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I already mentioned below that I thought your site was nicely done. But you didn't answer my questions directly which makes me a bit wary. My questions aren't

I already mentioned below that I thought your site was nicely done. But you didn't answer my questions directly which makes me a bit wary. My questions aren't site security questions per se, they deal more with the business of your site. Also, my questions are blunt, but not disrespectful, so don't be offended. 1) How do I trust you? How do I know you're not going to run away with all my money? Who are you? Registered brokerage accounts have segregated funds, so that brokerages can't get access to my money in case the brokerage goes under. You are saying everything is in one giant account. In the case you suffer a catastrophic loss, how do I know my money is safe? Also, how do I know you're not Madoff and won't run away with all the money? 2) How are you affording the ability to margin people's accounts? Where are you getting the money? 3) You say you check for margin requirements every 5 seconds? If I were a market manipulator, I would wait for the order book on BTC to thin out, then I would massively short the markets. This would hopefully trigger massive margin calls on your end, and forced liquidation. Since the order book is thin, I would probably be able to cover at rock bottom prices. Also, presumably you (the site) would suffer tremendous losses. How do you protect your customers from this?

zhoutong 15y ago
1. We can almost never be a registered broker for Bitcoin trading. There's almost no law regulating this market either. If you can't trust me now, it's all okay. I have never asked for trust. What I do is to write apps in the way that people feel trustworthy and reliable. If after, say, 3 months, my site grows larger with no known security issues, then the time will make it more trustworthy. 2. Not all people are doing long or short at the same time. Not all people are utilizing their margin fully at the same time. Not all people have active positions at the same time. We have a pool of money to make this possible. 3. Bitcoinica is not an Exchange. We don't match orders ourselves. The rates you see are inclusive of liquidity concerns. If there's excess positions, we trade them in Mt. Gox to balance our portfolio. When the order book is so thin that you can already move the market with your short positions, chances are the forced liquidation has already taken place. (Thin order book -> larger spread -> lower buying rate)

zhoutong 15y ago

1. We can almost never be a registered broker for Bitcoin trading. There's almost no law regulating this market either. If you can't trust me now, it's all okay. I have never asked for trust. What I do is to write apps in the way that people feel trustworthy and reliable. If after, say, 3 months, my site grows larger with no known security issues, then the time will make it more trustworthy. 2. Not all people are doing long or short at the same time. Not all people are utilizing their margin fully at the same time. Not all people have active positions at the same time. We have a pool of money to make this possible. 3. Bitcoinica is not an Exchange. We don't match orders ourselves. The rates you see are inclusive of liquidity concerns. If there's excess positions, we trade them in Mt. Gox to balance our portfolio. When the order book is so thin that you can already move the market with your short positions, chances are the forced liquidation has already taken place. (Thin order book -> larger spread -> lower buying rate)