The house doesn't make more money when the liquidation of a position is forced as opposed to triggered by the user.

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August 21, 2012, 07:11:42 PM
 #98

Do not forget to have enough funds to push the market either way to make people who are leveraged lose their money. Then return the BTC to the market price.

AKA The Manipulator
The house doesn't make more money when the liquidation of a position is forced as opposed to triggered by the user.

Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.

At $9.5 I am forced to liquidate.

If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.

If the price jumps up to $9.6 then returns to $9 I have zero BTC.

Who gets those 10 BTC when it jumps up to $9.6 then back?

http://www.bitpools.com
Pool your bitcoins with others. Vote on solutions using the Bitcoin blockchain. Keep your bitcoins in your cold storage until you find a solution you like.
Links and Reviews of useful every day places to spend bitcoins: https://bitcointalk.org/index.php?topic=943143.0
davout
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August 21, 2012, 08:07:20 PM
 #99

Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.

At $9.5 I am forced to liquidate.

If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.

If the price jumps up to $9.6 then returns to $9 I have zero BTC.

Who gets those 10 BTC when it jumps up to $9.6 then back?
The house simply gets its loan back by buying back when the price rises when liquidating a short.
Actually, the more money you make, the more money the house makes, there is definitely no incentive to force-liquidate positions.

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August 22, 2012, 02:29:51 AM
 #100

Say I am shorting 10 BTC at 10:1 at the price of $9/BTC.

At $9.5 I am forced to liquidate.

If the price jumps up to $9.4 then returns to $9 I am still sitting at the same 10 BTC.

If the price jumps up to $9.6 then returns to $9 I have zero BTC.

Who gets those 10 BTC when it jumps up to $9.6 then back?
The house simply gets its loan back by buying back when the price rises when liquidating a short.
Actually, the more money you make, the more money the house makes, there is definitely no incentive to force-liquidate positions.

I do not think bitcoinica actually sold a bitcoin for every bitcoin shorted. They would internally say they did and only sell when necessary.
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