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Another reason why Bitcoin and services accepting it rock.

http://mpex.co/
https://campbx.com/faq.php#trading
https://en.bitcoin.it/wiki/Trade#Futures
https://en.bitcoin.it/wiki/Trade#Forex
https://icbit.se/
https://www.firstnationalib.com/

Guys at ICBIT run it already for a year or so. It's not gambling though, it's a more serious futures trading stuff.

So if I were a producer or buyer of bitcoins, a solid futures market would be of great interest.

Who said that ICBIT is 'solid'? You cannot even find information about the company here: https://icbit.se/

Looking here: https://en.bitcoin.it/wiki/ICBIT, we see:

"Technically ICBIT is not an exchange since it does not act as a central counterparty. According to their website users are fully exposed to counterparty risk from other traders whose identities are concealed from them; the exchange does not pledge its own assets to back the other side of a customer's position. Traders are not allowed to conduct background or reputation checks of any kind on these anonymous counterparties."

So how "solid" is this, and who would use it?

ICBIT here: https://icbit.se/margincall says this:

"In the worst case scenario, your profit is always limited by ability to pay of counterparties to your contract. We do our best to resolve such situations before the particular user goes bankrupt, but if that happens, your profitable position will be closed (at a very good price for you!) and you would need to reopen it again."

...which I believe means that your return on investment is not guaranteed and instead of being paid fully on the result of a contract which is highly profitable in your favour, they will limit the profit to the ability of the other agent to pay. So there is a limit to the value on your contacts and if others take advantage of this, they can limit their risk while maintaining high risk for yourself. Im not a professional in this matter, but it seems to me that there is a serious flaw in this trading system.

So if I were a producer or buyer of bitcoins, a solid futures market would be of great interest.

Who said that ICBIT is 'solid'? You cannot even find information about the company here: https://icbit.se/

Looking here: https://en.bitcoin.it/wiki/ICBIT, we see:

"Technically ICBIT is not an exchange since it does not act as a central counterparty. According to their website users are fully exposed to counterparty risk from other traders whose identities are concealed from them; the exchange does not pledge its own assets to back the other side of a customer's position. Traders are not allowed to conduct background or reputation checks of any kind on these anonymous counterparties."

So how "solid" is this, and who would use it?

ICBIT here: https://icbit.se/margincall says this:

"In the worst case scenario, your profit is always limited by ability to pay of counterparties to your contract. We do our best to resolve such situations before the particular user goes bankrupt, but if that happens, your profitable position will be closed (at a very good price for you!) and you would need to reopen it again."

...which I believe means that your return on investment is not guaranteed and instead of being paid fully on the result of a contract which is highly profitable in your favour, they will limit the profit to the ability of the other agent to pay. So there is a limit to the value on your contacts and if others take advantage of this, they can limit their risk while maintaining high risk for yourself. Im not a professional in this matter, but it seems to me that there is a serious flaw in this trading system.

OK, let's take a look at one of their derivative contracts. Read, especially, Margin Call. The example given is buying a derivative contract, but the real issue is selling one. (There must be an equal volume bought and sold; this is a zero sum game.) Buying a contract costs you a known amount up front,which you may lose. Selling a derivative contract implies that, at some specified future time, you must deliver what you sold, even if you take an arbitrarily high loss doing so.

This is implemented by draining the account of the seller as necessary to pay off the loss. That would be OK if it was a cash account, with no margin. But this exchange permits selling derivative contracts on margin, where the seller is effectively borrowing from the exchange. They currently require 75% margin. Does the exchange take the risk of a counterparty defaulting? No. They write "your profit is always limited by ability to pay of counterparties to your contract." Actually, that's incorrect - it's limited by the cash counterparties have on deposit with the exchange, not their total assets. (That's probably just as well.) However, as a contract buyer, you don't know, and aren't allowed to find out, who the counterparty is or how much money they have on deposit.

The way this is set up, a seller of a derivative contract can escape part of a loss by draining their account. If the value of a derivative is increasing, the seller can cut their losses by draining their account up to the margin limit. This will force the exchange to drain out the rest of their account and close out the derivative contract. The derivative contracts can't change price by more than 10% per day, so there's a maximum loss when selling a derivative contract. This makes derivative contracts less valuable than they would otherwise be.

Then there's the issue of allocating losses when a counterparty defaults. Everything is anonymous, so you have no idea if the exchange is screwing you. On top of that, of course, you're relying on a pseudo-business with no identifying information to pay you money at a future date.

If you don't understand everything above, you should not be in this market.

OK, let's take a look at one of their derivative contracts. Read, especially, Margin Call. The example given is buying a derivative contract, but the real issue is selling one. (There must be an equal volume bought and sold; this is a zero sum game.) Buying a contract costs you a known amount up front,which you may lose. Selling a derivative contract implies that, at some specified future time, you must deliver what you sold, even if you take an arbitrarily high loss doing so.

This is implemented by draining the account of the seller as necessary to pay off the loss. That would be OK if it was a cash account, with no margin. But this exchange permits selling derivative contracts on margin, where the seller is effectively borrowing from the exchange. They currently require 75% margin. Does the exchange take the risk of a counterparty defaulting? No. They write "your profit is always limited by ability to pay of counterparties to your contract." Actually, that's incorrect - it's limited by the cash counterparties have on deposit with the exchange, not their total assets. (That's probably just as well.) However, as a contract buyer, you don't know, and aren't allowed to find out, who the counterparty is or how much money they have on deposit.

The way this is set up, a seller of a derivative contract can escape part of a loss by draining their account. If the value of a derivative is increasing, the seller can cut their losses by draining their account up to the margin limit. This will force the exchange to drain out the rest of their account and close out the derivative contract. The derivative contracts can't change price by more than 10% per day, so there's a maximum loss when selling a derivative contract. This makes derivative contracts less valuable than they would otherwise be.

Then there's the issue of allocating losses when a counterparty defaults. Everything is anonymous, so you have no idea if the exchange is screwing you. On top of that, of course, you're relying on a pseudo-business with no identifying information to pay you money at a future date.

If you don't understand everything above, you should not be in this market.

Obscure what links? The https://icbit.se/ link is the actual domain name of the Bitcoin exchange, ICBIT. The URLs point to various futures pages on ICBIT.

Hahaha, you're right - I screwed up!

Why obscure the links behind a link abbreviation service,

Obscure what links? The https://icbit.se/ link is the actual domain name of the Bitcoin exchange, ICBIT. The URLs point to various futures pages on ICBIT.

It is worse than that. The market is not even futures market. It is pure speculation.

On futures market, you can *BUY* or *SELL* a contract. Here, you buy and sell nothing.

https://icbit.se/CLG3

Positions are settled based on the corresponding futures price at COMEX (for the month of contract settlement) during the contract settlement day by transferring variation margin between contract holders. Reference information: http://www.cmegroup.com/trading/energy/crude-oil/light-sweet-crude.html

COMEX uses USD. So how is this using BTC if they are referencing COMEX?

If I had BTC, I would buy gold contracts. Sure. But you can't! They just sell you a make believe contract that then you must settle for BTC before it expires. Where is my gold then???

This is not futures. This is not even derivatives on futures. This is gambling on currencies value of BTC. No thanks to this scam.