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DeFi: como escapar del peso (y de la AFIP). Capítulo 2

DeFi: como escapar del peso (y de la AFIP). Capítulo 2
Capítulo anterior: Introducción
Capítulo 2: Lending
Aplica mismo disclaimer que el capítulo anterior
Existen varias plataformas que permiten tomar créditos en USD digital (USDC, DAI, etc) dejando como respaldo otras cryptos en un porcentaje mayor al que se se toma prestado (over collateralization), asumiendo una tasa de interés. Por ejemplo yo podría bloquear (dejar en garantía) 1 ETH (~240usd) y con eso llevarme 150DAI. Cuando quiera, devuelvo los 150DAI + el interés, y con eso me desbloquean mis ETH. Todo esto puede hacerse de manera automática, sin intermediarios y mediante smart contracts.
La contraparte de este sistema son quienes aportan eso DAI para prestar. Al igual que como en teoría funciona el sistema bancario, otras personas depositan sus DAI, los cuáles son prestados, y cambio reciben un interés mensual, diario o hasta incluso cada segundo (ver en vivo como se reciben intereses por segundo es una linda experiencia). La seguridad de los depositantes está dada en que el sistema esta "sobrecolateralizado", es decir que hay mas activos bloqueados como garantía que los prestados. A diferencia de los bancos que trabajan con reserva fraccional.
Las tasas de interés para tomar créditos o prestar van variando según diferentes circunstancias del mercado. El sitio LoanScan es un buen comienzo para saber que pagan en diferentes plataformas por prestar tus crypto, que pueden ser las tradicionales (BTC, ETH) o stablecoins (USDC, DAI). Es importante diferenciar entre las plataformas centralizadas, es decir aquella a las cuáles se les transfiere los activos y estos quedan en su custodia, de las descentralizadas, en las cuáles no hay un actor o empresa a quien se le deposite, sino que todo se maneja mediante smart contracts y no existe el riesgo de que la empresa funda o la hackeen y desaparezcan los fondos. Otra (gran) diferencia es que en las centralizadas vas a tener que crear una cuenta, pasar por un proceso de KYC, presentar documentación, etc., mientras que en las otras todo esto no es necesario, ya que se maneja directamente desde la wallet propia.

https://preview.redd.it/1gooaloxca351.png?width=850&format=png&auto=webp&s=ab947cbfd38df27323297946eec86ae59d1650a5
En esta captura de LoanScan se pueden ver las tasas de interés que pagan los préstamos en USDC y DAI. Actualmente en las plataformas centralizadas se está pagando mejor, pero esto puede variar con el tiempo. Vamos a tomar algunas como ejemplo:
BlockFi
Blockfi es una empresa de USA que se dedica a prestar cryptos y permite a otros usuarios financiar esos préstamos obteniendo a cambio una tasa de interés. Actualmente pagan 6% por BTC, 4.5% para ETH y 8.6% para las stablecoins (USDC incluído). Con sólo crear una cuenta en este sitio y depositar algunos USDC, estos van a empezar a generar intereses sin necesidad de hacer nada más. Los pagos se realizan el primer día del mes por lo acumulado en el mes anterior. Ej: si deposito 100USDC, a fin de mes me van a depositar 0.71USDC de interés. Ese monto se suma al que uno tiene adquiriendo interés, y el mes siguiente el interés será sobre 100.71USDC (interés compuesto). Uno puede elegir si recibir el interés en la misma moneda que lo genera (en BTC si tengo BTC y ETH si tengo ETH) o todo en una, al tipo de cambio correspondiente (por ej. puedo tener BTC, USDC y ETH depositados y cobrar todo el interés en USDC).
Nexo
Nexo es un sitio muy similar, basado en Suiza, donde también se pueden depositar varios tipos de cryptos. En este caso aparte de USDC se puede depositar DAI. La tasa para estos stablecoins es de 8%, y los intereses se pagan todos los días, a la medianoche de Europa.
El funcionamiento de ambos es básicamente el mismo, y los riesgos también: al tener depositados los fondos en esas empresas, estos siempre pueden ser bloqueados, trabados, robados, fundidos, etc. como en cualquier banco o broker tradicional. Las ventajas: una curva de aprendizaje mucho menor, no hay muchos tecnicismos ni cuestiones complejas que entender. Simplemente le prestas tu plata a una empresa, y esta te paga un interés. La creación de una cuenta es muy simple, no tienen restricciones de países y es un proceso 100% online de sólo unos minutos.
Exchanges
Existen algunos exchanges (Poloniex, Bitfinex entre otros) que también brindan la posibilidad de prestar crypto y pagan un interés. En este caso los fondos los usan quienes operan con leverage (margin trade), donde también tienen que colateralizarsu posición y eso disminuye el riesgo de no pago. Las tasas van variando según la cantidad de oferentes y demandantes y lo que esté dispuesto a recibir y pagar cada uno.
Comparten estas empresas información fiscal por los tratados de intercambio de información automática? No lo sé, y si alguien lo sabe sería bueno que lo comente. Lo único que me puede dar una pista es el país en el que esta registrada cada una. Lo que no se puede evitar en estos casos es tener que registrarse con los datos personales reales presentando documentación, al igual que un broker o banco tradicional, aunque mucho más fácil y rápidamente.
Servicios Descentralizados
Son aquellos en los que no hay una empresa que custodia y administra lo prestado, sino que funcionan directamente mediante protocolos (o smart contracts) que gestionan todo.
Oasis Save
Maker DAO (DAO es una organización autónoma descentralizada) opera la moneda DAI y tres servicios en su plataforma OASIS: Trade, Borrow, Save. Con Oasis Save uno puede bloquear sus DAI, los cuáles son a su vez prestados a otros en Borrow, y obtener un interés a cambio. La tasa de interés esta definida por los participantes de esta organización autónoma mediante una votación, y se usa para incentivar o desincentivar la demanda de DAI, y con eso mantener el peg 1:1 con el USD. En términos generales, si el DAI cotiza por debajo de 1USD, se sube la tasa de interés, y si este opera encima del dólar, se baja.
Para participar únicamente es necesario ingresar a Oasis, loguearse con la wallet propia y decidir cuántos DAI bloquear en Save. Automáticamente se empezarán a recibir intereses por cada segundo que transcurra con tu dinero prestado. Los DAI nunca son transferidos a nadie, simplemente son bloqueados en un smart contract, por lo que mientras estén ahi no los vas a poder transferir ni usar para otra cosa. Para salir, lo único que hay que hacer es retirar los fondos, lo cuál va a hacer que se deje de recibir el interés.
Hoy la tasa de interés de DAI Save es de 0%, lo que hace que obviamente no tenga sentido participar, pero esto cambia permanentemente. Al estar DAI cotizando por encima del USD (aprox. 1.02) se fue bajando la tasa de interés hasta llegar a 0%. Hoy esta cotizando nuevamente a $1, por lo que es probable que se vuelva a subir en el corto plazo.
Aave, Fulcrum, Compound, dYdX
Asi como Oasis es la plataforma nativa de DAI, existen muchas otras que funcionan básicamente de la misma manera, operando como un intermediario (aunque es sólo código) entre prestamistas y tomadores de deuda.
Aave, Fulcrum y Compound son tres de las principales, aunque hay muchas otras. En las tres se encuentran opciones para prestar diversas cryptos, manejando cada una su tasa de interés que puede ser fija o variable. dYdx es un exchange descentralizado, donde los prestamos son para traders utilizando leverage, al igual que lo descripto arriba con Bitfinex o Poloniex, aunque sin un tercero que administra todo.
Al momento de escribir esto, si uno tiene DAI y quiere prestarlos, le convendría depositarlos en dYdX que ofrece una tasa del 3.24% y si tiene USDC la mejor opción sería Aave, que rinde 3.68%. Pero esto puede cambiar en cualquier momento, siendo la mejor ventaja de operar con crypto que moverse de una plataforma a otra puede hacerse en cuestión de minutos y por un costo muy bajo. Incluso hay robots que se pueden usar para administrar los fondos y que te los vaya moviendo adonde mas convenga en cada momento (lo trataremos en otro capítulo)
Pool Together
Otro proyecto interesante es Pool Together, al que ellos definen como una lotería en la que no se puede perder. Participar de este juego requiere depositar DAI en un pool al que también aportan otras personas, luego ese pool se invierte y se obtiene un interés y al final de la semana se sortea ese interés adquirido entre todos los participantes con chances proporcionales a lo aportado. Es decir que si tengo 100DAI, en vez de invertirlo por mi cuenta puedo participar de este pool y tener la posibilidad de ganar un interés mucho más grande generado por un pozo mayor. A todos los que no ganan se les devuelve lo aportado, de ahi que nunca se pierde el capital inicial.
Conclusión
Lo más interesante de lo explicado en esta última parte es que todo esto se gestiona sin una persona o empresa intermediaria en la cuál haya que confiar, sino simplemente con código que se ejecuta según las reglas predefinidas en el protocolo. La clave de estos servicios descentralizados es que son non-custodial, es decir que nadie (más que uno mismo) custodia los fondos, y por lo tanto uno en ningún momento se pierde el control de ellos ni tiene que transferirlos, simplemente los bloquea en un smart contract bajo su control.
Según lo explicado en el capítulo anterior y este, uno podría pasar sus pesos de papel a DAI en una operación con otra persona para luego invertirlos en alguno de estos protocolos descentralizados. Pasaría a estar recibiendo un interés en una moneda atada al dólar que puede reinvertir, guardar o transferir adonde quiera, sin permisos ni papeles, formularios o burocracia alguna. Toda esta operación es privada, sin nadie que pueda intervenir, opinar si es correcto o no, definir si podes hacerlo según si anteriormente participaste de otro mercado o patalear porque fuga de capitales o idioteces semejantes.
En la vereda de enfrente están los servicios centralizados, regulados por el estado como entidades financieras, y donde uno debe siempre enviar sus datos personales para poder operar. Lo más prudente en estos casos a mi criterio es asumir que toda esa información es compartida con el fisco, ya sea de manera automática o bajo pedido. Esto aplica tanto para un exchange (en Argentina Ripio, Buenbit, etc.) como a las plataformas de lending descriptas arriba.
El Lending permite prestar tu dinero de manera segura y obtener un interés a cambio. Para poner un equivalente que todos conocen, sería algo asi como tener un bono pero en vez de estar emitidos por estados o empresas, son otras personas las que toman la deuda. Y vos también podés hacerlo si necesitas liquidez y no querés vender tus activos.
Próximo capítulo: Synthetix y como obtener exposición a cualquier activo del mundo real.
submitted by jreddredd to merval [link] [comments]

Goldman Sachs-Backed Startup just Bought Poloniex

"That’s just the start. Now Circle is preparing to take another major leap forward by tacking on an entirely new business as part of its underlying market infrastructure. On Monday Circle will announce, as Fortune can confirm for the first time, that it has bought Poloniex, one of the world’s most active cryptocurrency exchanges. A person familiar with the terms of the deal who was not authorized to speak about it tells Fortune that the price tag comes in around $400 million.
The acquisition will instantly make Circle a rising threat to Coinbase, the biggest cryptocurrency exchange in the U.S., as well as Bittrex and Kraken, the runner-ups. Counting contributions from Poloniex, Circle’s revenues over the past three months, excluding February, exceeded $250 million, placing the company on an annual run rate greater than $1 billion. Not bad for a 5-year-old upstart.
With the expansion, Circle is laying the groundwork for a day when cryptocurrencies become pervasive, prices grow less volatile, and the utility of digital tokens goes undisputed. If most of the dozens of exchanges competing today are just places to buy and sell coins, Circle has loftier ambitions: It wants to eventually help consumers turn their trading profits into a Tesla, a mortgage, or a portfolio of blue chips. Circle has ample funds, mainstream investors, sophisticated tech, a new network of customers annexed from Poloniex—and, with some luck, a legitimate chance at building the bank of the next century around crypto-finance."
Edit: Statement of Poloniex https://poloniex.com/press-releases/2018.02.26-Poloniex-joins-Circle/
submitted by etheronipizza to ethtrader [link] [comments]

Question regarding Bitmex Funding Rate

In the XBTUSD Perpetual Contract page it is stated that the Funding Rate is comprised of two main parts: the Interest Rate and the Premium.
Premium seems self explanatory. It is calculated using a difference between the weighted average of the price in multiple exchanges and Bitmex's orderbook to discourage longs when price is trading at a premium and vice versa.
I am confused about the Interest Rate component. The XBTBON page shows that the interest rate has been an constant of 0.0300%.
The stated formula for calculation is:
Interest Rate (I) = (Interest Quote Index - Interest Base Index) / Funding Interval
where
Interest Base Index = The Interest Rate for borrowing the Base currency
Interest Quote Index = The Interest Rate for borrowing the Quote currency
Funding Interval = 3 (Since funding occurs every 8 hours)
I find this confusing because unlike Bitfinex or Poloniex, Bitmex does not seem to have a borrowing market. From whom is XBT/USD borrowed? Is it from bitmex and do they get the Interest? If I go long XBTUSD at 5X margin am I borrowing the contracts at a fee from Bitmex?
submitted by warproxxx to BitMEX [link] [comments]

The Absolute Fucking Impossibility of Reporting Taxes On This Shit

EDIT: PLEASE STOP ASKING ME FOR DAY-TRADING TIPS. LEARN BY DOING.
I'm in the US. I day-trade cryptocurrencies and have made tens of thousands of orders across many pairs and exchanges (and have made substantially more than I would have by just "hodl xd", even with short-term penalty added, thank you very much). Uncle Sam wants his pie. Okay, fine. I know exactly how much I've made by simply tallying the deposits and withdrawals from by bank to my fiat gateways, and I'm willing to be taxed on that, but...
The IRS expects me to report every single transaction on a form with each interval gain and loss step reported in USD. Every single one of my tens of thousands of orders and partial trades, most of which having no actual valuation or realization in USD, yet somehow I'm expected to calculate the imaginary USD gain/loss of each when BTC/USD fluctuates by whole percents every other minute on the reference fiat exchange (GDAX, say). No matter what painstaking diligence is paid to reporting the notional USD gain/loss for every alt pair and perpetual swap trade by cross-referencing those irrelevant data points, I will inevitably end up with a totally fictional sequence of numbers that deviates significantly from my known, actual USD gain from what hit my fucking bank and what is presently on my exchange accounts. This especially when transaction and trading and funding fees are taken into account, as well as the nightmare of slippage and partial fills.
Also Bittrex completely wiped out my trade history, and everyone else's from what I hear, but my deposits/withdrawals are still there and that should really be all that matters (but not to the IRS apparently). I also had a stint on poswallet.com, same situation.
Now here's the mind-melting part: I use BitMEX. I've made most of my gains from there. (Yes, I know that US customers are ostensibly disallowed by BitMEX from using BitMEX, but we all know this is lip service, and it is not illegal in itself by US law to violate a site's T&S, and honestly BitMEX rocks so hard I'd be willing to set up an offshore company to keep using it). The IRS virtual currency guidance defines cryptocurrency as "property" and seems to concern itself with "exchange of virtual currency for other property", which is taxable. Okay, but is a perpetual swap or futures contract taxable? How is it possible to calculate the "cost basis" of a BitMEX position, where posted margin can arbitrarily and dynamically scale? No actual buying or selling of bitcoin occurs on BitMEX, so how is it taxable? How is it reportable? How?
How the fuck do I even report any kind of short position on Form 8949? This would apply to Poloniex and Bitfinex as well.
The IRS stipulates different (and highly favorable) tax rules for conventional futures trading, such as the 60/40 rule, where as I understand it 60 percent of futures gains are considered long-term and 40 percent are considered short-term, as marked-to-market. Would this apply to BitMEX futures as well? And how about when, at the end, you withdraw your bitcoin from there and it becomes "property" again to sell for fiat?
Even if I went to a tax attorney or CPA, as I intend to do, would they know more than me what with the terribly incomplete guidance the IRS has given about all this? Nevermind the logistical insanity of the step-by-step fictional USD conversion process. And forget about bitcoin.tax; they don't handle BitMEX or any kind of serious trading activity.
I've made a lot of money. I'm fine with being taxed fairly on my net gain. But the IRS has not adequately addressed the problems I have described in their guidance. What the hell do I do?
submitted by IshizakaLand to CryptoCurrency [link] [comments]

Beginner’s Guide to BitMEX

Beginner’s Guide to BitMEX

https://preview.redd.it/fl5e0q7i3cc41.jpg?width=1024&format=pjpg&auto=webp&s=445485d722839a9adc1ae13db4c965b0ae3e67b7
Founded by HDR Global Trading Limited (which in turn was founded by former bankers Arthur Hayes, Samuel Reed and Ben Delo) in 2014, BitMEX is a trading platform operating around the world and registered in the Seychelles.
Meaning Bitcoin Mercantile Exchange, BitMEX is one of the largest Bitcoin trading platforms currently operating, with a daily trading volume of over 35,000 BTC and over 540,000 accesses monthly and a trading history of over $34 billion worth of Bitcoin since its inception.

https://preview.redd.it/coenpm4k3cc41.jpg?width=808&format=pjpg&auto=webp&s=8832dcafa5bd615b511bbeb6118ef43d73ed785e
Unlike many other trading exchanges, BitMEX only accepts deposits through Bitcoin, which can then be used to purchase a variety of other cryptocurrencies. BitMEX specialises in sophisticated financial operations such as margin trading, which is trading with leverage. Like many of the exchanges that operate through cryptocurrencies, BitMEX is currently unregulated in any jurisdiction.
Visit BitMEX

How to Sign Up to BitMEX

In order to create an account on BitMEX, users first have to register with the website. Registration only requires an email address, the email address must be a genuine address as users will receive an email to confirm registration in order to verify the account. Once users are registered, there are no trading limits. Traders must be at least 18 years of age to sign up.
https://preview.redd.it/0v13qoil3cc41.jpg?width=808&format=pjpg&auto=webp&s=e6134bc089c4e352dce10d754dc84ff11a4c7994
However, it should be noted that BitMEX does not accept any US-based traders and will use IP checks to verify that users are not in the US. While some US users have bypassed this with the use of a VPN, it is not recommended that US individuals sign up to the BitMEX service, especially given the fact that alternative exchanges are available to service US customers that function within the US legal framework.
How to Use BitMEX
BitMEX allows users to trade cryptocurrencies against a number of fiat currencies, namely the US Dollar, the Japanese Yen and the Chinese Yuan. BitMEX allows users to trade a number of different cryptocurrencies, namely Bitcoin, Bitcoin Cash, Dash, Ethereum, Ethereum Classic, Litecoin, Monero, Ripple, Tezos and Zcash.
The trading platform on BitMEX is very intuitive and easy to use for those familiar with similar markets. However, it is not for the beginner. The interface does look a little dated when compared to newer exchanges like Binance and Kucoin’s.
Once users have signed up to the platform, they should click on Trade, and all the trading instruments will be displayed beneath.
Clicking on the particular instrument opens the orderbook, recent trades, and the order slip on the left. The order book shows three columns – the bid value for the underlying asset, the quantity of the order, and the total USD value of all orders, both short and long.
The widgets on the trading platform can be changed according to the user’s viewing preferences, allowing users to have full control on what is displayed. It also has a built in feature that provides for TradingView charting. This offers a wide range of charting tool and is considered to be an improvement on many of the offering available from many of its competitors.
https://preview.redd.it/fabg1nxo3cc41.jpg?width=808&format=pjpg&auto=webp&s=6d939889c3eac15ab1e78ec37a8ccd13fc5e0573
Once trades are made, all orders can be easily viewed in the trading platform interface. There are tabs where users can select their Active Orders, see the Stops that are in place, check the Orders Filled (total or partially) and the trade history. On the Active Orders and Stops tabs, traders can cancel any order, by clicking the “Cancel” button. Users also see all currently open positions, with an analysis if it is in the black or red.
BitMEX uses a method called auto-deleveraging which BitMEX uses to ensure that liquidated positions are able to be closed even in a volatile market. Auto-deleveraging means that if a position bankrupts without available liquidity, the positive side of the position deleverages, in order of profitability and leverage, the highest leveraged position first in queue. Traders are always shown where they sit in the auto-deleveraging queue, if such is needed.
Although the BitMEX platform is optimized for mobile, it only has an Android app (which is not official). There is no iOS app available at present. However, it is recommended that users use it on the desktop if possible.
BitMEX offers a variety of order types for users:
  • Limit Order (the order is fulfilled if the given price is achieved);
  • Market Order (the order is executed at current market price);
  • Stop Limit Order (like a stop order, but allows users to set the price of the Order once the Stop Price is triggered);
  • Stop Market Order (this is a stop order that does not enter the order book, remain unseen until the market reaches the trigger);
  • Trailing Stop Order (it is similar to a Stop Market order, but here users set a trailing value that is used to place the market order);
  • Take Profit Limit Order (this can be used, similarly to a Stop Order, to set a target price on a position. In this case, it is in respect of making gains, rather than cutting losses);
  • Take Profit Market Order (same as the previous type, but in this case, the order triggered will be a market order, and not a limit one)
The exchange offers margin trading in all of the cryptocurrencies displayed on the website. It also offers to trade with futures and derivatives – swaps.

Futures and Swaps

A futures contract is an agreement to buy or sell a given asset in the future at a predetermined price. On BitMEX, users can leverage up to 100x on certain contracts.
Perpetual swaps are similar to futures, except that there is no expiry date for them and no settlement. Additionally, they trade close to the underlying reference Index Price, unlike futures, which may diverge substantially from the Index Price.
BitMEX also offers Binary series contracts, which are prediction-based contracts which can only settle at either 0 or 100. In essence, the Binary series contracts are a more complicated way of making a bet on a given event.
The only Binary series betting instrument currently available is related to the next 1mb block on the Bitcoin blockchain. Binary series contracts are traded with no leverage, a 0% maker fee, a 0.25% taker fee and 0.25% settlement fee.

Bitmex Leverage

BitMEX allows its traders to leverage their position on the platform. Leverage is the ability to place orders that are bigger than the users’ existing balance. This could lead to a higher profit in comparison when placing an order with only the wallet balance. Trading in such conditions is called “Margin Trading.”
There are two types of Margin Trading: Isolated and Cross-Margin. The former allows the user to select the amount of money in their wallet that should be used to hold their position after an order is placed. However, the latter provides that all of the money in the users’ wallet can be used to hold their position, and therefore should be treated with extreme caution.
https://preview.redd.it/eg4qk9qr3cc41.jpg?width=808&format=pjpg&auto=webp&s=c3ca8cdf654330ce53e8138d774e72155acf0e7e
The BitMEX platform allows users to set their leverage level by using the leverage slider. A maximum leverage of 1:100 is available (on Bitcoin and Bitcoin Cash). This is quite a high level of leverage for cryptocurrencies, with the average offered by other exchanges rarely exceeding 1:20.

BitMEX Fees

For traditional futures trading, BitMEX has a straightforward fee schedule. As noted, in terms of leverage offered, BitMEX offers up to 100% leverage, with the amount off leverage varying from product to product.
However, it should be noted that trading at the highest leverages is sophisticated and is intended for professional investors that are familiar with speculative trading. The fees and leverage are as follows:
https://preview.redd.it/wvhiepht3cc41.jpg?width=730&format=pjpg&auto=webp&s=0617eb894c13d3870211a01d51af98561907cb99

https://preview.redd.it/qhi8izcu3cc41.jpg?width=730&format=pjpg&auto=webp&s=09da4efe1de4214b0b5b9c7501aba5320e846b4c
However, there are additional fees for hidden / iceberg orders. A hidden order pays the taker fee until the entire hidden quantity is completely executed. Then, the order will become normal, and the user will receive the maker rebate for the non-hidden amount.

Deposits and Withdrawals

BitMEX does not charge fees on deposits or withdrawals. However, when withdrawing Bitcoin, the minimum Network fee is based on blockchain load. The only costs therefore are those of the banks or the cryptocurrency networks.
As noted previously, BitMEX only accepts deposits in Bitcoin and therefore Bitcoin serves as collateral on trading contracts, regardless of whether or not the trade involves Bitcoin.
The minimum deposit is 0.001 BTC. There are no limits on withdrawals, but withdrawals can also be in Bitcoin only. To make a withdrawal, all that users need to do is insert the amount to withdraw and the wallet address to complete the transfer.
https://preview.redd.it/xj1kbuew3cc41.jpg?width=808&format=pjpg&auto=webp&s=68056f2247001c63e89c880cfbb75b2f3616e8fe
Deposits can be made 24/7 but withdrawals are processed by hand at a recurring time once per day. The hand processed withdrawals are intended to increase the security levels of users’ funds by providing extra time (and email notice) to cancel any fraudulent withdrawal requests, as well as bypassing the use of automated systems & hot wallets which may be more prone to compromise.

Supported Currencies

BitMEX operates as a crypto to crypto exchange and makes use of a Bitcoin-in/Bitcoin-out structure. Therefore, platform users are currently unable to use fiat currencies for any payments or transfers, however, a plus side of this is that there are no limits for trading and the exchange incorporates trading pairs linked to the US Dollar (XBT), Japanese Yen (XBJ), and Chinese Yuan (XBC).
BitMEX supports the following cryptocurrencies:
  • Bitcoin (XBT)
  • Bitcoin Cash (BCH)
  • Ethereum (ETH)
  • Ethereum Classic (ETC)
  • Litecoin (LTC)
  • Ripple Token (XRP)
  • Monero (XMR)
  • Dash (DASH)
  • Zcash (ZEC)
  • Cardano (ADA)
  • Tron (TRX)
  • EOS Token (EOS)
BitMEX also offers leverage options on the following coins:
  • 5x: Zcash (ZEC)
  • 20x : Ripple (XRP),Bitcoin Cash (BCH), Cardano (ADA), EOS Token (EOS), Tron (TRX)
  • 25x: Monero (XMR)
  • 33x: Litecoin (LTC)
  • 50x: Ethereum (ETH)
  • 100x: Bitcoin (XBT), Bitcoin / Yen (XBJ), Bitcoin / Yuan (XBC)

Trading Technologies International Partnership

HDR Global Trading, the company which owns BitMEX, has recently announced a partnership with Trading Technologies International, Inc. (TT), a leading international high-performance trading software provider.
The TT platform is designed specifically for professional traders, brokers, and market-access providers, and incorporates a wide variety of trading tools and analytical indicators that allow even the most advanced traders to customize the software to suit their unique trading styles. The TT platform also provides traders with global market access and trade execution through its privately managed infrastructure and the partnership will see BitMEX users gaining access to the trading tools on all BitMEX products, including the popular XBT/USD Perpetual Swap pairing.
https://preview.redd.it/qcqunaby3cc41.png?width=672&format=png&auto=webp&s=b77b45ac2b44a9af30a4985e3d9dbafc9bbdb77c

The BitMEX Insurance Fund

The ability to trade on leverage is one of the exchange’s main selling points and offering leverage and providing the opportunity for traders to trade against each other may result in a situation where the winners do not receive all of their expected profits. As a result of the amounts of leverage involved, it’s possible that the losers may not have enough margin in their positions to pay the winners.
Traditional exchanges like the Chicago Mercantile Exchange (CME) offset this problem by utilizing multiple layers of protection and cryptocurrency trading platforms offering leverage cannot currently match the levels of protection provided to winning traders.
In addition, cryptocurrency exchanges offering leveraged trades propose a capped downside and unlimited upside on a highly volatile asset with the caveat being that on occasion, there may not be enough funds in the system to pay out the winners.
To help solve this problem, BitMEX has developed an insurance fund system, and when a trader has an open leveraged position, their position is forcefully closed or liquidated when their maintenance margin is too low.
Here, a trader’s profit and loss does not reflect the actual price their position was closed on the market, and with BitMEX when a trader is liquidated, their equity associated with the position drops down to zero.
In the following example, the trader has taken a 100x long position. In the event that the mark price of Bitcoin falls to $3,980 (by 0.5%), then the position gets liquidated with the 100 Bitcoin position needing to be sold on the market.
This means that it does not matter what price this trade executes at, namely if it’s $3,995 or $3,000, as from the view of the liquidated trader, regardless of the price, they lose all the equity they had in their position, and lose the entire one Bitcoin.
https://preview.redd.it/wel3rka04cc41.png?width=669&format=png&auto=webp&s=3f93dac2d3b40aa842d281384113d2e26f25947e
Assuming there is a fully liquid market, the bid/ask spread should be tighter than the maintenance margin. Here, liquidations manifest as contributions to the insurance fund (e.g. if the maintenance margin is 50bps, but the market is 1bp wide), and the insurance fund should rise by close to the same amount as the maintenance margin when a position is liquidated. In this scenario, as long as healthy liquid markets persist, the insurance fund should continue its steady growth.
The following graphs further illustrate the example, and in the first chart, market conditions are healthy with a narrow bid/ask spread (just $2) at the time of liquidation. Here, the closing trade occurs at a higher price than the bankruptcy price (the price where the margin balance is zero) and the insurance fund benefits.
Illustrative example of an insurance contribution – Long 100x with 1 BTC collateral
https://preview.redd.it/is89ep924cc41.png?width=699&format=png&auto=webp&s=f0419c68fe88703e594c121b5b742c963c7e2229
(Note: The above illustration is based on opening a 100x long position at $4,000 per BTC and 1 Bitcoin of collateral. The illustration is an oversimplification and ignores factors such as fees and other adjustments.
The bid and offer prices represent the state of the order book at the time of liquidation. The closing trade price is $3,978, representing $1 of slippage compared to the $3,979 bid price at the time of liquidation.)
The second chart shows a wide bid/ask spread at the time of liquidation, here, the closing trade takes place at a lower price than the bankruptcy price, and the insurance fund is used to make sure that winning traders receive their expected profits.
This works to stabilize the potential for returns as there is no guarantee that healthy market conditions can continue, especially during periods of heightened price volatility. During these periods, it’s actually possible that the insurance fund can be used up than it is built up.
Illustrative example of an insurance depletion – Long 100x with 1 BTC collateral
https://preview.redd.it/vb4mj3n54cc41.png?width=707&format=png&auto=webp&s=0c63b7c99ae1c114d8e3b947fb490e9144dfe61b
(Notes: The above illustration is based on opening a 100x long position at $4,000 per BTC and 1 Bitcoin of collateral. The illustration is an oversimplification and ignores factors such as fees and other adjustments.
The bid and offer prices represent the state of the order book at the time of liquidation. The closing trade price is $3,800, representing $20 of slippage compared to the $3,820 bid price at the time of liquidation.)
The exchange declared in February 2019, that the BitMEX insurance fund retained close to 21,000 Bitcoin (around $70 million based on Bitcoin spot prices at the time).
This figure represents just 0.007% of BitMEX’s notional annual trading volume, which has been quoted as being approximately $1 trillion. This is higher than the insurance funds as a proportion of trading volume of the CME, and therefore, winning traders on BitMEX are exposed to much larger risks than CME traders as:
  • BitMEX does not have clearing members with large balance sheets and traders are directly exposed to each other.
  • BitMEX does not demand payments from traders with negative account balances.
  • The underlying instruments on BitMEX are more volatile than the more traditional instruments available on CME.
Therefore, with the insurance fund remaining capitalized, the system effectively with participants who get liquidated paying for liquidations, or a losers pay for losers mechanism.
This system may appear controversial as first, though some may argue that there is a degree of uniformity to it. It’s also worth noting that the exchange also makes use of Auto Deleveraging which means that on occasion, leveraged positions in profit can still be reduced during certain time periods if a liquidated order cannot be executed in the market.
More adventurous traders should note that while the insurance fund holds 21,000 Bitcoin, worth approximately 0.1% of the total Bitcoin supply, BitMEX still doesn’t offer the same level of guarantees to winning traders that are provided by more traditional leveraged trading platforms.
Given the inherent volatility of the cryptocurrency market, there remains some possibility that the fund gets drained down to zero despite its current size. This may result in more successful traders lacking confidence in the platform and choosing to limit their exposure in the event of BitMEX being unable to compensate winning traders.

How suitable is BitMEX for Beginners?

BitMEX generates high Bitcoin trading levels, and also attracts good levels of volume across other crypto-to-crypto transfers. This helps to maintain a buzz around the exchange, and BitMEX also employs relatively low trading fees, and is available round the world (except to US inhabitants).
This helps to attract the attention of people new to the process of trading on leverage and when getting started on the platform there are 5 main navigation Tabs to get used to:
  • **Trade:**The trading dashboard of BitMEX. This tab allows you to select your preferred trading instrument, and choose leverage, as well as place and cancel orders. You can also see your position information and view key information in the contract details.
  • **Account:**Here, all your account information is displayed including available Bitcoin margin balances, deposits and withdrawals, and trade history.
  • **Contracts:**This tab covers further instrument information including funding history, contract sizes; leverage offered expiry, underlying reference Price Index data, and other key features.
  • **References:**This resource centre allows you to learn about futures, perpetual contracts, position marking, and liquidation.
  • **API:**From here you can set up an API connection with BitMEX, and utilize the REST API and WebSocket API.
BitMEX also employs 24/7 customer support and the team can also be contacted on their Twitter and Reddit accounts.
In addition, BitMEX provides a variety of educational resources including an FAQ section, Futures guides, Perpetual Contracts guides, and further resources in the “References” account tab.
For users looking for more in depth analysis, the BitMEX blog produces high level descriptions of a number of subjects and has garnered a good reputation among the cryptocurrency community.
Most importantly, the exchange also maintains a testnet platform, built on top of testnet Bitcoin, which allows anyone to try out programs and strategies before moving on to the live exchange.
This is crucial as despite the wealth of resources available, BitMEX is not really suitable for beginners, and margin trading, futures contracts and swaps are best left to experienced, professional or institutional traders.
Margin trading and choosing to engage in leveraged activity are risky processes and even more advanced traders can describe the process as a high risk and high reward “game”. New entrants to the sector should spend a considerable amount of time learning about margin trading and testing out strategies before considering whether to open a live account.

Is BitMEX Safe?

BitMEX is widely considered to have strong levels of security. The platform uses multi-signature deposits and withdrawal schemes which can only be used by BitMEX partners. BitMEX also utilises Amazon Web Services to protect the servers with text messages and two-factor authentication, as well as hardware tokens.
BitMEX also has a system for risk checks, which requires that the sum of all account holdings on the website must be zero. If it’s not, all trading is immediately halted. As noted previously, withdrawals are all individually hand-checked by employees, and private keys are never stored in the cloud. Deposit addresses are externally verified to make sure that they contain matching keys. If they do not, there is an immediate system shutdown.
https://preview.redd.it/t04qs3484cc41.jpg?width=808&format=pjpg&auto=webp&s=a3b106cbc9116713dcdd5e908c00b555fd704ee6
In addition, the BitMEX trading platform is written in kdb+, a database and toolset popular amongst major banks in high frequency trading applications. The BitMEX engine appears to be faster and more reliable than some of its competitors, such as Poloniex and Bittrex.
They have email notifications, and PGP encryption is used for all communication.
The exchange hasn’t been hacked in the past.

How Secure is the platform?

As previously mentioned, BitMEX is considered to be a safe exchange and incorporates a number of security protocols that are becoming standard among the sector’s leading exchanges. In addition to making use of Amazon Web Services’ cloud security, all the exchange’s systems can only be accessed after passing through multiple forms of authentication, and individual systems are only able to communicate with each other across approved and monitored channels.
Communication is also further secured as the exchange provides optional PGP encryption for all automated emails, and users can insert their PGP public key into the form inside their accounts.
Once set up, BitMEX will encrypt and sign all the automated emails sent by you or to your account by the [[email protected]](mailto:[email protected]) email address. Users can also initiate secure conversations with the support team by using the email address and public key on the Technical Contact, and the team have made their automated system’s PGP key available for verification in their Security Section.
The platform’s trading engine is written in kdb+, a database and toolset used by leading financial institutions in high-frequency trading applications, and the speed and reliability of the engine is also used to perform a full risk check after every order placement, trade, settlement, deposit, and withdrawal.
All accounts in the system must consistently sum to zero, and if this does not happen then trading on the platform is immediately halted for all users.
With regards to wallet security, BitMEX makes use of a multisignature deposit and withdrawal scheme, and all exchange addresses are multisignature by default with all storage being kept offline. Private keys are not stored on any cloud servers and deep cold storage is used for the majority of funds.
Furthermore, all deposit addresses sent by the BitMEX system are verified by an external service that works to ensure that they contain the keys controlled by the founders, and in the event that the public keys differ, the system is immediately shut down and trading halted. The exchange’s security practices also see that every withdrawal is audited by hand by a minimum of two employees before being sent out.

BitMEX Customer Support

The trading platform has a 24/7 support on multiple channels, including email, ticket systems and social media. The typical response time from the customer support team is about one hour, and feedback on the customer support generally suggest that the customer service responses are helpful and are not restricted to automated responses.
https://preview.redd.it/8k81zl0a4cc41.jpg?width=808&format=pjpg&auto=webp&s=e30e5b7ca93d2931f49e2dc84025f2fda386eab1
The BitMEX also offers a knowledge base and FAQs which, although they are not necessarily always helpful, may assist and direct users towards the necessary channels to obtain assistance.
BitMEX also offers trading guides which can be accessed here

Conclusion

There would appear to be few complaints online about BitMEX, with most issues relating to technical matters or about the complexities of using the website. Older complaints also appeared to include issues relating to low liquidity, but this no longer appears to be an issue.
BitMEX is clearly not a platform that is not intended for the amateur investor. The interface is complex and therefore it can be very difficult for users to get used to the platform and to even navigate the website.
However, the platform does provide a wide range of tools and once users have experience of the platform they will appreciate the wide range of information that the platform provides.
Visit BitMEX
submitted by bitmex_register to u/bitmex_register [link] [comments]

Binance added Russian ruble support

Binance added Russian ruble support
https://preview.redd.it/im63di7rzm241.jpg?width=1000&format=pjpg&auto=webp&s=04c0f8adef5c25c5c1e864e414d014b3d3a02a7b
Binance is one of the largest crypto-exchanges in the world, which, thanks to innovative approaches, quickly took a leading position in the market. This year, the exchange launched margin trading with leverage and futures trading.
Now the Binance platform has launched a payment gateway that allows you to buy and sell cryptocurrencies for Russian rubles. The minimum purchase amount is only 1,000 rubles.
You can buy cryptocurrency in two ways:
  • Buy cryptocurrency using Simplex or Koinal wallet, paying for the transaction by Bank transfer via Visa or Mastercard. There is a 2.5% fee. The transfer may take up to 3 days.
  • You can replenish your Binance account through the AdvCash payment system and buy cryptocurrencies from the exchange's internal account. In this case, the funds arrive within a few minutes.
With the help of these wallets, you can withdraw rubles. Deposit and withdrawal using AdvCash is carried out without a fee. But that's not all. Now Binance supports other fiat currencies. You can also buy Bitcoin and altcoins for:
  • USD
  • EUR
  • CNY
  • TRY
  • UAH
  • KZT
  • NGN
  • INR
Trade-mate.io service provides automated trading on the Binance crypto exchange, as well as on Bitmex and Poloniex through the API. Traders can use trading signals provided by professionals, telegram channels or bots. For manual trading, the service provides an advanced Smart Trade function that supports trailing stop-loss and take-profit, due to which it is possible to maximize profit and reduce risks when trading cryptocurrencies.
submitted by mrhadow to matetrade [link] [comments]

Poloniex Margin Traders loss. My thoughts

Poloniex margin lenders losses. What it means for Poloniex / Circle and you.
Socializing the losses but not socializing the profits
Issue: Circle decided that the losses of the CLAM margin traders would be socialized. That is if you were lending only BTC then you also had to take in a loss to cover for the CLAM margin lenders. The point is that the BTC lenders did not participate in the high interest of the margin lenders, so how come now the BTC margin lenders are participating in the losses?
We know what will happen in the future if there are any further trading or lending losses. Circle / Poloniex will move any losses onto their clients to save their profits.

Delay in being informed about the issue
The issue took place on the May 26th an official email was sent on June 6th.
Why such a long delay in informing the margin lenders about this? If there is hack or loss of funds in the future should we expect similar delays?

Avoiding losses comes first and foremost, even at the cost of reputational damage
Circle / Poloniex decided to transfer the losses onto their clients, this comes at an important reputational damage. 13 million in the history of Circle is not enormous, but still Circle decided to put this out there and have their clients pay. Consider Binance hack where Binance decided to pay back any losses. Does this mean Poloniex have financial problems? Could those holding currency and trading on Poloniex be at risk? Is Poloniex insolvent, is it going under? If the owners were taking the long term view 13 million is not a lot when compared the reputational damage such a loss would entail.

It is unclear if the losses are un USD or in Crypto terms
The losses have been in Crypto, if BTC goes up will the USD or the BTC equivalent be returned? Are the losses still generating interest? Will Poloniex deduct any legal fess when the money is returned? Will the borrowers be liable for interest? How many borrowers are there? Where are they geographically located?

Circle/Poloniex have now upgraded their systems and removed the margin trading from low liquidity coins
This shows that those coins where not the best to be margin traded, and thus Poloniex needs to share "some" responsibility in these losses.

Why did only the margin lenders make the losses and not the margin traders / borrowers.
There must have been important profits to margin traders! Can some one confirm if these margin traders where connected to Poloniex / Circle in any way? Why did they take the profits, even though the system malfunctioned.

#Poloniex #MarginTrading #Crypto #PassiveIncome
submitted by Boksanter to PoloniexForum [link] [comments]

[Week of March 5, 2017] Initial Trade Ideas for 2 BTC Actively Managed Community Fund

Post your trade ideas for the first investments that we will make as a community in the community actively managed fund.
We currently have 2 BTC sitting in 1Broker and we need to get them into active positions.:
http://i.imgur.com/LwSBYWw.png
UPDATE OKAY we are going long BTC/USD 0.5 BTC margin and short EUUSD 3x 0.5 BTC margin
EDIT2: BTC/USD isnt working on 1Broker so we might expand this to BitMEX where we can do shitcoins and bitcoin too... pendingl...
for now, 1 BTC 3x short EURUSD!!
EDIT3: BTCUSD funds working again: 1 BTC 3x long BTCUSD added. so we are now , as of
Mar 6, 2017 long 1 BTC 3x BTCUSD 1276.21 and 1276.09 and short 1 BTC 3x EUUSD 1.061685 and 1.061875
submitted by theswapman to WhalePoolTrades [link] [comments]

3 Stablecoins Enterprise Executives Need To Know And Why

3 Stablecoins Enterprise Executives Need To Know And Why

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The digital asset space is undergoing a transformation and is trying to adapt to new and wider interest from large non-financial companies like Facebook, Samsung, Walmart, BMW, Shell and Nestle. Those companies, along with large financial services institutional players like J.P. Morgan, UBS and Fidelity, create enormous demand for tradable assets running on both public and private blockchains. These non-financial companies are usually less risk-averse than are the experienced traditional finance institutions. Thus, to embrace the new technology, they must rely on stable, reliable and scalable instruments like stablecoins. These new assets are ideally suited to service the expanding payments industry, a primary blockchain use case, and digital assets exchanges.
Having price stability when trading and exchanging digital assets is important and effectively creates additional channels for global remittance as well as better price efficiency.
But what are stablecoins in a nutshell? They are digital assets designed to have a stable value and extremely low volatility. Usually, they are backed by fiat currency – in most cases, the US dollar, digital assets or a physical commodity like gold or silver. There are projects that aim to completely remove the need for physical collateral and that rely on algorithms to dynamically adjust supply. The goal is that the price should not drastically fluctuate at any moment in time.
Recently, several interesting stablecoin projects came out, and they are pushing the boundaries of digital assets. For example, the NYC-based exchange Gemini is issuing GUSD but also applying for an ATS (Alternative Trading System) license, which will create a unique opportunity for the GUSD to reach newly tokenized assets and private placements.
Another two projects coming from the corporate world are JPM Coin, run by the powerhouse J.P. Morgan, and Fnality’s Utility Settlement Coin, which is backed by a plethora of banks like UBS, BNY Melon, Barclays and HSBC. Both seem to have the same aims, a similar reach and the same potential customers. It will be interesting to see if they cooperate at some point.
  1. Tether
One of the most important benefits of stablecoins is that, if widely adopted by a large number of crypto exchanges, they create an opportunity for price hedging and risk management that is several times cheaper than hedging versus fiat. Currently, the most used in trading stablecoin is Tether. The USDT is pegged to the US dollar and widely used to create crypto markets on more than 25 of the most popular cryptocurrency exchanges. Founded in 2014 by the founders of the Bitfinex exchange, Tether is now the sixth most liquid crypto asset, with a market cap of $3.9 billion. The asset is available mostly on crypto exchanges that don’t have the New York-based BitLicense and reside mostly outside the US.

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Recently, Tether was in the news when the New York Attorney General started a case against Bitfinex and its Hong Kong founding company iFinex for using Tether reserves to mask a missing $850 million. Strangely, this high-profile investigation had minimal effect on Tether’s stability. It dropped to $0.85 but recovered to its usual dollar parity of $0.99 – $1.01.
Being vital to the crypto trading ecosystem, Tether aims to be as widely available as possible. It is available on numerous networks like OMNI (Bitcoin), ERC20 (Ethereum) and Tron. To get a sense of how fragile everything is, last week Poloniex wanted to move $50 million between networks. However, instead of printing the needed amount, it issued $5 billion in new tethers, which surprised the whole market. Eventually, it was made clear that this was an issue with the decimals, or what the trading world knows as “fat fingers”.

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Why it is important: Considered by many to be the main driver behind the bull run of Bitcoin’s price, Tether is vital for the crypto community because it is widely spread and adopted by exchanges. It makes up 75% of the total Bitcoin trading market, so it is also regarded as probably the biggest liability in the industry. Many experienced traders are wondering what would happen to the Bitcoin price and volatility if USDT availability is restricted. The interested parties will watch closely on July 29th, which marks the next appearance in the New York courtroom.
  1. Facebook Libra Coin
The stablecoin that has taken all the attention lately comes from Facebook and is a vital instrument in the Libra Association’s plan for its new global payment infrastructure. Facebook’s grand vision is to establish a global payment network among the 18 million merchants on its platform and among its 2.6 billion users. Interestingly, the first companies invited to the Libra Association formation all seem familiarly related; well, you don’t start something that big with complete strangers, do you? Maybe the overall goal is to replicate the WeChat/Tencent model in the western world but instead of using CNY, Libra plans to use a basket of low-volatility assets (bank deposits and government securities) denominated in multiple currencies like USD, GBP, EUR and JPY.
Last week, its co-creator, David Marcus, was in front of the Senate Banking Committee and the House Financial Services Committee, answering tough questions about regulation, trust and privacy. Generally, the Senate and Congress were supportive of the innovation and technology direction that will position the US as the leader in payments. However, they remain highly skeptical of the governance and execution of the Libra project in relation to handling data privacy. With fresh memories of 2008’s financial crisis, most members of Congress were asking themselves, “What will happen if Libra goes down and we have to bail it out?” Which leads to the question: How do you bail out the finances of 2.6 billion people?
Another concern is the fact that the governing body of the Libra Association is being established in Switzerland. This creates the possibility of regulatory arbitrage between US and Swiss laws. For example, securities lawyers in the US might consider the Libra token to be a security, which might not be the case for their Swiss colleagues. With all the signs of ETF (Exchange Traded Fund) or Money Market funds, this can’t be too far. The Libra stablecoin reserve will grow based primarily on two sources: the investors who will initially buy the Libra Investment Token ($LIT) and any other retail users who would convert any type of fiat to use the payment network.
In comparison to another stablecoin issued by a large corporation (J.P. Morgan’s coin), the Libra carries a different sentiment. When J.P. Morgan announced its JPMC, nobody reacted too harshly. Of course, J.P. Morgan doesn’t have the same privacy issues that Facebook does and is generally known to do well in exactly this: banking services with currencies.
An interesting use for the Libra network, once live, will be to serve as the Layer 2 network to permissionless protocols like Bitcoin and Ethereum. This way, the open and trustless networks can communicate/exchange value and assets with the Libra permissioned stablecoin.
Why it is important: Libra is moving waters in DC. This last week, the President tweeted, US Treasury Department Secretary Steven Mnuchin held a press conference and two days were spent in Washington with the Senate and Congress. One thing is clear: cryptocurrencies, Bitcoin and blockchain received prime-time attention. In terms of what comes out of Libra, only time will tell. The sentiment is that it will be heavily regulated, maybe closer to being a bank. Thus, the Libra token will look like CBDC (Central Bank Digital Currency).
  1. Dai
Building on the Ethereum protocol, the team at MakerDao created Dai to be a stable and decentralized currency fueling the new wave of DeFi (Decentralized Finance) applications. It uses an instrument known as Collateralized Debt Position (CDP), which allows you to lock your Ether assets into their smart contract and receive a loan denominated in Dai from the MakerDao system. In essence, the Dai is pegged to the US dollar but backed by Ether. Having Dai on the Ethereum protocols enables many financial services applications which otherwise wouldn’t exist due to the cryptocurrencies’ high volatility. Having Dai issuance and usage completely open is key to trustless financial services.
Currently, many discussions are taking place about the protocol stability fee. This is the interest rate, currently at 20.5%, that all users must pay back to the system when closing their CDP positions. One might argue that this is too high and the current CDPs are overcollateralized. It seems like this is true. The current collaterization ratio is around 390%. For $81 million in debt, there is $320 million in collateral.

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The Dai is an important instrument in the DeFi ecosystem built on Ethereum. Currently, it is being used on protocols like dYdX, enabling decentralized margin trading; 0x Protocol, the open-source marketplace for crypto tokens; Uniswap, the exchange for swapping ERC20 tokens; Dharma, the open protocol for building apps that allow for the borrowing and lending of digital assets; and many more.
There are three main issues of which Dai users must be aware:
Why it is important: Nevertheless, piece by piece, the Open Finance infrastructure, with stablecoins at its core, is being built and is “eating up financial services” as we know them. Slowly but surely, all the existing financial tools will have their own open sources and trustless tokenized equivalents.
A growing concern about stablecoins is how they could be classified by agencies like the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC). For example, Basis’s stablecoin, despite raising $133 million, couldn’t escape the SEC classification as a security and had to shut down. Depending on how one reads the current regulation, one could classify the stablecoins as "swaps" under the CFTC regulation or as "demand notes" under the SEC. If you talk to experienced securities lawyers, the answer is always “it depends”.
Still, similar to other markets in which we saw interesting and innovative financial instruments, not all stablecoin projects will survive. The winner will be the one with the most user adoption, highest volumes, largest liquidity and lowest volatility. Last but not least, it should operate within an approved regulatory framework which will guarantee exchange listings and wider organic exposure.
It will be interesting to see if Facebook’s Libra receives regulatory approval, as this might pave the way for the long-awaited Bitcoin ETF.

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submitted by evseevam971 to u/evseevam971 [link] [comments]

BitMax.io (BTMX.com) Weekly Update (June 29 - July 05, 2019)

Platform Update
•7/4 - Enabled Deposit & Withdrawal of USDT ERC20
•7/4 - Implemented new device authorization process to enhance user account security
•7/5 - Completed web optimization for btmx.com site
•Rolled out volatility products on APP
•Updates on APP (Android + iOS) Version 1.3.8
-Updated asset display value to be BTC on ‘Balance’ page for USD as Quoting Currency on Me page
-Rolled out volatility product with access from homepage
-Enabled filter function for order history
-Enabled automatic login upon registration
-Implemented new device authorization requirement
-Supported deposit & withdrawal of USDT-ERC20
-Fixed other reported bugs
•Updates on WEB
-Displayed “Daily Interest Rate” on margin trading page
-Enabled unlock-all with one click function for BTMX unlock
New Listing & Activity
•7/3 - Listed COTI(COTI) under the trading pairs of COTI/USDT and COTI/BTC, and launched 85,000 COTI Airdrop to BTMX holders
•7/1 - listed Chromia(CHR) under the trading pairs of CHUSDT, CHBTC,CHETH, and launched CHR Net-Buy contest with 780,000 CHR as total reward
•7/3 - Launched quiz for BitMax.io users to predict closing price of CHUSDT at 12:00 p.m. EDT, July 4th, 2019. 10 users have been selected to each receive 100 CHR as reward.
Upcoming Events
•7/3 - To use reference pricing for selected trading pairs as the stop price for stop orders. The reference price is computed by taking an average last trade price from the following five exchanges (upon availability at the time of computation)- BitMax.io, Binance, Huobi, OKEx and Poloniex, and removing the highest and lowest price. This update is effective for both regular and margin trading
(For more details: https://bitmaxhelp.zendesk.com/hc/en-us/articles/360025973814-Use-of-Reference-Price-as-Stop-Price-for-Stop-Order )
•7/11 - After 5:00 a.m. EDT, login attempts from new devices will require user authorization through email verification before log-in
•7/18 - DeepCloud AI will launch token public sale for BitMax.io users at 8:00 a.m. EDT
•To enable Volatility Card trading
•To launch Volatility Card voucher to reward users for sharing and referral
For more information, follow BitMax.io on:
Official Website: BTMX.com (https://btmx.com)
Official WeChat Customer Service Username: bitmax-02
Official Telegram Group: https://t.me/BitMaxioEnglishOfficial
Official Weibo: BitMax Weibo (https://www.weibo.com/6608296213)
Official Twitter: BitMax Official (https://twitter.com/BitMax_Official)
Thank you for the continued support.
BitMax.io Team
July 5, 2019
submitted by BitMax_Support to BitMax [link] [comments]

Losing ~1.32 BTC a day in borrowing fees on a phantom position on Poloniex. Others might be affected as well.

Skip for tl;dr
Over two weeks ago I was trading on margin, as usual. No fancy bots, API or anything. Had plenty of short term trades and, as you all know, to long anything on margin you borrow BTC, which then gets returned to the lender once the position closes. Same deal with open orders.
On the 22nd of July I noticed that I had unrealized p&l even though I wasn't trading. Static p&l, no change with ETH or XMR price fluctuations. 27 BTC borrowed.
Checked open orders; nothing. Open positions; nothing. Curious.
Logged out, logged back in. Same. Tried a different browser that I never use for trading. No change.
I vaguely remember having over 100% margin in my wallet at various points.
Opened new positions, thinking that maybe after clicking the "close position" button it'll all go away. The system decided to just borrow the extra coins needed, and whenever I closed it only got rid of the new loans.
Upon opening the lending page on Polo I saw that I was borrowing the coins since the 20th of July. Most of them were relatively short term loans at or below 0.1% a day. Terribly annoying but not catastrophic.
Filed a support ticket the same day. (#333816)
What happened the coming days was that the system re-borrowed the coins once the loans were up, at whatever rate the market offered. Things were getting worse and then came Sunday. On the 30th, just as the lending rates were skyrocketing seemingly from one minute to the next, the system re-borrowed most of the 27 BTC at a whopping ~4.89% a day. For 60 days.
Filed another support ticket once I saw the rate. (#348948)
Since then, I've been paying around 1.32 BTC a day for no reason.
Exhibit A
No open orders. https://i.gyazo.com/49b84a82cb184ca87cca68d1ae85991b.png
Exhibit B
No open positions. https://i.gyazo.com/c35dccce0795d5a038372468f118f0c7.png
Exhibit C
The borrowed coins. https://i.gyazo.com/c2862891e051fd7a83a7d9b824eadba4.png
TL;DR:
I'm losing around 1.32 BTC (3500 USD equivalent) a day in BTC in borrowing fees to a phantom position which doesn't actually exist and therefore cannot be closed to return the coins to the lender. Over 4.6 BTC (12 grand equivalent) lost so far to this bullshit.
No open positions, no open orders. Nothing I can do. Support obviously didn't reply.
There might be others stuck in a similar situation. Therefore I highly recommend logging in (if you can) to check whether you have something similar going. I discussed my predicament with someone in the same situation a couple of days ago, for example. What's more, there were multiple "my loan didn't return on time" themed threads here so it's possible that plenty of people are stuck on the other side as well, without realizing.
I'm not going to "feed" my margin wallet extra BTC to keep it above maintenance margin (20%), therefore this will end in a margin call soon. Given the nature of my "position" the above may or may not take my whole wallet balance with it for all I know, but one has to cut their losses somewhere. I have a feeling by the time they get back to me, maybe in October, this will be swept into the "user is angry about margin call" trash bin without any follow-through.
Any ideas?
UPDATE 1 1825 Zulu (3rd of Aug)
Unrealized Lending Fees 5.265 BTC (~5.17 due to the phantom of Poloniex)
Current Margin 37.11%
UPDATE 2 1950 Zulu (3rd of Aug)
Promising news! Poloniex replied to my second ticket! They are looking into the issue.
Unrealized Lending Fees -5.343 BTC
Current Margin 36.81%
UPDATE 3 610 Zulu (4th of Aug)
Looks like Poloniex closed my phantom position shortly after update 2. https://i.gyazo.com/eaa336794858d87120f4e04e74b1d52e.png
I haven't been compensated (edit: yet), but at least the bleeding stopped.
Edit: There is nothing specific they mentioned in the response yesterday but one would fully expect the exchange to cover the cost of something like this.
UPDATE 4 1340 Zulu (4th of Aug)
Polo closed my tickets and sent an email thanking me for my patience and informing me that I have been credited (drumroll) 0.32 BTC for the accrued fees. http://instantrimshot.com/
I don't know how they came to 0.32 BTC, which, by the way, is less than the fees they themselves collected on my loans.
Edit:
I've sent a ticket asking them to explain why they chose to credit exactly 0.32 BTC. I haven't touched it or anything else in the account since.
Checking the trade history page revealed that the loan was for LTC. I don't remember trading LTC for months (there is no record of it either), all I have is fees accrued from the 22nd. https://i.gyazo.com/4d0ca71f5940897773c7d3ec8dc06e12.png
This is what the LTC margin trading page looked like several days ago before the loan was closed: https://i.gyazo.com/eed58684b6682e9020485adee6b3b0bc.png
It's not impossible that I placed an order which then vanished (or never even appeared). Remember, I had no open orders according to the system. The fact that it showed floating (but static) p&l all along without a position adds to my confusion.
I'm pretty perplexed by all this.
submitted by Chaos_Elephant to BitcoinMarkets [link] [comments]

Poloniex Refunds Investors With Over $18 Million Worth Of Bitcoin

Poloniex Refunds Investors With Over $18 Million Worth Of Bitcoin

The Company Lost The Funds In A So-Called Flash Crash In Trading Fees Pool
Crypto exchange Poloniex announced that the company starts to credit impacted lenders in Poloniex' margin liquidity pool. Trading fees – around 1800 BTC (20 million USD) – will be sequentially returned to their owners. 10% of the balance was previously refunded on June 14th 2019.
Poloniex supports margin exchanging, a framework where clients lend their Bitcoin to a "loaning pool," allowing their clients to borrow Bitcoin and trade with bigger stakes.
The loaning pool is a mirroring the traditional crediting – lenders should receive interest for locking in their Bitcoin, and the borrower is obliged to repay their debts along with the interest. In late May, the crypto project CLAMS (which was accessible for margin exchanging through Poloniex) all of a sudden slumped down with 80 percent in less than 45 minutes.
The rapid fall usually triggers a mechanism of automatic closing of borrower positions in order to prevent lenders from losing money. As it turned out, CLAMS' fast, massive price fall caused algorithm breakdowns in Poloniex' mechanized liquidation framework, resulting in investor losses of 1,800 BTC (worth around $13.5 million at the time).
Poloniex would seek other strategies to redeem the investor funds in the margin pool.
Other crypto exchanges also had issues with sudden illiquidity. CoinbasePro experienced and issue in December 2018 when Ethereum briefly collapsed to $13 form its former $100 price level.
submitted by Crypto_Browser to u/Crypto_Browser [link] [comments]

For EVERYONE who has witnesses the DDoS on Kraken today.

Do NOT mess around with margin trading on a website that does not guarantee your coins. Poloniex, Kraken, and others explicitly state that if something crashes then they are not responsible for filling your margin position or coins back to original state. Coinbase is FDIC insured up to 250,000 dollars in their USD wallet. ONLY use reputable, trusted exchanges. And if you aren't trading, BUY A FUCKING WALLET AND PULL YOUR COINS!!!!
ALSO: Do not trade on your "current" emotion, It hasn't even been an hour an i've seen multiple people saying they regret panic selling because of this Kraken DDoS, only to buy back in 10 minutes later at a higher price essentially losing money. This HODL meme isn't mentioned 24/7 for no reason.
If there is ANYTHING you can learn from what just happened, it is this: 1. Store your coins in a cold storage not a centralized exchange (after all don't you believe in decentralized blockchain technology in the first place?) 2. DO NOT PANIC SELL. 3. Do not check ETH price or forums 500x a day, go out, have a beer, get laid, and live a little and let Vitalik and the rest do their thing. You're have invested in ethereum for a reason, stay committed to it and just relax.
submitted by Sensualities to ethtrader [link] [comments]

my story; I have finally courage to speak about it

Dear BCH supporters,
I would like to share - very compact - my crypto story, my success but also my biggest mistake, which ironically made me trust BCH even more
I started in crypto in February with my first deposits.. I had been following bitcoin since 2013 ( i even remember still watching the price on a ticker go from 30 to about 120 usd in a matter of hours ), but was always afraid to actually put money in...
Last February i read about the March 11 ( then afterwards March13) bitcoin ETF decision and i thought it would not pass and therefor i was going to bet against bitcoin and for alts... I was never a maximalist btw and always thought that eventually bitcoin will be replaced by something better... it happened before many times in many industries..
Anyway, I had been reading and was intrigued by Ripple since 2015, not because i like it but simply because Banker coin, and bankers always win..
So in February/March i took all my savings around 14.000 euro and bought 50% xrp and 50% Ethereum... I caught both waves, respectively: xrp from $0.01 to about $0.2 and eth from $24 to about $300... Once ethereum hits its ceiling in June at $400 and started dipping i sold all for btc and xrp for btc and started to short Ethereum on margin on Poloniex... I was very addicted to everything ethereum and had a good grasp for the price and shorting earned me extra btc - even though i messed up there too - so that by the fork i had 80 bitcoins...
Having my btc on Trezor it took 4 days before i could move it to bittrex and 20 confirmations before i could sell my 80 BCH for 0.09... I then had around 87 Bitcoins.... Then I read the 'infamous' conspiracy 4chan message about these guys are playing high stakes poker and they are angry and have a plan ( if you remember what im referring too)...
Suddenly I felt Bitcoin Cash was indeed the real deal ( keep in mind i never took part in the scaling debate or was even much informed about this, no political involvement or opinion whatsoever)... but it was clear to me that there was a serious group in bitcoin that supported Bitcoin Cash sincerely..
So on August 6th, at 0.055 i converted all my BTC into BCH for a total number of 1311 BCH... and stored it back on my Trezor... Then the first Korean pump happened and my life became a blur...
Being unexperienced in trading and overwhelmed i became full of joy, fear and panic at the same time... i thought the flippening happened, then i read scam everywhere... i became a concern troll, i listened to Richard Heart, then to Roger Ver.. i read and read and lost control of what i knew all along...
When BCH dumped i sold low, then bought back in high, sold low in a dump , fomo'ed back in high... it became a mayhem in my head (and all of this happened within a couple of weeks)
Then came the China scare and i fucked up again and again... My crypto ''career'' was a straight line up until BCH.. And suddenly i saw my insane profits decimate continously due to my stupid behaviour...and eventually i had 500 BCH left and sold them all when BCH fell below 300 euro in October...
I was devastated because deep down inside i knew all along BCH was the right choice... but still i made shit loads of fiat money, as my parents kept telling , but i was mad as hell, and for good reason since i went full retard last fall...
A little later when BCH made its first spike back to 500 euro i regained my confidence and bought back in with half of the money i cashed out at 300, and have been in peace ever since...
Im a 30 year old with no prior experience but recently bought a cool Mercedes Benz and just bought an apartment which a year ago was not even a possibility in my wildest dreams...
Today I understand that I could have been the smart money, but im still the early adopter... I will get there, that much is certain for me.. but if there is anything to take from this for you... is that Bitcoin Cash has proven to me and the world that it is unstoppable... this sub also shows that the community is truly grass roots... so read my story and laugh at my mistakes, but know that Bitcoin Cash is the most solid (extremely volatile) investment in this world today... and the future of cash
Tell everybody in your family and friend circle... it is real...and it is growing up fast... and even though we are all in it for the money.. i am starting to understand the actual value of P2P permission less cash and what it will mean for humanity long term
Godspeed!
submitted by CALP101 to btc [link] [comments]

Beginner’s Guide to Exchanges – Part 1

Beginner’s Guide to Exchanges – Part 1

Hola Compadres! It is me u/poop_dragon here with another guide. Today I would like to run through a list of ETH exchanges. This is just Part 1 of this list, and it covers established exchanges. Soon I will post Part 2 and 3 which will go into some other types of exchanges (derivative markets, coin converters, decentralized, and foreign exchanges) Side note, I have given rating to these exchanges based on some comparisons, news, and information which I have found online. Recently, EVERY exchange has been slow/unresponsive in their customer service due to the huge influx of new users. My intention is to help educate new users about the exchanges available. I am not trying to discredit, advertise, pump up, or damage reputations. If you feel something is inaccurate, please respectfully bring it up in the comments. I will be editing as we go. Last thing of note, I have only included the lowest level trading tier to calculate trading fees, which assumes the highest rates. Most exchanges offer lower fees for bigger orders, but I have gone with the assumption that everyone here is not dropping whale amounts of cash.

00 – Concepts and Definitions

01 –Digital Exchanges

Poloniex

Exchange Type Maker Taker
All Currencies .15% .25%
Feature Details
2FA Google Authenticator Available
Wallet Security ‘Majority’ of Funds in cold storage
Personal Information Encrypted and Stored Off-Site
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Level 1 X X $2,000 USD Daily Withdrawal Limit
Level 2 X X X X X X $7,000 USD Daily Withdrawal Limit
Level 3 X X X X X X $25,000 USD Daily Withdrawal Limit
Level 4 X X X X X X X X >$25,000 USD Daily Withdrawal Limit
What is a KYC? It stands for Know Your Customer Documentation. This varies between exchanges. However, like most things, if you have to ask, you probably can’t afford it.

Bittrex

Exchange Type Maker Taker
All Currencies .25% .25%
Feature Details
2FA Google Authenticator Available
Wallet Security Multi-stage wallet Majority’ of Funds in cold storage
Personal Information IP Whitelisting restricts trading from new addresses
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Basic X X X 3 BTC or less daily
Enhanced X X X X X X 100 BTC or less daily

02– Fiat Exchanges - USA

Coinbase (GDAX)

Country Credit/Debit Linked Bank Account Wire Transfer
Australia 3.99% - -
Canada 3.99% - -
Europe 3.99% 1.49% SEPA- Free (€0.15)
Singapore 3.99% 1.49% -
UK 3.99% - SEPA Free (€0.15)
US 3.99% 1.49% $10 Deposit / $25 With / ACH Free
Exchange Type Maker Taker
ETH/FIAT 0% .30%
ETH/BTC 0% .30%
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Level 1 X X X
Level 2 X X X X X Crypto Only
Level 3 X X X X X X X Fiat Enabled
Level 4 X X X X X X X X Higher Fiat Limits
Feature Details
2FA Google Authenticator, Authy, SMS
Wallet Security 98% Assets in Cold Storage
Personal Information 3rd Party Verified, Secured, Stored Offline
Digital Currency Insurance Fully Insured by Lloyd’s of London
Fiat Insurance Up to $250,000 by FDIC
Bug Bounty Multiple bounties up to $10,000

Kraken

Country Linked Bank Account Wire Transfer
EUR Free SEPA €5-10 (€0.09 Withdrawal)
US Free SWIFT $10 ($60 Withdrawal)
UK Free SWIFT £10 (£60 Withdrawal)
CAN Free SWIFT Free ($10 Withdrawal)
Exchange Type Maker Taker
ETH/FIAT .16% .26%
ETH/BTC .16% .26%
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Level 0 X No Trading Allowed
Level 1 X X X X No Fiat, Unlimited Crypto
Level 2 X X X X Fiat $2,000Day/$10,000Mo
Level 3 X X X X X X Fiat $25,000Day/$200,000Mo
Level 4 X X X X X X X X Fiat $100,000Day/$500,000Mo
Feature Details
2FA Google Authenticator, Master Key Available
Wallet Security Majority Assets in Cold Storage
Personal Information PGP Encrypted Emails, Global Settings Lock
Digital Currency Insurance Maintain Full Reserves
Bug Bounty Multiple bounties

Gemini

Country Linked Bank Account Wire Transfer
USD Free Free
Exchange Type Maker Taker
ETH/ALL .10-.25% .25%
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Individual X X X X X X X None - Except for ACH
Feature Details
2FA Google Authenticator, Authy Available
Hot Wallet Security Hot Wallet Hosted by Amazon Web Services
Cold Wallet Stored in 2 tiers of cold and 'cryo' multi-sig storage
Personal Information Encrypted in Transit and Stored Offline
Digital Currency Insurance Fidelity bond by 'top-tier insurance company'
Fiat Insurance Up to $250,000 by FDIC

03– Fiat Exchanges - Hong Kong

Bitfinex

Country Credit/Debit Bank Transfer Express Bank Transfer
ALL - .1% ($20 Minimum) 1% ($20 Minimum)
Exchange Type Maker Taker
ETH/ALL .10% .20%
Tier Level Name Email DOB Phone Address Official ID Bank Info KYC Limits
Individual X X X X X X (2) X X No Stated Limits
Feature Details
2FA Google Authenticator, Twilio Available
Account Security New IP Addresses locked for 24 hours, require verification and detection
System Security Hosted and Backed-up on Linux, protection from DDoS
Personal Information Email encryption with OpenPGP
Wallet Security Only .5% of funds are stored in hot wallets
EDIT : Thank you to u/Ginger_Bearded_Man for the suggestion. Bittrex has been added.
submitted by poop_dragon to ethtrader [link] [comments]

I've predicted most movements correctly so far. Here is my non-technical, purely emotive analysis.

I believe technical analysis is bullshit. Price goes up when people buy, price goes down when people sell. People buy when they feel like so. Understanding emotions is, in my opinion, the main ingredient to predicting the markets. On this thread, I'll post no charts, lines nor concrete targets. I'll just, in plain text, elaborate on how I believe the market will behave from now on.
Before, a background. I'm a medium veteran on this. I've sold half of my Bitcoin holdings for Ether on Jan 2016. It was trading at 2 USD at those times. Through 2016, I made many good trades, doubling my stake. Early this year, when Ether was traded at 8 USD, I called bottom and opened a 2x margin on Poloniex. At 50 USD, I closed my long and rebought it of Ether, essentially doubling it again. I then sold 20% of my position for fiat, and held the rest. All things considered, I've done really well so far.
In short, this what I think will happen now: the rest of the year will be nightmareish-ly awful for Ethereum (price wise).
Ouch. Yes, I'm sad about that, but that's my only logical prediction. If you just take a breath and look at what is going on, it will become obvious. Reflect about the following: 6 months ago, this subreddit was flooded with negativity. People would laugh at you if you bought Ether. Discussions were all about who made more money shorting. Suicide lines popped up on the front page every other day. Everyone thought Ethereum was garbage. That was the time to buy, and buy a lot. The reason is simple: people were, clearly, misjudging the value of the asset; largely. The emotive nature of humans made them sell Ether at much lower price than what it was worth. I had no doubt that, given enough time, the price would rise, and it would rise a lot. That's when I opened a 2x long.
Now, the exact opposite holds. "Ethereum is the new paradigm", "give me more cheap $350 eth" (lol), Jesuslik converting memes in lambos, people selling their houses and wives for Ether. Once again, human emotion is dominating, and it is painfully clear they're paying more for an Ether than what it is worth. Now is the time to sell. Not just sell, sell and short it hard. 420 USD was the top, and, through the rest of the year, things will not be pretty. Price will decrease, and it will decrease a lot. Volume and interest will go away, suicide lines will start popping up again, people will go bankrupt and this sub will once again become a troll fest. I don't expect any more notable pumps until, at least, late 2018. What had to happen, happened. Party is over now.
Said that, I'm not selling a single bit of my Ether. That is my analysis, but I could just be wrong, and, on the long term, Ether could be worth 30x what it is now. Also, trading again would involve leaving a lot of money on exchanges, which, at this point isn't worth the risk, because one of the major exchanges will probably be goxed soon. So, I'll just hold what I have and swallow the inevitable losses, betting on the very long term.
This was my sentimental and social analysis. Please, don't be angry at me. I could (and hope to) be wrong. That analysis is soft, based in no meaningful or technical merits. It is all subjective emotions and how I feel.
Thanks, and good trades! :)
PS: development-wise, this will be the best fucking year for Ethereum. So, if you're going to sell, at least hold some to pay gas, because truly amazing things are being developed, and you'll want to try them out!
submitted by drunk_blastoise to ethtrader [link] [comments]

Why Bitfinex went from a Premium in its Crypto/USD pairs to now a significant Discount

For the Medium link just go here: https://medium.com/@Austerity_Sucks/why-bitfinex-went-from-a-premium-in-its-crypto-usd-pairs-to-now-a-significant-discount-e7be193d7cb0
Background
Bitfinex is currently trading at over $150 discount to GDAX:
https://cdn-images-1.medium.com/max/800/1*CN1zwuIP2eL3tUkgM8mesw.png (Chart showing Bitfinex price trading well below other BTC/USD exchanges)
More curiously, just last month they were trading at a 10% premium to other exchanges. So why the drastic change over the course of a month?
In the revelations last month of Bitfinex having trouble with its banking partners in Taiwan, many customers were concerned about being able to get fiat off the exchange. Basically, USD gateways to Bitfinex were closed off except for three ways:
  1. Taiwanese domestic transfers were still flowing to and from Bitfinex’s TW accounts.
  2. USD Tether was still flowing because Tether also has Taiwanese banks, so USD flow between Tether and Bitfinex have been uninterrupted, and Bitfinex has been honouring the conversion 1:1 for customers.
  3. Attorney escrow arrangements for one-time withdrawals (this was introduced this month, in May)
Initially, this led market participants to bid up the Crypto/USD pairs (ETH/USD, BTC/USD, etc) in order to be able to withdraw funds from Bitfinex. People scared about solvency risk or who merely preferred to have access to the funds now rather than later, were willing to overpay for crypto on Bitfinex relative to other exchanges, just to get out:
https://cdn-images-1.medium.com/max/960/1*RuhcnDYNRrIyQUXmE7lOFQ.png
It also led to some interesting price action on the USDT/USD pair which trades at Kraken:
https://cdn-images-1.medium.com/max/640/1*JFiWjEaIPmZ6Jl5-Oa01Hg.png
If you had a USD balance on Bitfinex, you can convert that into USDT (if you’re verified) and withdraw that USDT token out to Poloniex or Kraken and trade however you want. Because so many people were already buying crypto into 8–10% premiums, people chose to sell USDT at a discount for dollars instead, as their preferred way of getting out of Bitfinex USD / USDT. Additionally, Tether holders who were concerned about the integrity of the dollar backing of the USDT tokens were willing to sell USDT for under $1, as low as $0.89, in order to access dollars faster. Broadly, this is a reflection of two things:
(1) Liquidity premium where the trader values having the USD now versus waiting for banking issues to resolve and getting it later (simple time value of money).
(2) A risk premium on whether Tether funds get seized or other complications arise where the dollars aren’t backing USDT properly
Bitfinex: From Premium to Discount
For weeks these dynamics outlined above led to crypto pairs on Bitfinex trading at a premium and USDT trading below the dollar. However, after the recent attorney escrow arrangements were announced to start rolling out, the premium in Bitfinex has really dropped. In fact, it dipped into a discount this week:
https://cdn-images-1.medium.com/max/640/1*GTo1SZAowaVUj4BI1hDAvA.png
Finex BTC/USD price dropping into discount versus other exchanges This is a reflection of:
1) All the panic-buying demand had exhausted itself in the first weeks, so much of the jittery USD money had already gone. Also, crypto prices in general have gone up, leading to a lower Crypto Value : USD ratio in Bitfinex as new USD struggles to enter through domestic TW banks.
2) The rest of the “I want my fiat out of Bitfinex _now_” crowd, has now exited through the attorney escrow arrangement, taking USD out of Bitfinex’s ecosystem.
3) The dearth of USD on the exchange from 1) and 2) has resulted in:
a. Less USD buying power and thus reduced demand for the Crypto/USD pairs on Bitfinex, and thus a discount on Bitfinex crypto pairs versus other exchanges.
b. A boost in USD lending rates for margin traders, since less USD on the exchange means more people have to borrow to trade.
The above factors (a) and (b) incentive people to sell BTC, ETH, LTC, XMR on Bitfinex in order to get USD on the exchange to earn USD rates and to take advantage of deeper discounts in crypto pairs themselves.
4). Additionally, with the depressed Crypto prices on Bitfinex, it even incentivizes people to overpay for USDT on Kraken in order to access USD for buying the discounts and arbitraging from Bitfinex.
Bitfinex right now is trading at 9% below GDAX, for example. And there are no frictions to withdrawing crypto from Bitfinex. So it is economical to overpay for USDT on Kraken even 5%, so that you can get USDT into Bitfinex for a USD balance 1:1, and then buy 9% discount, send it to GDAX and pocket 4% difference.
Also, don’t underestimate 3(b) above. The USD lending rates right now are 0.4–0.5% per day. This is over 100% APY, a rate considered usurious in a number of jurisdictions!
https://cdn-images-1.medium.com/max/640/1*ioAWUjvqkXYm2AlfnFvIuA.png
Traders then are balancing the discounted crypto pairs on Bitfinex and this USD rate they can lend out at. Because if you have no TW domestic account or special arrangements with Bitfinex to get USD deposited, you can only send USDT or crypto to access USD on the exchange. Some are hungry enough for that USD swap yield that they are willing to send crypto to Bitfinex and sell well below market just to access USD balance to earn these high margin funding rates.
One final point is that Bitfinex has anonymous, unverified accounts. Which means you can make a totally undocumented account, send as much BTC or ETH as you want to it, and sell into USD. They don’t require a burdensome KYC/AML process like Gemini, BitStamp, GDAX, etc. This ease of depositing crypto and selling (for privacy-conscious people who want to hedge downside risk) makes for even more selling pressure relative to other BTC/USD exchanges.
Conclusion
All of the imbalances discussed above have been a result of USD frictions into Bitfinex. It has been a chain reaction resulting from the initial freeze to the various gradual withdrawal options.
Since Bitfinex’s banking problems, there has been a rollercoaster of a market reaction, starting with Bitfinex crypto pairs trading at a premium reflecting liquidity preferences of those who could not pull USD out. The attorney-escrow arrangement and USDT withdrawals has also led to USD exiting the Bitfinex ecosystem, causing a shortage of USD.
This USD shortage has led to reduced demand for crypto on Bitfinex, and USD holders are splitting their efforts between lending USD for margin traders to buy crypto, or buying the crypto themselves to send to other exchanges for arbitrage opportunity. Finally, the higher USD rates incentivize traders of particular risk appetite to sell crypto at a discount in order to earn 0.4–0.5% on US dollars per day (while avoiding crypto exposure). This increases discount pressure on crypto pairs.
For anyone who is able to get fiat onto Bitfinex, ideally through TW domestic bank account (so it’s 1:1 USD) has a number of arbitrage opportunities to take advantage of.
These deep discounts are unlikely to last longer than the next week, as Bitfinex is testing new onramps for fiat, which would lead to a flood of interest to buy cheap crypto and lend at attractive USD rates.
As soon as Bitfinex conclusively addresses the USD flow issues, the crypto pair prices will normalize with other exchanges that don’t have banking frictions and USDT price will return to par.
submitted by theswapman to BitcoinMarkets [link] [comments]

A Warning About Major Exchanges

Hey Everyone!
So I can't verify every detail of what I am posting here, but I wanted to be sure that I would make a post as a fair warning to all that you should do some further research into exchanges and where they get their money from. Especially the ones that use Tether (aka USDT) considering that Kraken, Bittrex, Poloniex, and Bitfinex use it for margin trading and other ways of raising capital.
As far as I can tell this has got Mt. Gox 2.0 written all over it and is only a matter time before people start cashing out and realizing exchanges will not be able to pay out. This will be especially concerning once new money stops flowing in and the markets start stabilizing.
To explain what is happening, exchanges are using Tether coins (aka USDT) under the impression that they are backed 1 to 1 by actual USD. Since there’s $1.3 billion of tether circulating, there should be $1.3 billion parked in bank accounts somewhere. However, there are many reasons to believe these bank accounts aren't holding the cash that they should be. Here are a couple reasons:
  1. Tether’s website makes a claim that’s unusual among cryptocurrencies: “every tether is always backed 1-to-1 by traditional currency held in our reserves.” The site also says each tether can be redeemed for $1. But its terms of service say: “There is no contractual right or other right or legal claim against us to redeem or exchange your tethers for money. We do not guarantee any right of redemption or exchange of tethers by us for money.”
  2. On Dec. 2, Bitfinex released a quarterly report announcing it would no longer serve U.S. customers because it’s too expensive to do business with them. This followed Wells Fargo & Co.’s decision earlier in the year to end its role as a correspondent bank through which customers in the U.S. could send money to Bitfinex and Tether’s banks in Taiwan. Bitfinex and Tether filed suit against Wells Fargo, but later withdrew the case.
  3. Neither Tether nor Bitfinex disclose on their websites or in any public documents where they’re located or who’s in charge
Long story short, it is looking like tether is going to be the second coming of Mt. Gox (1st market crash). They keep printing fake money and pump it into the market allowing for bitcoin prices to skyrocket. The people that are going to get screwed the most are the ones who bought bitcoin at 6K+ when Wells Fargo ended its ties with tether forcing it to take its suspicious activities else where. Coincidentally if you look at market prices, this has also led to massive price rises in the market. Since Dec 11th alone, over 400 million tether has been released into the market without the market cap of tether ever changing.
I hate fud but this seems very different.
End result? There is an external audit scheduled for January 2nd for tether. Who knows what will happen. In many ways the market is behaving similar to the stock market in 2007 when certain people saw the housing bubble but had to wait for the general public to realize it for the bubble to burst.
Personally, I have cashed out for me and my investors. Not because there isn't money to be made but because ultimately I could be taking money from someone who is excited about investing into the blockchain technology and is clueless about financial markets. I love reading the stories of people who have been able to pull themselves out of financial debt thanks to bitcoin, but unfortunately I believe there will also be lots of stories of people losing everything they have once the truth about tether surfaces.
Please be careful.
submitted by ThinWalletCollegeKid to CryptoCurrency [link] [comments]

How Bitfinex will handle a hardfork with respect to Margin Trading and Funding

New post on Bitfinex regarding the handling of Margin positions and Funding in the event of a Bitcoin hardfork:
Due to the complexities surrounding a potential Bitcoin hardfork event, we would like to communicate Bitfinex’s plan for handling the accounting of margin positions and borrowed funding.
We must, once again, strongly urge the Bitcoin mining community to avoid such an event, if at all possible. The knock-down effects on Bitcoin exchanges and their customers could be severe, causing substantial price fluctuations, inefficient price discovery, and needless customer losses.
In the event of a hardfork that results in a chain split, Bitfinex and other major exchanges—such as Poloniex, Kraken, and GDAX—are faced with the challenge of resolving complex accounting issues in margin trading. Ideally, each exchange would agree to a uniform and coherent methodology; however, each serves different audiences and have different market structures, making a universal solution unworkable. For example, Bitfinex has decided to take a different approach than the one proffered by Poloniex. While we understand Poloniex’s approach may make sense for their business, it is not an approach that ultimately satisfies our operational requirements at Bitfinex.
After much analysis, we have chosen to handle the accounting of margin trading and funding based on the model of how stock spinoffs, dividends, and distributions are handled in equity markets. Specifically, in the case of a hardfork event, lenders will receive both BTC and BTU. Anyone that is short BTC/USD or long any BTC trading pair (ETH/BTC, LTC/BTC, etc.) will owe BTU to the lender, effectively making the user short BTU. An exception is in the case that BTC is borrowed but not in use as margin collateral, in which case BTU accrues to the lender. Users that are margin long BTC/USD or short any BTC trading pair will receive BTU.
This methodology is complex and operationally challenging, but we believe it to be the most economically correct and fair approach for Bitfinex and our customers. Furthermore, we believe it is the only approach that will keep the BTC lending market functioning through a hardfork event. Imagine a hypothetical situation where lenders do not receive BTU. They will simply stop lending if a hardfork appears imminent. And while Bitfinex has, rarely, stepped in to become a lender of last resort, in such a dramatic situation Bitfinex would be unable to—and would not want to—cover demand. Consequently, lending liquidity would completely disappear and Bitfinex would be obliged to begin partial liquidations of margin positions using borrowed BTC that could no longer be renewed. We believe that such a hypothetical outcome should be avoided at all costs. Our plan should prevent the negative consequences of this hypothetical and seems likely to allow the funding market to continue to operate.
While our proposed methodology will ensure a functioning lending market for BTC, borrowers must understand that while their P&Ls may climb during a hardfork event, they will have offsetting BTU liabilities that will be applied to their accounts, but perhaps not immediately. At the moment Bitfinex detects a BTU block that is incompatible with the BTC chain, we will immediately halt the processing of all BTC deposits and withdrawals for all users, and freeze all movements for all currencies for any borrower of BTC. This freeze will last until the BTU accounting can be adequately prepared and addressed. BTC borrowers can hedge or estimate this liability with newly listed Chain Split Tokens (CSTs).
We wish to state clearly and publicly that the scope of any disruption associated with a potential hardfork is in the hands of the Bitcoin Unlimited developers. We request that the Bitcoin Unlimited developers implement strong two-way replay protection and wipeout protection so that, if a hardfork event occurs, we can quickly list BTU and resolve accounting issues for customers with BTU liabilities.
More details on the specific procedures will be forthcoming, but we feel that it is important to address the economic implications as soon as possible so that our customers can plan accordingly.
submitted by bfx_drew to BitcoinMarkets [link] [comments]

LocalMonero now supports price formulas! This feature will be especially useful for arbitrage traders, as they will now be able to use data from different markets together in order to set their price.

This one was a long and hard one, but we're finally releasing it. Price formulas!
Here's a GIF demonstrating the feature.

What's that?

You can now write a formula using different variables and functions to craft a price that will suit your needs much better than a simple margin below/above market price. The variables are representative of market data. To access this function, simply select the third price input mode called "price formula" during the ad creation or edit process.
We pull data from the following sources:
All these sources will have all the XMR-related tickers available, in as many quotes (ask, bid, low, high, open, last) as is provided by the source. CoinGecko will also have tickers available for all the other cryptocurrencies that are traded on the site. There are also variables to convert between USD and all other fiat currencies.

Examples

submitted by Alex_LocalMonero to Monero [link] [comments]

The New Crypto Order & Escaping Financial Repression

The Vigilante’s View
It is our first issue in months that bitcoin hasn’t hit an all-time high! And it’s the last issue of the year. And what a year for cryptos it was.
To put it in perspective, bitcoin could fall 90% from current levels and it will still have outperformed stocks, bonds and real estate in 2017.
Bitcoin started 2017 at $960.79.
At the time of this writing it is near $13,000 for a gain of 1,250% in 2017.
And, bitcoin was actually one of the worst performing cryptocurrencies in our TDV portfolio in 2017!
Ethereum (ETH) started 2017 at $8. It has since hit over $800 for a nice 10,000% gain in 2017.
That’s pretty good, but not as good as Dash which started the year at $11.19 and recently hit $1,600 for a nearly 15,000% gain.
I hope many of you have participated in these amazing gains! If not, or you are new, don’t worry there will be plenty more opportunities in the years ahead.
It won’t all be just home runs though… in fact, some of the cryptos that have performed so well to date may go down dramatically or collapse completely in the coming years.
I’ll point out further below why Lightning Network is not the answer to Bitcoin Core’s slow speeds and high costs. And, I’ll look ahead to 2018 and how we could already be looking beyond blockchains.
Yes, things are moving so fast that blockchain just became known to your average person this year… and could be nearly extinct by next year.
That’s why it is important to stick with us here at TDV to navigate these choppy free market waters!
New Years Reflection On The Evolution Of Consensus Protocols
Sooner or later crypto will humble you by its greatness. Its vastness is accompanied by a madness that is breathtaking, because you quickly realize that there is no stopping crypto from taking over the world. The moment you think you have everything figured out, is the moment the market will surprise you.
We are for the first time living and witnessing the birth of the first worldwide free market. Throughout this rampage of innovation, we all are implicitly aiming for the best means of harnessing consensus. As we leave this bountiful 2017 and aim at 2018, it is important for us to meditate and appreciate the progress we have made in transforming the world through the decentralization of consensus. It is also important to reflect on the changes in consensus building we have partaken in and those yet to come.
Consensus is the agreement that states “this is what has occurred, and this is what hasn’t happened.”
Throughout the vastness of history, we humans have only really had access to centralized means for consensus building. In the centralized world, consensus has been determined by banks, states, and all kinds of central planners. As our readers know, any centralized party can misuse their power, and their consensus ruling can become unfair. In spite of this, many individuals still praise the effectiveness of consensus building of centralized systems.
People from antiquity have had no other option but to trust these central planners. These systems of control have created still-water markets where only a few are allowed to compete. This lack of competition resulted in what we now can objectively view as slow innovation. For many, centralized consensus building is preferred under the pretense of security and comfort. Unfortunately, these same individuals are in for a whole lot of discomfort now that the world is innovating on top of the first decentralized consensus building technology, the blockchain.
Everything that has occurred since the inception of bitcoin has shocked central planners because for the first time in history they are lost; they no longer hold power. We now vote with our money. We choose what we find best as different technologies compete for our money.
What we are witnessing when we see the volatility in crypto is nothing more than natural human motion through price. The innovation and volatility of the crypto market may seem unorthodox to some, because it is. For the first time in history we are in a true free market. The true free market connects you to everybody and for this reason alone the market shouldn’t surprise us for feeling “crazy.” Volatility is a sign of your connection to a market that is alive. Radical innovation is a sign of a market that is in its infancy still discovering itself.
In juxtaposing centralized consensus building with decentralized consensus building, I cannot keep myself from remembering some wise biblical words; “ And no one pours new wine into old wineskins. Otherwise, the new wine will burst the skins; the wine will run out and the wineskins will be ruined.” – Luke 5:37
The centralized legacy financial system is akin to old wineskins bursting to shreds by the new wine of crypto. Decentralized consensus building has no need for central planners. For example, think about how ludicrous it would be for someone to ask government for regulation after not liking something about crypto. Sorry, there is no central planner to protect you; even the mathematical protocols built for us to trust are now competing against one another for our money.
These new mathematical protocols will keep competing against one another as they provide us with new options in decentralizing consensus. As we look unto 2018, it is important that we as investors begin to critically engage and analyze “blockchain-free cryptocurrencies.”
HASHGRAPHS, TANGLES AND DAGS
Blockchain-free cryptocurrencies are technologies composed of distributed databases that use different tools to achieve the same objectives as blockchains.
The top contenders in the realm of blockchain-free cryptos are DAGs (Directed Acyclic Graphs) such as Swirlds’ Hashgraph, ByteBall’s DAG, and IOTA’s Tangle. These blockchain-free cryptos are also categorized as belonging to the 3 rd generation of cryptocurrencies. These technologies promise to be faster, cheaper, and more efficient than blockchain cryptocurrencies.
Blockchains were the first means of creating decentralized consensus throughout the world. In the blockchain, the majority of 51% determine the consensus. The limits of blockchains stem from their inherent nature, whereupon every single node/participant needs to know all of the information that has occurred throughout the whole blockchain economy of a given coin.
This opens up blockchains to issues akin to the ones we have been exposed to in regards to Bitcoin’s scaling. It is important to make a clear distinction in the language used between blockchains and blockchain-freecryptocurrencies. When we speak about blockchains it is more proper to speak about its transactionconsensus as “decentralized”, whereas with blockchain-free cryptocurrencies it is best if we refer to transaction consensus as “distributed.”
Swirlds’ Hashgraph incorporates a radical and different approach to distributing consensus. Swirlds claims that their new approach will solve scaling and security issues found on blockchains. They use a protocol called “Gossip about Gossip.” Gossip refers to how computers communicate with one another in sending information.
In comparison to the Blockchain, imagine that instead of all of the nodes receiving all of the transactions categorized in the past ten minutes, that only a few nodes shared their transaction history with other nodes near them. The Hashgraph team explains this as “calling any random node and telling that node everything you know that it does not know.” That is, in Hashgraph we would be gossiping about the information we are gossiping; i.e., sending to others throughout the network for consensus.
Using this gossiped information builds the Hashgraph. Consensus is created by means of depending on the gossips/rumors that come to you and you pass along to other nodes. Hashgraph also has periodic rounds which review the circulating gossips/rumors.
Hashgraph is capable of 250,000+ Transactions Per Second (TPS), compared to Bitcoin currently only allowing for 7 TPS. It is also 50,000 times faster than Bitcoin. There is no mention of a coin on their white paper. At this moment there is no Hashgraph ICO, beware of scams claiming that there is. There is however a growing interest in the project along with a surge of app development.
IOTAs DAG is known as the Tangle. Contrary to Hashgraph, IOTA does have its own coin known as MIOTA, currently trading around the $3 mark. There are only 2,779,530,283 MIOTA in existence. The Tangle was also created to help alleviate the pains experienced with Blockchain scaling. IOTAs Tangle creates consensus on a regional level; basically neighbors looking at what other neighbors are doing.
As the tangle of neighbors grows with more participants the security of the system increases, along with the speed of confirmation times. IOTA has currently been criticized for its still lengthy confirmation times and its current levels of centralization via their Coordinators. This centralization is due to the fact that at this moment in time the main team works as watchtower to oversee how Tangle network grows so that it does not suffer from attacks.
Consensus is reached within IOTA by means of having each node confirm two transactions before that same node is able to send a given transaction. This leads to the mantra of “the more people use IOTA, the more transactions get referenced and confirmed.” This creates an environment where transactional scaling has no limits. IOTA has no transaction fees and upon reaching high adoption the transactions ought to be very fast.
Another promising aspect about IOTA is that it has an integrated quantum-resistant algorithm, the Winternitz One-Time Signature Scheme, that would protect IOTA against an attack of future quantum computers. This without a doubt provides IOTA with much better protection against an adversary with a quantum computer when compared to Bitcoin.
ByteBall is IOTA’s most direct competitor. They both possess the same transaction speed of 100+ TPS, they both have their own respective cryptocurrencies, and they both have transparent transactions. ByteBall’s token is the ByteBall Bytes (GBYTE), with a supply of 1,000,000; currently trading at around $700. ByteBall aims to service the market with tamper proof storage for all types of data. ByteBall’s DAG also provides an escrow like system called “conditional payments;” which allows for conditional clauses before settling transactions.
Like IOTA, ByteBall is also designed to scale its transaction size to meet the needs of a global demand. ByteBall provides access to integrated bots for transactions which includes the capacity for prediction markets, P2P betting, P2P payments in chat, and P2P insurance. ByteBall’s initial coin distribution is still being awarded to BTC and Bytes holders according to the proportional amounts of BTC or Bytes that are held per wallet. IOTA, ByteBall and Hashgraph are technologies that provide us with more than enough reasons to be hopeful for 2018. In terms of the crypto market, you don’t learn it once. You have to relearn it every day because its development is so infant. If you are new to crypto and feel lost at all know that you are not alone. These technologies are constantly evolving with new competitive options in the market.
As the technologies grow the ease for adoption is set to grow alongside innovation. We are all new to this world and we are all as much in shock of its ingenuity as the next newbie. Crypto is mesmerizing not just for its volatility which is a clear indication of how connected we are now to one another, but also because of the social revolution that it represents. We are experiencing the multidirectional growth of humanity via the free market.
Meanwhile Bitcoin Is Turning Into Shitcoin
It is with a great degree of sadness that I see bitcoin is on the cusp of destroying itself. Bitcoin Core, anyway. Bitcoin Cash may be the winner from all of this once all is said and done.
Whether by design or by accident, bitcoin has become slow and expensive.
Many people point out that IF the market were to upgrade to Segwit that all would be fine. I’ll explain further below why many market participants have no incentive to upgrade to Segwit… meaning that the implementation of Segwit has been a massively risky guess that so far has not worked.
Others say that the Lightning Network (LN) will save bitcoin. I’ll point out below why that will not happen.
Lightning Networks And The Future Of Bitcoin Core
If you’ve been following bitcoin for any length of time, you’re probably aware of the significant dispute over how to scale the network. The basic problem is that although bitcoin could be used at one time to buy, say, a cup of coffee, the number of transactions being recorded on the network bid up the price per transaction so much that actually sending BTC cost more than the cup of coffee itself. Indeed, analysis showed that there were many Bitcoin addresses that had such small BTC holdings that the address itself couldn’t be used to transfer it to a different address. These are referred to as “unspendable addresses.”
In the ensuing debate, the “big blockers” wanted to increase the size of each block in the chain in order to allow for greater transaction capacity. The “small blockers” wanted to reduce the size of each transaction using a technique called Segregated Witness (SegWit) and keep the blocks in the chain limited to 1MB.
SegWit reduces the amount of data in each transaction by around 40-50%, resulting in an increased capacity from 7 transactions per second to perhaps 15.
The software engineers who currently control the Bitcoin Core code repository have stated that what Bitcoin needs is “off-chain transactions.” To do this, they have created something called Lightning Networks (LN), based on an software invention called the “two-way peg.” Put simply, the two-way peg involves creating an escrow address in Bitcoin where each party puts some bitcoin into the account, and then outside the blockchain, they exchange hypothetical Bitcoin transactions that either of them can publish on Bitcoin’s blockchain in order to pull their current agreed-upon balance out of the escrow address.
Most layman explanations of how this works describe the protocol as each party putting in an equal amount of Bitcoin into the escrow. If you and I want to start transacting off-chain, so we can have a fast, cheap payment system, we each put some Bitcoin in a multi-party address. I put in 1 BTC and you put in 1 BTC, and then we can exchange what are essentially cryptographic contracts that either of us can reveal on the bitcoin blockchain in order to exit our agreement and get our bitcoin funds.
Fortunately, it turns out that the video’s examples don’t tell the whole story. It’s possible for the escrow account to be asymmetric. See:. That is, one party can put in 1 BTC, while the other party puts in, say, 0.0001 BTC. (Core developer and forthcoming Anarchapulco speaker Jimmy Song tells us that there are game theoretic reasons why you don’t want the counterparty to have ZERO stake.)
Great! It makes sense for Starbucks to participate with their customers in Lightning Networks because when their customers open an LN channel (basically a gift card) with them for $100, they only have to put in $1 worth of Bitcoin. Each time the customer transacts on the Lightning Network, Starbucks gets an updated hypothetical transaction that they can use to cash out that gift card and collect their bitcoin.
The elephant in the room is: transaction fees. In order to establish the escrow address and thereby open the LN channel, each party has to send some amount of bitcoin to the address. And in order to cash out and get the bitcoin settlement, one party also has to initiate a transaction on the bitcoin blockchain. And to even add funds to the channel, one party has to pay a transaction fee.
Right now fees on the bitcoin blockchain vary widely and are extremely volatile. For a 1-hour confirmation transaction, the recommended fee from one wallet might be $12 US, while on another it’s $21 US. For a priority transaction of 10-20 minutes, it can range from $22-30 US. Transactions fees are based on the number of bytes in the transaction, so if both parties support SegWit (remember that?) then the fee comes down by 40-50%. So it’s between $6 and $10 US for a one hour transaction and between $11-15 for a 15 minute transaction. (SegWit transactions are prioritized by the network to some degree, so actual times may be faster)
But no matter what, both the customer and the merchant have to spend $6 each to establish that they will have a relationship and either of them has to spend $6 in order to settle out and get their bitcoin. Further, if the customer wants to “top off” their virtual gift card, that transaction costs another $6. And because it adds an address to the merchant’s eventual settlement, their cost to get their Bitcoin goes up every time that happens, so now it might cost them $9 to get their bitcoin.
Since these LN channels are essentially digital gift cards, I looked up what the cost is to retailers to sell acustomer a gift card. The merchant processor Square offers such gift cards on their retailer site. Their best price is $0.90 per card.
So the best case is that Lightning Networks are 600% more expensive than physical gift cards to distribute, since the merchant has to put a transaction into the escrow address. Further, the customer is effectively buying the gift card for an additional $6, instead of just putting up the dollar amount that goes on the card.
But it gets worse. If you get a gift card from Square, they process the payments on the card and periodically deposit cash into your bank account for a percentage fee. If you use the Lightning Network, you can only access your Bitcoin by cancelling the agreement with the customer. In other words, you have to invalidate their current gift card and force them to spend $6 on a new one! And it costs you $6 to collect your funds and another $6 to sell the new gift card!
I’m sure many of you have worked in retail. And you can understand how this would be financially infeasible. The cost of acquiring a new customer, and the amount of value that customer would have to stake just to do business with that one merchant, would be enormous to make any financial sense.
From time immemorial, when transaction costs rise, we see the creation of middlemen.
Merchants who can’t afford to establish direct channels with their customers will have to turn to middlemen, who will open LN channels for them. Instead of directly backing and cashing out their digital gift cards, they will establish relationships with entities that consolidate transactions, much like Square or Visa would do today.
Starbucks corporate or individual locations might spend a few USD on opening a payment channel with the middleman, and then once a month spend 6 USD to cash out their revenues in order to cover accounts payable.
In the meantime, the middleman also has to offer the ability to open LN channels for consumers. This still happens at a fixed initial cost, much like the annual fee for a credit card in the US. They would continue to require minimum balances, and would offer access to a network of merchants, exactly like Visa and MasterCard today.
This process requires a tremendous amount of capital because although the middleman does not have to stake Bitcoin in the consumer’s escrow account, he does have to stake it in the merchant’s account. In other words, if the Lightning Network middleman wants to do business with Starbucks to the tune of $100,000/month, he needs $100,000 of bitcoin to lock into an escrow address. And that has to happen for every merchant.
Because every month (or so) the merchants have to cash out of their bitcoin to fiat in order to pay for their cost of goods and make payroll. Even if their vendors and employees are paid in bitcoin and they have LN channels open with them, someone somewhere will want to convert to fiat, and trigger a closing channel creating a cascading settlement effect that eventually arrives at the middleman. Oh, and it triggers lots of bitcoin transactions that cost lots of fees.
Did I mention that each step in the channel is expecting a percentage of the value of the channel when it’s settled? This will come up again later.
Again, if you’ve worked in the retail business, you should be able to see how infeasible this would be. You have to buy inventory and you have to sell it to customers and every part that makes the transaction more expensive is eating away at your margins.
Further, if you’re the middleman and Starbucks closes out a channel with a $100,000 stake where they take $95,000 of the bitcoin, how do you re-open the channel? You need another $95,000 in capital. You have revenue, of course, from the consumer side of your business. Maybe you have 950 consumers that just finished off their $100 digital gift cards. So now you can cash them out to bitcoin for just $5700 in transaction fees, and lose 5.7% on the deal.
In order to make money in that kind of scenario, you have to charge LN transaction fees. And because your loss is 5.7%, you need to charge in the range of 9% to settle Lightning Network transactions. Also, you just closed out 950 customers who now have to spend $5700 to become your customer again while you have to spend $5700 to re-acquire them as customers. So maybe you need to charge more like 12%.
If you approached Starbucks and said “you can accept Bitcoin for your customers and we just need 12% of the transaction,” what are the odds that they would say yes? Even Visa only has the balls to suggest 3%, and they have thousands and thousands of times as many consumers as bitcoin.
The entire mission of bitcoin was to be faster, cheaper and better than banks, while eliminating centralized control of the currency. If the currency part of Bitcoin is driven by “off-chain transactions” while bitcoin itself remains expensive and slow, then these off-chain transactions will become the territory of centralized parties who have access to enormous amounts of capital and can charge customers exorbitant rates. We know them today as banks.
Even for banks, we have to consider what it means to tie up $100,000/month for a merchant account. That only makes sense if the exchange rate of bitcoin grows faster than the cost of retaining Bitcoin inventory. It costs nothing to store Bitcoin, but it costs a lot to acquire it. At the very least the $6 per transaction to buy it, plus the shift in its value against fiat that’s based on interest rates. As a result, it only makes sense to become a Lightning Network middleman if your store of value (bitcoin) appreciates at greater than the cost of acquiring it (interest rate of fiat.) And while interest rates are very low, that’s not a high bar to set. But to beat it, Bitcoin’s exchange rate to fiat has to outpace the best rate available to the middleman by a factor exceeding the opportunity cost of other uses of that capital.
Whatever that rate is, for bitcoin, the only reason the exchange rate changes is new entry of capital into the “price” of bitcoin. For that to work, bitcoin’s “price” must continue to rise faster than the cost of capital for holding it. So far this has happened, but it’s a market gamble for it to continue.
Since it happens because of new capital entering into the bitcoin network and thus increasing the market cap, this results in Bitcoin Core becoming the very thing that its detractors accuse it of: a Ponzi scheme. The cost of transacting in Bitcoin becomes derived from the cost of holding bitcoin and becomes derived from the cost of entering bitcoin.
Every middleman has to place a bet on the direction of bitcoin in a given period. And in theory, if they think the trend is against Bitcoin, then they’ll cash out and shut down all the payment channels that they transact. If they bought bitcoin at $15,000, and they see it dropping to $13,000 — they’ll probably cash out their merchant channels and limit their risk of a further drop. The consumer side doesn’t matter so much because their exposure is only 1%, but the merchant side is where they had to stake everything.
If you’re wondering why this information is not widely known, it’s because most bitcoin proponents don’t transact in bitcoin on a regular basis. They may be HODLing, but they aren’t doing business in bitcoin.
Through Anarchapulco, TDV does frequent and substantial business in bitcoin, and we’ve paid fees over $150 in order to consolidate ticket sale transactions into single addresses that can be redeemed for fiat to purchase stage equipment for the conference.
For Bitcoin to be successful at a merchant level via Lightning Networks, we will have to see blockchain transactions become dramatically cheaper. If they return to the sub-$1 range, we might have a chance with centralized middlemen, but only with a massive stabilization of volatility. If they return to $0.10, we might have a chance with direct channels.
Otherwise, Lightning Networks can’t save bitcoin as a means of everyday transaction. And since that takes away its utility, it might very well take away the basis of its value and bitcoin could find itself truly being a tulip bubble.
One final note: there are a some parties for whom all these transactions are dramatically cheaper. That is the cryptocurrency exchanges. Because they are the entry and exit points for bitcoin-to-fiat, they can eliminate a layer of transaction costs and thus offer much more competitive rates — as long as you keep your bitcoin in their vaults instead of securing it yourselves.
Sending it out of their control lessens their competitive advantage against other means of storage. It comes as no surprise, then, that they are the least advanced in implementing the SegWit technology that would improve transaction costs and speed. If you buy bitcoin on Poloniex, it works better for them if it’s expensive for you to move that coin to your Trezor.
In fact, an exchange offering Lightning Network channels to merchants could potentially do the following…
1) Stake bitcoins in channels with merchants. These coins may or may not be funds that are held by their customers. There is no way to know.
2) Offer customers “debit card” accounts for those merchants that are backed by the Lightning network
3) Establish middle addresses for the customer accounts and the merchant addresses on the Lightning Network.
4) Choose to ignore double-spends between the customer accounts and the merchant addresses, because they don’t actually have to stake the customer side. They can just pretend to since they control the customer’s keys.
5) Inflate their bitcoin holdings up to the stake from the merchants, since the customers will almost never cash out in practice.
In other words, Lightning Networks allow exchanges a clear path to repeating Mtgox; lie to the consumer about their balance while keeping things clean with the merchant. In other words, establish a fractional reserve approach to bitcoin.
So, to summarize, Bitcoin Core decided increasing the blocksize from 1mb to 2-8mb was “too risky” and decided to create Segwit instead which the market has not adopted. When asked when bitcoin will be faster and less expensive to transfer most Bitcoin Core adherents say the Lightning Network will fix the problems.
But, as I’ve just shown, the LN makes no sense for merchants to use and will likely result in banks taking over LN nodes and making BTC similar to Visa and Mastercard but more expensive. And, will likely result in exchanges becoming like banks of today and having fractional reserve systems which makes bitcoin not much better than the banking system of today.
Or, people can switch to Bitcoin Cash, which just increased the blocksize and has much faster transaction times at a fraction of the cost.
I’ve begun to sell some of my bitcoin holdings because of what is going on. I’ve increased my Bitcoin Cash holdings and also increased my holdings of Dash, Monero, Litecoin and our latest recommendation, Zcash.
Other News & Crypto Tidbits
When bitcoin surpassed $17,600 in December it surpassed the total value of the IMF’s Special Drawing Rights (SDR) currency.
Meanwhile, Alexei Kireyev of the IMF put out his working paper, “ The Macroeconomics of De-Cashing ,” where he advises abolishing cash without having the public aware of the process.
Countries such as Russia are considering creating a cryptocurrency backed by oil to get around the US dollar and the US dollar banking system. Venezuela is as well although we highly doubt it will be structured properly or function well given the communist government’s track record of destroying two fiat currencies in the last decade.
To say that the US dollar is being attacked on every level is not an understatement. Cryptocurrencies threaten the entire monetary and financial system while oil producing countries look to move away from the US dollar to their own oil backed cryptocurrency.
And all this as bitcoin surpassed the value of the IMF’s SDR in December and in 2017 the US dollar had its largest drop versus other currencies since 2003.
And cryptocurrency exchanges have begun to surpass even the NASDAQ and NYSE in terms of revenue. Bittrex, as one example, had $3 billion in volume on just one day in December. At a 0.5% fee per trade that equaled $15m in revenue in just one day. If that were to continue for 365 days it would mean $5.4 billion in annual revenue which is more than the NASDAQ or NYSE made this year.
Conclusion
I never would have guessed how high the cryptocurrencies went this year. My price target for bitcoin in 2017 was $3,500! That was made in late 2016 when bitcoin was near $700 and many people said I was crazy.
Things are speeding up much faster than even I could have imagined. And it is much more than just making money. These technologies, like cryptocurrencies, blockchains and beyond connect us in a more profound way than Facebook would ever be able to. We are now beginning to be connected in ways we never even thought of; and to some degree still do not understand. These connections within this completely free market are deep and meaningful.
This is sincerely beautiful because we are constantly presented with an ever growing buffet of competing protocols selling us their best efforts in providing harmony within the world. What all of these decentralized and distributed consensus building technologies have in common is that they connect us to the world and to each other. Where we are going we don’t need foolish and trite Facebook’s emojis.
As we close a successful 2017 we look with optimism towards a much more prosperous 2018. The Powers That Shouldn’t Be (TPTSB) can’t stop us. As we move forward note how much crypto will teach you about ourselves and the world. In a radical free market making our own bets will continue to be a process of self discovery. Crypto will show us the contours of our fears, the contours of our greed, and will constantly challenge us to do our best with the knowledge we have.
Remember, randomness and innovation are proper to the happenstance nature of a true digital free market.
Happy New Year fellow freedom lovers!
And, as always, thank you for subscribing!
Jeff Berwick
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How to Start trading on Poloniex with 5 $ - YouTube How To Trade on Poloniex Poloniex a Tradingview Poloniex Trade Bot - Concept & Install Guide Margin trading on Poloniex - YouTube

The trading site works only with cryptocurrencies and does not accept FIAT (e.g. USD). Daily trading volume of Poloniex is $577,246,085 / 231,083 BTC (06/2017). Margin Trading. In the end of 2018 Poloniex removed margin trading for traders from the US. The reason is that in the United States there are too many different jurisdictions from TRX is now available for lending on Poloniex! Lend a minimum of 2,500 TRX and start earning interest or trade TRX/BTC and TRX/USDT on margin. New USDT Margin Pairs. Three new USDT margin trading pairs are now available on Poloniex! You can now trade BCHSV/USDT, BCHABC/USDT, and XMR/USDT on margin alongside 23 other pairs. Poloniex exchange platform had turbulent several years, but it seems that now the exchange is ready to stabilize and win back its user base. The trading platform offers some of the lowest cryptocurrency trading fees on the market, margin trading, margin borrowing, has its decentralized exchange, and the IEO launchpad. Poloniex is a centralized cryptocurrency exchange located in Seychelles. There are 126 coins and 226 trading pairs on the exchange. Poloniex volume in the last 24 hours is reported to be at ₿3,034.58. The most active trading pair on Poloniex exchange is BTC/USDT. Poloniex is established in year 2014. Blocery (BLY) is now on Poloniex BLY wallets are now open and you can begin depositing BLY and trading BLY/USDT. To celebrate our new listing, we’re kicking off our Blocery Trading Competition. From August 20, 2020 at 03:00 UTC to August 27, 2020 at 02:59 UTC, customers who trade at least 25,000 BLY will win from a total prize pool of 250,000

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How to Start trading on Poloniex with 5 $ - YouTube

This is a quick video on how to margin trade on Polo Poloniex Trading Tutorial - How To Get Started And Make Your First Trade - Duration: 27:07. Scrembo Paul 149,824 views. 27:07. How The Economic Machine Works by Ray Dalio - Duration: 31:00. Wanna trade crypto? https://www.binance.com/?ref=15193962 Wanna leverage trades? https://www.bitmex.com/register/e655oo Wanna trade stocks with crypto? https... In this CoinStaker.com Video, we show you how to make money by margin lending on the Poloniex Exchange. For more information on Lending: https://www.coinstak... A quick guide to margin trading on Poloniex - Duration: 4:06. Circle 2,766 views. 4:06. The Secret Code Of Successful MACD Trading (Strategies Included) - Duration: 11:31.

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