MINING had its drop earlier - PMBs are just losing price now to achieve similar value.  The impact of difficulty changes is far more obvious in DMS so has been priced in much earlier.  And MINING's price was initially depressed (relative to PMBs) because those liking SELLING could ALL sell MINING and push the price down.  With PMBs noone can sell the price down (other than operator) without realising a loss (and investors in general are reluctant to realise a loss even when they wouldn't buy at or slightly below the price they refuse to sell at).

If that were true that would be fine.  But in fact you HAVE speculated about difficulty - but only on the scenario that most suits your targetted conclusion - that mining difficulty FALLS by 50%.

And your other point, that the example shows MINING doesn't behave like PMBs is NOT proven by your example (at least not in the way you hoped it would).  Had you compared the behaviour of MINING to the average of a pool of PMBs - half of which lost their hardware and defaulted and half of which flourished then the conclusion would be rather different.

Comparing MINING to PMBs in more realistic scenarios is, indeed, tricky.  In general terms where MINING ceases to behave like PMBs is when difficulty stops rises fast.  The problem is that, as we saw last time that happened, PMBs also stop behaving like PMBs then - and a significant portion of them default as the operators can no longer make a profit operating them.  Difficulty stopping rising happens BECAUSE it isn't profitable enough to mine for more people to want to do so (and the new ones that there are get balanced by existing ones dropping out).  A lot of PMB operators (most) have no disclosed assets able to continue supporting their obligations if mining becomes unprofitable.

And that's where furuknap's article flirts with outright lying.  He attempts to conflate "Mining being profitable" with "PMBs being profitable" when in fact the two things are in no way linked.  PMBs are at their best (if the contract is honoured) when mining is UNPROFITABLE - as that's what leads to difficulty stopping rising or even falling.  Any time mining makes any significant profit people will continue buying more hardware and difficulty will rise.

Furuknap's argument is in essence that when mining STOPs being profitable MINING will close.  And he's right about that.  But so in all likelihood will his own PMB.  It's one of the specific defined situations in which he'd close it :

"2. The overhead of operating the contracts becomes greater than its profits"

Furuknap appears to be claiming there's some mythical scenario in which difficulty isn't rising AND mining is profitable.  That doesn't exist - if difficulty isn't rising and mining is profitable then people WILL buy more hardware and more mining companies WILL start - and by doing so they break the condition.  In practice difficulty will stablise when it's not profitable to buy new hardware to mine with - at that point mining with existing gear may well still make more than it costs for many people (but not by a lot) but it actually isn't profitable when taking into account capital costs.

The lack of understanding of this is shown best in the following paragraph:

"However, the situation that may make mining profitable is a stop in the rise of mining difficulty. If that happens, all mining assets suddenly becomes vastly more profitable and thus prices will rise rapidly."

What scenario does he envisage where difficulty stops rising whilst mining is "vastly more" profitable?  Why is noone buying more hardware if it's "vastly more" profitable?  If the profit from mining repays capital costs in a short period of time then why aren't people buying more hardware?  If it doesn't repay capital costs then it isn't profitable at all - let alone "vastly more" so.

It's as though he just hasn't looked at what the situation was when that precise situation actually happened.  Did PMB prices rise massively?  Of course not - as by then the dividends were miniscule compared to the prices paid for them.  And most mining itself wasn't making money as fast as the value of hardware was being lost - which led to PMBs in particular being unable to continue operations.  Luckily (for PMBs) ASICs then arrived and bailed them out.

History WILL at some point repeat itself in that respect.  At that point DMS WILL close (precisely when depends on SELLING's judgement).  Some PMBs will buy out, some will continue paying, some will default.  But that time is still some while off - and the dividends before it's reached will be many years of the dividends after it's reached - so the difference between the expectation for MINING and PMBs is only a small percentage of actual long-term returns.

I'd just like to hear how furuknap believes mining can be profitable AND difficulty not rising - yet there's no significant interest in buying more mining gear.  Because somehow that's a scenario he bases part of his case on - and it doesn't exist.  Difficulty stops rising when mining is UNPROFITABLE if capital costs are taken into account (those with ASICs already continue mining as the capital cost is sunk and resale value becomes low).

Note also that his argument is that DMS.MINING can never win.

Which is strange - and obviously false.  Both MINING and SELLING can ONLY 'win' the combined cost of them.  With SELLING trading at a higher price it's rather obvious that SELLING's max profit is actually lower than MINING's (both in absolute terms and as a percentage).

SELLING can only 'win' the whole pot if difficulty immediately rises to near infinity.
MINING can 'win' the whole remaining pot if, at any time, difficulty stops rising by more than about 2-4% per change (precise value depends on the performance of investments).

Whilst MINING can't ever gain more than the value of SELLING in profit (plus investment gains) that's still well over a 100% profit all the time MINING is cheaper than SELLING and it would ALL be given in a very short time-span compared to PMBs.  SELLING can't possibly make a 100% profit at current prices - yet his focus is on how MINING can't make a profit.  Very strange - or it would be were he not trying to sell a PMB.

And it's the fast nature of the final profit that is the other element he fails to address.  Whilst it's true that MINING's max profit is capped and PMBs isn't (provided the issuer has provision to continue paying out after the hardware backing it fails and needs replacing - which few have) there are definite advantages to getting a final payment fast rather than having to get slightly more over a period of years.  You no longer have the CP risk and can reinvest the profits to end up with more.

Obviously that doesn't work if godzilla gos around stamping on all mining hardware that doesn't belong to PMBs - but outside furuknap's article that seems unlikely.

The main thrust of the article considers a scenario where half of mining power vanishes.

It then compares the behaviour of DMS.MINING to a fictional PMB.  And that fictional PMB is generously assumed to have mining power that wasn't in the half that vanished.  When of course there''s a 50% chance it now has no hardware with which to back its operations (or if you assume losses were spread evenly has only 50% of the hashing power it previously had).

Rather obviously if you compare A and B in a disaster scenario and then assume B is immune to all the down-sides then B will come off the better.  So yeah - if you assume godzilla is careful only to stamp on mining hardware that is NOT owned by PMB operators then furuknap's conclusion makes sense - and those scared that godzilla may have a grudge against ASICs should avoid DMS.  If you believe he wouldn't avoid PMBs then you have to value PMBs based on 50% of their hardware having vanished.  At which point you're looking at defaults with some PMBs being worth 0 if the past is anything to go by (exception being any who have proven non-mining assets from which dividends would be paid if godzilla stamps on their rigs).

Assuming that a 50% chance doesn't apply is reckless and not a reasonable assumption to make - it isn't some remote possibility that can be ignored for all practical purposes.  By furknap's definition it's going to apply half the time so MUST be factored in when drawing conclusions (assuming that godzilla is a metaphor for some mining catastrophe such as ASICs dieing after X months of use or whatever - rather than based on some specific information he has that it will apply to some locations not hosting PMBs' hardware).

In the short-term the drops in price SHOULD occur on the securities that actually get the dividends.  The value of ANY security immediately after it receives a dividend IS lower than the value immediately before the dividend by precisely the amount of the dividend (ignoring any minor adjustment for CP-related reasons).

In the longer term the rational explanation for it would be if those buying MINING believe dividends to SELLING will slow down to a near halt before they exceed the excess NAV over the value of MINING (i.e. difficulty will stop rising rapidly in the not too distant future).  They then make a decent profit quickly when DMS closes and they get a lump sum - or more slowly if SELLING choose not to close quickly and hope difficulty starts rising fast again.

A less rational reason is that the price of MINING is linked to the price of PMBs (in conditions of fast-rising difficulty it has very similar expectation and value to them) so its price tends to get maintained by people buying it because it's cheaper.  People who don't have any particular view of likely medium to long-term scenarios for mining difficulty can buy MINING knowing that at least in the short-term it will be better value than PMBs (costing less for the same dividends) and that acts to stabilise its price a bit.  They don't guarantee themselves a profit doing that but DO ensure that in most (NOT all) scenarios they end up better off than if they'd invested same amount in more expensive PMBs.  And in the scenarios where PMBs perform better in any reasonable time-scale (years not decades) they're pretty much guaranteed a profit from MINING (those scenarios are ones where difficulty stops rising quickly and DMS closes with MINING getting nearly all the funds and SELLING very little).  This is a less rational reason because those buying in this manner are doing so BECAUSE they haven't attempted to work out likely future behaviour - which is irrational (as they haven't considered the possibility that even at the price of MINING, PMBs aren't going to give a worthwhile return).

Different people buy for different reasons - the market price reflects a sort of average of their expectations/beliefs/guesses.  It isn't possible to give an exact reason why the price is at a specific point.  The drops, however, are completely expected if the initial market valuation before them was 'correct'.

He stopped paying dividends at all for a bunch of months before - but wasn't delisted and got to try to scam some new fools.

Like all ponzis he only pays out a portion of what he gets in - so as soon as sales slow down dividends stop.

Sold   327
Swapped   0
Total   327
Price   0.039514
Total   12.921078
Less Fee   12.89523584
Man Fee   0.386857075

BTC Balance (BTC-TC)    1,385.05183112
11417 LTC-ATF.B1    114.17000000
Coinlenders CD 29/7    202.94451305
Coinlenders CD 13/8    100.48358161
Just-Dice Balance    157.79185920
TOTAL ASSETS    1,960.44178498
   
Outstanding MINING   49949
Outstanding SELLING   49949
Outstanding PURCHASE   2062
Effective Units   52011
   
Block reward   25
Difficulty   26,162,876
Hashes per MINING   5000000
   
Daily Dividend    0.00009611
50 days (Min Liquid)    0.00480554
100 days (Forced Close)    0.00961107
365 days (Buyback)    0.03508041
405 days (IPO)    0.03892484
400 days (Post SELLING div)    0.03844428
410 days (Pre SELLING div)    0.03940539
   
NAV Post MINING Div    1,955.44297085
NAV/U Post MINING Div    0.03759672
Days Dividend Post Div   391.18
SELLING Dividend    -         
NAV Post SELLING Div    1,955.44297085
NAV/U Post Selling Div    0.03759672
PURCHASE selling price    0.03947656
PURCHASE buy-back price    0.03684478
   
J-D House profit at report   -523

You should check the thread for the pass-through.  Operator is on holiday at moment and said he'd sort it out when he gets back at end of the month.  Same for the one he operates on BTC-TC.

There's a risk he's going to try to claim it was a dividend and take a part of it (unfortunately it was settled as a dividend on MPEx despite not being one) so if you can sell at or near .0035 per share it may be better to sell now.

Think all other pass-throughs have now paid out in full (mine on LTC-Global, namworld's on BTC-TC and the Havelock one).

Doh yeah - bit of a brain-fart there from me.

He can't freeze them out but he CAN take the lion's share of the action.  If it were possible to write a bot to edit investments then tbh I'd do one to try to keep as near the Kelly limit as possible.  It does actually make sense to increase risk% (by increasing local amount) when no whales are around.  Reason is that the effective max-bet isn't what's displayed on the site but rather the lower of that and the largest bet any active bettor will make.  It's a bit of a gamble as a whale could show up from nowhere and kick off with a max-bet - but my instinct says that's a risk worth taking IF I could program a bot to reduce local amount as soon as anyone bet more than X (and then restore it once there'd been N minutes of no bets over X).  I'd basically be looking to keep my real exposure close to 1% per bet - even when there was only low action so I needed a much higher risk % to achieve it in practice.

Think if youre going to liquidate it you have to do it based on max-bet not on actual wagers.  i.e. if 1% of their total bank-roll doesn't cover their portion of a max-bet then they're liquidated and don't get ANY action.  Reason's two-fold:

1.  It avoids letting people mess around with tiny amounts staked that can never accept action from a max-bet.
2.  Doing it otherwise leads to a scenario where either displayed max-bet isn't accurate OR calculation of max-bet is hard (as it's no longer 1% of all active deposits as some can't accept max-bet action).

Yeah there's some issues with implementation of it.  And some potential interesting things investors can do - such as when a whale's betting big run a martingale against them by modifying their local coins balance (if you remember I mentioned this ages back).  Also a large investor can try to freeze nearly everyone else out when there's no whales around by inserting a large local value so that max-bet rises to where anyone operating at 10% with 10% of coins deposited can no longer cover a single max-bet so is frozen out of taking the low-level action.  As soon as a few start doing that everyone who wants any action when whales aren't around ends up having to deposit all coins anyway.

Other issue with it it transparency.  If someone's balance is near the max-bet then they'd be in and out of investing a lot if there was a whale betting.  It would be hard for them to verify that their ending balance was actually fair.  The lack of ability to easily see that your balance was what it should be in those circumstances is possibly the largest argument against it from an investor's perspective.

LTC-ATF.B1 dividend received.  After conversion back to BTC we received 0.6965398 BTC.

You don't need to verify they have them as the only coins of theirs that will ever back anything are the ones dooglus DOES have control of.

Only small down-side to it is that max-bet is likely to plummet fast if a whale starts winning big - as more and more people's cash on deposit runs out (whether they have more or not is irrelevant if they aren't around to refill).  But if it starts off higher (which it almost certainly would) then it's not a real problem.

So someone with 100 BTC could do any of:

Deposit and invest 100 and get 1% risk exposure on their 100 BTC.
Deposit and invest 10 BTC and get 0.1% risk exposure on their 100 BTC.
Deposit and invest 100 BTC plus claim they have another 900 BTC in reserve and get 10% risk exposure on their 100 BTC.

The second one is the one people wanting lower risk seem to miss - that they can get behaviour pretty similar to 0.1% risk already by withdrawing 90% of their coins (actual behaviour varies from true 0.1% risk exposure increasingly as the balance moves further from initial deposit).  And the differences in behaviour actually act in a manner more consistent with the objectives of those wanting low risk (e.g. losses from even a mega-lucky whale capped at 10% of BR).

This sort of system is far more efficient use of capital - at the expense of investors having to think for a few seconds about what they're doing.

Yeah I can add that in (it'll be at bottom) - though if a whale is playing at the time I take value it may not match (investment and house profit are changing multiple times per second).  But in most situations it should be pretty accurate as a base-line for working out whether we're up or down since previous report.

House was at about -878 when today's was produced (we're very slightly down from when I grabbed our value now with house at -880).

Sold   922
Swapped   0
Total   922
Price   0.039416
Total   36.341552
Less Fee   36.2688689
Man Fee   1.088066067

BTC Balance (BTC-TC)    1,376.81420469
11417 LTC-ATF.B1    114.17000000
Coinlenders CD 29/7    202.83479490
Coinlenders CD 13/8    100.42946260
Just-Dice Balance    155.70284875
TOTAL ASSETS    1,949.95131094
   
Outstanding MINING   49462
Outstanding SELLING   49462
Outstanding PURCHASE   2222
Effective Units   51684
   
Block reward   25
Difficulty   26,162,876
Hashes per MINING   5000000
   
Daily Dividend    0.00009611
50 days (Min Liquid)    0.00480554
100 days (Forced Close)    0.00961107
365 days (Buyback)    0.03508041
405 days (IPO)    0.03892484
400 days (Post SELLING div)    0.03844428
410 days (Pre SELLING div)    0.03940539
   
NAV Post MINING Div    1,944.98392502
NAV/U Post MINING Div    0.03763223
Days Dividend Post Div   391.55
SELLING Dividend    -         
NAV Post SELLING Div    1,944.98392502
NAV/U Post Selling Div    0.03763223
PURCHASE selling price    0.03951384
PURCHASE buy-back price    0.03687958

With the J-D investment recovering a lot of its loss NAV/U and the price of PURCHASE has actually increased today.

Put them up now.  Will post report once I've checked wallet balance after dividends matches my spreadsheet.

Yeah it would be a total pain for me.  I get the user ID to send to from the list of who transferred.  I use copy/paste to put in my own transfer out so there's minimal risk of me sending to the wrong person.  I can, of course, get the quantity to send wrong - but a pin wouldn't change that.  Obviously I wouldn't object to a pin being added if it was optional.

I plan to automate the exchanging eventually (it can't be done right now even if I had the time - as API doesn't currently provide sufficient information : it lacks the identity of the sender so a bot wouldn't know who to send back to) which would be impossible if there was other information required beyond identity of sender.

Not sure how many transfers I've done for DMS but it must be getting towards 1K sets of paired transfers.  Only errors so far (other than missing a few - which were all caught up with either when my daily audit caught the error or when the user PMed querying) were a couple of occasions where I failed to send 1 of either Mining/Selling (probably clicked transfer instead of pressed yubikey and didn't notice) and one where I sent too few of one.  Oh and on a few occasions I mistakenly sent mining rather than purchase when doing swaps in from my personal account - just force of habit there I guess.

Copy/Pasting name to send to from wherever it originated rather than retyping it is best protection by a mile.

I considered that (as you said earlier, I don't object in theory to people picking the level of their BR they risk) but I think any loss of ROI from that would be balanced by the reduction in CP/exploit risk and the increase in ROI on committed capital allowed by more flexible management.

Personally if that change were implemented I'd likely withdraw 90% of what I have deposited, increase risk % to 10% and re-balance the BR each day.   That would give me similar (not quite the same) results as now with less CP risk and efffectively no delays on withdrawing up to 90% of my 'deposit'.  I'd expect quite a few others to do the same - so net result would likely be increased max bet but less cash on deposit : which is a good thing for the site and allows more efficient investing.

I have no idea whether it would satisfy those who can't see how adjusting capital deposited can simulate lowering risk %.

Only down side is that if most investors increase their risk% and keep less cash on deposit then max bet would fluctuate far more with the possibility that if a whale had a big losing streak it could take some while for fresh batches of deposits to come in and allow the whale to ocntinue betting at the same level to return their borrowed winnings.

Your argument is fundamentally flawed in a bunch of ways.  Two key ones being:

It's not the same as someone divesting when a whale appears - as they don't get to keep ongoing profits from small bets when they do that.
The small bets don't give any significant variance to the BR as a whole - ALL of the significant variance comes from (relatively) large bets.  Pool 1 doesn't reduce that variance at all.

Pool 1 ONLY impacts the site's overall bank-roll if that bank-roll would otherwise fall so low as to no longer support a 20 BTC max bet.  All the time max bet is above is that pool 1 just leeches off low-variance profits whilst not increasing max-bet or doing anything useful.

It benefits noone except those in pool 1.

Dooglus gets a lower max-bet, has to implement changes and then offers higher CP-exposure (assuming there's some who won't invest at present who would otherwise).
Bettors get a lower max-bet.
Pool 2 get less of the low-risk profit.

All to allow some people to provide unneeded investment (to cover stuff that pool 2 could cover on its own).  As the existence of Pool 1 wouldn't help bettors, dooglus or Pool 2 it's just a charity if it ever existed - existing purely to help itself and offering nothing of value in return plus causing harm to everyone else just by its very existence.  It actively promotes totally inefficient investment - holding cash for the sake of it with no purpose (unless needlessly dikuting profits is a valid purpose).

I think there's about 0% chance of dooglus implementing it so I'm done discussing it.

That suggestion is logically unsound.  Remember the purpose of the site having investment is because it needs it.

Consider a simple implementation where there were two pools:

Pool 1 only took action on bets under 20 BTC
Pool 2 took all action

If pool 2 had less than 2k BTC in it then max bet would have dropped to 20 BTC - obviously bad for the site.

If pool 2 had more than 2K BTC in it then max bet would be 1% of pool 2.

Why is pool 1 now needed?  Pool 2 can cover ALL bets without pool 1.  And by getting rid of pool 1 you may get some of that money back into pool 2 - increasing max bet and hence the site's expected profits.

The existence of the 2 pools has precisely three effects:

1.  It lowers the house's expected profits (reducing max bet)
2.  It lowers profit for those in pool 2 - as they unnecessarily share profits with those in pool 1.
3.  It gives low risk investment opportunity  - encouraging people to invest in it rather than pool 2.

But pool 2 is what dooglus needs - so why should he want pool 1 to exist?  It doesn't add to max bet.  It increases CP risk which may reduce capital in pool 2.  Some of the investment there would be in pool 2 if pool 1 didn't exist.

It's a concept that essentially asks dooglus and those willing to back vs big bets to charitably give some profit to people offering UNNEEDED investment - in the process reducing the high-risk cover.  I'm just not seeing why people believe they have an entitlement to low-risk profit where their investment provides no benefit to anyone other than themselves.  The low-risk action can be covered just by people who are also willing to take on the high-risk action - so WHY do dooglus or those willing to take on the risk want to give profit to those who just want a safe steady cash-stream?

You (and plenty of others) fundamentally fail to understand why investment of this scale is needed in the first place.  It's NOT to cover the 0.1 BTC bets.  It's to cover the 200 BTC bets.  And the low-variance action is the reward for accepting the high-variance action.