There is an easier way to decide that than feeling it. How many people have paid 30 BTC to use it ? PR girl, this is a simple one to answer.

As far as I know, every part of this scam is outlined in the contract. This does not make it any less of a scam, but a scam that users are accidentally agreeing to it.

Parts I found scammy/schemey:

- Main source if revenue directly related to the amount of noobs that can be recruited and made to pay the 30btc registration fee.

 - Bashes all other security exchanges yet is not even a real stock exchange and instead a gambling site.

- Other main source of revenue relies on a robots ability to predict the future where their users cannot. Unless this robot is in possesion of a magic 8-ball, it is doing nothing but gambling.

- No real value created. One guy loses money and one guy wins the other guys losses. Money is switching hands but never is value created like a normal business.

- nonfunctional securities. 2 securities for gambling sites, 1 for a video game dev (only source of creating value related to this scheme albeit very little value) and of course s.mpoe which gets its profits from recruiting noobs to pay the registration fee and hopefully gamble against the robot and lose.

- Website designed to mislead. Everything about the site reeks of bullshit. Designed to make you think you are "investing" in something legit but really you are throwing money away unless you are taking part in the scheme.

Point of this thread was to determine what mpex does and whether its profits come from actually creating value which has become clear is not the case.

Butthurt?

yes currently only coinbase is doing good and quick work others some are dumb and some are going very slow so just concentrate on this one

Despite my better judgement warning me it is an utter waste of my time to respond to such ongoing flailings and desperate attempts to lower the tone of the conversation, on this occasion I will accept the invitation to explain the inherent idiocy of claiming to provide competent options market making services while never hedging options positions and never entering naked positions.

By definition, an options market maker is a guaranteed buyer, and a guaranteed seller. The market maker does not get to decide, in advance, whether they're going to be buying or selling, and the market maker does not get to use a crystal ball to tell them, in advance, what demands are going to be made either to buy or sell options or to deliver or to take delivery of the underlying.

As a result, any competent market maker -- who, being competent and all, is not going to introduce inordinate levels of counterparty risk -- continually adjusts positions both in cash and in the underlying entity which are sufficient to cover their obligations created by ongoing sales and purchases of options. That's in addition to ongoing adjustments to bids and asks across option chains so as to accommodate changes in the price of the underlying and fluctuations in demand for the options. In my original example, when they're short a call, they might ensure that short position is balanced by a long in the underlying -- and, notably, maintaining that long position, whose price moves inversely relative to the short position, is the very definition of hedging. To the extent the position is covered, it is hedged -- by definition. Someone who claims otherwise either does not understand the meaning of the words, or they hope that you don't.

(I'm simplifying quite a bit here. More generally speaking, options market makers keep a lid on directional risk, or delta risk, via a range of strategies, including using futures. They also keep a lid on risks associated with the other Greeks -- gamma, vega, and theta -- but we're dealing here with someone who claims to provide competent market making while ignoring the obvious delta.)

The types of adjustments I've just outlined explain why, generally speaking, competent market makers tend not to lose large amounts of money: a competent market maker is not merely gambling with a pot of underlying capital by buying and selling options willy-nilly, hoping to make a killing on the bid/ask spread. On the contrary: their entire operation is designed and delta hedged so as to avoid wild swings in the net value of their position and to provide a service which is both extremely reliable for market participants -- by virtue of continually ensuring their ability to deliver on their obligations -- and highly profitable to themselves.

Merely "having money" and providing a bit of options market making without a grasp of the basic mechanics of risk management in the activity does not make one a competent market maker; it makes one a gambler.

Merely "having money" and occasionally losing large sums while options market making does not make one a competent market maker; it makes one a source of counterparty risk.

The bottom line is that out in the real world of finance, a supposed market maker who not only failed to grasp the concept of delta-neutral hedging but actively promoted their lack of hedging activity as some sort of good thing would be laughed out of the room -- or more likely just ignored. Only here, where Bitcoin finance remains in its infancy, can someone swagger in without a clue about even basic delta hedging, point to a big bag of money, and attempt to browbeat and intimidate folks into thinking that that somehow implies they know what they're doing and can be relied upon as a safe counterparty.

Good advice & an interesting read, thank you MPOE-PR.

Until such time as you are capable of magicking up anything other than a fairly tale to explain how a competent options market maker can simultaneously never hedge option positions and never enter a naked option position, it will remain the case that I'm fucking retarded.

19:18:24 mircea_popescu: ahaha that dr greg forum guy is hysterical.
19:18:40 mircea_popescu: "how one never enters naked options positions, while simultaneously never hedging options positions"
19:18:57 mircea_popescu: aka, "how does one not steal clothes while also not returning them"
19:19:15 mircea_popescu: forum muppets never heard of this mystical concept of, you know... like having money ?

But you are the one asking us to pay you 30btc for a service which we have no idea how it operates and how it creates revenue.

Or should we just take your word for it and fork over the 30btc, invest in s.mpoe, and see how it goes?

More advertising your nonsense filled blog.

I will ask again. How do you make money? You can't just say "finance" and expect people to buy it.

I´d like to announce the start of my first bitcoin related project

...

Litecoin integration and a poker software are on our roadmap.

PicoStocks is down for a while and will remain like this for sure over the weekend.
Funds from our hot wallet and cold wallet account have been stolen

http://blockchain.info/address/1NzM1bdTKuK9z3pQUCc1raXPezYUenSNWj
http://blockchain.info/address/12RAM7r4EraZ5ESU5QJwe8sS3gj3YYEgpF

There is no sign of an intrusion into the systems. Both wallets were located on different computers. We suspect that these have been copied by people who had access to the system in the past and decrypted.

This is of course a serious loss for the company, but we expect no losses for the users. the funds collected on user account will be returned.
We will have to create a new hot wallet and we will change all PicoStocks addresses for all users, but the rest will remain as it was. We will open the system when we have positively reviewed the security and collected the funds for the users :-( Maybe in 1 week from now :-(

However the more relevent question is whether it is over-valued

For another instance, critics are quick to point out that the BTC is traded on MtGox at 13.5 dollars or whatever it is traded at, which would put S.MPOE somewhere around 8 million dollars, which would be excessive.

So for the last 3 months the total was 2,061 BTC, which if annualised is 8,244 BTC

Thus for the last quarters data ONLY the stocks would seem to be trading at 97x earnings or a div yield of 1.0%. This seems incredibly low in Bitcoin world, compared to most stocks that yield 10-30%.

I could be wrong and those 30btc may go to a legit cause that actually creates value in some way but I simply can't figure it out.

You want no involvement of that nasty State ... until it is your property that is at issue.  Trace Mayer does the same thing.  He espouses all these freedoms and then put all these copyright threats on his page.  The "Bitcoins not Bombs" people say they want to end governments by using Bitcoin .... yet they want something done about sexual harassment at conferences. 

Was the request to back up your condescension with substance too hard for you? Remember, all you have to do is explain how one never enters naked options positions, while simultaneously never hedging options positions.

Or did you mean for hand-waving references to borrowing to somehow accomplish this magical feat all by itself?