Bitcoin Forum

As a test for an idea I had, I want to propose (and conduct) the following auction system:

You can send bids of at least 0.01 BTC in up to 8 decimal digits of precision to the following address to win the 1 BTC deposited there:
1FHEiDZtMnWg6DtsaFGuT6DKUNadhjH6Ct
(https://blockchain.info/address/1FHEiDZtMnWg6DtsaFGuT6DKUNadhjH6Ct)

The winner however will NOT be the person who bids the highest and also not the one who bids lowest - to win, you need to bid as close to 125% of the average of all valid bids as possible.

An example:
The average bid amount of all valid bids is 0.01337 BTC.
0.01337*1.25 = 0.0167125, so whoever did bid closest to that amount is the winner.

In case several people who bid exactly the same amount would win, the transaction who got into an earlier block wins. In case it's even the same block, the one with the higher fees paid to miners wins (yay miners!). In case this STILL doesn't break the tie, the lower transaction ID wins (to have some slightly arbitrary "coin flip" event - I hope it's enough randomness for a 1 BTC penny auction...).

Please make sure to send bids ONLY from addresses YOU control, similar to gambling on satoshi's dice. A lot of people will probably NOT win the BTC auctioned off and get back their bid, so be prepared for that.

You can place as many bids as you like until the next retarget (at block #223776), all transactions included in blocks until then (above 0.01 BTC) will be considered valid bids.
Every transaction counts as seperate bid, so having a 0.01 BTC bid and bidding 0.05 BTC after that means you have 2 bids (0.01 BTC and 0.05 BTC), not 1 (0.06 BTC).

Fees:
I take a flat fee of 0.005 BTC off every bid, no matter how high it was initially and I'll keep 100% of the winning bid of course. Also I keep 100% of all bids below 0.01 BTC as punishment for not reading. The rest of the bids will be returned to the address they came from (if several addresses are involved combining unspent outputs, I'll just send it to one of them). I'll pay any transaction fees the network might require and I'll use the blockchain.info "sendmany" implementation for that.

Transactions that come in late (after block #223776) but before I returned all loosing bids will also be returned after having the fee deducted, but they won't be used in the calculation of the winning bid and they also can NOT win. If somebody sends BTC AFTER I reimbursed all bids, I consider this a donation and a token of appreciation and you will NOT be reimbursed at all.

After the block #223776 has been mined, I'll publish the outcome and stats and start paying back bids as well as the winner.
I'm human, errors can happen and this is not an automated process, so please be a bit patient after the block has been mined to let me triple check everything. I'll try to be as fast as possible (I expect a payout after max. 24 hours), but please don't expect to get your bid back already in block #223777.
Also this is an experiment, I know that I'll loose a bit of money if less than 200 bids are entered (which, given the "popularity" of this subforum is already a bit risky) but that's ok. I'm rather interested if people actually like the idea enough to bid and how high they bid and I think that fun is worth the time and 1 BTC.

As editing is not possible here, I'll probably post from time to time the current averages and other stats to keep the thread afloat. Also feel free to comment (please stay on topic) as well as announcing your guesses here (of course, only what's in the block chain ultimately counts).

Happy bidding and may your guess be the best! :)

Though this is an "auction", but I think it should be put into the gambling section but not this Auctions. there are lots kind of auction gambling in the game theory, so please everyone do not play it here one by one......

"Gambling and all "investments" that are so risky they might as well be gambling (HYIPs, pyramid schemes, etc.)"
^^^ didn't really fit this idea in my opinion, as compared to a game of luck this one is highly influencable by anyone taking part, similar to a bet (...or an auction). Also this is NOT a http://en.wikipedia.org/wiki/Dollar_auction where all bids are lost to the operator, I chose only to take a small fee, not depending on bid amount.

Also this auction is strictly time limited (unlike a penny auction that typically continues after each bid), unlike pure gambling it also has actual quite some risks for me as the operator and there are already several dollar or progressive auctions in this subforum which are actually worse than this one by design.

Do I understand thins wrong, or would an easy way to win this game just be to wait until the last moment and then send the exact average with a high fee? (Bot?)

Personally, I do feel that you understand things wrong. I'm as curious to see if it will work as you are, though.

Why don't you make a Bot to do this and see what happens?

You can try... and please share your findings!
Btw. you'd need to send 25% more than the average, which also moves the average up a bit (in reality you'd do a few iterations in increasing the bid + calculating the average, since BTC is capped at 8 decimals. You can still come to a perfect value in every situation if you leave out all other players.). Everyone else however who already has a bid in the system can also already anticipate your move and/or try to place a second (higher or lower) bid to move the average in a fitting place below their first bid.

Botting this might even work, as currently the stakes are far too low (I don't have the money for blowing away 100 BTC immediately on a penny auction and also I'd need to automate the payback process then because there would be more bids) and there's also low incentives for other to seriously gamble or invest time/work for this amount of BTC. If this were a new game on Satoshi's dice, you could expect some quite heavy botting and counterbotting very soon though. Add to this the fact that you can easily bid several 100 BTC with this system as the fee is fixed and not percent based to move the average more.

Weird + interesting. Apparently it's not even worth the risk if I (as a long term forum member with several trades) offer a whole BTC for grabs with bids of 0.01 BTC min. ???

Well, at least it didn't cost me anything beyond time and effort. Thanks for every comment in this thread and see you around the forum in the future. :)