exahash was talking about your initial position as IPO manager of BDT.

It would help to know if you are talking about Burt Wagner or Bruce Wagner. Based on what you write it looks like you are talking about Bruce.

Edit: A bit of trivia - BurtW's original username here was bwagner, but he changed it, probably so people won't erroneously think he has anything to do with mortgage scams and three-pronged attacks.

Let's put it this way. Out of the people involved in this "drama" I currently trust Alberto the most. He's made some blunders in the past but at least he's not disappearing for weeks without a trace or playing neighborhood bully freezing people's assets willy-nilly.

We're still working to resolve this, but I wouldn't worry too much. Alberto is still committed to uphold his contract, I just hope Nefario is as committed to let issuers on his platform uphold their contract.

By the way, I'll only have a limited ability to handle this over the next few days, mainly because of military reserve duty.

The issuer of BDT is Alberto Armandi, not JRO.

I'm trying to figure out what is the problem.

I have 0% equity in Bitdaytrade.

Way to twist my words. On day one there was no ASIC on the horizon. Now the ASIC prospects seem promising, but there is still uncertainty if and when BFL will deliver; if it happens any time soon then yes, the value of deterministic mining bonds will greatly decrease.

By the way, back then even BFL's FPGA products were considered vaporware/scam by many. I took all the information available to me and estimated that they are in fact legitimate. Because of this I was able to offer bonds at a price that made use of their products' cost-effectiveness. After a long time (during which I still paid coupons!) they did indeed deliver (some, I'm still waiting for my second order). If they had not, I would have suffered a major loss and still be committed to my deterministic obligation. That was a risk I took, not the investors. I took a bet on BFL and won, and it's perfectly fair for me to profit from it. If we instead penalized people for making the right decisions we'd be in a lot of trouble.

I've used something called an "analogy".
If I take 1 BTC debt, I still owe 1 BTC even if the value of a BTC decreases.
If I take 1 MH/s debt, I still owe 1 MH/s even if the value of a MH/s decreases.

Your argument would have made some sense if there was indeed a global splitting of hashrate. But there's not, miners who bought equipment from one specific manufacturer will get an increase at some unspecified time which differs between them (and which they are unable to prove). Others are either stuck with what they have (other FPGAs) or sell their equipment at a loss (GPUs).

It is unfortunate that they think deterministic assets are wrong, and this indicates that the Bitcoin market lacks maturity and economic understanding.

Thank you, I've been waiting for the right time to unwatch this thread and add you to my ignore list (you're at the respectable 2nd place). Happy trolling.

It's too late for me but for future reference if you want people to read what you write you should consider the following:
1. Only write about things you understand.
2. Present your argument in a clear, methodical way.
3. Avoid personal attacks and offensive terms.

Nonsense. This is more like if I take a 1 BTC loan when 1 BTC=$10, clarify that it is BTC-denominated, the BTC price drops to $0.5 and then you'll expect me to pay back 20 BTC because that's worth the same $10.

You are also forgetting that only people who bought from BFL get a free upgrade. People who bought alternative FPGAs do not get anything, do they also need to increase their bond x20?

I never said otherwise. I only said that's part of the risk investors are taking and for which they are ultimately responsible.

Clearly our views on this subject differ. Yes, the deterministic model doesn't handle the current events very gracefully. But it's not about the current events, deterministic contracts will play a key role for many years to come, and I am not interested in contaminating the concept.

Casascius wasn't complaining. He said you can post in the newbies section and still have it discussed by veterans.

As I said multiple times, an investment being "recommended" is a function of the price. It will be inappropriate for me to discuss whether the investment is recommended at any specific price. I am currently not offering any new bonds so I have no direct interest in people buying them at this point.

You can doubt it all you want, it was my intention. I wanted to simultaneously make a profitable, honest business venture, offer people a streamlined way to invest in mining, and move us one step closer to a hashrate commodity market.

When I created the bond I did not know when would ASICs arrive, did not expect them to be introduced with such an aggressive pricing strategy, and I definitely didn't expect the trade-in program. To suggest that I somehow plotted to cunningly profit from these events is ludicrous.

In the long term issuers don't determine the price of bonds, the market does. I explained very clearly what the asset does, what factors go into valuating it, and that it is every investor's responsibility to evaluate how much they stand to gain from it. It is not my fault if someone decides to pay 0.7 BTC per bond (not to me, in the secondary market) and it ends up a bad investment.

In theory the prospect of profiting from upgrade plans and such would make its way into the price the issuer is willing to offer the bond at. In my case I had not expected such a plan, and so it was not reflected in my initial price.

I am not. (Not like most greedy people, or like most people of any kind for that matter. I do like money however.) If I was I would probably have given up my word and my values and offered an upgrade plan to win the popularity contest. Or try to offer new bonds the moment ASICs arrive to capitalize on the uncertainty with regards to the target equilibrium.

You keep focusing on the "fairness" of issuers sharing the outcome of every positive event with investors but never stop to consider the bad things that can happen, and the risks of being committed to stick to the contract no matter what. I could die and continue to pay coupons from beyond the grave, would many greedy people do that?

I am thinking of establishing a long term trust-relationship with my investors by doing exactly what I said I would do, rather than resort to whims and marketing gimmicks. Really, if you read the PureMining OP and contract appendix you'll see I went out of my way to specify what I would do in every contingency and why, and I made a huge deal out of it being deterministic. I have no idea how could anyone get the impression that upgrading the bond was an option. If I wanted to do a mining company like everyone else I would have done a mining company.

Switching from GPU/FPGA to ASIC is once in a lifetime. There will be further hardware advances but they won't be anywhere near as drastic. The disruptive thing here isn't the ASIC, it's BFL's upgrade plan. There's no way every time they make a new device they will allow everyone to do 100% value trade-in.

Buying back does not harm investors. If the asset devalues it means so have its expected earnings, at which point the investors are better off with the issuer buying the bonds back.

Yes. They didn't invest in FPGA currency or BFL currency or whatever (and there are ways to do that if that's what you want). They invested in MH/s currency. Usually when a currency you invest in is devalued you will suffer loss.

Actually MykelSilver is right. We used an incorrect formula previously but it looks like it was corrected only for gold and not for BTC. BTC/USD Hourly and Weekly interest rates should be changed to $10000 * 0.01 / 168 and 10000 * 0.01 / 7 respectively.

That's not really fair, giga will trade 5 MH/s assets for 20 MH/s for free if and when BFL releases their ASICs and upgrades his equipment. Part of the current valuation of mining bonds is a result of uncertainty (whether justified or not) of this event.

I take it that if Giga's DC gets hit by a meteorite, the asset should downgrade to 0 MH/s because the melted equipment really belongs to the holders?

If you want to enjoy all positive events but suffer from none of the negative events, we can do that but it would cost extra and people who don't want this extra service shouldn't be forced to pay for it.

Exactly, it's about the market. You can certainly say assets A, B and C are currently overvalued and are thus a bad investment. If you found a "rule of thumb" that these assets happen to be those with property X it's ok to say this as well. But it's unacceptable for you to say that PDMIs are inherently bad, which you did - and for that purpose it doesn't matter if you're harming my business, disparaging my invention, or just being wrong on the internet.

I'm backed by hardware.

This makes sense only in very specific circumstances. In general nobody will want to buy the equipment at a price which will make this profitable. This is viable if he's selling GPUs to gamers to get ASICs (also at some loss), but again this is a once in a lifetime event.

Maybe but they have every right to affect you in this way.

No, because then the bank has no way of knowing that you'll be willing and able to stick to your payment plan. But you can offer a car as collateral to get a loan for a purpose which has nothing to do with cars. Similarly, an issuer doesn't need mining hardware to be good on a mining asset, but he does need to be honest and responsible with his liabilities and assets (and could also offer unrelated assets as collateral if applicable).

Who said anything about misleading? If someone is offering a naked PDMI he should definitely make it very explicit.

That's extremely simplistic. It's a market and there are only so many people interested in the asset, and so much they can and will spend on it. Utility of money is sublinear and as you scale an investment the risk (which is quadratic) increases proportionally, requiring a higher expected profit (i.e., lower price) to compensate.

Never said otherwise.

You can start with https://en.bitcoin.it/wiki/Proof_of_Stake but there are some new ideas I still need to write about.

I guess it will be easier to estimate the exact cost with a more specific design.

There's something about this whole situation that people simply aren't getting. The upgrade path offered by Giga et al isn't allowed by sprinkling magic powder on his equipment. It is making use of BFL's upgrade offer which is a once in a lifetime event brought about by a very specific circumstance. In the "real world", mining companies can't upgrade their equipment for free. If the company bought X GH/s of equipment with its IPO funds it is stuck with X GH/s of equipment. If there is anything that negatively impacts mining profitability, the company's profits and dividends will shrink accordingly, just like with a deterministic instrument.

The same issuer that is "protecting his investors" could just as well screw over his investors. IMHO it is much less risky to invest in a deterministic asset where the issuer has no influence at all on the returns - the investor can focus on global parameters such as difficulty and price instead of playing guessing games what the issuer will or will not do. You're entitled to a different opinion but please stop the trash-talk saying deterministic assets should be "filtered out".

I respect Giga's decision but it's taking us one step further from a true commodity market for hashrate, which would be to the benefit of all.

Development work isn't one of the things that's outsourced.

Alberto is helped by friends, outsourced contractors and consultants (that includes me), but he really is the only one directly involved.

If you can demonstrate that loss / missed profit was caused by bugs in the system Alberto will be happy to compensate you after the fact.

Sukrim said "shares" because that's the term usually used for units on GLBSE, he knows they are not company shares.

Issuing new PDMIs (or traditional bonds for that matter) doesn't affect their returns, but that doesn't mean it doesn't affect their traded price. Increasing supply reduces price since there is only a limited number of people willing to pay the higher prices.

Technically yes, but investors who bought at that price were compensated so the effective IPO price was 0.28 BTC, and the highest I ever offered it is 0.4 BTC (the highest it was ever traded is 0.7 BTW).