Quote from: dyask on April 20, 2014, 11:33:19 PM

Excuse me, I've short sold many times. I think I understand it very well. Have you actually ever short sold anything? Short selling requires borrowing the asset and selling that, then you pay interest on that borrowing and pay back with the asset. It is pretty simple. There isn't any gaining title to the asset you sell, at least not with stocks or contracts so I don't see how it is any different with a crypto currency.

No you are wrong. When you borrow a stock to sell it short you have title to the stock. You may not know this as all you have been doing is executing the sale. A whole lot more is happening in the back office of the organization you are dealing with.
You may think you "know it well', but you're only familiar with what is happening on the surface, not in the back office, where things are reconciled.

Now, large firms may not follow this procedure as, for them, but not for you, it has been a grey area legally. And depending which country you are in the regulators may not have caught up fully yet. though it's been a big area of focus the last few years.

But..without digressing too much, this is different to crypto currencies because of the nature of them. By the nature of the blockchain itself.
But in short, when you deposit your coins with an exchange (or most anyway), they can pretty much do what they like with them. Some go into eh hot wallet. They are no longer yours. this is why "hackers" (not really hackers) were able to to steal coins from several exchanges, out of the "hot wallets".

As the coins are entirely fungible, you just get an equal amount of coins back if you withdraw.

Now because, you as the "owner" of the coins have never entered into a loan agreement, you imagine you still own your coins and can sell them at will. But you can't necessarily. You are relying on a "trusted third party" to not stuff things up.
If the exchange loaned out coins, which were then shortsold then obviously everyone cant sell or withdraw their coins.
But that, my friend, is just one of the problems.
This is a market manipulators dream

Imagine being the only person or organisation who was able to short sell a particular crypto currency. Bad news comes out and you have no competition. Everyone one else is either long or square.

And yes, I have probably done hundreds of thousands of short sales, as I have worked professionally in that business for many years. I'm very familiar with market making, short selling etc...

What I'm concerned about is exchanges and trading firms destroying and profiting from what I think is a tremendous community based project. I don't think they really have the crypto community at heart most of the time

Added in edit: I should have added that the gold market in the west is a notable exception where shorting is concerned, but that is hardly a model that should be emulated.