Sebastian... it's a problem because, depending on how players are betting, the odds are not in our favor. The house edge doesn't mathematically make us a profit in the long term if Doog takes the 10% cut and players bet on average at lower than 90% chance of winning.

Doog.... if you could publish a chart with the average weighted betting probability as a function of time since JD opened up shot I would very grateful. I'd like to see how much we deviated from my 90% prediction.

I'm willing to bet that when Nakowa played we dropped wayyyyyy below my threshold!

Then charge the fee on the investors, who gives. As long as the fee is flat Doog will be incentivized to push more volume on the site.

5% of all bets made wager an amount larger than 1 mBTC. Considering that all bets placed on this site up to now is ~500 million, 25 million bets have been placed with wagers greater than 1 mBTC. Of these, about 51% have been won by the house... so roughly 13 million.

If the investors paid a 1 uBTC for every bet won by the house whose wagered amount was greater than 1 mBTC, Doog would have earned 13 BTC. Now, granted that this is nothing compared to the 1.2k he's made up to now but it still stands that about 100 million bets are consistently placed each month. This would allow him to profit a cool 2 BTC month without risking anything and consuming a very low amount of electricity compared to what your average miner uses to mine that same amount.

http://imgur.com/R2y04mo

The flat fee can be further discussed and refined, I'm just proposing a proof of concept!

Before answering Doog I want to quickly confute the martingale argument. Charging a variable fee that is 0.01-0.1% or, more simply, a flat fee of ~10 uBTC wouldn't alter the martingale strategies at all. It would at most penalize the dust bettors of which:

a) We choose to not care since they are contributing less than 0.1% of total amounts wagered on the site
OR
b) we allow them to play for free as long as they're betting amounts that are lower than, say, 1mBTC

In either case, the most generally played martingales would be hardly affected in case of the flat fee. They would be slightly affected but not by much in case of the variable fee. (I personally prefer flat fee).

Now, on to Doog. You wouldn't be disincentivized by the new profit scheme. With a flat fee being paid, your job becomes that of enabling large amounts of bets which, ultimately, benefit the investors also since the 1% house edge is more and more guaranteed the more bets (not necessarily wagered amounts) are placed on the site. One variant of the flat fee could even be that when the bankroll wins a bet, the investors pay the fee for that bet while when the player wins the player pays.

It is not true that overtime investors would be paying the same amount. The current scheme places friction on the upside of the bankroll while exposing us investors to a larger downside. If some whale comes in and chooses to place subsequent 100+ btc bets, we the investors are risking huge downside. This is especially true since large bets are few and far between and the law of large numbers doesn't really apply to them. In these circumstances the investors are just stuck with the variance of the whale's betting strategy. If we have to pay a 10% fee on any profit we make in these circumstances, the EV for the investors is easily made negative.

Just follow the math. Let P be the probability of a bank win off of a given bet and Q be that of a loss. For convenience let M be the multiplier of the bet. The 1% house edge boils down to a very simple relationship between Q and M, namely:

QxM=0.99

In the absence of a Doog fee, the EV of a bet is (in units of the betting amount):

EV = P-(M-1)xQ = P-[(0.99/Q)-1]xQ = P-0.99+Q = P-0.99+(1-P) = 0.01

Where the normalization condition P+Q=1 was used in the last step. Let's now factor in Doog's cut:

EV = 0.9xP-(M-1)xQ = 0.01-0.1xP

It's easily seen that whenever P is greater than 0.1 (i.e. anything less than 90% bet from the bettor's perspective) the EV for the bankroll is negative. This would confirm the general perception in the trollbox that 90+% betting schemes have been very profitable for the house. Mind you that this doesn't imply anything for the gambler... he's playing the normal house odds with negative EV=-0.01.
Hence, at the current state of affairs, the investors can expect to lose money whenever gamblers bet at less than 90%.

The EV calculation shown above can be generalized for a different "Doog tax" which I will denote as G. Currently, G=0.9. Repeating the calculation results in:

EV=0.01-(1-G)xP

which is negative whenever P>0.01/(1-G).
Clearly, unless G=1, there will always be percentage threshold beyond which the EV for investors is negative. Considering that a lot of gamblers bet at probabilities that are less than 90%, this is something which should be seriously addressed.

Now, in Doog's defense, one might argue that this EV calculation which already considers a large number of bets being made, also assumes that a cut is being taken whenever the house wins. In reality though, Doog takes his cut only once a week thus allowing us to play at a positive EV for a week at a time and, only on sundays, paying the cut to Doog.

This argument can be easily confuted though by compounding all weekly bets into one average bet after which, in case of a bank win, Doog takes his cut. We can then reproduce the same exact calculation for the investor EV as before. The one key parameter that we need is the average betting probability weighted by the bet wager size. DOOG... if you could supply me with this number I'd be very grateful.
In other words, for every bet made on a weekly basis denote P_1,2,...,n the probability at which each bet was placed and K_1,2,...,n the amount wagered. Then the average betting probability is:

<P>=SUM{P_nK_n}/SUM{K_n}

If <P> is less than 90% then we have a serious problem on our hands!

Last but not least, I'd like to tackle the all too easy standard of "if it ain't broke, don't fix it".
Lets stop for a moment and discuss honestly about what it means for something to be broken.

The house profit is a quarter of what it should be. Granted that this was due to a "very lucky" streak by the biggest whale bettor of all times (Nakowa), and that the biggest loss the site incurred happened on a timescale of about a week, the above mathematical EV argument shows that the investors risk to incur a larger burden than they should granted the money that they put up. In some circumstances they even stand to lose with a higher probability than the bettors themselves!

It is for all these reasons that I continue to press for a serious consideration of a flat betting fee in exchange for full profit in the pockets of the investors.

I look forward to receiving the piece of data I requested.

I'm not trying to take anything a way from Doog. If anything I think he deserves a more consistent stream of income for his services independently on whether the site wins or loses as a whole.

Charging uBTC or 0.01% fees for amounts wagered above 10mBTC should be totally acceptable. Ultimately the investor is receiving a very valuable service. Where else on the internet does one have the opportunity to play such a low house edge against such a large bankroll? There HAS to be value in that. Primedice and Satoshidice offer max profits of 20-40 btc. It's nothing compared to what JD offers.

Look, I'm not saying the amounts I'm proposing are perfect. I'm just trying to point out that there is ample wiggle room to discuss among investors and Doog what the best course of action is. Ultimately, though, the gambling profits should be totally distributed among the people who are risking the coins: a.k.a the investors.

Again, I'm not attacking Doog in any way and I value his work very much. The man is always available and present. He's knowledgeable and very able at what he does. I would him up there along with Friedcat and Mike Caldwell among the most trustworthy forum entrepreneurs. We need to ask ourselves what service is Doog offering and how should he be remunerated.

The way I see it, he gives us an awesome brokerage service to coordinate bets between gamblers and bankrollers. He deserves to be paid for that independently on whether the site wins or loses and it should be worthwhile for him also!

All I ask is that at least an investor referendum is organized so that this can be discussed more openly among all investors so that a consensus can be found.

To be honest TimeTwister I agree with you. Ultra whale bettors are what makes this site move up and down. They even allow day trading on JD for some people. I'm just throwing out ideas on how the site could be fine tuned that's all.

Another thing Doog could do is charge a flat fee which is some percentage of the bet amount.
Something like, if the wagered amount is above a certain threshold, then charge 0.1-0.01% of the wagered amount. This way dust bettors could keep on betting freely and Doog is incentivized to market the site for larger bettors.

There are a million different ways in which Doog can keep on getting paid for the spectacular job he does. Furthermore, he deserves a steady income for the services he provides. We investors, on the other hand have got money on the line. If the house edge is 1%, that is the risk I am taking. I should gain profits that match the risk I take.

I'm not "whale" (was simply in the chatroom hearing him abnoxiously spaz yesterday), but thank you fr the wonderful plots. You should plot the derivative with respect to the betting amount instead of the cumulative distributions you just gave us. It would give us a better idea of the standard range within which the vast majority of bets are placed. For example, if 99.9% of bets were due to amounts wagered between 0.01 and 50 btc, it would be in the investors best interest to concentrate on these bettors and penalize the tails (ultra whale bettors and micro-dust bettors) by both introducing a flat fee and considering about lowering the max bet percentage.

I don't think competition due to the flat fee would be much of an issue granted that the vast majority of bettors bet amounts three orders of magnitude larger than the fee. If you're worried about blocking off new users which might simply want to test the site, give a promotional amount of bets at no, or reduced, fee. Hell, the brockerage fee could be charged to the investors for bet amounts above a certain threshold.

I'm not saying that these changes would allow investors to not take risks (I'm not stupid like "whale" who expected a bond like return from his JD profits). What I'm asking is that they reap the full profit of the risk they take.

The site really does work wonderfully, I just think maybe it could be fine tuned a little bit.

P.S. you could even make the flat fee completely to your control so that you may explicitly tune the amount of traffic to your site

Dear Dooglus,
I'd lie to reiterate a point discussed in the trollbox tonight so that you may read it over at your convenience and answer it at your leisure. A few users complained that your cut over the site is unfair to the investors due to their taking all the risk. It is true that you run the site and you have done such a spectacular job at it all throughout but it would be nice to come to reconsider the distribution of profits as the site and its usage evolves.

One suggestion that I proposed was to drop the percentage cut from the investors all together and instead charge a flat fee to bet. Such a fee would be reminiscent of a stock brokerage service where you allow bettors and bankrollers to contract a bet on your site.

A flat fee furthermore would weed out the monstruos amount of satoshi/dust bettors which wreak lag on the website and populate the trollbox with... well.... more trolls. 99% of the site's profit must be generated by wagered bets larger than 1 mBTC at least (could we get a fact check on this).

How about you charge a flat fee from now on of 10-200 uBTC (that is micron-btc 10^(-6)) to bet on JD. Based on the amounts wagered up to now, a 250 uBTC flat fee would have earned you the same amount of coins. As the gold price (measured in bitcoins) increases over time the fee can be reduced such that every ~50-100k bets you can expect to have earned an ounce of gold.

This would work well for investors in that now they would reap the full profit of their risk and you sir, for guaranteeing such a consistently phenomenal service. Furthermore you would be incentivized to advertise the site and lure new bettors mid-range bettors.

As a further plus to the site, we would experience less trolling, less spamming, less begging and, more importantly, LESS LAG.

I look forward to hearing your thoughts on this.

I see this thread died off in November but figured I would drop notie of my experience with TH.

I was one of the many customers whose bitcoins vanished without notice when Tradehill shut down two years ago. After an email sent to the support@tradehill address, Jared Kenna answered me quite promptly verifying the amount owed to me and asking me for a wallet address he could deposit them to. I immediately responded with my wallet address and thanked him for his business.

Weeks and months went by without any news about my coins. I started emailing TH support 3-5 times a week asking for the status of my coins without receiving a response. Eventually, after 5 months, I sent an email threatening legal action. Surprisingly, my coins were returned that same day and Jared Kenna contacted me again to verify that the transaction had gone through properly.

It was a long hassle but ultimately everything got straightened out.

Olesentv,

How much did you lose on the site?

If you go to http://just-dice.com/raw.dat you can download the raw historical data showing you how Wagered/Profit amounts have changed over time.

Apart from one VERY LARGE win by a player named Nakowa back in August (if I'm correct) the site's profit has been tracking the 1% line very accurately. Sure, Dooglus could have been Nakowa. If that were true he'd have gotten away with over 30k bitcoins by now which are pretty much enough to have him set for life. Luckily I had no money invested at the time Nakowa prowled the site.

At the same time, though, one must acknowledge the Dooglus' fair share on the site has already netted him some 1.2k bitcoins which isn't peanuts by any measure. It is in Dooglus' best interest to keep the site and, more importantly, the investor's faith in it for as long as possible. At the moment he probably has no bitcoins invested in the site bankroll. That means that he is raking in pure profit from the site's gambling operation.

Even if he had stolen in the past, the track record the past couple months has been impeccable and I will continue to trust the solidity of Doog's spectacular business model.

Nubbins, how did you extend the chain of custody on your coin?

Mike, I disagree. You wouldn't be performing the role of a bank. Guaranteeing the chain of ownership of the coins is a logical extension of your "trust in Mike Caldwell" product. Furthermore, following with the educational philosophy, you'd be incentivizing people to accept and understand the fundamental concept of a digital signature: a "technology" foundational to the premise of bitcoin itself.

Mike, I feel like the best thing to do would be to implement on your website a proof of ownership system of the coins.

All coins should also list a Mike Caldwell signed PGP key of their original buyer. When an original coin owner then sells his coins to someone else, they can sign the PGP key of the new buyer and have the site be updated with the new owner's PGP key.

This won't help against tampering of Casascius coins per se but would certainly render counterfeiting impossible since, for a given coin address, it is impossible to know what the private key of the real owner is. Ultimately, only Mike could counterfeit the coins.

This doesn't eliminate trust. What it does is keep trust over Casascius coins what it has always been: trust in Mike Caldwell.

It would certainly be a hassle to implement this mechanism for past coins since all original owners would have to be contacted and, furthermore, some coins have already traded hands so people would have to play catch-up on the PGP chain. However, the hassle would be very much worthwhile to many proud Casascius owners.

Furthermore, the whole mechanism could be automated on the website so that any coin sales can update the PGP chain. Within this framework, new buyers would conclude a sale by having their PGP key signed by the coin's previous owner and updated on the website.

This should seriously be taken under consideration for the benefit of both your business and the overall Casascius community. 

Thanks Dave! I'll just do that instead....

I have recently purchased a holo error Casascius coin on ebay from an original owner (coin has already been received).

I am starting this thread to document the purchase and be able to refer any future buyers to this thread.

The original owner will follow this post by including his proof of purchase from Mike Caldwell along with customs declaration showing our own respective delivery addresses confirming that the coin was shipped to me.

I wonder how the possibility of counterfeiting these coins is going to be cooked in their market value of time.
How does one prove that the coin for sale is an absolute original unless it somehow was graded BEFORE the august announcement of counterfeit coins in circulation??

I keep the original documentation showing the original owner but how can even that be trusted?

I'm very interested in buying. How much are you asking?

Hey Doog,

would it be possible for users to query the betting history of specific users? I'm referring to something analogous to the "My Bets" tab where one can type in a specific user ID and see the betting history of that user.

Thanks!

Hey Doog,

I got locked out of my account due to having tried the Auth code too many times incorrectly.

My authenticator's clock seems properly synced and I can access all my other accounts with it except "zipmaster" on JD for some reason. I am currently logged in on my phone from earlier today but whenever I try investing/divesting and get asked for the auth code it's the same problem all over again. Could you look into it please?

Thanks.