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1061  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 09:43:40 PM
Bulls profit if it goes up, It should be it going down that would be bad for Bobcorp.
Not if Alicecorp can't fulfill its obligations on the loan.

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But defaults seem to me to simply emphasise the need for collateral.

Where would this collateral come from? Shareholders' homes?

If Alicecorp's shares are sold in BTC, and Alicecorp borrows LTC from Bobcorp, but LTC price rises 1000x, there's no way Alicecorp can pay back the loan; the BTC won't cover it.
1062  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 09:17:27 PM
But unlike all of the other vehicles we've been discussing, that method opens up the risk of default. What if Litecoin goes up by 10X? The BobCoin litecoin bulls could lose money.
1063  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 09:02:48 PM
How would AliceCorp go about shorting litecoin?
1064  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 08:38:46 PM
- Does not require an oracle
- Is not too specific
- Makes sense to actually buy -- offers up to 1:1 leverage

Pick two
1065  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 07:39:43 PM
What if the longcoin could be split further? I.e. the issuer/house/platform will pay for the longcoin in backdrop + asset?
Then each basket is:
(((1 BTC) + (15 LTC)) + (1 BTC - 15 LTC))
Now the market has to value the longcoin more than the shortcoin. I see no way to "game" this system, but do you?

I hadn't planned to implement the long and short coins as baskets themselves but simply to buy back pairs aka completed baskets for the value of the backdrop, since the actual long and short parts cancel each other.
I know, but this method makes the market actually value them properly. The longcoin can be redeemed for its parts, the shortcoin can be redeemed for its backdrop by paying the short part, and the two can be redeemed together for the backdrops.

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Maybe though people holding shortcoins might have an incentive to simply not offer them for sale until some mythical pie in the sky time when they will be worth the full amount of the backdrop, the stuff it is short on having vanished away to zero value.
That'd be a silly thing for them to do, but it's no loss to the issuer.

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So I can see how having a time limit by which they have to be redeemed in order for the entire shortcoin to not become worthless could be useful.
This is the most fundamental flaw of the basket. The shortcoin can become a liability and simply be discarded.

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But if having to tie up capital in the form of backdrop is as big a problem as you seemed to have earlier thought
It's actually 2 separate problems:
- The shortcoin can have a negative value
- It's not economical to be long 15 LTC by tying up 1 BTC; instead, why not just buy the 15 LTC? This is the "worse than 1:1 leverage" part.

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maybe tying it up indefinitely in the hope the thing you shorted will become worthless, or even just in the hope it will some year or decade become worth less than it was when you bought the basket or the shortcoin, is unlikely?
It's still no loss to the issuer.

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I wonder how much of a problem it would actually be to have a few scrooges who keep hoarding shortcoins, more and more and more shortcoins, and "never" selling them?
It wouldn't be a problem if the longcoin and shortcoin were themselves baskets, as I said above:
(((1 BTC) + (15 LTC)) + (1 BTC - 15 LTC))

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Since the longcoin can never go down in value to less than the value of its backdrop, the house/platform presumably should always be able to buy the longcoins back for that amount if no one else is willing to offer more.
The house should offer the backdrop + asset for longcoins, and the house should sell the backdrop for (shortcoin + asset).

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Again, the oracle problem comes into play. I prefer my futurecoin idea above. Options don't need an oracle either.

Yes but options maybe require some special programming, if only in the form of smart contracts that take any needed collateral into the custody of the contract itself (which Open Transactions smart contracts can do); they might not be amenable to being implemented simply as tokens people can trade on the markets like any other tokens?

(This idea of trading like any other token is also part of why I prefer not to have to resort to having expiry dates on tokens.)

-MarkM-
- Alice creates 5 CALL tokens: buy 1 LTC for 0.003 BTC. The platform holds 5 LTC.
- Alice sells the 5 tokens to Bob. He sells 3 to Chris.
- Note that the platform didn't require any collateral from Bob.
- LTC price rises to 0.006. Bob exercises his 2 tokens. His tokens are removed from existence, 0.006 BTC is sent to Alice, and 2 LTC are sent to Bob.
- Afraid of a further rise in price, Alice buys 1 of her tokens and exercises it. She buys the LTC from herself, removing the token from existence.
- Alternatively, if her own tokens are unavailable, she buys an identical token (9.12.LTC.0.003) and holds it. The platform allows her to "link" it to one of her issued tokens.
-- Thus when Chris exercises one of her tokens, Alice's account takes the BTC sent to it by Chris and uses it to exercise the one she bought; both are removed.
- LTC crashes and the last token Alice issued (held by George) expires.

It seems to me that it would work.
1066  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 06:32:59 PM
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This matter of how to actually cause markets to value the longcoins and shortcoins appropriately is interesting though, Hmm...
I think the only way to do it is to have the issuer (or some market-maker) accept longcoins and shortcoins separately.

Maybe the platform could afford to do that on an alternating-type basis.

That is, it accepts them one at a time, and each time only of the type it didn't accept the previous time.

This could be smoothed out somewhat by having users offer the coins for sale, the marketbot then being able to look at both markets to check it can make a pair, and if doing so is within what it thinks (oops, maybe needing an oracle to do its thinking for it) is a worthwhile price it buys a pair.

Thus its buying activity basically broadcasts to the markets what its oracle is telling it is worth buying, which again brings us back to oracles.
What if the longcoin could be split further? I.e. the issuer/house/platform will pay for the longcoin in backdrop + asset?
Then each basket is:
(((1 BTC) + (15 LTC)) + (1 BTC - 15 LTC))
Now the market has to value the longcoin more than the shortcoin. I see no way to "game" this system, but do you?
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It seems possible that if the interest on leverage loans is high enough, and such loans are popular enough, a brokerage doing the collateral/leverage accounts could build up enough collateral of its own that it might be able to provide larger leverage ratios to smaller borrowers, maybe even eventually to the point that small enough loans requested by frequent enough customers could even reach 1:1

For example if a specific customer has borrowed 100 of something at 1% per such loan 100 times, then the brokerage has already received 100 from them in fees, thus might be willing to risk some of that by offering an increase in leverage on loans that small or smaller.
Unfortunately, in a market with anonymous consumers, anyone could seek to recoup their fees by scamming the lenders.

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Futurecoins maybe could be done as baskets the way assassination markets and such work. Basically someone interested in betting on a true/false proposition buys a basket of two coins, an itwasfalsecoin and an itwastruecoin. They then sell either of those to someone wanting the one they themselves do not want. When history reveals whether "it" was true or false, the house buys back either the true or the false but not both, the other becoming worthless.

Presumably the coins would then be retired while new but similar baskets are issued offering much the same bet but covering a new span of time.

Unfortunately this again needs an oracle, and oracles introduce liability as to whether the oracle might from time to time, ever, or always lie.

Again, the oracle problem comes into play. I prefer my futurecoin idea above. Options don't need an oracle either.
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(LIARbility, hee hee.)
hee hee
1067  Economy / Long-term offers / Re: Starfish BCB - Loans and Deposits on: September 29, 2012, 05:44:41 PM
Hello,

I was linked here by member Chang Hum who told me you may be able to help me with a 100 BTC loan...

I am willing to provide my name, address, phone number, email, HD color photo of my ID, HD color photo of my Social Security card and references along with video/photo proof that I am the person I am identifying myself to be (i.e. a picture or photo of me holding my identification with a name card proving my forum identity).

Additional details on my loan request are posted here: https://bitcointalk.org/index.php?topic=110905.0

Thank you for your time and consideration!!!

What's wrong with you

Well, when I read the sticky thread at the top of the board (the one labeled "How to Request a Loan" it says to be ready to give my SSN. When trying to borrow money?BTC it is important to be able to establish your identity...

And you really think it's a good idea to give your SSN to a grown man who loves Spongebob Squarepants and who is running an obvious scam?  Holy fuck, this forum breeds the biggest idiots. 
It does indeed  Kiss
1068  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 05:33:02 PM
Obviously trading on margin / leverage isn't really feasible for the markets we're talking about. The best we can strive for, then, is 1:1 trading. A long/short basket does much worse than this, and so do the various CFD ideas. The futurecoins and options work 1:1, which is good. Additionally, both futurecoins and options can be traded as assets, but again, they don't work so well in an illiquid market.

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This matter of how to actually cause markets to value the longcoins and shortcoins appropriately is interesting though, Hmm...
I think the only way to do it is to have the issuer (or some market-maker) accept longcoins and shortcoins separately.
1069  Economy / Service Discussion / Re: The pirate and the SEC - Alleged e-mails. on: September 29, 2012, 03:37:37 PM
I got exactly the same email an hour ago...
Here is the full copy: http://pastie.org/4791945

- Anyone know what is this about?
- How did they got my email address?

I didn't invest with Pirate, so I honestly don't know why I am receiving this anyways.

Did you give him a rating on OTC?  It seems that everyone getting it so far has rated Pirate on OTC.
I have received this email, from a legitimate .gov address. AFAIK they got my address from OTC somehow... I rated him -10 for "defaulted on large loan."
1070  Economy / Securities / Re: [BMF] MAJOR ANNOUNCEMENT INSIDE on: September 29, 2012, 03:31:16 PM
Still wondering why CPA hasn't paid out on its NAV insurance contract...
1071  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 03:28:45 PM
It could be implemented this way:
- Alice advertises a CFD at X price (spot)
- Bob agrees to the contract. He takes the short.
- It is Alice's CFD, so she will be naming the price. This is specified in the contract. (Obviously, this could be the other way around)
- At contractually-specified intervals, (this part can be done by a bot) Alice publishes a price to the server.
- Bob sells 1 BTC to Alice at that price. The "losing" party sends the "winning" party the difference. These two transactions are designed to cancel out, so Alice's published price is always above X.

But what is really happening (cancel out the dollars) is:
- At intervals, Bob sells 1 BTC to Alice for X (spot at time of contract)

And really, the whole appeal of CFD's is that they can be done on margin, and for that, one needs an oracle. Therefore, it's probably best for the sale to be done as a means of dispute resolution; it's better for the parties to agree on the price. Still, even one dispute would require a trade at the full value of the contract... and as that's probably not feasible, we're back to our problems:
- Baskets: "backdrop" problem means that if the price changes too much, coins can be less than worthless yet discarded for 0.
The backdrop also means it's not done on any kind of margin/leverage; in fact it's quite the opposite. The backdrop must be several times the value of the asset being traded, so to make a little profit from your longcoin or shortcoin, you need a lot of money.
- CFD's (traditional): relies on an oracle
- CFD's (with dispute resolution): again takes a lot of money to make a little profit
- CFD's (repetitive futures contract): again, lots of money, little profit
- Futures contract: Aha! we might be getting somewhere... it can't be done on margin (an account in the red will just be thrown away), but it could work...

I'm not very familiar with Open Transactions. Can it hold money in escrow? Can it hold fiat? If so, we could use trade-able "futurecoins":
- A futurecoin pair is created at $10 by a user. In order to hold a long or short position (an unbalanced coin), a user's account must have enough money to fulfill the contract. Thus, the user deposits 1 BTC.
- The user sells the longcoin to someone with $10 in their account.
- Several things can now happen. Both people can hold their coins, and a sale at $10 will be executed when the contract ends. The first user could buy the longcoin back on the open market, and when the contract ends, no transaction will take place. Buying the balancing coin would also allow the user to withdraw his money. So would selling the unbalanced coin, so perhaps this would encourage liquidity

I'm not sure futures were meant to be an asset Tongue

Of course, there are also options, but without an oracle (MPEX relies on an oracle), all options sold must be covered. If you are selling a PUT option, you must have fiat*put price*quantity on the exchange, and if you are selling a CALL option, you must have BTC*quantity on the exchange. However, only the original seller must have sold it covered; if I buy a PUT option from you and sell it to someone else, you still hold the obligation. I can use bananacoins to short BTC, without having BTC or fiat on the exchange this way: I buy the PUT from you with bananacoins and wait for it to appreciate.

The long+short basket currencies does have one major strongpoint: there's only one of it. Futures, CFD's, and options all have a strike price or something like it, so in a low-liquidity market, they're hard to trade. The baskets, however, are only two things: a longcoin and a shortcoin, and these can be valued by the market.

That does beg the question, however: "Who backs the long- and short-coins?" Why is a litecoin-longcoin worth 15 LTC + 1 BTC? If they can only be redeemed from the issuer as pairs, the 15 and -15 LTC don't really exist except in the minds of the traders. There is no real reason to value a longcoin more than a shortcoin except the concept; it's like a piece of paper which SAYS it's worth 1 BTC + 15 LTC, but it's only worth what others will pay. Bitcoin is worth only what others will pay, but it doesn't state in the transaction "this is worth 3 bales of hay" or whatever. It seems to me that the issuer must also buy-back individual long- and short-coins, or else the system is indistinguishable from two halves of a key which must be put together to open a lock: why should one half be worth more than the other?
1072  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 03:20:44 AM
Well presumably the price they name must at least be on the correct side of the strike?

So long person must name at least strike, and short person must name at most strike?

Maybe you can run through your example again but this time with it being the case that the prices they can get out in the world are below their strike price not above it?

-MarkM-

If I understand you correctly, you mean something like this (let's just use MtGox now; I think the arbitrage scenario has been established):

1. Bob and Alice create a CFD for 1 Bitcoin, beginning at $5. Bob takes the short, Alice takes the long.
2. Bitcoin drops to $4. Alice wants to cheat Bob; she claims it's at $6
3. Bob says "sure, it's at $6." He pays her $1 (the difference).
4. Since Alice named the price, she must accept the trade. Bob buys 1 BTC for $4 and sells it to her for $6. She sells it back to the exchange for $4.
5. Math. Bob sends MtGox $4, Alice 1 BTC, and Alice $1; he receives $6 and 1 BTC from Alice. This is a profit of $1, which makes sense because he "won" his short.
Alice sends MtGox 1 BTC and Bob $6; she receives 1 BTC from Bob, $1 from Bob, and $4 from MtGox. This is a loss of $1, which makes sense because in truth, the exchange rate fell, so her long position should be losing.

Really, the party can name any price for exercise (even a negative price Tongue) and it will still work out properly.

In the case that there really are two different prices (say 2 different local markets or something), then it's possible for both parties to profit; this profit comes from the arbitrage.
1073  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 03:04:11 AM
Hmm, okay, so the long person has to accept a coin at their choice of long price to exercies the contract.

Presumably meanwhile the short person has to provide a coin at their coince of short price in order to exercise the contract?

So if Bob, who took the short side, claims his oracle's price is $1, while Alice, who took long, claims her oracle's price is $10... What then?

If Bob is correct that short is the way it went, he has to send Alice a bitcoin for $1.

If Alice is correct that long is the way it went, she has to pay Bob $10 for a bitcoin.

So what is the net effect? Are they both right, so Bob sends a bitcoin and Alice sends him $9 change?

Or are they both right, so Bob sends one bitcoin for $1 and a second bitcoin for $10 and receives $11 from Alice for the pair of them?

Oh wait, the $5 comes into it somewhere too presumably...
That won't work. If it's a no-oracle CFD (aka futures contract Wink), then they have to agree on the exercise price. Who is on which end of the trade would be specified in the contract. Possibilities include...
- CFD can be exercised at will; exerciser is forced to make the trade (forced to buy if they are long or sell if they are short)
- CFD is exercised at set date; the long person (or the short person, as specified in contract) is forced to make the trade

In both possibilities, the person forced to make the trade names the price.

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EDIT: By the way, for my purposes fees to the platform/exchange are irrelevant, so only worry about whether Bob or Alice require a fee one from the other. Both are paying per API call for each and every thing they have the platform do for them, including telling them about each other's offers.
I think the most elegant way is to not specify any fees in the contract. If I can buy bitcoins for $1 each at an exchange which charges 1200% commission, is that really worth concluding a short CFD over?
1074  Economy / Securities / Re: Long+Short basket currencies on: September 29, 2012, 02:12:14 AM
Oh that is very nice, yes, thank you for that.

But it is already a step toward letting the players discover prices themselves aka a step away from "the oracle". In fact there is not really "an" oracle anymore, and no reason to think there are only two places where alice and/or bob could discover yet more prices.

Thus, I still think the properly elegant solution I am looking for would be one in which no one other than maybe alice needs concern themselves about what alice uses as an orancle or even wjether she uses one at all (aka uses her ass as in pulls numbers out of her ass) and same for bob; thus no oracles other than the players themselves in their oracular capacities (however limited those capacities might be).
I still believe my solution works. Bob and Alice do not need to agree on the price at all; they must simply accept trades for the value of the CFD at that price. Consider the scenario in which Alice tries to scam Bob:

1. Bob and Alice create a CFD for 1 Bitcoin, beginning at $5. Bob takes the short, Alice takes the long.
2. BTC-e trades at $6; MtGox trades at $7. (Bob only has access to BTC-e)
3. Alice claims that tradeb1tco1ns.tk is trading at $10.
4. In order to exercise the CFD at $10, Alice must accept 1 BTC from Bob for $10. Bob then sends her $5 (the difference).
5. Do the math. Bob buys the 1 BTC for $6 and sells it for $10, but must send Alice the $5 difference. 10-6-5 = -1. He loses $1, which is the difference between $5 and $6.
Alice sends Bob $10 and receives 1 BTC (the sale) and $5 (the difference). She sells the 1 BTC at MtGox for $7. 5+7-10=2. She gains $2, which is the difference between $5 and $7.

The actual transactions (some of it cancels) are:
Bob  -> Alice 1 BTC
Alice -> Bob $5

Tee-hee! It all cancels! This method of a no-oracle CFD is simply a futures contract at spot price! A 1 BTC CFD starting at $5 is really just a 1 BTC future/forward.

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Thus I still have not really come up with anything better yet than the thread-titular baskets, though I have been reading upon how MPEx works (and finding out their secret sauce seems to be secret).
I think MPEX options are just oracle-based options in which no USD is transacted. If you buy a 1 BTC call, and BTC rises $1.2, you get 1.2 USD * (BTC/USD).


[/quote]
1075  Economy / Scam Accusations / Re: Usagi: falsifying NAVs, manipulating share prices and misleading investors. on: September 29, 2012, 01:18:35 AM
Riddle me this: If company A owns 50% of company B, B owns 50% of C, and C owns 50% of A *and* 1 dollar, how much is each company worth?

Obviously, A+B+C can't be worth more than 1 dollar...
1076  Bitcoin / Bitcoin Discussion / Re: No, the Linux Kernel is not like Bitcoin nor its network. Sorry. on: September 27, 2012, 09:34:22 PM
They are exactly alike.

Linus Torvalds is to linux, as Satoshi Nakamoto is to bitcoin.
The Linux kernel can be contributed to by anyone, as can bitcoin code and protocol.

You have no idea what you're talking about.
Go do your own thing. See how many people follow you.

So it's alright if Gavin imposes a tax within the network that will go to governments under the legitimacy of The Bitcoin Foundation? We shouldn't oppose this if it occurs?

We're dealing with money here. Not a product.
Gavin can't do that; doing so would require a hard fork.
1077  Economy / Securities / Re: [GLBSE] GIPPT (closing down payback is under going) on: September 27, 2012, 09:11:07 PM
It's tricky. Quote my post.

AppleBetCat
DankEinsteinFree
1078  Economy / Securities / Re: Discuss OBSI.* here on: September 27, 2012, 05:27:40 PM
Right, that's the graph.

Again, was there every any doubt that it wasn't a scam?
1079  Economy / Securities / Re: Discuss OBSI.* here on: September 27, 2012, 05:19:47 PM
Is ANYONE surprised? FFS!
Pirate runs, OBSI comes back with the same deal but variable interest rates. Obviously nobody would ever borrow long-term at those rates.
As the graph in that thread showed, it was a successful ponzi scheme. I was just about to short it Roll Eyes

I simply can't believe that anyone would lose money in it.
1080  Economy / Securities / Re: [BMF] MAJOR ANNOUNCEMENT INSIDE on: September 27, 2012, 05:17:56 PM
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The NAV of BMF is approximately 0.50.

Wrong.

Since usagi wont update and correct his faulty spreadsheet, I thought I would
Using GLSBE API, up to date date numbers, feel free to point out any errors:


That spreadsheet is from September 20th but you've changed some of the numbers on it. You're lying again.

get caught lying much?
Care to enlighten us casual readers as to which numbers Puppet fraudulently changed?
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