If not, the moderators don't take kindly to exhortations to violence on the forums.

This sounds like a good deal for a low-risk USD-pegged loan. It's exciting to see the loan market heating up

Have you considered trying to arrange some long-term OTC call options with MPOE or other willing option writer?

I too think this is a fairly hopeless exercise, except for the principle of it. But it'll be an expensive principle to pursue, and I doubt most people will want to.

I'd prefer it if the Uncle Vinny suggestions were left off the thread, though. I know people are joking, but suggestions of physical violence (or harassment) just lower the level of discussion, and give detractors more shit to be taken out of context about the "lawless" bitcoin community.

Congratulations! Does the lender want to remain anonymous? There aren't that many people around here that can handle loans that big.

Also, do you plan to sell the coins on MtGox or arrange a private sale without moving the market? When trading large amounts, I typically try to find someone in #bitcoin-otc, first because it can potentially be slippage-free, but also because it's just a more subtle way of doing things (and I love to be subtle). Since I'm overall long bitcoins, I'd prefer not to do much to lower the MtGox price where possible

That's great! I'm confused by the volume view though. I've seen it go from 4 to 2 to 4 to 75 to 10 to 1 in a sequence of refreshes. Is it a 5-minute snapshot of the volume or something? It'd be nice to get historical volume. Perhaps we should bug nefario

How does this work? I see 565 asks at 0.6 but it says 10000 shares (bonds?) issued, too. Does that mean the issued bonds have all been sold and there have been four exchanged after the 10000 were sold?

Edit: I guess that means that of the 10000 issued, 565 are still for sale at the initial price.
Edit 2: Wow, those went pretty quickly

Wage garnishment, liens on his property (a car?), etc.

In most places, having no money is no excuse for taking someone's money and not paying it back.

All I gotta say is om nom nom. I can't wait until my box arrives

I think for now we only have the payment as of the end of last month.

"Security questions" are often the weak point of many authentication systems. If indeed all it takes (I don't use GLBSE) is to know your birth city, that is clearly insufficient security. Ask about first pet names if you must have security questions at all, but leave biographical data that can be scraped from facebook out of it.

Due to some outstanding open questions about aspects of the contract (preventing fraud, etc.), I'm putting the auction and sale of these CDS on hold until I can resolve them. It turns out that getting the details right in this setting is a lot more difficult than it might be in the "real world".

Sorry for getting people's hopes up! I'd like this to work, so I'll be thinking hard about how to resolve the problems and will post an update once I have more to say.

Hey, I can play hardball too. I offer $68, and that's my last (and first) offer!

Sorry for the delay on more detailed terms of default. There are some tricky bits I'm still working out, but I'll have them up soon.

Also, about people's requests for pirateat40 CDSes, I've decided against offering them. This is not because I don't have faith in him (I'm one of his largest lenders), but because it simply isn't in my interest to offer them. Selling CDSes on him carries the same risk as a direct loan to him, but necessarily earns less in fees than the interest that could be made in a direct loan (and there's not a good notion of risk-free rate for doing other things with the coins you get by not lending). Note that this isn't always the case, especially when it's hard for people to lend to pirateat40, either because they don't have an account with him or because he doesn't have the capacity to accept their coins.

You're going to want to backtest/simulate it on historical data too. Not to make sure it makes you lots of money, as past performance has little bearing on future behavior, but simply to make sure it doesn't do anything ridiculously stupid and is behaving as you'd expect.

If you don't have data or know how to simulate the bot outside of the real market, you probably shouldn't be doing this.

I'll take one pack of the tastiest kind! I think that's B, isn't it?

I'm sorry this is stressful for you, and I'm sure you're having a hard time, but if you accept a load of money from a bunch of people, lose it, then make up lies about losing it to try to delay them finding out, you should expect some stress.

I hope things get resolved for you and all your lenders, but it's harder to have sympathy when we find out about you taking out more loans behind your existing defaulted lenders' backs and the like.

That's certainly an issue to keep in mind. By buying a CDS, you're not actually killing your risk as much as diversifying your exposure. Most people don't like to have a portfolio with only one security in it, because "all your eggs are in one basket". Similarly, if your entire risk exposure is from one borrower, that should make most people uncomfortable. By buying a CDS from someone (e.g., me), you're spreading your risk exposure across multiple people: if you own 1000 coins of debt from imsaguy and buy 500 coins of protection from me, you're now 50/50 exposed to me and imsaguy. Assuming imsaguy and I are uncorrelated (e.g., he isn't my brother or my partner in crime), other things equal, you're safer this way (and are paying me for the reduced risk).

Risk evaluation is a really hairy topic and there are entire departments at most financial institutions dedicated to measuring it and making sure people don't do stupid things. Things like (co)variance and correlation exist as imperfect measures of it, but their degree of imperfection can't really be known until it's too late Risky business!

Yeah, I know, but given how most defaults have happened so far in the lending community, recovery is usually unlikely, and it might simplify things to just make binary CDSes. They're less common in the "real world" due to the pervasive presence of a strong legal system, but I'd imagine they'll be the norm around here.

I also think it's important to distinguish between two meanings of naked CDSes:

• The buyer of the CDS does not own the debt in question, so he is either speculating (betting) on the default or hedging other risks that are assumed to be correlated with the reference entity's default. This is the common definition of a naked CDS, as far as I understand it.
• The seller of the CDS does not have the coins he is liable for, so at best he is gambling on the bitcoin exchange rate (to move more funds into bitcoin if he needs to pay out) and at worst he is simply incapable of ever paying his full liabilities if shit hits the fan. As I mentioned earlier, in theory if you can assume that the probabilities of your loans defaulting are completely uncorrelated, it might make sense to be liable for more money than you have, but in general that's a very risky path to go down, especially when everything in this community is so risky and most people do not have experience with assessing risk.

I consider the second meaning of naked CDS (not a standard one, as far as I know) to be a lot scarier than the first one, and would suggest actively discouraging people from doing that by requiring proof of funds. I wouldn't go as far as using an escrow for the coins, because that would kill part of the incentive to actually write CDSes in the first place (they mean you can get paid interest, like a loan, for coins you own, but you can also use the coins in the mean time; have your cake and eat it too!), but CDS writers should be able to prove that they are not only in a financial situation to cover their liabilities, but that they are also responsible and won't take undue risks with the money in question. Perhaps a monthly statement (signed, using that bitcoin client feature for proving address ownership?) showing where the coins are would be enough.

Anyway, thanks for your input. You seem to know what you're talking about, so I'd appreciate any other comments you have on these contracts. There are a number of unique features about the bitcoin credit market that make it hard to blindly apply CDS terms from elsewhere to it, but I think that if we can come up with common features that we'd like to see in them, and possibly even standardize on them, we might eventually see a real market for these things.

Sure thing!