Why does Bitfinex allow shorting with BTC as collateral?


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Bitcoin derivatives exchange BitMEX has made another strategic pivot recently by announcing they were going to stop issuing new futures contracts and instead focus on new swap products which pay (and deduct) interest from users who are short (or long). Perhaps most importantly: the contract never expires, so you are never forced out of your position because of any settlement.

They started by releasing the ETHBTC swap product and have now swept their product offering of futures with this new swap product. There's a lot of confusion surrounding this new product, but it can be quite simple once you understand a few financial principles. Patiently read through this article if you would like to understand why there's a premium, and what the Bitfinex BTC and USD rates have to do with the price of futures and the behavior of the BitMEX XBTUSD...

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We have previously written about ways to invest in bitcoin. These articles implicitly assume that bitcoin prices will rise, at least over the long term. But what about the ‘non-believers,’ the naysayers, the people who have no faith in bitcoin and think the whole thing is one big Ponzi scheme? This article is for you. Here are some of options for shorting BTC. Keep in mind that these are not the only companies where you can short bitcoin but they are currently the most popular with traders. (For related reading, see: Why Is Bitcoin's Value So Volatile?)


Bitfinex is a bitcoin trading platform owned and operated by iFinex Inc. based in the British Virgin Islands. The platform is fairly popular among day traders. Currently Bitfinex occupies the number three spot in trading volume, according to Bitcoincharts. The platform is at number one if you exclude the Chinese bitcoin exchanges. The company operates a peer-to-peer-based lending program. Users that think...

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How To Margin Trade Bitcoins at Bitfinex

At Bitfinex you can trade BTCUSD with 3.33x leverage. Through peer-to-peer funding services, users can borrow United States Dollars or Bitcoins and trade with them, just sign up and fund the account with some collateral.

If you don’t have a Bitfinex.com account sign up & use referrer code for 10% fee discount: iJEOS8Lrjo

You can use USD or BTC as collateral for trading bitcoin on margin. Transfer the funds to your trading account and click on the ‘Margin Trading’ tab at the top.

If you think bitcoin price will go up, place a ‘Long’ or ‘Margin Buy’ order. This will borrow USD to buy bitcoins at the price you choose. To close your position, submit a ‘Margin Sell’ for however many bitcoins you bought.

If you think bitcoin price will go down, place a ‘Short’ or ‘Margin Sell’ order. This will borrow Bitcoins to sell for USD at the price you choose. To close your position, submit a ‘Margin Buy’ for however...

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UPDATE (3rd August 2:40 UTC): Bitfinex representatives confirmed 119,756 BTC (more than $60m) has been lost or stolen from the exchange.

Hong Kong digital currency exchange Bitfinex has taken its trading platform offline following a reported hack that resulted in the theft of customer funds.

According to a statement posted on its website, Bitfinex has suspended trading, deposits and withdrawals. Both the number of customers impacted and the exact amount lost in the breach are unclear at this time.

Bitfinex said:

"We are investigating the breach to determine what happened, but we know that some of our users have had their bitcoins stolen. We are undertaking a review to determine which users have been affected by the breach. While we conduct this initial investigation and secure our environment, Bitfinex.com will be taken down and the maintenance page will be left up."

The exchange, which trades a number of digital currencies, said that only its...

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Disclaimer: The information contained in this article is for general information purposes only. Any reliance you place on this information is therefore strictly at your own risk.

As you already may know, Bitfinex is advanced crypto-currencies trading platform. It offers advanced order types, margin trading, margin funding and other cool things. Margin funding is a liquidity feature, which goes hand in hand with the margin trading and comes in play when we are talking about passive income.

Bitfinex allows you to provide liquidity in the form of bitcoins and/or dollars to traders, who want to trade on margin. Essentially Bitfinex allows you to lend your money to traders and earn daily interest which can be up to 0.1% per day and sometimes even higher!

Read below and learn how to set up your account, how much you can earn and what risks are involved.

But before you begin, there is great news for you!


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So I’ve been talking a lot about Bitfinex recently, since I started using it about 2 weeks ago. Up until now, I’ve been using a variety of exchanges including Bitstamp and BTC-E to trade my Bitcoin. I just want to point out that there is a big distinction between exchanges, and trading platforms like Bitfinex. On exchanges, all I could do was sell Bitcoin at a high, and buy them back at a low, or hold some USD in the hopes of snatching up some cheap Bitcoin. In fact, I’m sure all of you reading this have been trying to do exactly that for the last few months. If you haven’t heard of Margin trading, get ready to be blown away; you’ll be kicking yourself for not doing so earlier.

Why does everyone like selling BTC into FIAT, instead of Margin Trading Short/Long??? Trust me, you’re MISSING OUT. https://t.co/i5PliWJiz6

— Alvin Lee (@onemanatatime) January 18, 2014

When I first started trading on Bitfinex, I was totally tripping out about how I didn’t find out...

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Disclaimer:Fusion Media

would like to remind you that the data contained in this website is not necessarily real-time nor accurate. All CFDs (stocks, indexes, futures) and Forex prices are not provided by exchanges but rather by market makers, and so prices may not be accurate and may differ from the actual market price, meaning prices are indicative and not appropriate for trading purposes. Therefore Fusion Media doesn`t bear any responsibility for any trading losses you might incur as a result of using this data.

Fusion Media or anyone involved with Fusion Media will not accept any liability for loss or damage as a result of reliance on the information including data, quotes, charts and buy/sell signals contained within this website. Please be fully informed regarding the risks and costs associated with trading the financial markets, it is one of the riskiest investment forms...

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The Premier Bitcoin futures and Derivatives Trading Guide

Welcome to the best bitcoin trading guide on the internet. We have a complete table of contents below that you can use to navigate the rich content available to help you learn the ins and outs of trading bitcoin futures. Note that sites sometimes use slightly different systems, and where it is relevant it will be noted in this guide.

If you are looking for specific exchange walkthroughs, see the menu on the left to for BitMEX, CryptoFacilities, Bitfinex, and WhaleClub. There you can find full screenshot and step by step explanations of the key features specific to each place.

Here you will learn more broad concepts regarding daytrading bitcoin and futures in general. Even if you are not an active trader, there's a lot to learn about markets and how they're structured in this guide. Some of the early sections may be a little too easy for those of you who already are traders, so just navigate through to...

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Description of the exchange website: Bitfinex(www.bitfinex.com)

Bitfinex exchange offers three trading pairs: BTC/USD, BTC/LTC, LTC/USD.

For depositing and withdrawing USD the website requires identity verification and following some pretty strict rules. The list of documents required for verification: passport or other identity document, utility bill or bank transfer proof, phone number.

There are several options for trading: margin trading; trade without margin; Broker (set your percentage for the use of your funds for margin trading).

For transactions you can use several modes of execution of your orders. Trading operation fees are 0.15% and decrease as your current assets increase.

Deposit funds in USD accounts using Egopay, withdrawals through Egopay or international bank transfers.

The exchange website has a referral system which rewards your referral with 10% discount on trading for 30 days.

For contacting the...

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While Bitcoin is certainly notorious for its volatility, there has been much speculation among Bitcoin community members, financial experts and the general public regarding the latest price drop. The forums have been abuzz with rumors ranging from margin trading to an NSA plot to take over Bitcoin.

As it happened

The price dipped into the low US$440’s, while the price at the BTC-e exchange hit a low of US$309, and even though the price soon recovered in line with other exchanges, the short time window allowed some lucky buyers to acquire reasonable quantities under US$350 per coin.

Many believe that the culprit was BitFinex with its large number of sell order that caused the freefall in price. BitFinex makes it possible for individuals to trade on leverage. In other words, users can borrow money to trade with. This feature was certainly popular with many BitFinex users who were using it to go “long” on Bitcoin. Thus, they were betting borrowed money...

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Bitfinex, one of the leading digital currency exchange, today reported that it has faced a security breach. Following the discovery, the exchange reportedly halted all its bitcoin trading operations until further notice.

“Today we discovered a security breach that requires us to halt all trading on Bitfinex, as well as halt all digital token deposits to and withdrawals from Bitfinex”

According to the Bitfinex homepage, the breach was discovered at around 18:00 UTC, same time when the platform suspended operations. The platform is currently consolidating all the activities, accounting for individualized customer losses, settling open margin positions and other collaterals which may have been affected by the breach.

As of now, the company believes that the security breach was limited only to Bitcoin wallets without affecting other cryptocurrency operations. Regarding any settlements, the company states:

“Any settlements will be at the current market...

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Short selling (or "selling short") is a technique used by people who try to profit from the falling price of a stock. Short selling is a very risky technique as it involves precise timing and goes contrary to the overall direction of the market. Since the stock market has historically tended to rise in value over time, short selling requires precise market timing, which is a very difficult feat.

Here's how short selling works. Assume you want to sell short 100 shares of a company because you believe sales are slowing and its earnings will drop. Your broker will borrow the shares from someone who owns them with the promise that you will return them later.

You immediately sell the borrowed shares at the current market price. When the price of the shares drops (you hope), you "cover your short position" by buying back the shares, and your broker returns them to the lender. Your profit is the difference between the price at which you sold the stock and your cost to buy...

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Alexander Kroeger and Asani Sarkar

Bitcoin is the most popular virtual currency yet developed. Proponents assert that bitcoin can remove frictions involved in payment and settlement systems by eliminating the need for the financial intermediaries that exist in traditional currencies. In this blog post, we show that while bitcoin transfers themselves are relatively frictionless for the user, there are significant frictions when bitcoins trade in exchange markets resulting in meaningful and persistent price differences across bitcoin exchanges. These exchange-related frictions reduce the incentive of market participants to use bitcoin as a payments alternative.

The Case for Bitcoin
A virtual currency may be defined as “a type of unregulated, digital money, which is issued and usually controlled by its developers, and used and accepted among the members of a specific virtual community.” Bitcoin is a virtual currency and online payment system that was launched...

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Short selling: un-American or pro-market?

The ability to sell something you don’t own is one of the unique aspects of Wall Street. This article aims to demystify the concept of short selling, why traders do it, how short sales work, and the many risks involved. Besides the risks, traders must be diligent in following margin requirements, short selling rules, and even deal with margin calls or hard-to-borrow issues when necessary. Recognizing the important aspects of short selling allows traders to better manage potentially unlimited losses due to market risk, as well as other perils like dividends and corporate actions.

Oftentimes short sellers are the black sheep of the investor community and many wish short sellers simply did not exist. In actuality, however, short sellers aid in creating a healthy and efficient market in many ways. Several benefits include improving the price discovery mechanism, allowing for the expression of a contrarian view, and bringing...

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Happy to publish today the results of an audit I performed for the Bitfinex exchange. This is similar to the Kraken audit, we simply took some of the feedback on board (hash email address into leaf nodes), improved the security in a few places (balances were anonymized even to me) and streamlined the process some more (presenting



As always, an audit does not constitute an endorsement and it does not address any risks outside of present insolvency. It's also not infallible, exchanges can borrow money or ask others to sign their audit message. Finally, until we can implement fully zero-knowledge, cryptographically provable audits, you have to trust the auditor, i.e. me, to have done my job correctly.

Also same as last time, I did not receive any compensation for the audit and I did it in my free time.

Hash: SHA1


AUDITOR: Stefan Thomas

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