That would be true if and only if the investment will cause all investors to lose money. Here, the issuer is betting that the difficulty will change at a rate that will cause him to have a net positive return. Investors are betting that the difficulty will change at a rate that will cause THEM to have a net positive return. As long as neither is absolutely assured (and it's not), the bet is fair and it's up to the market to determine the appropriate price based on risk. If nobody thinks the issue price is fair, nobody will buy at IPO.

There's a lot of FUD about these. Transparency is the only remedy. But arm waving and hyperbole is not actual transparency.

I'll just put this here to get it out of the way.

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CSS changes! AHHH! Fontsize different from what I'm used to! Worst thing ever! Unusable! I hate change! AHHHHHHHHHH! (*thud* sounds as people hit the floor due to aneurysms)
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The comment on the "no" vote in question is: "This asset in almost guaranteed to be a loser for investors. Priced too high for the risk. Probably should wait until the equipment has shipped, then reapply."
(The emphasis is mine.)

Given the statement that the voter believes it's too high for the risk, they obviously believe there is a potential for profit, or they would have omitted that part entirely - their own value judgment has them believing that the security is not worthy of their own investment because the risk to the investor comes from the delivery timeframe of the hardware, not in the ability of the issuer to perform. If the voter believes there is a potential for profit, then the first sentence is a statement on the risk/reward proposition, and not on the fact that there is no chance for profit like you're making it out to be. The last sentence solidifies the idea even more: They encourage the issuer to reapply later - not because the believe the issuer is unable to execute on the contract, but because the subjective risk assessment makes them believe the security will not start returning a profit to investors in the timeframe they believe will provide a suitable return. Clearly, the voter is basing the decision on their own personal risk/reward calculations, not on "does this have zero chance of profit, and thus should be considered a sham?"

I must assume you think I'm being obtuse, and so you're returning the favor by trying to be cute/coy/whatever. I am not. I've hopefully made myself more clear with my last statement.

That's not at all what I said. At the risk of repeating myself too many times, the vote in question was based on the subjective application of *value*, which should not be the case in voting for securities for approval on any exchange, (unless the exchange fancies themselves to be NYSE back in the mid 20th century when the name of the exchange influenced investors' willingness to buy a stock, and therefore correlated directly with market capitalization/value of the securities). Value is determined by the market; suitability for the exchange, based on the reasons I've stated earlier, should be the only thing the voters determine. I see no logical conflict with my position when that difference is understood. I'm open to correction, though - if the argument is based on what I actually said: Voting for approval to be listed on any exchange shouldn't be based on risk/reward assessments; they should be made on suitability to the exchange and to weed out obvious shams, scams, pyramids, etc. A potential loss is not in itself a sham investment, but a guaranteed loss is.

Careful, your defensiveness is showing.

I don't know where you got the enforcement idea, but I think it's very overstated. Guidelines != rules, they're suggestions akin to "keep this in mind when voting, as the purpose of the vote is to (insert guidelines here)". Kinda like just giving voters a reminder, "hey, please don't ruin this for everyone else just because you're feeling stingy today."

The first part of that is most of my point - it may not be an investment that's attractive to you, but that's not a reason enough to prevent others from taking the risk.

That's EXACTLY what I meant by "good for the exchange" - if it's never going to be profitable for investors under any circumstances, that's a bad faith issuer, and that's not good for the exchange, as the risk of loss is pretty much guaranteed except to those who can convince someone else to hold the bag, and the exchange will start to be seen as a haven for scams and pyramid schemes. But if the security is something that's not personally attractive to a voter but that still could be profitable to investors, the fact that it's not personally attractive to the voter isn't itself a good reason to vote "no". Think about a speculative venture that is not backed by guaranteed assets at the time of issuance - like starting a literal real-world goldmine. If there is gold in the ground, it could succeed, but if there is no gold in the ground, it would certainly fail. You can't know until you start digging, so the contract cannot possibly guarantee a return on investment of any kind. It's a classic high risk/high reward scenario. If the issuer has a reasonable track record of profitably running goldmines, one's personal feeling about their own willingness to invest should not impact their vote on whether the security should be issued - the vote should be based on the reputation of the issuer, the clarity and terms of the contract, and the voter's opinion on whether or not the contract could reasonably be executed. It should NOT be based on the personal risk assessment of the voter, as it's up to the individual investor to assume risk. The goal of an exchange should not be to guarantee returns - it should be to provide a place for issuers and investors to meet, and to screen out obviously bad issuers from the system to protect the reputation of the exchange - not to protect the investors from their own informed decisions. A lack of return does not necessarily mean the issuer is bad - it could simply mean there was no gold in the ground after all, despite the good faith belief of the issuer.

I see voting as a safeguard against outright scams and immature/incapable issuers - not as a safeguard against what might be considered "risky" investments. A well informed market will price risk appropriately. Some will win, some will not. And that's OK. Case in point: ASICMiner. High risk for investors - too high of a risk for some at the beginning. But if it had hypothetically been listed at BTCT-CO at the beginning, would some of those potential voters have been correct to vote no because the risk was too high for them personally? Not at all - not unless they had information that led them to believe it was a scam or that the issuer was incapable of performing on the contract. But without adequate guidelines as to the reason for voting, they may very well have voted it down. And that's why I think the voting guidelines should be made more explicit.
Great point.

I think voting guidelines should be better defined, myself... yes/no should not be on the basis of "can I personally make money on this?" but rather "is this security good for the exchange as a whole?" and "does this pass the smell test?"

I'm tempted to grab a voting stake just to offset "nos" that obviously come from people who simply don't want to invest and vote "no" instead of simply abstaining... but the dividend is too low to justify locking up 2000 LTC or whatever the current price is.

No, it's not. It is only necessary to the extent that people who already use it believe it is necessary. Some people like to pretend they're the trust police for Bitcoin, and bully people into thinking that their way is the only way to do things, because... well, because they say so. And they get all huffy and self-righteous and talk down to anyone who thinks otherwise. Lots of ad hominems, red herrings, circular logic, etc. It's a lot like a plumbers' union making rules amongst themselves about how they deal with each other, which is perfectly fine, and then some electrician comes into town to set up shop and doesn't join the plumbers' union - so the plumbers get all mad because the electrician isn't subjecting themselves to the little voluntary cooperative agreement the plumbers have between themselves. It boils down to this: You're free to do your own thing, but you can expect to hear a very small number of very loud but very impotent people making noise that amounts to nothing of consequence. Feel free to ignore them.

That said, you don't seem to be gaining much traction at the moment. I believe this has a lot to do with the marketing style you've chosen, which makes your site seem a lot more like a gambling site than it does an investment one. That, and the fact that you blatantly ripped off the Mt. Gox site design - complete with Mt. Gox logo - and there's not going to be a lot of confidence that you are a legitimate operation right off the bat. I, for one, have gone so far as to determine algorithmically how one might profit from your system based on the information available without opening an account, and while the trading system makes sense (it's really a simple over/under bet) the margin delta (2x on long, 4x on short) means you are giving yourself a huge advantage at the expense of site users and pocketing the difference. Anyone who does the math will quickly realize the house advantage is astronomical if a user/investor/gambler plays both sides. Add to that the "withdrawal fee" and I'm not surprised at all that you're having to beg for customers.

You would put your hope to better use if you hoped that mining would begin ASAP.

Exactly my point, actually... there are hard assets, and there are assets made out of thin air. Fiat and bitcoin are similar in that they have no hard value beyond their use in trade (commerce). Gold, on the other hand, has an intrinsic value that can be denominated in fiat, but even without fiat, it has actual value to commerce in that it can be consumed for actual physical needs (like wiring for electronics, optic filters, jewelry, etc.)

I see what you're getting at now - I think we still disagree not on a fundamental level but on an application of value level, and that's OK.

No, that's the use of a block in the blockchain, which can be (but is not required to be) paid for with bitcoin via transaction fees - it's not a use of a bitcoin itself. And I didn't say that it was worthless, I said that (stating another way for clarity) it has no inherent value outside of the value that can be used in trade.

Um... bitcoin is the very definition of value out of thin air. It can't be used for ANYTHING else other than trade. It can't be used in manufacturing like gold/silver/etc, it can't be made into jewelry like diamonds... it's a straight up thin air value placeholder. The original comparison was valid, and it's perfectly OK for market cap to be greater than available currency, because market cap represents the sum of what investors were willing to value shares (note - this is not the same as paying for shares, since not all shares were purchased at today's prices) up through today for returns in the future. Even if we suddenly rewrote the rules and made it so that mining never generated another bitcoin today, the companies that continue to provide profit to investors will trade at more than the profit they generate because investors see the value in future returns. See: P/E ratios. The economic mechanisms at work in open markets still work with bitcoin the same as fiat, and that's OK - the main difference between fiat and bitcoin is that fiat can be printed to the extent that a single unit can be practically worthless (inflationary) while bitcoin cannot, but it can be lost (deflationary).

he's saying this smacks of (if I might stretch the grammar rules of English for a bit) "shilliness"... it reads a whole lot like an advertisement disguised as a discussion.

That's a REALLY large fee. Exchanges charge much less for transfers, for instance 0.2% (to each side) with BTC-TC. Granted, exchanges are automated, but that's exactly the point - you'd expect automated transfers to be MORE expensive than a manual transfer because of the added speed and convenience the automation brings. I'd be fine with a fee if it were less than what the passthroughs/3rd party exchanges provide, otherwise one would lose an important benefit of having direct shares - the ability to transfer shares cheaper than on an exchange. (The primary benefit, of course, being an absence of the need for trusting a 3rd party to hold your direct shares on account as is required for the passthrough/3rd party exchange shares.)

I'm familiar with the concept, and I don't think that there is any conflict whatsoever (right now) between growing total hashrate and the ability to keep cold spares. Think about it: the delay of deployment due to learning how to deploy these quickly has already been flushed out. The estimated rate of 60 boards per day is an estimate of actual deployment, and can't be used as a "peak" value of actual hardware racking - nobody but Friedcat's team knows the actual rack rate. Add to that the knowledge that the percentage of the network has not only kept up, but has INCREASED at the same time, and we can extrapolate that the deployment of hardware has accelerated beyond the initial few weeks' rate. They're learning how to deploy faster, so there's no reason to put a limit on their deployment efforts just because we don't see the effect on the network hashrate. That's how I came up with my theory... mind you, it is just a theory, but I did take into account the idea that the deployment must accelerate beyond the growth of the network in order to maintain the current percentages. Of course, it won't stand up perpetually, but for now, deployment is accelerating beyond what's necessary. And that makes me think that there's no reason they can't assembly-line this into a cold standby situation. That's how I think I'd do it, anyway, in order to avoid growing hashrate too quickly while leveraging the workforce putting the hardware into place at peak efficiency.

My personal opinion is that they spend time racking and networking devices that are powered down but ready to go, and that they keep an eye on hashrate/difficulty closely enough that they simply provide power to the cold devices when a boost is necessary to maintain their "dominant but not too powerful" position. I have no evidence for this other than a gut feeling based on observation of the hash rates and competition, but I'm pretty sure reality is something very close to this description. I wonder if they have at least 50% spare hashpower ready at any given moment, but that's just me daydreaming.

In a word: Juggernaut.

The DMS mining security has an effective cap on the price due to how it's issued and is therefore more attractive to buy/hold buyers interested in the dividend, while TAT's is uncapped and will respond to market demand and is therefore more attractive to flippers and speculators. (Also, DMS has that odd second security tied to it tracking the other side of the bond transaction that makes it a little more complex to understand, and it looks like a lot of folks simply aren't confident enough in their own understanding of it to risk their money.)

the thing is, you can't convert either to the other in the equivalent hashrate since they're both virtual assets... (you can't take 5 of TAT.VIRTUALMINE and convert to hashrate, then sell that hashrate for 1 DMS.MINING. You have to do it in BTC, which is not tied to the hashrate at all.) At least, not like how you could take a BFL device and trade it for an equivalent hashrate in Avalon chips, anyway. They're both really nothing more than 2nd-tier bonds* backed by the issuers' reputations and promises to repay. So value against each other can't be made against hashrate, it has to be compared using dividends.

I know, I know, it's splitting hairs since the dividends for both are exactly 5:1 to each other, identical to the hashrate ratio between them. But a better comparison would be "TAT.VIRTUALMINE pays x dividends per day, and DMS.MINING pays 5x dividends per day (ignoring the DMS.SELLING dividend for the sake of simplicity here, since the conversation is focusing on the mining divs anyway.)" Then you're left with rate of return on the original purchase price, along with a confidence multiplier based on the reputation and promise to repay of the issuer in regards to the actual dividends. When you boil it down, THAT'S the real comparison between the two issues - ability to repay and track record of repayment. (This appears to me to be flat between the two, by the way.) The wrench in the clockworks is the way the purchase price is worked out with DMS, since you can buy more at the lower static value the issuer sets if the market price of the derivatives start to approach TAT's value per hash. DMS.MINING is effectively building in a permanent undervalue situation compared to TAT's free market rate, effectively capping the rate of return for DMS "buy and hold" investors (UNLESS the "SELLING" derivative works a different way than I understand, but I'm pretty sure I understand it.) Kinda weird way to do it if you ask me, but it's an extremely interesting experiment at the very least.

^{*I don't mean "2nd-tier" as a slight by ANY means - I mean they are both backed by other company's assets, and not on their own assets. I own a very little of both primarily for the educational value.}

I'm curious, as I'm not really sure how BTC-TC works behind the scenes regarding dividend scheduling - are the currently queued dividends static or based on the number of units sold as of when the dividend was queued? (There have been 1139 units sold as of this post and there are a little less than 17 hours remaining until the first dividend, if I'm not mistaken.) In other words, if you sell more units in the interim, will the currently queued dividend amount change to correlate with the number of outstanding units at the ex-dividend time?

This really is a fascinating set of securities, I'm watching very closely to see how the market acts on them.

it's a joke - by rotating it instead of flipping on the Y axis, he's pointing out that the original complaining poster is just bloviating

Why bother taking them off the market for any time at all? It's not like the buyers expected the price to stay high forever - every single one of them paid a high premium for immediate delivery while difficulty was (relatively) low compared to other device offerings. All buyers of dedicated single-purpose mining hardware know the hardware is a depreciating asset, it should come as absolutely no surprise to them when the price drops. If people get upset about it, it's their own damned fault for having unrealistic expectations.