Here's my question for Bitcoinica


Hypothetical: the majority (let's say 90%) of bitcoinica users are long in the market (buying) and are leveraged close to the max (let's say 4 to 1).

From where do the currency funds come to fill those leveraged orders?

Same hypothetical question for large HEAVILY LEVERAGED sell orders that come from the majority of bitcoinica members?

Could you clarify that you do indeed have deep pockets with lots of money and bitcoins to fund these scenarios?
If you don't, then what mechanisms are in place so the market can't leverage past the point of no more funds?

If there are no mechanism and limited funds then the only other option would be for a fractional reserve exchange,
in that case it would be an ethical choice to clarify it to your users.

What does this mean for bitcoinica's users if there are no mechanisms and limited funds?
It means that at some point the leveraged buys or sells do no influence the market the same as a 1:1 buy or sell.
Leveraged buys and sells would merely be "placing your bets" on what way the market will go without really participating.

I would really appreciate if you could address all this.