user323: What sort of service is Bitcoinica (or was before it was closed)?

user516: From the Bitcoin wiki:

An exchange that enables leveraged speculation in its
  contract-for-difference (CFD) market against the Bitcoin to USD
  (BTC/USD) exchange rate.
The service charges no trading fees but instead earns from the trading
  spread -- similar to how forex trading functions.

This was a powerful (and risky) service to provide to traders as leveraging allowed them to invest in more bitcoins than what they owned, and the contract-for-difference market allowed traders to take a position (gamble?) on exchange rate movements.
There appeared to be a strong appetite for such a service, because it grew in popularity very quickly - it was first mentioned on bitcointalk.org in Sep 2011 and by March 2012 was large enough to be holding BTC43,000 (when it was first hacked).

323: <p>What sort of service is <a href="https://www.bitcoinica.com/" rel="nofollow">Bitcoinica</a> (or was before it was closed)?</p>
 516: <p>From <a href="https://en.bitcoin.it/wiki/Bitcoinica" rel="nofollow noreferrer">the Bitcoin wiki</a>:</p>

<blockquote>
  <p>An exchange that enables leveraged speculation in its
  contract-for-difference (CFD) market against the Bitcoin to USD
  (BTC/USD) exchange rate.</p>
  
  <p>The service charges no trading fees but instead earns from the trading
  spread -- similar to how forex trading functions.</p>
</blockquote>

<p>This was a powerful (and risky) service to provide to traders as leveraging allowed them to invest in more bitcoins than what they owned, and the contract-for-difference market allowed traders to take a position (gamble?) on exchange rate movements.</p>

<p>There appeared to be a strong appetite for such a service, because it grew in popularity very quickly - it was <a href="https://bitcointalk.org/index.php?topic=42267" rel="nofollow noreferrer">first mentioned on bitcointalk.org in Sep 2011</a> and by March 2012 was large enough to be holding BTC43,000 (<a href="https://bitcoin.stackexchange.com/q/3642/516">when it was first hacked</a>).</p>
