Curiously, for the first time since I've made this spreadsheet, the arbitrage on buying PURCHASE and selling MINING over buying directly SELLING is negative (i.e. it is more convenient to just buy SELLING). However this is not taking into account that buying PURCHASE increases a small bit the total assets, which is something you want if you plan to hold SELLING, right? Right on both points. Yesterday was second time I (briefly) noticed that trades in the direction you point out were profitable (or arbing in other direction made no sense). There have also been a few occasions when it was cheaper to buy a SELLING+MINING than to buy a PURCHASE (of course PURCHASE still sold despite that) - which would also automatically meet the condition of buying SELLING making more sense. Such opportunities don't tend to last long of course. Whilst theoretically buying PURCHASE gives a small increase compared to arbing, that difference is absolutely minimal (as its split between 30k+ shares) so can be discounted for practical purposes. |
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What about splitting the cold wallet up into smaller amounts and giving them to other established members of the bitcoin community? I trust that dooglus is up to his eyes in backups, but this would also remove some of the incentive to take the money and run. The passwords for those accounts could use samir secret sharing so dooglus wouldnt have to trust these other people as well.
How can you possibly have it so dooglus doesn't have to trust them? Either has access to the accounts - in which case he doesn't have to trust them but all we've done is added new risk. OR He doesn't have access to the accounts - in which case he DOES have to trust them. In general this kind of approach ends up adding risk not removing it. And, more importantly, it makes it hard for investors to assess risk - as we can't tell in advance who our capital is going to be exposed to. |
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If you see 7500 shares outstanfing in Btct.co it mean it still 7500 shares which will be sold at 0.2 BTC
I hope this will help for clarification
Wrong way round. Outstanding = sold. If you see 7500 shares outstanding it would mean 2500 shares left to sell at 0.2 BTC. |
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in BF, all issued shares must be paid a dividend, even if it's the issuer that holds them. It's kinda annoying if you are still trying to sell shares and are forced to have enough btc pay yourself in order to pay everyone else.
It also makes it impossible to tell how many shares have been sold - which is great for those who want to market-manipulate their own assets but not so great for legitimate issuers or for investors. |
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But investors in S.MG (should) want whichever will give the best return on investment - the company's focus should NOT be on "what will make the most players happy" but on "what will make the most profit for our investors". And I'm VERY certain MP is on the side of investors not players.
None of which to say the two (pleasing investors and having satisifed players) are mutually exclusive - it's just that it's far easier to develop something that focuses on one of them than to try to deliver to both.
I disagree here. Even if investors care only about profits and not happy users, unhappy users will not bring profits in the long term, and likely not even in the short term (though that may happen). If your game is horrible it won't sell, no matter if it has a good business model (actually, having a bad game is a bad business model itself). Furthermore you'll alienate players for your future games. If instead your game is great but it doesn't have a sound business model, it may be a financial failure, but at least will give you a head start for your next one (assuming you manage to try to make one). So, both of these failures bring you no money, but while one gives you an advantage for an eventual next try, the other gives you a penalty! You're not disagreeing with me at all. If making a bad game or having unsatisfied/unhappy customers makes less profit then a profit-driven company won't do that. But the reason they won't do it is because it hurts profit - not because of an overriding desire for good games or happy customers. There's no denying the two things are linked - and that producing horrid games is bad on every score. Where the distinction matters is on more marginal decisions - where there's a choice between making customers more happy or making more profit. Most of the time the two are in general alignment - but by no means always. You could probably make customers happier by halving all prices - but unless that increases overall profit (i.e. increase in volume outweighs loss of margin) a company shouldn't do so (a simplification of course). Your second example relies on the company having sufficient capital to make a second game after financial failure on the first. If they do - and it it's planned - then it's generally known as a loss-leader and it a perfectly sound profit-driven decision to make. If a company unintentionally makes a loss then that's normally going to be bad management however you cut it. |
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Thats obvious. Question is, if we made a profit at just-dice, should we pay it out to ourselfes at some specific point? (Not the whole investment, only the profit)
Won't the profit be included in the coming SELLING dividend?
Yes - all profits from investments are included in NAV and add to the next SELLING dividend. When we made 3 BTC on J-D yesterday that added 3 BTC to the total amount of dividend SELLING will receive in a few days (it looks safe to assume SELLING will get a dividend). You can see how this has effected things from the daily reports. After last SELLING dividend NAV was exactly (to a few decimal palces anyway) 400 days of MINING dividends. There have been 9 days of MINING dividends since then. But NAV/U at present is still 395.94 days of MINING dividends - its only fallen by 4.06 days not by the 9 it would have fallen by were it not for our investments (and the profit from selling new PURCHASE). That means that the next dividend per share for SELLING will be 4.94 MINING dividends larger than it would have been if it wasn't for the various profits. That's 0.0005822284 SELLING will get in its dividend that it wouldn't get without investments/markup on PURCHASE. Or an extra 20.6 BTC in total that will get paid out. I can't give the exact breakdown easily, but I'd say just over half of that is from investments and the rest from the markup on PURCHASE. |
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But if you would cash out the profit, it adds to our balance (and that's your wallet not someone else's).
Pretty sure the profit is already factored in, which explains why the just-dice and coinlenders numbers have grown from their respective 100 and 200 BTC numbers. Right - there's no such thing as unrealised profits with Just-Dice (in any meaningful sense). Our balance there gos up when the house wins (and down when it loses) - profit isn't stored or treated any differently than your initial investment (minor exception in how its treated for dooglus taking own cut but I move our profits out and back in to remove that effect which is theoretically slightly -EV for us but makes the accounts more accurate). Unrealised profits doesn't refer to a changing cash balance - but to an asset which has a higher value than you bought it for, but where there's no guarantee of that higher price remaining available if you don't sell. That's not the case here OR with Coinlenders. Consider we have a balance of 107 BTC at J-D - of which 100 is our initial deposit and 7 is profit. If we withdrew that 7 profit to our wallet then redeposited it in J-D as fresh investment what would have changed? Absolutely nothing - as there's no process of 'realisation' associated with the balance that makes the profit element any less (or more) secure than the capital element. The same's true with Coinlenders - our CD is displayed with a value which is our initial capital + interest due to date. NONE of that can be withdrawn (until the end date of the CD - at which point ALL of it can be taken out). All of it is equally at risk (CP exposure) but none of it is unrealised (as there's no action I can take to 'realise' or 'unrealise' the profit). If, for example, I could sell LTC-ATF.B1 on the market for 10% over face value then that 10% profit WOULD be unrealised profit - as we have no entitlement to it just an opportunity to realise that profit if we choose. Nothing DMS holds is valued including unrealised profit of that nature. I don't even mark holdings of LTC-ATF up for unrealised profit other than on pass-throughs (where I need to reflect market prices in my spread-sheet for management of the pass-throughs themselves) and VERY rarely (once or twice in 9+ months of operation) for holdings that are explicitly disclosed as being long-term in nature. With J-D you could correctly argue that the profits are exposed to risk beyond just C-P risk (they can be lost if the house loses), However that is NOT because they're unrealised - but because we've chosen to continue to expose them to the same risk (and potential gain) as our initial deposit there. |
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Do you cash out just-dice profits in a specific interval or is this unrealised profit?
Everything we have is unrealised all the time it's sitting in someone else's wallet. |
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Sold 1279
Swapped 0
Total 1279
Price 0.048994
Total 62.663326
Less Fee 62.53799935
Man Fee 1.87613998
BTC Balance (BTC-TC) 1253.41577
12600 LTC-ATF.B1 126.00000000
Coinlenders CD 201.24372250
Just-Dice Balance 106.95438926
TOTAL ASSETS 1,687.61388221
Outstanding MINING 35437
Outstanding SELLING 35437
Outstanding PURCHASE 637
Effective Units 36074
Block reward 25
Difficulty 21,335,329
Hashes per MINING 5000000
Daily Dividend 0.00011786
50 days (Min Liquid) 0.00589288
100 days (Forced Close) 0.01178577
365 days (Buyback) 0.04301806
405 days (IPO) 0.04773236
400 days (Post SELLING div) 0.04714308
410 days (Pre SELLING div) 0.04832165
NAV Post MINING Div 1,683.36228392
NAV/U Post MINING Div 0.04666414
Days Dividend Post Div 395.94
SELLING Dividend -
NAV Post SELLING Div 1,683.36228392
NAV/U Post Selling Div 0.04666414
PURCHASE selling price 0.04899735
PURCHASE buy-back price 0.04573086
Thanks to high profits on Just-Dice, sale of 500 more LTC-ATF.B1 at a profit and high sales of PURCHASE we actually grew in NAV/U today (albeit by a tiny amount) even after paying the MINING dividend.
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WEEKLY REPORTAs usual all figures represent the status as of Sunday (yesterday) evening.   Another good week for the fund with growth of 6.27% before management fee. Growth would have been higher (just under 9%) except LTC rose significantly vs BTC as BTC fell vs USD. The 100:1 split went through smoothly and I only needed to change three numbers in my spreadsheet (outstanding shares, authorised shares and HWM). The spread on the market has tightened and a few shares are already changing hands - so clearly the change has benefitted some current investors (who can sell partial old units) and some new ones (who can actually buy now). We sold all our Ciphermine - so they don't appear in long-term holdings (which I'd said was likely). With the release of a 3rd batch of shares I judged it better to divest totally of them rather than end up stuck below a ceiling if the third release failed or was slow to sell out (which appears to be the case). A significant chunk of our high profits this week and last came from these - expect profits to drop back to more normal levels (my expectation is for weekly profits of 1-3% ignoring exchange-rate impact but that should NOT be taken as any sort of guarantee). Our LTC-ATF.B2 bond is up for moderator approval on BTC-TC now. Currently it has 4 YES votes and noone has raised any issues/complaints about it so it will hopefully be approved before long. That will reduce the cost to us of future capital from 0.6% per week to 0.35% (assuming we can sell at that rate). As has been previously stated I won't be recalling LTC-ATF.B1 - even though it would likely make financial sense for us to do. I'd always (honestly) given the impression the bond would run for a long time and do not intend to forcibly change that. I will, however (assuming LTC-ATF.B2 sells decently) offer buy-back at 100% rather than 99% on it as a small incentive for holders to sell back to the fund if/when they choose to divest. Initially I'll be selling 50 BTC-worth of LTC-ATF.B2 - which can be used for current activities. I'll then sell a second batch when our next security (a fractional ASICMINER pass-through on LTC-GLobal) is launched - to ease cash--flow for that. Further sales will be as and when necessary as usual. For now I'm holding off on releasing dividends - the recent rise in LTC's price vs BTC is by no means solid : occurring as a reaction to BTC falling vs USD. Last night we clearly saw that when BTC started to make a recovery LTC lost back some of that ground. As ever I want to avoid the scenario where I dividend out capital then have to sell more units - I'm firmly convinced that diluting by selling more units is something ALL investors should want avoided and will remain as cautious as I need to be to keep the risk of that to a minimum. My website's coming along fine - and is on schedule for public release at the end of this week. There may still be one more weekly reportd published here before they're moved to the site (it'll take me a bit of time to produce a decent template for the financial details). Links will still be posted here weekly. Management Fee : 171 units - sounds a lot until you realise its less than the 2 old units I got last week. Bid at : 0.575 (we're slightly up since the report was frozen yesterday)
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Since you mentioned it, I will likely be offering a S.MG PT sometime soon. I know it won't be popular, but I think it could turn that way eventually.
Yeah - I don't expect a lot of trade on S.MG yet but down the road it could well become pretty active. I'll probably end up doing a pass-through on LTC-Global eventually - but it's low in my priority list unless I get multiple requests for it. I have no intention, at present, of LTC-ATF moving into running pass-throughs on BTC-denominated platforms. |
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Hm, I'll need to recheck this when I get back. You may be right and if so I'll update the article.
*¤&%&%&!!! I just spent three hours writing a full response, and the browser crashed. *sigh* OK, here we go again, luckily most of the work was in validating the numbers... I checked again, and you are wrong. However, by forcing me to recheck everything, you pointed me to a mistake I had made in my first model. I'll explain that and post the updated numbers, but let me first explain why you're wrong, and let me do so with the extreme example you had. In my model, I am deducting the dividends earned by the competing contracts from the prices of contracts currently mining. This means that in the analysis, any dividend earned works in favor of the competitor. I believe you mentioned this wasn't fair and that one couldn't compare minig with a non-mining asset, but you may have misunderstood the model as it already accounts for this. However, If difficulty goes up 1 million percent then no dividends will be earned at all, so no price deduction takes place. Of course, this also means that everyone loses everything, so the question really becomes who pays more for their shares because that determines how much an investor will lose. Because BFMines is priced lower than competitors per mhs, that means investors lose less with BFMines (they would lose 0.00468 with TAT.VM and 0.00400 with BFMines). To be accurate, this depends on when the difficulty goes up by a million percent. If that happens next week, then dividends earned until next week will reduce the loss. To err on the site of caution, for my model, I have actually assumed that no difficulty changes happen in July at all. This favors competitors, due to the balance between the BFMines bonus being lower and the decrease in reduction from the competitors, the effect isn't too great (a percentage point or two). If I include the changes during July, it favors BFMines. Now to my error. In my first model, I had wrongly reduced the dividends by the same rate as the hashrate increase. In other words, if hashrate increased 15% then dividends would decrease 15%. This is obviously wrong, because if the difficult went up 100%, the dividends would then be zero, when they should be 50%. In the fixed model, I now correctly use the growth in difficulty to calculate the returns. Although not entirely correct for a physical mining operation, I have used the formula from DMS.Mining, as I'm sure you'll approve of that being correct (or at least equal for all). I should mention that when designing the contracts, I used the correct method. So, the results... My statement from the article is that the chosen difficulty shouldn't affect comparing the assets 'too much' (only mining investments in general). The 'too much' is of course a relative term, so let me show you what it means in practice. Here are the results from the updated model using 15% as the monthly change:  Here are the results from the updated results using 30% as the monthly change:  As you can see, the change from 15% to 30% affects TAT.VM competitiveness by 1% point only. This is due to the reduced price reduction countered by the reduced bonus. I'm thinking this is within the limits of what you can call 'not too much'. The overall effect on mining profitability, however, is reduced by just over 14% for all assets. I had spent a long time describing the formulas before my browser crashed, and I can't be bothered to rewrite it all again, so I've uploaded the Excel sheet to Google Drive so you can verify the formulas yourself. https://docs.google.com/spreadsheet/ccc?key=0Am7kSNaxKrIMdGg1WnI1ZFp2RTh1ZXp2NVpCNkxIVGc&usp=drive_web#gid=0I should point out that if updated with today's prices and the reduced dividend payout time for competitors until September 1 (still not accounting for price drops), BFMines is again the cheapest mining investment per mhs on BTCT:  This does not include any transaction fees, however, which would further favor BFMines by a percent or two, depending on what the transaction fees are. Of course, if the transaction fees goes through the roof, that further increases the benefit to BFMines contract holders, as unlike TAT.VM at least, the dividend is based on real mining rather than a return formula. Speaking of which, and slightly off-topic; does DMS.Mining pay out transaction fees? The effect you mention with your extreme example slightly affects the analysis if the increases are within normal expectations only, but the effect is so small that I call it, with good conscience, 'not too much'. For a doubling from my chosen numbers, the effect is around 1%; for a quadrupling, the effect is another percent. However, from there on, the effect is turning around and is eventually cancelled out, so if there's an increase of 240% per change, BFMines is faring better again, and with a change of 1 million percent, the effect is all but cancelled out. In other words, BFMines, with its lower price and bonus is effectively priced at the same level as TAT.VM was when I wrote the article. With the price rise on TAT.VM today, BFMines is the cheapest mining contracts on BTCT, regardless of whether you include any of the factors that would further favor BFMines. .b Thanks for the detailed reply - now I'll have to do some math as well (or maybe not). A few points I can comment on without even doing math: 1. I agree that at current prices, if you make the assumption that your PMB will be profitable then it represents better value than the PMBs you compared to at their current prices (possible exception being PAJKA if their extra hardware arrives very soon - and I make no comment on comparisons to assets that aren't PMBs). However : your whole basis of comparison assumes profitability - by measuring it based on selling price rather than on returned capital. Specifically, if yours makes a loss (and if it does, so do the other PMBs you compared to) then the small difference becomes increasingly larger as a percentage of any of returned capital (total dividends paid), loss made etc. I don't make this point to argue you should project total earnings - that would be unreasonable and I dont think ANYONE can do that accurately (certainly not for any model which involves profit being made) - just to point out that the whole basis of comparison you use assumes profitability. 2. At a cursory glance it appears you may have mistakenly forgotten to apply the difficulty change to your bonus calculation. Increased rate of change doesn't just change the value at the start of September but also the rate at which it drops DURING september hence having a double-whammy impact on it. Rather obviously when your miner arrives so will be the rest of that load - so there should be a spike in difficulty not a levelling out. That won't have a huge impact on anything - though if the difficulty change-rate were continued over the whole period in which the bonus was generated it would have a more significant impact. 3. Annual yield appears to be calculated as though once your Miner arrives all ASIC manufacturers will immediately stop producing ASICs out of sympathy - i.e. there'll be no further difficulty rises for a year. Calculating an accurate annual yield would be hard - but implying that difficulty will never rise again is rather horribly misleading. The column is misleading giving an entirely false impression of what returns investors could expect in a year. 4. You asked about DMS.Mining and transaction fees. DMS.Mining does NOT pay any equivalent of transaction fees. Nor do any existing PMBs (that I'm aware of). That's because all current PMBs pay based on theoretical output from mining rather than actual output from mining. That means no transaction fees but also no Stales, no orphans, no reductions if net connection dies, no reductions if hardware breaks down etc. You now appear to be saying you pay based on actual mining results - are you saying if the hardware breaks down you'd suspend dividends? If not then how would you be calculating transaction fees for periods when your hardware was inoperational? The approach I took with DMS.Mining (and taken by all current PMBs that I know of) if that the loss of transaction fees is more than compensated for by 0% down-time and 100% efficiency. 5. Your repeated references to "cheapest on BTC-TC" should be changed to "cheapest of the ones on BTC-TC I chose to compare to". That you choose not to compare to DMS.Mining is your choice - and your right (even if the stated reason - price volatility - is debatable and irrelevant for investors rather than speculators). But you can't make a claim about "cheapness" that includes it (which any claim relating to "all" does) when you chose not to include it in your comparison. NO PMBs (unless yours is an exception) are actually mining securities - as ALL of them have payouts defined independently of the output (or even existence) of mining hardware. The ones that actually have hardware only have it as proof of capability to pay - not as the source of dividends (as they ALL are committed to paying out even if the hardware fails/is stolen). |
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My last post on this - just want to be clear what I AM saying and what I'm NOT saying.
I'm NOT saying it's certain BFMINES will make a loss. It IS possible that the manufacturers are stupid enough to sell hardware that will mine more than 20 times the price they sell it for (or couldn't get funding for less than 1950% interest from a source other than pre-orders).
I AM saying that the rate of difficulty change from now until the hardware arrive is CRITICAL when comparing to assets laready mining.
I AM saying that furknap's figure for those short-term difficulty changes is wrong - and unduly favours his own asset.
I AM saying that by actually claiming BFMINES will be profitable for investors furknap is putting his reputation on the line where most others avoid doing so. It's highly likely some people WILL buy because he said it would (or was very likely to) be profitable who wouldn't have otherwise bought.
I have no interest (in fact a definite disincentive) in trying to actually define a likely range of returns for this security (or ANY mining 'bond').
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I'm not bashing DMS.Selling for never being able to return 100% ROI
That one's an interesting strawman - as you appear to be saying that there's something automatically bad about an investment that will never return 100% ROI. Side-note: For those who don't understand what ROI is (furknap DOES know what it is - and is using the term correctly) it refers to Return ON investment (profit) not (as often misused here) Return OF investment (getting your initial investment back). SELLING can never (or almost never) return a 100% ROI at current prices - that is correct. But got no idea why you'd believe that is any way a bad thing. I regularly buy shares and sell them for a 10% -20% profit. I NEVER feel bad when I make 10-20% in a few days because it's less than 100%. If someone offered a bond paying 30% dividends/year and ending in a year then it could NEVER give a 100% ROI. But would that make it bad? Of course not. So it's not actually very generous of you to refrain from bashing SELLING for something which isn't of itself a fault anyway. An investment can be great whilst never being able to achieve a 100% ROI and can be horrible whilst theoretically being able to deliver well over 100% ROI. ROI without a time-scale is meaningless - and bashing something because of its max ROI without an associated time-scale would be stupid. I didn't quote rest of the sentence - but if you DO want to bash SELLING investors or those selling SELLING to them they feel free : the whole point of DMS was, however, to let people do the bashing with BTC rather than with words. |
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"Also, I don’t speculate in difficulty changes as a policy, but I’ve chosen to account for 15% per month for the next two months when comparing the numbers. This may or may not be right but regardless, it shouldn’t affect the comparison of assets too much, only mining investments in general."
I can see no rational basis for assuming a 15% rise per month in the next 2 months for difficulty. Even a quick look at current trends shows that in recent months the rise is consistently around double that. That's with only 3 companies providing ASICs - and one of them (BFL) only just really getting going. Like I said, that number isn't really relevant in terms of comparing mining assets which was the point of that article. The number is relevant in terms of evaluating mining investments as a whole only. I know you said that - and you were wrong the first time you said it. That number is VERY important when comparing a security not mining yet (yours) to ones already mining (the ones you compared it to). Saying it a second time doesn't make it true. Easiest way to explain why it's relevant is to consider an extreme example - a ridiculously extreme example. Imagine that difficulty rose by 1 million % at every difficulty change from now until delivery of your hardware. You say that doesn't matter for comparison purposes - yet it rather obviously does. As the income mined before the next difficulty change for things already mining would exceed what yours would mine from now until you died peacefully of old age. When comparing yours to ones already mining the key to consider (as you can't compare them purely on price) is how much extra will they mine compared to you in the period before your hardware arrives. Rather than considering it in terms of difficulty it's easier to explain when considered in terms of earnngs (those are inversely proportional to difficulty so conclusions drawn are valid). If earnings/day now are X Earnings per day at delivery now are Y days to delivery are Z Then we can approximate earnings (by assumign a steady change in difficulty or earnings) extra from a competitor before yours arrive as being Z*(X-Y)/2 - i.e. the number of days times the total change/2. Rather obviously as Y gets smaller (difficulty increases more so earnings reduce more) that number increases. But not only does increasing difficulty make Y smaller (and the difference in earnings greater), it also makes the starting difficulty for YOUR mining higher - meaning your bonus is smaller AND is competing against a larger deficit. I'm not seeing how you could possibly reach the conclusion that difficulty change BEFORE your hardware arrives doesn't matter for comparisons. It's CRITICAL when comparing. Difficulty changes AFTER your hardware arrives are, indeed, not all that relevant for comparisons - but that's NOT what you were asserting as you were specifically referring to difficulty changes BEFORE your hardware arrives. And those are the ones that are obviously wrong - and in a direction which unjustly favours your own security in comparison to ones whose hardware (or virtual hardware) is already mining. |
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And if all Bitcoin mining investments are unprofitable, do you then think that Bitcoin will survive?
Vast majority of bitcoin mining investments to date have made a loss for investors. Bitcoin is still around. It's a bit like asking if gold-mining was unprofitable would gold survive? When you think about the answer to that you should realise that mining being being unprofitable has absolutely no detrimental effect on Bitcoin - one of four things happen (or a mix): The price rises so it becomes profitable. Some miners stop mining and it becomes profitable for the rest. Miners are too stupid to realise they're making a loss. Miners sell shares to idiots - passing the losses on - and carry on mining making a profit themselves anyway. Numbers 3/4 happen all the time anyway. |
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Other option is doing secured loans ourself (this was mentioned in the contract and would be fine). Basic terms would be:
We'd only do secured loans.
Loans would have to be secured by providing collateral to us - in the form of solid securities - with a value significantly in excess of the loan value.
We'd charge a pretty low rate - reflecting the very low level of risk to us. Something like a 1% setup fee then .1% per day.
Loans would be small ones (10-100 BTC). Micro loans (under 10 BTC) aren't worth the hassle and we don't have the capital to do medium (100s) or large (1000s) ones.
I'm fine with doing that - but do SELLING holders want me to? Feed-back welcome - don't worry about the details just whether you'd like it done in principle. Before any loans would be made a contract for borrowers would need to be approved by SELLING (and so would the securities we'd accept as collateral).
I don't see how could we enforce such a loan, in case the borrower defaults. Think you're misunderstanding what I mean by secured loans. You want to borrow 100 BTC? You transfer to me 150 BTC worth of securities first. If you default or their value drops below 110 BTC then I sell them and get our money back. That's what happens with most of Coinlender's loans now - collateral is required. |
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Honestly I would rather provide more BTC to coinlenders rather than deal with providing secured loans directly.
Returns wouldn't be much more from private loans anyway. But I'm totally averse to us exposing a large part of capital to any single counter-party. I have no reason to distrust TF (if I did then we wouldn't be invested there at all) but at same time I can never have absolute certainty about anyone else's reliability. And the fund CAN'T expose too much to one party because we then run into the situation where a default becomes likely to impact MINING - who have no vote and, generally, gain no benefit when everything gos well. So even with very low-risk investments we MUST maintain diversity in any exposure other than to myself/burnside (which MINING holders explicitly accepted by buying into DMS in the first place). So nope - maximum investment target for any single CP remains 20%. I will, however, take out a new CD after difficulty rise assuming there's sufficient capital to do so. |
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Namworld's BTC-Bond on BTC-TC. That only pays 0.03% per day (.21% per week, not much over 10% per year) - so I've been reluctant to propose it as it's so low and I can't anywhere find details of what assets currently back it.
That does seem kind of low, especially if there's no backing information. I'd be more open to LTC-ATF.B2 if there was more than 50BTC opportunity to invest in it. I would like for DMS.SELLING to invest a bit more, either in J-D, CL, or another avenue - I like the idea of secured loans as long as they're not too much trouble for you to set up and maintain. I'm not comfortable going over 20% with ANY single investment - so whilst I fully intend to put more in CL it won't go over that. Issue with J-D is that it can lose as well as win - though the likelihood of significant losses for us is pretty minimal (someone would have to hit a bunch of very unlikely wins or risk a lot of BTC repeatedly). Occasionally our investment there is going to take a 1-2% loss but I don't see any real risk of large losses in any short period. At present we're up about 7% on our investment there - statistically we should only be up about 3-4%. If there's significant interest then I'm fine with putting up a vote to increase our investment there to 20% (it's currently under 10% but would be adjusted up to around 10% after next difficulty change). |
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The amount of BTC just sitting there in cash form is still kind of high, any chance you could spend more on investments?
If SELLING holders want me to invest more I will. But that needs two things: 1. Proposed investments. 2. A vote approving them. If cash continues to rise then I already intend to take out a new Coinlenders CD - 2 weeks after previous one started so as to give best possible spread on maturity dates. Just-Dice there was opposition to investing more than 10%. In fact we're doing very well there (someone lost a 640 BTC not long back which means we made nearly 3 BTC there today). I plan to send a top up there after next difficulty change (once we know what capital left will be after that). There's no more LTC-ATF.B1 available at face value or near. LTC-ATF.B2 is being approved so I could take some of that - but there's not going to be a lot of that issued initially anyway. Other options we have are : Namworld's BTC-Bond on BTC-TC. That only pays 0.03% per day (.21% per week, not much over 10% per year) - so I've been reluctant to propose it as it's so low and I can't anywhere find details of what assets currently back it. Graet's loan on Bitfunder. Pays a decent rate and he has a good rep but problem with it I'm not convinced it's properly backed. The funds are largely being used to replace BTC stolen from the mining pool he runs - so any time he pays out he has to borrow back money that isn't even his. And if there are mass withdrawals from the pool then the backing for the bond vanishes and he has to borrow from somewhere else to payout any bond-holders who want to cash out. Other stated use was to buy servers - which are obviously valued in fiat and so not appropriate to be the backing for a BTC-denominated bond. Whilst I don't doubt his willingness and good intentions to pay I'm sceptical of his ability to do so if something gos wrong. For me to trust funds to someone I need to be convinced not just that they're honest and well-intentioned but also that they have the capability to fulfil their end of the deal even if there are significant problems. I'm not convinced of that with Graet.Loan. Other option is doing secured loans ourself (this was mentioned in the contract and would be fine). Basic terms would be: We'd only do secured loans. Loans would have to be secured by providing collateral to us - in the form of solid securities - with a value significantly in excess of the loan value. We'd charge a pretty low rate - reflecting the very low level of risk to us. Something like a 1% setup fee then .1% per day. Loans would be small ones (10-100 BTC). Micro loans (under 10 BTC) aren't worth the hassle and we don't have the capital to do medium (100s) or large (1000s) ones. I'm fine with doing that - but do SELLING holders want me to? Feed-back welcome - don't worry about the details just whether you'd like it done in principle. Before any loans would be made a contract for borrowers would need to be approved by SELLING (and so would the securities we'd accept as collateral). |
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