Are you sick of getting scammed?! Then come on in......

[yochdog]

I think now that nearly every single HYIP scheme has blown up, thus bringing a sense of reality back into the BTC world, a legitimate lending opportunity at sane rates has a place.  


I am offering 10% APR on loans, with the following terms:

-Maximum 500 BTC per lender
-Minimum 90 day commitment from date of first funds transfer
-After 90 days, funds can be called at month end with 5 days notice.  If funds are absolutely needed before a month end, they will be returned but without the partial months accrued interest. 
-Funds can be returned by borrower with accrued interest at any time, for any reason without penalty
-Exchange rate collar of +-30% to protect both lender and borrower from extreme price movements.  Starting point of the collar will be the spot price at time of each funds transfer


Now, I will attempt to preempt the inevitable questions:

Q.  Why on Earth would I lend to you when I can get <insert insane weekly APR here> with Pirate, Hashking, PPT, Bitcoinmax , etc?
A.  Two reasons.  First, those rates are bullshit as we are all finding out.  Second, you will actually get your money back.  

Q.  What will you be using the borrowed BTC for?
A.  I have legitimate real-world business opportunities that offer me 20-25% annual returns.  They are limited in scale, but I am glad to make the 10-15% spread for my trouble and avoid the anal exam that comes along with bank loans.  

Q.  What is to keep you from running away with all of my BTC?
A.  I have a strong desire to see BTC succeed as a parallel economy.  In order for that to happen, responsible lending/borrowing must occur and I see myself as part of that evolution.  I have a LOOONG track record of doing multi-thousand dollar deals with ample opportunity to scam people.  Never once has doing so ever entered my mind.  My word is my bond and I will never break it.  

Q.  This is great, but how will the details work?
A.  I want this to be as transparent as possible.  If lenders allow me, I will list them on a publicly accessible spreadsheet.  This will list a history of loans made, as well as repayments.  Interest will be calculated on a %/12 basis and shown as well.  Those lenders that wish to remain anonymous will not be listed.  



I am in this for the long haul.  The sooner we dispense with insane, clearly fraudulent rates of return, the better off the entire community will be.  

10% that you actually get is infinitely more than 3,300% that is imaginary.  

[Stephen Gornick]

Q.  What will you be using the borrowed BTC for?
A.  I have legitimate real-world business opportunities that offer me 20-25% annual

What if the exchange rate for bitcoin rises to $15 or more? (i.e., rises more than 20-25% on an annual basis?)

[Edit: just read this:

Exchange rate collar of +-30% to protect both lender and borrower from extreme price movements.  Starting point of the collar will be the spot price at time of each funds transfer

]

[Gyrsur]

^^good question! please be aware you have with all Bitcoin business an foreign currency exposure and you cannot hedge it. this risk exist always if you break out the closed Bitcoin economy which not realy exist at the moment.

EDIT: otherwise you have to stay within bitland but it's a dream so far.

EDIT2: you are able to hedge it if you buy BTC with the same amount of your business.

[yochdog]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run. 

[nimda]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run. 

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

[yochdog]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run.  

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

The collar would be tied to the $/BTC exchange rate, and the best way to illustrate is by example:

Lets say you lend me 500 BTC, and at funds transfer the exchange rate is $10/BTC.

For example sake, lets assume you have earned 50 BTC in interest, and now want to call all 550 BTC.  However, the exchange rate is now $4/BTC.  Rather than getting back only your 550 BTC worth $2,200 (when you lent 500 BTC worth $5,000!), we would use a formula to ensure the 30% collar is dollar terms.  In this case we would take $3,850 (550*7) / 4 (spot rate) and arrive at a repayment of 962.50 BTC.

Essentially, we are insulating both borrower and lender against extreme loss of purchasing power by putting in a floor and ceiling on the exhange rate.  However, the collar only kicks in once the exchange rate has moved beyond the collar limits. 

[nimda]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run.  

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

The collar would be tied to the $/BTC exchange rate, and the best way to illustrate is by example:

Lets say you lend me 500 BTC, and at funds transfer the exchange rate is $10/BTC.

For example sake, lets assume you have earned 50 BTC in interest, and now want to call all 550 BTC.  However, the exchange rate is now $4/BTC.  Rather than getting back only your 550 BTC worth $2,200 (when you lent 500 BTC worth $5,000!), we would use a formula to ensure the 30% collar is dollar terms.  In this case we would take $3,850 (550*7) / 4 (spot rate) and arrive at a repayment of 962.50 BTC.

Essentially, we are insulating both borrower and lender against extreme loss of purchasing power by putting in a floor and ceiling on the exhange rate.  However, the collar only kicks in once the exchange rate has moved beyond the collar limits. 

I don't even know if that type of financial contract has a name
I fully understand the example, but I can't describe it. Maybe, "The purchasing power of the returned asset is limited to a gain or loss of 30% by varying the amount returned"?

[yochdog]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run.  

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

The collar would be tied to the $/BTC exchange rate, and the best way to illustrate is by example:

Lets say you lend me 500 BTC, and at funds transfer the exchange rate is $10/BTC.

For example sake, lets assume you have earned 50 BTC in interest, and now want to call all 550 BTC.  However, the exchange rate is now $4/BTC.  Rather than getting back only your 550 BTC worth $2,200 (when you lent 500 BTC worth $5,000!), we would use a formula to ensure the 30% collar is dollar terms.  In this case we would take $3,850 (550*7) / 4 (spot rate) and arrive at a repayment of 962.50 BTC.

Essentially, we are insulating both borrower and lender against extreme loss of purchasing power by putting in a floor and ceiling on the exhange rate.  However, the collar only kicks in once the exchange rate has moved beyond the collar limits. 

I don't even know if that type of financial contract has a name
I fully understand the example, but I can't describe it. Maybe, "The purchasing power of the returned asset is limited to a gain or loss of 30% by varying the amount returned"?

That would probably fit!

I use "price collar" loosely.....but it is a good approximation. 

[nimda]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run.  

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

The collar would be tied to the $/BTC exchange rate, and the best way to illustrate is by example:

Lets say you lend me 500 BTC, and at funds transfer the exchange rate is $10/BTC.

For example sake, lets assume you have earned 50 BTC in interest, and now want to call all 550 BTC.  However, the exchange rate is now $4/BTC.  Rather than getting back only your 550 BTC worth $2,200 (when you lent 500 BTC worth $5,000!), we would use a formula to ensure the 30% collar is dollar terms.  In this case we would take $3,850 (550*7) / 4 (spot rate) and arrive at a repayment of 962.50 BTC.

Essentially, we are insulating both borrower and lender against extreme loss of purchasing power by putting in a floor and ceiling on the exhange rate.  However, the collar only kicks in once the exchange rate has moved beyond the collar limits. 

I don't even know if that type of financial contract has a name
I fully understand the example, but I can't describe it. Maybe, "The purchasing power of the returned asset is limited to a gain or loss of 30% by varying the amount returned"?

That would probably fit!

I use "price collar" loosely.....but it is a good approximation. 

Normally collaring a price is done with options. http://en.wikipedia.org/wiki/Collar_(finance) I suppose you are just cutting out the middle-man!

[yochdog]

I think the 30% collar protects pretty well.  I am more than willing to take that risk quite honestly......I think it washes out on the long run.  

By 30% collar what do you mean? Is it that if BTC rises by 30%, you return 30% less BTC, and if BTC falls by 30%, you return 30% more BTC? Or are you buying options, writing CFD's, or agreeing to forwards and futures for 30% of the total lent amount? Or, are you simply going to absorb the loss if BTC rises by 30%?

The collar would be tied to the $/BTC exchange rate, and the best way to illustrate is by example:

Lets say you lend me 500 BTC, and at funds transfer the exchange rate is $10/BTC.

For example sake, lets assume you have earned 50 BTC in interest, and now want to call all 550 BTC.  However, the exchange rate is now $4/BTC.  Rather than getting back only your 550 BTC worth $2,200 (when you lent 500 BTC worth $5,000!), we would use a formula to ensure the 30% collar is dollar terms.  In this case we would take $3,850 (550*7) / 4 (spot rate) and arrive at a repayment of 962.50 BTC.

Essentially, we are insulating both borrower and lender against extreme loss of purchasing power by putting in a floor and ceiling on the exhange rate.  However, the collar only kicks in once the exchange rate has moved beyond the collar limits. 

I don't even know if that type of financial contract has a name
I fully understand the example, but I can't describe it. Maybe, "The purchasing power of the returned asset is limited to a gain or loss of 30% by varying the amount returned"?

That would probably fit!

I use "price collar" loosely.....but it is a good approximation. 

Normally collaring a price is done with options. http://en.wikipedia.org/wiki/Collar_(finance) I suppose you are just cutting out the middle-man!

This.  Exactly this. 

[bitcoinbear]

Will there be a pass-through on GLBSE?

[yochdog]

Will there be a pass-through on GLBSE?

LOL.

Well played sir.  Well played. 

But no.....I prefer to keep this a direct lender/borrower relationship.

[bitcoinbear]

Will there be a pass-through on GLBSE?

LOL.

Well played sir.  Well played. 

But no.....I prefer to keep this a direct lender/borrower relationship.

Is there a minimum deposit size?

[nimda]

Will there be a pass-through on GLBSE?

LOL.

Well played sir.  Well played. 

But no.....I prefer to keep this a direct lender/borrower relationship.

I'm not sure you can prevent one from appearing.

[yochdog]

Will there be a pass-through on GLBSE?

LOL.

Well played sir.  Well played. 

But no.....I prefer to keep this a direct lender/borrower relationship.

Is there a minimum deposit size?

no......but I would prefer to keep them 50 BTC and above. 

[Severian]

Are you sick of getting scammed?!

Never! This is bitcointalk.org, after all.

[mc_lovin]

all this constant scamming is going to turn the general public away from bitcoin.  we need BRIGHT news, not scandals!

[yochdog]

all this constant scamming is going to turn the general public away from bitcoin.  we need BRIGHT news, not scandals!

I 100% agree.

That is precisely why I am offering a legitimate, REASONABLE lending opportunity to the forum.  The sooner we run out the shysters and HYIP morons, the better the future of BTC will be. 

[tucenaber]

-Exchange rate collar of +-30% to protect both lender and borrower from extreme price movements.  Starting point of the collar will be the spot price at time of each funds transfer

This is not constructed in the right way. The price of an option increases with the time to maturity, because the probability that the bitcoin price will change more than 30% is of course higher if you wait for 6 months than if you wait only three months.
If you want to bundle two options into the price of the loan then you will have to offer more for a loan with a longer time to maturity. Otherwise only a stupid person would loan out for longer than the minimum 90 days.

BTW. I believe collar is the right term for this construction.

[JohnBigheart]

if you plan to convert the BTCs to USD and use the dollars to accelerate your dollar based business wouldn't it make more sense to make the loan on a USD basis? Parties agree on a BTC->USD , USD->BTC conversion rule (like MtGox weighted average or similar). I use BTCs to transfer funds but both the principal and the interest is accounted in dollars. When you pay back you simply calculate the BTC value of the payment and transfer the BTCs.

This way you are clearly hedged and the entire scheme is simpler to comprehend.