You're wrong on your fiat exposure definitions.

Most mining operations usually have massive fiat exposure.  Right now that's not the case - due to scarcity of ASIC supply - but as soon as supply catches up with demand mining investments become effectively fiat-denominated.  I'll let a few people claim that's not the case before I explain (again) why mining bonds/shares are effectively fiat-denominated (hint: consider how you'd value a new mining secuirty.  Now consider how you'd value an existing one with same hardware.  Now look at how that value varies with exchange-rate).

S.DICE isn't massively exposed to fiat - it's only exposed to whatever extent you believe volume of bets declines when BTC rises in price.  The jury's still out on what evidence there is for that being signifiant.

ZigGap (in your list) was a scam and collapsed a few months back (it only lasted a few weeks before issuer vanished).  As such it no longer has any fiat exposure - as its value remains at zero no matter what happens with the exchange-rate.

Some recent change seems to have changed something so that if you have graphs disabled you can't access any tabs other than the trade one for securities.  e.g. you can't look at trade history, options etc.  It was fine until maybe a week ago - then broke.  If I re-enable graphs then all tabs work - if I disable graphs then it stops working again.

WEEKLY REPORT




Another week of small growth has passed (2.38% growth - with an estimated 1.42% being from trading and remainder from a small drop in the LTC/BTC exchange-rate).  OP of the thread has been updated with all results to date (I only update that every few weeks).

NEW SECURITY - LTC-ATF.BFIN

The contract for this is now up - however I haven't completed the thread for it or unlocked it for moderator approval.  The reason for this is primarily that there are some question-marks over the current status of MtGox.  The security is intended to be a USD-denominated security initially investing solely in loans for margin-trading on Bitfinex.  Bitfinex hold significant reserves on MtGox - and I'm not comfortable releasing the security until I have confidence investors face no significant immediate risk resulting from exposure to MtGox.

In addition to the above, Bitfinex have recently (in the past week) announced that they will be supporting LTC.  That's great news for us (aside from the benefit to LTC in general it potentially makes moving funds in and out of their cheaper) but will require some minor amendments to the contract.  I'm holding off on those changes to see whether they're adding BTC/LTC and/or LTC/USD trading.

Hopefully we'll be able to proceed with launch this week - but no promises on that.


S.DICE

You may have noticed that we hold a significant quantity of S.DICE - and at a significantly lower price each than last week.  I trade regularly trade S.DICE - with buy orders up to catch sells from the regular panic sells/in desperate need of cash people.  Those happen every month - usually in the middle of the month.  This month there was actually a good reason for selling (though not necessarily at the prices sold at) - S.DICE are making a token effort to prevent US customers using their service.   It's only a token effort (those with US IP addresses can't bet via their website) and won't stop anyone who wants to bet (they can bet directly by sending to a BTC address as before).  It will, however, reduce volume somewhat by deterring (very) casual bettors.

The value in the spreadsheet reflects current market trading range - my expectation is that will rise slightly from there but I have to value based on the market not on my own guesses.  I'm not, however, looking to panic sell those shares.

ODDS AND ENDS

Bid at 46 (the buy-back at 2% over NAV/U has ended - noone sold back)
No management fee this week - we're back over the previous HWM but not by enough for me to claim a unit.

Your very first question is where you're going wrong.

"Repay" what?  What did they pay him that needs to be repaid?

The whole point of what he did is to show that ripple BTC ious are worth nothing - and so he can give them away for free.  If someone wants him to "repay" the NOTHING they paid for the IOUs in the first place then I'm sure he will.

If you mean he wasn't able to redeem the IOUs then the you're also wrong - for at least two reasons:

1.  He COULD pay off all the IOUs with 1 real BTC if he wanted to - he HAS enough funds.  So your wording is wrong anyway.
2   What was the agreed means of repayment and the time at which it was to be made?  There isn't any - so debating whether he can (or will) do something that isn't defined or agreed is meaningless.

You're confusing a worthless IOU with a contractual obligation to repay a debt.  Ripple allows issuing both of those types of paper - and treats them the same (and allows them to be swapped for one another) - which is the issue being highlighted.

I'm tempted to offer to pay off his debt to close this matter - obviously I'd pay it off with ripple IOUs

Yes.

You CAN'T have it on your account - all you can have in your account are XRPs and IOUs.

You just issue them - no contracts, no need to have any BTC, no need to be owed anythig yourself.  Only two requirements to issue ANY amount of debt:

1.  You have some XRPs
2.  The person you're issuing to has unused trust towards you at least equal to the amount of debt you're creating.

Make an alt account, trust your main account for a billion BTC and you can send a billion BTC to it.  That simple.  And if someone else trusts you AND a gateway then those 1 billion BTC can be exchanged for ones issued by the gateway (up to the lower of their trust to you and their trust to the gateway).  As far as ripple is concerned they're all just BTC with equal value (to anyone who trusts both issuers).

It's actually NOT the same thing.

If I ask someone to give me their private key and they do, noone else can do anything to harm them unless I give away the key.
If I ask someone to trust me for 100 BTC on ripple and they do then other people can cause them financial loss WITHOUT me doing anything.

The difference is down to a flaw in how ripple is implemented - that it values all IOUs based purely on face-value.  So 1 BTC issued by a gateway that will redeem immediately is treated as having the same value as a BTC issued by a penniless bum with a track-record of scamming, failing to meet promises and zero assets (a large chunk of the forum membership falls in this group).  Or, as in this case, the same value as a BTC issued by someone trying to prove just how bad that system is - with no promise or intent of ever redeeming it.

Issuing the BTC did no harm - where harm occurred was from the requirement to extend 100 BTC of trust in return for receiving 1 BTC of worthless IOU.  But seriously - anyone dumb enough to do that DESERVES to suffer loss as an example to the rest of the community.

If I said I'd give you an IOU for $1 in return for being allowed to use your $100 overdraft facility at your bank would you accept?  If not, why would you accept the same offer made on ripple?  Because that's basically what the deal was - just most people accepting it didn't have a usable overdraft facility so were immune to harm.

Debt is something that you owe - a claim someone else has against you.  Not all debts are created with the intention of being repaid (e.g. loans that are made for tax reasons without either party to the loan having an intention of there ever being a repayment).  Perpetual bonds are another example of debt that will never be repaid (talking RL ones not the pretend mining ones on here).  The bond issuer borrows money that will never be repaid - paying interest (a dividend) on it regularly.  The only way to get your cash back is to sell it to someone else.

That's why debt/IOUs with no agreed terms is worthless.

Maybe an example will help - for the examples below the assumption to be made is that I WILL honour any commitments I made (in practice all debt should be discounted in value based on your confidence that I'd repay):

If I said I'd owe you 20 BTCs to be settled in a week in return for 10 BTCs from you now then (IF you had total trust in me) you could reasonably value those 20 ripple BTCs at similar value to 20 actual BTCs.

If I said I'd owe you 20 BTCs to be settled in 5 years in return for 10 BTCs from you now then (IF you had total trust in me) you would STILL have to value them at a lot less than 20 actual BTCs (as they'd generate no revenue in the meantime and were illiquid).

In ripple BTCs of each of the above scenarios are treated as being interchangeable (whether its 2 sets from same issuer or from 2 different issuers) - despite the fact they have very different actual value.

Now consider a third scenario (equivalent to perpetual bonds):

I say that if you give me 10 BTC now I'll owe you 10 BTC on ripple.  I will never repay those BTC but on the first of each month I'll send 0.01 BTC for each BTC owed to whoever currently holds them.  Again - to ripple those are just BTC - and swappable with anyone else's BTC (provided someone trusts both me and the other issuer).  These BTC may have more or less value than the other ones - depending on how people value 1% interest/month against liquidity.  But I'll never repay them - and am NOT a scammer for issuing them.

Now the final case.  I say if you give me 10 BTC now I'll owe you 20 BTC on ripple but will only ever repay them if I win the lottery.  What are those BTC worth?  Nearly nothing (even ignoring the fact that I don't play the lottery).

Do you see how the value of a debt/IOU is defined by the TERMS that apply to it - not by its face value?  But ripple treats them all based on face value.

TF's ones were pretty much explicitly worthless.  In the absence of terms the only way to reasonably assess value of something is to look at what consideration was given in return for them - and assume a similar value.  Nothing was given - so their value is gong to be around zero.

You're not thinking it through far enough.  For one thing, before we can distinguish between the two sample responses you give we need a defined point in time at which the IOU issuer is obliged to give a response at all (a settlement date).

IOUs (taken as meaning any acknowledgement of debt) don't necessarily EVER have to be redeemed.  For example perpetual bonds are never intended to be redeemed - yet are debt.  And on ripple, IOUs can be created for, as an example, shares.  Are those scams because the issuer has no intention of ever redeeming them?

Now IF there were some definition of what minimum liquidity (or maximum time before redemption) had to be provided to be allowed to issue a BTC IOU then we'd be having a very different discussion.  But no such definition exists.  So issuing IOUs with no intention ever to settle is allowed (as opposed to just not prevented) - which is, of course, why noone should grant trust to anyone without making an agreement outside of ripple on the terms for settlement (do even ripple gateways actually provide a guaranteed time-scale for redemption of their IOUs on request?).

Maybe ripple should add a popup when someone tries to extend trust - refusing to do so unless the user ticks a box saying "I have agreed to this issuer's policy on redeeming their IOUs in general and, if applicable, this one in particular".

At what point has be broken his promise?

If you borrow 1 BTC from me without agreeing any terms of repayment are you a scammer IMMEDIATELY (as you haven't repaid it?) How about in a week's time?  Or a month?  A year?

An IOU can NOT be defaulted on (other than by the issuer stating that they default) unless a means/time-scale for settlement was agreed.

If you disgaree then answer this simple question:  if you receive 1 TF BTC on ripple at what date/time has be defaulted if he hasn't yet redeemed it?

If your claim is that ALL ripple BTC debts should be IMMEDIATELY redeemable for actual BTC then that has some very nasty logistical issues - not least of which being that if you borrow on ripple (i.e. issue an IOU in return for real BTC) you can't actually spend those BTC without being immediately a scammer as you can no longer redeem them on request.  If, on the other hand, your claim is NOT that all IOUs should be immediately redeemable on request then we're back to asking how/when is the agreed redemption of these TF IOUs?

That's ONE of the flaws this little experiment has addressed - that IOUs with no terms are inherently worthless as they can only ever be redeemed if the issuer of the IOUs voluntarily chooses to do so (there's no clearly defined point at which a 'default' can be declared).  Another flaw shown here (which I pointed out and asked about ages back - but it got ignored despite Ripple team answering easy questions in same thread) is that all IOUs are treated equally - just because I issue trust to A and B does NOT mean I value IOUs from them equally or am fine with IOUs from one being swapped to IOUs from the other without any input from myself.

Well if you want to compare then you have to take into account delivery dates.

The blades would arrive within a week.  When will the Avalons arrive?  How much will each GHz of blade hash-power mine in the interim?  Without that data a comparison is meaningless: using your logic you could compare to BFLs (which would work out far cheaper on paper - but ONLY exist on paper).

Only thing you can easily do a fair comparison is other batch 3 Avalon securities - as those are likely to arrive around same time and have same hashpower and reliability.

Just to update with current values:

Exchange-rate .0265 (it's a bit volatile right now but in that area)
Adjusted NAV/U : 46.423 (adjusted as we're back over the old HWM)

Bid at : 47.35 (still 2% over NAV/U due to buyback offer following contract change)

WEEKLY REPORT

The spreadsheet below represents the holdings (and exchange-rate) as of Sunday evening - when I usually produce reports.  I was tempted not to do one this week gaving failed to post it on Sunday (by contract I only need to produce them every 2 weeks anyway) but have decided to post it late - so as to make my results spreadsheet nice and easy (with each row representing 1 week).

Will post a current NAV/U in a seperate post afterwards.




Results were slightly better this week than last - taking us almost back to the previous HWM.  In part that was due to LTC falling vs BTC, with the remainder down to a bit better trading performance (actual trading profits were similar - but with a smaller capital base it represents a larger percentage growth).

Our new security is now up - it's not quite ready for moderator approval (it needs admin unlock first and I also need to make a forum post for it explaining some of the contract detail).  At present it's essentially a USD-denominated fund that will loan to margin traders on BitFinex.  The contract is, however, written to allow addition of additional USD-denominated investments as/when suitable ones are found.  The contract is also written to allow dual-listing on multiple exchanges (BTC.CO being the next) - allowing one pool of capital to be split between IPOs on different exchanges.

The security has very low risk for LTC-ATF.  The funds belonging to the new asset will be segregated in a seperate account and are NOT guaranteed nor do they have any claim on LTC-ATF's other assets.  The only risk for LTC-ATF is brief exposure to exchange-rates.  That exposure is VERY brief - for the period of time between USD being transferred between wallets on BitFinex until a sell order into BTC is processed (also on Bitfinex).  LTC-ATF will get 10% of profits made - with the main contribution LTC-ATF makes being provision of rapid currency movement between BTC and LTC (LTC-ATF can provide that as it already has cash sitting on BTC-E).  That removes/reduces the new security's exposure to exchange-rates (which would otherwise be high - due to withdrawals from LTC-Global AND BitFinex being manual and slow) whilst using capital that we already have (the cash we have on BTC-E serves to fill any sudden needs and to allow rebalancing of our funds as the exchange-rate moves).

At present the 150 LTC for registering the new security is listed as a ticker asset (as we did with the pass-throughs) but I anticipate that being refunded (we've been running profitably for over 6 months which allows us free listings).

In the morning I'll go over the contract again to check for typos etc (something I didn't actually bother doing on the other contracts - which shows) then get a forum thread up and see about getting it unlocked for moderator approval.  If you have questions about the contract I'd suggest hanging on until I've made the thread - some bits of the contract may not make too much sense without an explanation (it's hopefully obvious what the contract says - but maybe not so clear why I've written specific terms in).

With LTC slowly falling vs BTC at the moment I'm not going to make another dividend payment yet (if it stops falling for a while - or we make significant profits - then I'd be looking at dividending out a further 10 LTC per share).  I'm also going to stop selling bonds at the 250 BTC mark.  My intention, once it's confirmed we're entitled to free listings, is to launch a new bond on BTC.CO at a LOWER rate of interest and issue further/replacement bonds there if needed.  Without the listing fee, BTC.CO would work better for the bonds - I could leave up bids/asks for one thing - and if we can cut the rate a bit then even better (I'd be looking at 0.05% per day - if the bonds were on BTC.CO I could schedule dividends in advance which I can't do on LTC-Global due to having to take exchange-rate into account).  I would NOT be looking to do a forced recall on the current bond - that would be acting in bad faith (especially to anyoe who bought at over face value), so those would stay outstanding until they were sold back at face-value.

Sent 0.3 BTC to address in your signature.

I tried out your CryptoCoin alerts app and it has a use for me, so no need for any interest on the loan.

Loan can be returned to 1CHZYKZrEhvSHHLzGJAZnzbGtypsoRqTMx whenever you're done with it - drop me a PM when you repay if you want me to confirm you repaid in case I don't notice the repayment.

Your mistake is not treating BTC as a currency - that simple.

If buy some euros for $100 then a month later sell them for $75 I've made a $25 loss - even though I had same number of euros.
If I buy some BTC for $100 then a month later sell them for $75 I've made a $25 loss - even though I had same number of BTC.
If I buy some USD for 100 BTC then a month later sell them for 75 BTC then I've made a 25 BTC loss - even though I had same number of USD.
If i trade 10 oz of silver for some USD then a month later trade those USD back for 7.5 oz of silver then I've lost 2.5 oz of silver - even though I had same number of USD.

For some strange reason you see the third case as somehow different to the first two (and I've no idea how you see the fourth) - maybe because YOU value everything in USD/euros.  Profit/Loss is measured in the currency you invest - not some arbitrary currency that your investments may be valued in elsewhere.

If I invest USD into something priced in USD then I expect profit/loss to be measured in USD.  If I invest BTC into something priced in BTC then I expect profit/loss to be measured in BTC.

Exception to that is where the investment is explicitly denominated in a currency other than the one it's transacted in.  Examples of that being my LTC-ATF.B1 (transacted in LTC but with a face value in BTC) and Esecurity (which is traded in both LTC/BTC but has a face value set in USD).

Where the dishonesty creeps in is where asset issuers sell things which SHOULD plainly be denominated in USD (assets and income being in USD) but then set a fixed price in BTC/LTC to try to pretend it's a BTC/LTC investment.  That type of asset should set their price/face value in USD, do all accounting in USD and report profit/loss in USD.  They should also make plain to potential investors that their investment is a SHORT on BTC/LTC.  But they don't do that because of some mix of ignorance (some falsely believe their security IS BTC-denominated when in practical terms it isn't - see most FMBs) and deceit (they know they wouldn't get so much investment if they were honest from the start about investors making a BTC-denominated loss if BTC rises).

PM funds in general SHOULD be valued in BTC/LTC - as they're explicit in being a bet that PM value will rise faster than BTC/LTC (they have other uses which are an extension of that).  So the value of the fund in BTC/LTC IS what matters - as that's what investors CHOSE to bet on when they invested and is the number they're interested in.

Actually it makes sense to be reporting in BTC.

I don't know what all of the securities invested in are, but disclosed ones are namworld's BTC-BOND and my LTC-ATB.B1.  Both of those have a fixed face value in BTC, pay fixed interest/dividends based on that face value and are redeemable at (or very near) face value.

The startup loan is also fixed in BTC - so a large part of assets and all liabilities are genuinely fixed price in BTC.  Only major element that isn't is the silver - and it makes sense to value that in BTC as well given that one of the purposes of the security is to invest BTC into silver.  And obviously all elements need to be valued in same currency - or it becomes a pain working out what portion of share price is what.

Valuing in USD is either for assets that have a face value in USD or for ones that pretended to be priced in a crypto-currency but are now accounting in fiat so their losses are disguised.

Nice clear accounts by the way Cusdog.

Would have thought providing the address linked to the ASIC-MINER shares (to prove you have them) and signing a message with the address (to prove it's yours) would be fine.

I tend to agree that having an escrow is pretty pointless - if people don't trust you at all then they should just not buy your shares.  Proving you actually have ASICMINER shares (rather than just promising to buy some - as was initially the case) was the more serious issue in my view : pass-throughs should own the underlying assets before selling them on.

I think you still need to address the issue raised - that you were trying to sell shares in the pass-through without owning any shares of ASICMINER.  If that's been resolved then you need to amend your contract to reflect the change.  Last update you gave here was that you were looking for an escrow - if one was found that it could be a good idea to say so (and have them confirm it).

As far as I can tell that's the only stated reason why anyone hasn't voted yes - so maybe if you address it you'll get the votes you need.

Answered in my post you quoted - "The amount of time taken has little impact (unless reduced so far that propagation time begins to become a significant percentage of total time between blocks). "

It's the bit in brackets you need to look at.  With stupidly fast block times you hit the point where block propagation time (the time between a valid block being found and most miners on the network having it) becomes significant - and miners end up constantly building competing chains and finding orphans.  That makes a 51% type attack easier - as you no longer need a majority of hashing power due to the total inefficiency of miners trying to work on the 'real' chain (attacker has no such inefficiency as their replacement block-chain is build up offline before all being released at once).  There's also issues with very fast block times and pools.

The period during which miners work on outdated chains needs to be kept to a small percentage of average block time basically.  Which is fine on LTC but not fine with 1 second block times.

That is totally and utterly incorrect.

6 Litecoin confirmations are approximately as secure as 6 Bitcoin ones.  The amount of time taken has little impact (unless reduced so far that propagation time begins to become a significant percentage of total time between blocks). 

If I flip 2 coins then the chance of 2 heads in a row is 25% whether it takes me a second per flip or an hour per flip.  It's very similar with finding blocks - the likelihood of any individual miner finding a block is dependent on the percentage of total hashpower they own.  Someone with 51% of hashpower will find just over half of all blocks regardless of whether it takes 1 minute or 1 hour on average to find a block.  Their chance of successfully starting a 51% attack from any given point will be near enough identical on LTC/BTC - where they have a slight advantage on LTC is that they can make more tries in the same amount of time (but that has nowhere near the impact you indicated).

The fallacy you stated is one widely assumed to be true by those with little grasp of math (or a flawed understanding of how block generation works).  It IS, however, a fallacy - lots of semi-numerate people failing at math doesn't make their incorrect answers right.

If you want to understand in detail how you're wrong then Meni Rosenfeld (apologies if I got his name wrong) did a proper analysis of it somewhere.