Bitcoin Forum

Due to the sheer amount of controversy this has caused, I've decided to shut it down.

I don't think that penny auctions are a scam, but I do accept that there are far too many ways for me to have deceived people in the way this one was operated.

I thought long and hard about refunds and how best to do them, the doubling each refund above was appealing, but it didn't allow me to give out the 11 BTC which was what the winner had been promised.

I'm going to refund every bidder except the most recent with 0.25 BTC, and send the winnings of 11 BTC to the most recent bidder (1AQDgdT6Jmu642wVCF8ayPfdKfNghnfLzA). This means that the most recent winner will be paid 11 BTC, the rest will get their bids back and my losses are capped at 11 BTC.

BlockExplorer links for refunds:
Bidder 1 - Link (http://blockexplorer.com/tx/291d75578f432a9fc1a8abe0b91b00e903bab2604263e302683b2ef6bd7f0c5e)
Bidder 2 - Link (http://blockexplorer.com/tx/46b68a3645d1aa7046673238c57774d5ba97637c1f2d27ef77656a791ea3e9b8)
Bidder 3 - Link (http://blockexplorer.com/tx/5fda3e5248d469e71cb9585432af05797c7ea3554dabb3a9c83db53d5a1f6087)
Bidder 4 - Link (http://blockexplorer.com/tx/9ae0efe407d2bc351c40a6e1ffff2f5cf2160e39c2ca437319fb48ea45acf168)
Bidder 5 - Link (http://blockexplorer.com/tx/6ea835a7c67826824d9443815687dec66317d16fed435d59d666aec28186e44a)
Bidder 6 - Link (http://blockexplorer.com/tx/3e44924192cf72214784ac20f166e9bf68545a2b9b9bc348c091bc2d675e9964)
Winner - Link (http://blockexplorer.com/tx/f0409db7141f652fae5501c5d5ab0028ac7acb9d68aaad4e5cee0ffd7c75833b#o0)

This has been a learning experience and although I'm down 11 BTC, I think I've gained some knowledge about the reaction of the forum to penny auctions, some of the weaknesses in it which are very hard to do securely, and how to better trade in future. For this, I think it's a fair price to pay.

Hopefully it will also show that I'm not a cheap profiteer and I'm not going to abuse the Bitcoin community which I enjoy being a part of. I was just trying a new commercial model and the resounding reply was that it doesn't work

If the winner wants the Radeon 5830, they can send me 12 BTC back (as originally said) to cover shipping anywhere in the world, and I'll send it to them.

Got one bid... who's next? :3

Someone must want to buy this for 0.02 BTC?

Still only one bid? I'm somewhat surprised that no one wants to buy a 5830 for 0.02 BTC. :S

Every one is waiting to get closer to the 24hr waiting period. These types of auctions are awkward, why would you bid before the end time... And if the auction will take 43 bids to break even, any single person bidding will want to recoup the investment, thus making up to 43 bids... Some will drop early, but if 2 members end up fighting over this, it's going to be one slow, long, boring fight... 1 bid per day, 3 months to go :)

Anyhow, I would change that to bids within 23:45 from the last bid don't change the bid end, thus giving at least some reason to bid inside that window.

I could do, but my worry is that with the forum being quite slow, someone will snipe during a weak time zone and it'll end without another person having a chance to counter-bid.

Maybe people aren't as dumb as you think?

+1

I'm still trying to understand this process. I must be missing something, as I don't understand why anybody would rationally want to participate.

I think he's trying to be like uBid and similar sites, where one signs up, funds their account, and proceed to bid on auctions at 1-penny (usd) intervals.  The catch, is that it costs 60 cents to make a bid, non refundable.  If you get out bid, you must spend another 60 cents to place a higher bid, adding a penny to the price.

When you see on these sites that an Iphone sold for "$3.35" the site actually made $200 off that sale.

Ubid is legit, not one of those pay to bid auction sites. This is a classic Dollar Auction (http://en.wikipedia.org/wiki/Dollar_auction) scam.

He even named it Penny Auction. :p

Ill take the next bid. What are we at 0.03?

0.02, you have to send 0.25 to 1KkxqpJ4TNp1hgQAgjAFfqi2ooA5rzZCQn to bid. ^^

this sounds like beezid type of auction.

Yep, that's what it is.

eh what the hell why not

sent .25

As soon as it appears in Block Explorer I'll update the bids and end time.

hope no one's dumb enough to bid on this. He can easily make 25 btc selling 1 card.

Or I could lose 10 BTC, that's part of the nature of a brinkmanship game.

At the end of the day somebody will take the card home for less than it's worth.

This thing can take years to end, good luck  ;D

I doubt it, the bids will probably happen in a flurry when 2-3 people start, and then end 24 hours after the flurry.

"Rei" reminds me of a character name from sailor moon.
Marrrrrrrrrrs Fireeeeeeee Ignite!

Anyhoo, why not set up a Bid button with MyBitcoin.com's merchant tools? Then you could put that in the first post, say "click here to bid" and then after they make payment, redirect to this thread where they can choose to post that they made a bid.

Meanwhile, once there's 1 confirmation, MBC will send you an email.  If you can, harvest that email to increase your auction price counter.

It would be fun and interesting to try.

I never pay to bid. ever.

good luck

To say that I'm somewhat surprised that anyone wants to let a Radeon go for 0.03 BTC would be a massive understatement.

They are probably all waiting until 15 min before the time runs out to make a new bid. (aka sniping)

Can someone win the auction
 and then you send them 11btc
and they don't send it back?

Yes. Look at the first post again...

didn't see that.

Yeah that's fine, the auction is for a Radeon or 11 BTC. If someone wishes to remain anonymous or not to send me their address, they can take 11 BTC.

I think I may have accidentally sent a payment from this wallet to itself, it's showing up as 'Payment to yourself' but still unconfirmed, so I assume I didn't copy mtgox's address.

If this goes through, just ignore it. If it sent from another of my wallets I'll update this post to clarify that it's not a bid.

It it went through to another of my wallets, false alarm.

did you or didnt you?

It's still 0/unconfirmed so the network doesn't seem to want to process it.

Does the network not process payments to yourself? (I haven't lost any BTC anyway)

Edit: I've reopened Bitcoin and the transaction has just disappeared entirely. Very odd, but looks like it wont be an issue.

Up with another bid. Waiting for some more. :P

Right, because we're all a bunch of evil bastards who can't stand the idea that someone else might get a deal. All we do by bidding is ensure that somebody doesn't get a Radeon for .03 BTC. We don't get anything for ourselves. Malice just isn't that strong a motivator.

It is fascinating how a conman thinks, isn't it?

To whoever the last bidder is:

send me 1BTC so I won't bid on it.  ;D

I'm not trying to imply anything, but all bids should be acknowledged by someone in the forum, or else how can we tell the seller isn't putting bids himself?

Did I say this up loud? Ahm, nevermind that, let me just prepare a great deal based on similar rules for, ahm, I don't know, a pair of 6990's and the winner gets, hmmm, 250 btc.

Seriously, though, each bidder NEEDS to come forth and say they placed the bid, or else this is just asking for FUD.

You can't know that. And you can't know that even if the winner is legit, that the second to last bidder won't be an alternate nickname he's using, who bids it up way beyond it's value. After all, it costs him nothing to do that.

Anyone who is familiar with a dollar auction is knows that it's a scam. Why anyone would trust a person who's running a known scam to run it "honestly", especially when the transactions are pseudo-anonymous and non-reversible, is beyond me.

This little scam is still running?

why? it only costs .25 to "bid".. which isnt really a bid at all but each person paying to beat the person behind them.

this thing will get until there is a bid every 23.90 hours.. the "seller" will have a constant flow of 0.25 coins every 24 hours or so and never have to give up the card, cause it doesnt matter how high the top bid is.. it only takes 0.25 to top it.

heck i could keep everyone from getting the card or the coin EVER by sending this guy money every 23 hours. See the problem yet? everyone want to be last but there is no last. as long as there are new bitcoin holders.

I just cant believe he sucked 5 people into paying.. yes i really hope one of them is he last and even though I would love this card and really could use it, I would never send him .25.. it's  fools game.

Any auction where you pay to bid and cannot set the amount of your bid is a scam.

All he has to do is place his own bid from another account any time someone else might win the video card for less than its fair market value. Eventually, he'll either be way over the fair market value in profits and let someone 'win' or he'll win himself.

I'm sorry if people think that it's a scam, I've dealt several thousand dollars over this forum / OTC and don't plan on scamming someone over 11 Bitcoin. It seems to be generating a lot of controversy, more than I expected, and not an awful lot of bids, which is not what I expected.

The issue with having everyone acknowledge making a bid is that it breaks a lot of the anonymity of Bitcoin. It allows anyone watching Blockexplorer to identify addresses and sources of Bitcoin to individual users, which cannot possibly be a good thing for privacy, one of Bitcoin's most attractive factors.


Why would you want to keep sending me coins to prevent someone else from getting any? It doesn't make any commercial sense.


This vulnerability isn't unique to penny auctions. If I wanted to bid up my own auction on eBay, all I need is a second account or a friend who's willing to cheat the system. All sales require a level of trust between buyer and seller.

I repeat, I've done several thousand dollars of trade through this forum and the OTC IRC, I don't intend to scam anybody.

If every bidder so far agrees to a refund (I'm pretty sure I know who two of the bidders are), I will quite happily end and cancel the auction as I don't think my commercial experiment has worked how I wanted it to. If any of them don't agree then I can't really do it because it wouldn't be fair.

No, it is not even close to the same.  On Ebay if you did that you do not get to keep profits from the loosing bids.  While there is an incentive to try to get a higher price on ebay there is a pitfall of 'wining' your own auction and getting NO money.  Also ebay is now better at punishing shill bidders by detecting and closing BOTH accounts. 

If you place fake bids on your own penny auction you get to keep all of the other real bidders money.

Fair point.

If you can think of a way to secure it so that I can prove that I'm not doing this, I'd be open to trying it. I'm not trying to scam anyone, I don't want to scam anyone. I like to think I have a pretty positive reputation here and I don't want to damage it.

You've already damaged it. PAY TO BID AUCTIONS ARE A KNOWN SCAM.

You can protest as much as you want, as long as you are running a KNOWN SCAM you are a scammer. Shut it down and give anyone who bid double their money back (would be very little at this point), then maybe you will have some credibility.

Very simple, run a fair and open auction where one does not have to pay to bid.

Other than that you have an extremely negative reputation based on trying this scam.

I don't think he's trying to scam anyone. It's a pretty simple idea that involves a card and people throwing a few BTC until everyone forgets about it, resulting in a winner. In my opinion, it's relative to the "hand on the car" game, if you're the type to suggest that time >= money.

Regardless of the fact that it *could* go on forever, it's still a chance at getting the card if people slip up and forget to check how much time's left. I personally think that the game is flawed in the sense that it resets for 24 full hours, otherwise I would give it a shot.

I'd agree with Smalleyster, penny auctions fill every aspect of a scam. They are even illegal in some countries.

Only with bitcoins, you don't even need proxies or dummy accounts.
Just keep padding the price with your own money while waiting for suckers to send in theirs.

Due to the sheer amount of controversy this has caused, I've decided to shut it down.

I don't think that penny auctions are a scam, but I do accept that there are far too many ways for me to have deceived people in the way this one was operated.

I thought long and hard about refunds and how best to do them, the doubling each refund above was appealing, but it didn't allow me to give out the 11 BTC which was what the winner had been promised.

I'm going to refund every bidder except the most recent with 0.25 BTC, and send the winnings of 11 BTC to the most recent bidder (1AQDgdT6Jmu642wVCF8ayPfdKfNghnfLzA). This means that the most recent winner will be paid 11 BTC, the rest will get their bids back and my losses are capped at 11 BTC.

BlockExplorer links for refunds:
Bidder 1 - Link (http://blockexplorer.com/tx/291d75578f432a9fc1a8abe0b91b00e903bab2604263e302683b2ef6bd7f0c5e)
Bidder 2 - Link (http://blockexplorer.com/tx/46b68a3645d1aa7046673238c57774d5ba97637c1f2d27ef77656a791ea3e9b8)
Bidder 3 - Link (http://blockexplorer.com/tx/5fda3e5248d469e71cb9585432af05797c7ea3554dabb3a9c83db53d5a1f6087)
Bidder 4 - Link (http://blockexplorer.com/tx/9ae0efe407d2bc351c40a6e1ffff2f5cf2160e39c2ca437319fb48ea45acf168)
Bidder 5 - Link (http://blockexplorer.com/tx/6ea835a7c67826824d9443815687dec66317d16fed435d59d666aec28186e44a)
Bidder 6 - Link (http://blockexplorer.com/tx/3e44924192cf72214784ac20f166e9bf68545a2b9b9bc348c091bc2d675e9964)
Winner - Later

This has been a learning experience and although I'm down 11 BTC, I think I've gained some knowledge about the reaction of the forum to penny auctions, some of the weaknesses in it which are very hard to do securely, and how to better trade in future. For this, I think it's a fair price to pay.

Hopefully it will also show that I'm not a cheap profiteer and I'm not going to abuse the Bitcoin community which I enjoy being a part of. I was just trying a new commercial model and the resounding reply was that it doesn't work

If the winner wants the Radeon 5830, they can send me 12 BTC back (as originally said) to cover shipping anywhere in the world, and I'll send it to them.

Anyone else think this is a scam???


Now many people around here starts calling things they don't like a scam.

Bidding-fee auction is NOT a scam. It is just a model of gambling.
But the business is prone to abuse from the guy who runs it. In most cases, this is very hard to verify by bidders. So, it is possible that it MAY be scam, depending on how it's run and the guy who runs it.

Still think it's a scam?
Ok... Um... Buying Bitcoins with Paypal? SCAM!!! SCAMMER!! GTFO!

.....Hell No! Buying Bitcoins with Paypal  <--- NOT scam
Buying Bitcoins with Paypal and file chargeback after receiving Bitcoin <--- SCAM


For this thread and this auction, making the bidders anonymous will make the whole thing more prone to be scammed. However, I saw the OP in the community for quite a long time, and is certain to some point that he won't scam. I was preparing to come and make a bid after about 10+ bids, for the competition to sorta 'died out' or given up. Too bad it got canceled. If the auction require each bidder to show themselves in the thread AND have bidding requirement of 20+ posts to make a bid, perhaps it won't stir such controversy.

Kudos to the OP for refunding everything AND also give away the big prize. It's quite a loss.

People, you can sorta see your reflections when you see people who just learn about Bitcoin coming to this forum and call Bitcoin a big scam.

Disappointed the big prize wasn't split among the bidders but I threw in my quarter coin and got it back more than I expected to be honest.

You did good sir!

Thank you.

He did the "right" thing. Will the "winner" be as kind?

I don't mind what the winner does. If he wants the Radeon he'll have to tell me who he is. :P


Sorry about that. It was one option but I figured by offering it all at once I wasn't lying about the auction as the winner still got to 'win', by refunding everyone else I made sure they didn't lose anything.


I take most of your points, but illegality shouldn't be a measure of legitimacy. Lotteries and sports betting are illegal in many countries, but they aren't a scam. They make the business running them a profit, but so do most services and products, so that's not a measure of a scam.


Thanks for the support, of course you're right, there's no way I'd scam people especially for 11 BTC, but it's easy to see why people could think it's a scam. Unfortunately the model is very hard to verify and doesn't seem to be overly popular here. I was trying to find something worth offering to the community and this doesn't seem to be it.

Thanks everyone who participated, everyone who criticised and everyone who supported me. Hopefully this can be a good learning experience for all of us.

I love how the people not willing to fork up any money are the ones who cry about this, not thoese actually involved.

Oh and to the guy who said that pay to bid auctions are a scam. So the Xbox360 with Kinect I got for under $20 usd is a figment of my imagination? I bet that $3 lightsaber also dosent exist. Pay to bid auctions are a good thing, if you are into them. Your logic equates to that of someone crying over a lost bet at a casino. You have no promise of any return and the rules are laid out pain and simple. A regular auction works the same way, but the price gets inflated by bids that people have no intention of honoring and a relived when they get overtaken. If your worried about this sort of thing, then maybe Bitcoin isnt for you.

Fact of the matter, Reikoku is a pillar of this community. His mining contracts and other public dealings have been a part of this forum for as long as I can recall. I have not once heard of any negitive feedback, or any reason to doubt his intentions. Anyone who stumbles across this topic should know that about Reikoku and not let this form negitive opponion about him.
Good luck to you.

The biggest issue about your penny auction is:
the seller can "cheat" to prolong the auction indefinitely.

Now that I know you probably aren't doing it, but there's no way for others to know.
Anyways, good decision to end this.

Thanks for the support Shakaru, yeah I won an iPhone 4 for 4 euros and a 0.35 final bid so I'm not against these at all either. It's a bit of a gamble, but ultimately as long as the seller is clear at the outset, and the buyers understand how it works, I don't think it's a bad thing.

Ultimately the community has spoken, and I can understand their fears. Reputation alone doesn't prove anything, just look at FoodStamp. I think the only way to make this work would be through a signup-based site and on faster timers, and that would require far more users to know about it and be interested in it than currently are.