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Author Topic: [FINISHED] Bet on bitcoin future price here (July 1st, 2011)  (Read 12764 times)
dacoinminster
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May 26, 2011, 02:58:10 PM
 #1

Since there is no bitcoin futures market, I'm starting one. Speculate now on the value of bitcoins on 7/1/2011.

This is an experiment, so please don't bet your life savings.

Rules:

1) All bets will be tracked at this newly created address in a currently-empty wallet: http://blockexplorer.com/address/1945qfobZxdnmVJ6qBd4FgcVcWBhDXKiTV
2) The "bitcents" represent your bet on the USD price of bitcoins on July 1, 2011 at noon U.S. pacific time. Examples:
      a) A bet of 1.13 BTC sent to that address is a bet of 1.13 BTC that bitcoins will be worth $13 USD on July 1st
      b) A bet of 12.08 sent to that address is a bet of 12.08 BTC that bitcoins will be worth $8 USD on July 1st
      c) A bet of 0.15 sent to that address is a bet of 0.15 BTC that bitcoins will be worth $15 on July 1st
      d) You can use sub-cents if you want. A bet of 0.015 BTC is placed on $1.50 per bitcoin
3) Winnings will be put in one pot and distributed as follows:
      a) 98% of the pot will go to the winners (those within + or - $0.50 of the final value, inclusive)
      b) 2% of the pot will go to me
      c) The pot will be split among winners by the size of their bet multiplied by the number of days in advance they made their bet (days will be fractional with resolution in seconds, per block explorer timestamps)
      d) Winnings will be returned to the sending address, so use the real bitcoin client, not a managed wallet
4) The reference price on July 1st will be determined by me, using my browser on MtGox, at exactly noon PST pacific time. If for some reason I am unable to do this, I will rely on MtGox records and/or forum members posting the price in this thread. I will do my best to be fair, and I will not be betting any of my own bitcoins, so I should be impartial.
      e) I will post the final price and who I think the winners are and how much they should get here for community vetting. I will allow for comments to accumulate over the following weekend, and then pay out on Monday Tuesday following the holiday weekend if there is no great scandal.
5) If an excessive amount of bitcoins are bet, I will probably seek a trusted forum member to hold some of the bitcoins so they aren't all in my care. My first choice would be _mndrix, followed by GavinAnderson. I would consider other highly trusted members if neither of them want to do it. Edit: See bond info below
6) New: As an incentive to kick things off, I'm offering 0.1BTC each to the first 5 betters: http://forum.bitcoin.org/index.php?topic=10008.msg144375#msg144375

Obviously placing multiple bets at different prices is going to be a common strategy.


Update: Michael Hendrix (of Coinpal/Coincard fame) has agreed to hold 50 of my personal bitcoins as a bond against any mishaps with the money. You can see where he posted in the thread below with his PGP signature agreeing to hold my bond. You can view the bond here: http://blockexplorer.com/address/168bokgyuxUYp1HL7xeyZzQCj7dEKZQyuR

For posterity, here is the email I sent him:


Quote
---------- Forwarded message ----------
From: *********************
Date: Thu, May 26, 2011 at 12:09 PM
Subject: Bitcoin Bond
To: m*chael@ndrix.org, serv*ce@ndrix.org


Hey Michael,

Would you be willing to hold a 50BTC bond for me? I'm running an experiment on the bitcoin forum with bitcoin futures, and I need to have somebody trustworthy to hold some bitcoins for me in case I make off with all the money.

The thread is here: http://forum.bitcoin.org/index.php?topic=10008.0

If you are willing to hold the bitcoins, please reply to me by email AND post on the thread (so I know your new forum name is really you) with an address to send the bitcoins to. Then I can post bond with you.

If people bet more than 50 bitcoins, I'll probably send you additional bitcoins for safekeeping at the same address.

Please let me know whether you are willing.

Thanks!

-********* (dacoinminster)

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bitcoinfrenzy
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May 26, 2011, 04:34:42 PM
 #2

Interesting concept, although I think there's a fundamental flaw in that the payout is in BTC.  This rewards long bets more than short bets, and would probably make it unprofitable to bet on a severe decline in BTC, even if you thought one was likely to happen.  You can see an example of the problem at http://www.bitcoinfrenzy.com/2011/05/problems-with-proposed-bitcoin-futures.html.

dacoinminster
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May 26, 2011, 06:54:22 PM
 #3

Interesting concept, although I think there's a fundamental flaw in that the payout is in BTC.  This rewards long bets more than short bets, and would probably make it unprofitable to bet on a severe decline in BTC, even if you thought one was likely to happen.  You can see an example of the problem at http://www.bitcoinfrenzy.com/2011/05/problems-with-proposed-bitcoin-futures.html.

Very good point. This is NOT a good way to hedge against a bitcoin collapse (such a hedge would have to be denominated in a currency other than bitcoins, by definition). Betting on anything from a 50% drop to a big gain, however, should be quite profitable if you are right.

Of course nobody has placed any bets yet. I'm looking into posting a bond of my personal bitcoins with someone to prove my honesty.

Update: See the first post in this thread for current bond information.


bitcoinfrenzy
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May 26, 2011, 07:03:45 PM
 #4

Can you explain how the following would work with an example? 

Quote
The pot will be split among winners by the size of their bet multiplied by the number of days in advance they made their bet (days will be fractional with resolution in seconds, per block explorer timestamps)

Thanks.

dacoinminster
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May 26, 2011, 07:15:29 PM
 #5

Can you explain how the following would work with an example? 

Quote
The pot will be split among winners by the size of their bet multiplied by the number of days in advance they made their bet (days will be fractional with resolution in seconds, per block explorer timestamps)

Thanks.

Sure. Obviously the closer we get to July 1st, the more confident someone can be about a bet they place. If I had no time component, all the bets would come in at the end.

Consequently, a bet placed 10 days before July 1st is weighted at half the weight of a bet placed 20 days before July 1st. If you bet 30 bitcoins one day before July 1st, you would receive the same winnings as another winner who bet 1 bitcoin 30 days before July 1st.

Make sense?

Note: my previous post in this thread has now been updated.

dacoinminster
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May 26, 2011, 07:39:10 PM
 #6

I just realized that there is no incentive to be one of the first people to bet. The first 5 people to post in this thread that they placed a bet of any size (include your address and the amount) will receive 0.1 BTC sent to the betting address from my personal wallet (not from the futures pool), to kick things off.

mndrix
Michael Hendricks
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May 26, 2011, 07:50:36 PM
 #7

Hey Michael,

Would you be willing to hold a 50BTC bond for me?

-----BEGIN PGP SIGNED MESSAGE-----
Hash: SHA1

I'm always up for an experiment.  dacoinminster, you can send your
50 BTC bond to 168bokgyuxUYp1HL7xeyZzQCj7dEKZQyuR

I've signed with my OTC key so people who don't know me can
decide whether I'm trustworthy
-----BEGIN PGP SIGNATURE-----
Version: GnuPG v1.4.11 (Darwin)

iQEcBAEBAgAGBQJN3q7kAAoJEM5SyYpICBmRZQEH/2kKlWZcrJU3t8YS/7s390oo
8rYQlgonhOH5ss86UZxXJKO0LyXtwHOsrjZ9+GqVKdQoFNcc9KdtI0Sr2g9LXNor
eTBDDi0puSyTdTVKUeOpYm/lKqae24OI/iDYnD08dqQy4LyS/9q4UZqKWrRMTwi8
JGW5ki3rQ2R1EnAMYavqOFkNyK/6E21XM/rlKgHCEd3VUrOLZo59Kp1l7/ICgDfK
X5O+lTk7vyIdJ18TyF6lwbRb7d6gN8jA6sMIT4tADRnv+d90EnvhEf8OyK6Q6y9y
iDmZCm0iTg5ngk34a5Pf9asPDI++zeaJZWRCvllhePNFdI0FrDp39oE15ADRNjc=
=GcpL
-----END PGP SIGNATURE-----
dacoinminster
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May 26, 2011, 08:10:59 PM
 #8

50 BTC sent. You can view the bond here: http://blockexplorer.com/address/168bokgyuxUYp1HL7xeyZzQCj7dEKZQyuR

I can't think of any reason why it woudn't be safe to place bets now. Let me know if you guys can think of any other problems.

bitcoinfrenzy
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May 26, 2011, 09:39:22 PM
 #9

Another question.  Will you post updates of the bets you receive with BTC amount and guess?  For the sake of transparency, this may be a good idea. 

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May 26, 2011, 09:45:08 PM
 #10

This is interesting. I plan to play, gotta get some strategery first.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
dacoinminster
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May 26, 2011, 09:46:09 PM
 #11

Another question.  Will you post updates of the bets you receive with BTC amount and guess?  For the sake of transparency, this may be a good idea. 

All bets are publicly visible here: http://blockexplorer.com/address/1945qfobZxdnmVJ6qBd4FgcVcWBhDXKiTV

Probably anybody who bets should also post it here so that previous betters get notified by the forum, and this thread stays more visible to other potential betters who might give you their money Smiley

Maged
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May 26, 2011, 09:57:23 PM
 #12

I'll kick things off...

I bet 0.097 btc that the price will be $9.70. Yeah, it's a small bet, but that's still a month out.

It's coming from 1NptwUa4wFNUXPyhQ8wsS54s36QeTPaJYK

dacoinminster
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May 26, 2011, 10:02:28 PM
 #13

Quote
What if another exchange service becomes more popular than MtGox OR MtGox is not available on July 1st?

I'll use the best data available from the biggest exchange running. If for some reason winners cannot be chosen in a way that seems fair to me, I will just return all bitcoins to the original betters.

Quote
And how can I bet that bitcoins will be worth >$99?  Huh

Buy some bitcoins Smiley

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May 26, 2011, 10:02:40 PM
 #14

A quirk of this system is that if the price happens to be low and stable near the deadline it will be easy for late bets to win. Say it's been $2-$2.50 for a week it's easy money 1 day out (possibly to the point of bets only being limited by people's fear of you running with 10k+ bets, haha or fear of manipulation at the last second). But if it is more stable and high, say $21-$23 it takes multiple bets to cover the range.

Not saying you should change anything, it's an interesting game.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
dacoinminster
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May 26, 2011, 10:08:50 PM
 #15

I'll kick things off...

I bet 0.097 btc that the price will be $9.70. Yeah, it's a small bet, but that's still a month out.

It's coming from 1NptwUa4wFNUXPyhQ8wsS54s36QeTPaJYK

I see it in block explorer. I sent 0.1 BTC to your address. 4 more people are gonna get the freebie!

dacoinminster
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May 26, 2011, 10:11:01 PM
 #16

A quirk of this system is that if the price happens to be low and stable near the deadline it will be easy for late bets to win. Say it's been $2-$2.50 for a week it's easy money 1 day out (possibly to the point of bets only being limited by people's fear of you running with 10k+ bets, haha or fear of manipulation at the last second). But if it is more stable and high, say $21-$23 it takes multiple bets to cover the range.

Not saying you should change anything, it's an interesting game.

If I do this again, maybe I'll do +/- 5% instead of +/- $0.50 to win.

jack102938
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May 26, 2011, 10:14:26 PM
 #17

I just bet 0.1 btc that the price will be $10.

It's coming from 16rdqfvMxgArJXZ28RR91t3HiJDhmuitjJ
dacoinminster
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May 26, 2011, 10:29:00 PM
 #18

The two jokers above just got their free money. 0.2 BTC left to give away.

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May 26, 2011, 10:58:02 PM
 #19

I just sent in my guess. It will make some of you choke on your drink.

15UFyv6kfWgq83Pp3yhXPr8rknv9m6581W
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May 26, 2011, 10:59:30 PM
 #20

i bet 0.17 BTC that value will be 17$.

coming from :
18wk1xCrjqCvbkfSXZVCWJu9Nn4Q74dSyc

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