What happened in the past does not affect the outcome of new bets. Nakowas wins caused the site to be a large amount below the expected profit and the expectation is that the site will stay that amount below the expected profit. A numbers example, suppose 1M coins wagered, 1% edge, but no profit was realized (so 0 profit). This is 10K coins below the expectation. Lets say that the next 1M wagered has the expected 10K profit. Total profit is now 10K, with 2M wagered. So the profit percentage has grown from 0% to 0.5%, coming closer to 1%, but the site is still 10K below its expected profit.
One thing i can see is that, when the house took a big hit of taking away 70% then it cant go back. Thats the difference to throwing a dice because all results have the same chance there. If the max profit is only 30% of the previous then the chance to win 70% back is slim because it would need more losing bets because of the lower max profit. So it might be that stochastics dont work here perfectly because the chances arent even. But when throwing a coin it would have to work. I mean when the first results are 100 times head and then it moves on with head, number, head, number and so on then the theoretical result of head and number thrown the same time in average will become more and more near. If youre at 100000 throws then the 100 times from the first throws doesnt matter much because constantly the results go nearer to the theoretical value.
It might be that it doesnt work here because the chances arent fully even.
Profit-percentage is calculated by dividing profit by the amount wagered. There's is an important distinction between this notion of profit ("1% of the wagered amount was gained by investors!") and the notion of a profit on your investment ("My investment in JD has grown by 20%!"). Both statements between brackets are compatible with eachother, since they concern different notions of profit.
Right. But so it is with the JD house too. It is set together of many small investments that werent there from the start. So if you invest 1
BTC in your account and it gains 20% profit, then you add 99
BTC, then the profit of your 100
BTC Investment is 0.2% only anymore. Simply because its 2 different investments and the biggest investment didnt have the time yet to earn so many profit. Might be that nakowa has a share in the 0.25% but the rising house has to have a share in it too.
Winning 70 times in a row is very unlikely, yes. But Nakowa didn't do that. He lost many bets, but played so much that he edged out ahead. The nice chart by Peter R. shows the progression of Nakowas bets and the likelihood of this occurring. The conclusion is, and has always been, that Nakowa was quite lucky, but not extremely so. Rolling a pair of sixes on two six-sided dice has comparable odds, to give a point of reference.
Was the profit jump higher after october 7th nakowa too? If so then nakowa only should have taken the house from 6000
BTC to 4500
BTC only. Thats nothing were i would await that it leads instantly to the theoretical profit being 7.5 times higher than the real profit on october 21. I mean when i see the theoretical profit how could it develop that far away from the real profit? That doesnt fit to me yet. When it grows so high while in fact he did win way less at the end then the variance should be high since the profit only shows the 1%. Thats some extraordinary luck then.
But when i see the y-axis... i realize those are only the stats starting from the house value. It doesnt say how big the house was. That would be interesting to see to judge his luck.
Then... when i see the graph
https://i.imgur.com/0Ikj2PC.png it seems that all bigger wins (cant judge what part of the house was taken) are doing an irreversible damage to the profit since the chance to win it back is lowered. Winning back the loss of half the house is only possible with much more luck than the winner had because you need more wins at max profit. That "luck" might already been eaten by wins with lower max profit. Max profit can eat 100
BTC when the player wins at a house of 10000
BTC. But it would need more than one bet at max profit to win these 100
BTC back then. So the house is vulnerable to big losses because it cant grow back easily?
I wonder why the irreversible damage doesnt seem to apply to the new graph. Even when there werent so big losses it should have to have at least some effect isnt it?
The graph shows that nakowa played so much that in theory JD Incestors would have won 30,000
BTC. And thats only 1% house edge. Wouldnt that mean he played bets worth 3,000,000
BTC when they would have been even bets? And the variance of so many bets win-lose wasnt enough to stop this winning streak? Its hard to imagine.
If I am right, investors would make a lot more money under the new system as opposed to the old since Doog just takes a cut of wagered and not of profits.
And when nakowa wins again then the investors doesnt only have a big loss from nakowa but JD would think they made a fortune. 30.000
BTC additional profit so the fee for all investors would be 3000
BTC on top. It would be a really big hit to the investors on top.
Im uncertain if the profit can go as high again at all. Something along the line that you can win high with a high investment, but when your investment is shrinked very much you will struggle to win it back because you have less investment now. Bitcoins make bitcoins, without them you need way more luck. Though i cant explain it properly.
@Sebastian: Of the 5 million BTC wagered on this site, 1 million of them were wagered in one day by Nakowa. That's 20% of all wagered BTC on JD. You understand that the 1% house edge protects investors in the long run via the law of large numbers. Unfortunately for us, Nakowa was an isolated circumstance thus deviating reality from statistical expectations. If more Nakowa's were to play on the site, we could expect to reach the true 1% line in the forseeable future since Just like one managed to win 10k, another stands to lose 11k etc...
Im not sure what to think. When the small bets nowadays dont tend to go to the real theoretical profit why should another huge better tend to that line? His bets are exactly even again. He could be the next nakowa winning as he could be nakowa losing.
When he really won 10K, how big was the house at that time? And would it be possible at all to make the same in the opposite direction with the current size of the house and half kelly?
As an investor I would much prefer to see 1,000 btc wagered over 1 million bets rather than 5-10 bets, as the variance is sure to be much less. The proposed system misaligns management incentives with investor interests. Specifically, Dooglus will have a disproportionate incentive to expend resources attracting whales rather than on advertising likely to bring the smaller, more desirable traffic.
If you think that way you need something like kelly 0.01% instead kelly 0.5% as it is set now globally. Now you risk potentially a half percent of your investment with each bet. This is what whales are for. I didnt want to miss likashing because i won with him. And guys like him move the whole site. I doubt he would be happy playing millions of bets because the risked amount of investors became so small that the max profit is very small.
Though i dont know what to think about nakowa yet. I dont know how much of the house he really took. It shouldnt be too much when max profit is 1% of the house. And max profit gets lower everytime he wins. Maybe theres a graph for the house as y-axis too.
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