Not necessarily true ... depends on the net position that Plus500 hold, how much risk they take on their book and how much they hedge on Gox or other exchanges if they are net short. Not sure how they deal with net long unless they are able to borrow BTC to short.
I think their business model has error :-). They do not buy or sell bitcoins. You cannot buy/sell bitcoin at plus500 ... only make CFD.
edit: you can after CFD manipulate price easy (if you have enough resources)
YOU cannot buy or sell Bitcoins with them .. it is all CFDs. That does not mean that THEY do not use BTC to hedge when and where they can, and I would be very surprised if they do not
I'm not sure they can DO HEDGE (they do not have enough bitcoins) ... beacause they do not know how much I'll short at their platform (and they need 4x more ... if I'll try short 12M btc then they will need 48M. ... and there are only 12M existing ).
The fact is that shorting with leverage crap is a motherfucking scam. It's just gambling in its purest form, but they are gambling with customers money - if they lose big time and go bust, it's their customers who are left holding the bag. The managers who drive the business are just swimming in money pools and are the same scammers doing the very same tricks that trigger the financial crisis in the modern world.
Did you know that plus500 is owned by UK banks, did you?
I would not put it that strongly ... they are just feeding a nation/world's addiction to gambling
Yes, I know they are UK based. I feel safer (for now) having fiat with them than in an account in Slovenia, which is rumoured to be on the edge of a banking crisis. When I think its time to actually buy and hold BTC I will use my Bitstamp account. Meanwhile Plus500 is quicker and safer from my experience. No wallet to get hacked and a nice fiat paper trail.
Leverage and shorting is another issue ... really depends on the net house position, on which we can only speculate. Bad risk management, yeah, could get fucked. I would be more worried if they only traded Bitcoin. As it is, they have other revenue streams.
I agree, if they lose and go bust, customers are left holding the bag, but that's the same if an exchange gets hacked/closed down. We are always on the wrong side of these things and always will be . It's part of the game right now.
EDIT : Shorting, leverage and manipulation are 3 completely seperate things. A market that cannot be shorted is more open to manipulation than one that can. It's when things get out of control and the speculative money is running the market that we have a problem. As for leverage, it's only a danger if you don't know how to use it and over-extend yourself (translation - get too greedy
). On a macro scale, yes, that's a huge problem ... banks and governments are massively over-leveraged - that's the real scam. The tax payer is short a put and being charged for it !
