I know that Bitcoinica, Gavin Andresen's faucet and TradeHill all got hacked through Linode's support system a while back, in which the attacker managed to reset all their passwords.
That's exactly what we want to eventually do. For an efficient market to run, there needs to be a way to manage risk.
However, if you mention "derivatives" to any normal BTC user, the mostly response of "huh?", or "aren't those the things that made the world collapse in 2008?".
Future Block, as it currently stands, is an entertainment site to bet on something novel. However, our hope is that:
1. It serves as an education tool to introduce people to derivatives, because derivatives are essentially about taking one position or the other.
2. To build liquidity for a derivatives exchange. Parimutuel applications are great for this because you don't have the 'chicken & egg' problem where you need 2 types of customers for it to work.
2. However, we have our own hash rate calculations by directly interfacing with the actual blockchain. This isn't in production yet. This is because hash rate is always going to be a guestimate. Depending on the time intervals that you pick, the guestimates vary. So we asked overselves, what helps us to maximise transparency. So we decided to go with blockchain.info's hash rate because everyone can check that.
Parimutuel betting is where all the bets are placed in a pool and when the pool closes we then distribute the winnings amongst the bets. [1] In fact, this is how a lot of horse racing works
This means you are not guarranteed betting X pays out Y. And this does change as bets are made on either side. And so one may think, why not just bet the last minute? House fees are initially 0% at 6 AM (PDT) but roll up linearly to 20% by 6 PM (PDT). This is to encourage betting early and discourage bet sniping at the last minute. [2]
Having said that, we do plan to move towards a floating model, more similar to the futures market as we gain transaction volume.
Current prediction targets are set by us. And bettor bet on either sides. As we gain liquidity and transaction volumes are increased, we plan to then turn this into a real time exchange so that the transactions are settled real time and we essentially have a moving prediction target.
In fact, this how we got our name at future representing futures market and block representing bit coin. :p
Shorting will require more borrowing/lending in the BTC ecosystem. But there are other ways to mitigate downside risks, such as hedging (put options in particular). This is really our goal, to create a futures/options exchange.
As we get more volume, then we can do stuff like this and let the market dictate things like "Prediction Target" or "BTCUSD Strike Price".
Because of the nature of this site, we are very sensitive to any security related questions. Sorry!
Without revealing anything specific, we have a number of trigger conditions and any bet size over or under the limit is a trigger condition. That marks the bet as invalid and manual admin action is then required to refund the bet.