So you think you're going to start a Bitcoin business, right?

[rini17]

Wait, so MPOE had a transaction volume of 25,000BTC in the month of November. MPEx had a profit of 433BTC in the month of November. Somehow that means they're worth 45 million USD? I'm not seeing the math.

If you did your research, you'd have seen that the 433BTC is not everything there is at all. They paid up to 9.9% monthly interest ( 4`083.99552 BTC ) to the bondholders who financed the options market. But they also took the MPOE loss, so the net revenue for bondholders was actually lower 4083-1961 = 2122 BTC. That's ~ 25k USD just in one month. All considered, together with future potential, millions of USD valuation really isn't much of a stretch.

[1715346476]

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[crazyates]

Wait, so MPOE had a transaction volume of 25,000BTC in the month of November. MPEx had a profit of 433BTC in the month of November. Somehow that means they're worth 45 million USD? I'm not seeing the math.

If you did your research, you'd have seen that the 433BTC is not everything there is at all. They paid up to 9.9% monthly interest ( 4`083.99552 BTC ) to the bondholders who financed the options market. But they also took the MPOE loss, so the net revenue for bondholders was actually lower 4083-1961 = 2122 BTC. That's ~ 25k USD just in one month. All considered, together with future potential, millions of USD valuation really isn't much of a stretch.

Yes, I saw that line about the 4083BTC paid, but it's right in the middle of this:

Operational results, MPOE
....
Revenue : 25`553.98115344 BTC, of which :
....
Expenditure : 27`515.29937379 BTC, of which :
....
Loss : −1`961.31822035 BTC

Which I'm having a hard time getting past. Why are you counting the "capital expenses" or bondholder repayment as a profit?

[rini17]

Wait, so MPOE had a transaction volume of 25,000BTC in the month of November. MPEx had a profit of 433BTC in the month of November. Somehow that means they're worth 45 million USD? I'm not seeing the math.

If you did your research, you'd have seen that the 433BTC is not everything there is at all. They paid up to 9.9% monthly interest ( 4`083.99552 BTC ) to the bondholders who financed the options market. But they also took the MPOE loss, so the net revenue for bondholders was actually lower 4083-1961 = 2122 BTC. That's ~ 25k USD just in one month. All considered, together with future potential, millions of USD valuation really isn't much of a stretch.

Yes, I saw that line about the 4083BTC paid, but it's right in the middle of this:

Operational results, MPOE
....
Revenue : 25`553.98115344 BTC, of which :
....
Expenditure : 27`515.29937379 BTC, of which :
....
Loss : −1`961.31822035 BTC

Which I'm having a hard time getting past.

I'll retry on this from another angle. The number you decided to fixate yourself so much on is there only because bondholders asked for over 9% interest. So it alone doesn't change much on the soundness of the core MPOE business. Had the bondholders asked for 5% (like it went few months ago), the capital expenses would be only 2062 BTC and there would be some profit in the end.

[Rassah]

I'll retry on this from another angle. The number you decided to fixate yourself so much on is there only because bondholders asked for over 9% interest. So it alone doesn't change much on the soundness of the core MPOE business.

Actually it does. Bonds are debt, pure and simple. It doesn't matter if the people holding the bonds are investors or a bank (who would also be an investor). When you owe and pay out more money than you take in as profits, it may be good for bond/debt holders, but it's not good for the company; the bond holders' net worth goes up, but the company's value actually goes down.

Think of it this way. I'm a new company, and you let me borrow $20, with the promise that I will pay you $5 every month, and your whole $20 at the end of the year (I.e. I sell you a bond). Every month I use that money to make a widget, and sell it for $5, which I then give to you as your dividend. But the problem is, it takes me $6 to make that widget in the first place. Sure, you are better off now than before you got that $5, but you'll likely never get your original $20 back, and my company is not likely to survive, let alone be worth something. This is why knowing the company assets (how many $20s they have), their revenues (how much they sell widgets for) and expenses (what it costs to make a widget) is important. It let's you see whether a company is growing or shrinking (in my example shrinking by $1 a month), at what rate relative to it's own worth, and if it's losing money, how long it can survive doing it before it need to turn around and make profit (in that case $20 / $1 = 20 months).

[Rassah]

On the other hand, if MPEX is a stock (is it? I don't know) paying out dividends in that same situation, then the dividend amount is somewhat irrelevant. They are slowly shrinking their total cash pile, but giving you some of their cash anyway. Why? I don't know, but all that does is reduce the time they have to turn around and start making profits before their cash reserves run out. In this scenario, pretty much the only things that matter is what their loss rate is, and how long they can sustain it. Stock dividends are usually not a very good indication of a company's health and growth prospects.

That applies to real live corporations, too. Paying a dividend sends a signal that the company doesn't have anywhere to grow any more, and is just sitting on an ever increasing pile of cash it doesn't know what to do with. It's why tech companies are so reluctant to pay them, and why Microsoft only recently started. Any change in dividend payment amount is also seen as a a signal about the strength or weakness of a company, and this is why even failing companies just keep paying out the same dividends, hoping no one will notice they are failing, or that everyone thinks the managers know something the investors don't. It's also why companies that never paid them before are reluctant to start, or start very small: lowering a dividend payment because they can't afford it is seen as VERY bad news, so they would rather pay much less than they're able, and have a big buffer of cash just in case.

[crazyates]

Wait, so MPOE had a transaction volume of 25,000BTC in the month of November. MPEx had a profit of 433BTC in the month of November. Somehow that means they're worth 45 million USD? I'm not seeing the math.

If you did your research, you'd have seen that the 433BTC is not everything there is at all. They paid up to 9.9% monthly interest ( 4`083.99552 BTC ) to the bondholders who financed the options market. But they also took the MPOE loss, so the net revenue for bondholders was actually lower 4083-1961 = 2122 BTC. That's ~ 25k USD just in one month. All considered, together with future potential, millions of USD valuation really isn't much of a stretch.

Yes, I saw that line about the 4083BTC paid, but it's right in the middle of this:

Operational results, MPOE
....
Revenue : 25`553.98115344 BTC, of which :
....
Expenditure : 27`515.29937379 BTC, of which :
....
Loss : −1`961.31822035 BTC

Which I'm having a hard time getting past.

I'll retry on this from another angle. The number you decided to fixate yourself so much on is there only because bondholders asked for over 9% interest. So it alone doesn't change much on the soundness of the core MPOE business. Had the bondholders asked for 5% (like it went few months ago), the capital expenses would be only 2062 BTC and there would be some profit in the end.

What? You're telling me that if they didn't have to pay so much back to bondholders, they would turn a profit. No SHIT Sherlock! Not counting my student debt, I'm worth loads of money! But you can't just ignore those facts! I do have student debt, and that affects A) my net worth, and B) my monthly income. They didn't pay back 5% to bondholders, they paid back 9%. This made them LOSE money over the course of a month. So again, I'm having a hard time understanding why you decided to count those dividends they paid out as a form of profit.

Second thing, and this is something I just found out from you, is it's also a red flag when an interest rate goes up from 5% to 9%. Higher interest usually means higher risk, so that tells me people aren't as confident in MPOE

[MPOE-PR]

This has been pretty much an exercise in "I won't bother to find out what I'm talking about but here's what I think anyway". Guess what? Something like that isn't called thinking.

The interest went from 5% to 9% because the capital retained went from ~7k to over 40k. This happened because a lot of options were sold. Hardly a bad thing.

The student debt is irrelevant because you pay a fixed %. MPOE bonds don't work that way, they're auctioned monthly. Please read up on how it actually works.

The "made them lose" money is also nonsense, because MPOE bonds don't work that way. Neither MPOE nor MPEx can in fact lose money, ever, no matter what happens. This is probably one of the main reasons the stock is so attractive to investors.

Re paying dividends: MPOE/MPEx retains no profit whatsoever, all it makes is distributed as dividends. This is so for a reason.

[crazyates]

I mentioned student debt because that's a significant monthly payment in my life atm. I could have used rent, or insurance, or anything, but it's all just an analogy. My point still holds that if they had paid 5%, the numbers might have looked better. But they didn't, they paid 9%, so why even argue that 5% would be more profitable?

[MPOE-PR]

The student debt is irrelevant because you pay a fixed %. MPOE bonds don't work that way

I mentioned student debt because that's a significant monthly payment in my life atm. I could have used rent, or insurance, or anything, but it's all just an analogy.

Can you see where that analogy breaks down, if I take the time to select things out for you?

[Rassah]

See here.

Finally got a chance to look through the financials. Does Romania have very different accounting reporting standards? (Do you have accountants/finance people?) I found this very difficult to read and understand. Specifically, the terms used seem unusual or convoluted. For example:
In Revenue and Expense in the MPOE section, when you list Contracts Sold/Bought/Exercised, is that BTC amount revenue made on the trading fees? Total amount of contracts traded on the site by users? Options trading done by MPEX themselves as if they were just an investor? I can't figure out what the final -1,961 loss actually means in context.
The Capital expenses number doesn't really specify what it's for or from, and I can't tie the 41`252.48 number to anything.

The bondholders table mentions total capital. I'm assuming that is capital held by your company, which was raised through bond sales? (Usually it's lumped together with cash in the assets section, and listed in this section as a liability).

That said, using whatever info I could figure out (I couldn't figure out MPOE'S contracts section), if we assume assets are BTC41,252.48 received from bondholders, the liability is also BTC41,252.48 that is owed to bondholders, and all equity is paid out as dividends, then the Enterprise Value of the company is just share value * # of shares, or BTC0.000527 * 1,000,000,000 = BTC527,000. That does seem ridiculously unrealistic.
On the other hand, if we use the most recent dividend payout of BTC433.9709647, or BTC0.00000043 per share, and use the low end of a normal market required rate of return at 6% annually, then using the Dividend Discount Model we find that the actual share price SHOULD be closer to (BTC0.00000043 *12) / 6% = BTC0.0000868, which would make the company value actually be BTC86,794. Still a lot, but nowhere near BTC527k.
Now, this of course assumes that the dividend will remain the same (it won't), and that I've understood the rest of the financial statement parts correctly. This also means that at 0.527mBTC the stock is greatly overvalued compared to 0.087mBTC price for expected 6% annual return or 0.043mBTC for expected 12% annual return, OR that stock owners REALLY believe in MPOE's growth, and are willing to take a tiny 0.98% annual return on investment right now in hopes that this will REALLY grow later. Or it could mean that there aren't enough savvy investors trading to actually determine a more sane price, and the trading on MPOE is mostly done by crazy people, who's valuations are based on nothing but hopes and wishes, like currency.

[MPOE-PR]

Does Romania have very different accounting reporting standards? (Do you have accountants/finance people?)

Nah, it's really two coconut halves and we're banging them together.

In Revenue and Expense in the MPOE section, when you list Contracts Sold/Bought/Exercised, is that BTC amount revenue made on the trading fees?

MPOE is the options trader. As a result, the BTC amount is revenue/expenditure on the actual contracts bought or sold. If someone sells the bot 100 CALLs at 1 BTC each then the bot has just expended 100 BTC. If someone buys 100 PUTs at 2 BTC each then the bot has 200 extra revenue. These are added up and reported.

Options trading done by MPEX themselves as if they were just an investor?

This is the confusing part, I bet. MPOE is the options trader, just that. MPEx is the exchange itself, just that. These two were independent entities, and were conglomerated in April, by means of MPOE buying MPEx, and creating a single entity which trades under the S.MPOE symbol and reports revenue/expense separately but at the same time.

I can't figure out what the final -1,961 loss actually means in context.

MPOE made some money selling options and exercising options sold to it by customers. MPOE also spent some money, buying options, paying exercises against its sold contracts by customers, and paying for the capital to back all this trade up. So to revisit November numbers:

Revenue : 25`553.98115344 BTC, of which :
(this means overall MPOE received a total of 25`553.98115344 BTC)
contracts sold : 23`577.52108954 BTC
(of which by means of selling contracts 23`577.52108954 BTC)
contracts exercised : 1`976.4600639 BTC
(and by means of exercising against customers 1`976.4600639 BTC)

Expenditure : 27`515.29937379 BTC, of which :
(this means overall MPOE paid a total of 27`515.29937379 BTC)
contracts bought : 21`642.46998797 BTC
(of which by means of buying contracts 21`642.46998797 BTC)
contracts exercised : 1`788.83386582 BTC
(and by means of customers exercising against it 1`788.83386582 BTC)
capital expenses : 4`083.99552 BTC (41`252.48 x 9.9%)
(and to pay the bondholders 4`083.99552 BTC, which is 9.9% for the month over a 41`252.48 BTC capital base)

This all comes to : -1,961.31822035 BTC, overall. On the strength of its trade, MPOE made 2,122.67729965 BTC in the month of November. This was fully paid to bondholders. 1,961.31822035 BTC extra, which were also needed to pay the bondholders was actually taken out of their bonds (which is how those bonds work, any shortfall is met by the bond capital). So therefore people who deposited 41,252.48 BTC received 4,083.99552 BTC in cash as interest payment and were left with 39,291.1617796 BTC in capital, for a net gain of 2,122.67729965 BTC.

Had the cost of capital not exceeded MPOEs actual results from trade, there would have been a profit there. For instance in September revenue was 17,307.84070878 BTC, expenditure 13,022.03561971 BTC (including capital expenses of 506.18979000 BTC), leaving a profit of 4,285.80508907 BTC which was distributed to shareholders.

The Capital expenses number doesn't really specify what it's for or from, and I can't tie the 41`252.48 number to anything.

From the contract:

(i)MPOE will calculate, retrospectively, at the end of each Reporting Month for that Reporting Month, a capital requirement in the following manner : at every moment a momentary capital reserve requirement is calculated, equal to the total amount paid for bought contracts minus the total amount received for sold contracts plus the largest sum that can be necessary to cover all the contracts sold. The capital reserves requirement for the Reporting Month will be equal to the largest of all momentary reserve requirement calculated during that interval.

That 41,252.48 means that in the worst case scenario, if BTC would have gone either to zero or to infinity, the most that MPOE might have owed would have been 41,252.48. For this reason this sum was retained, to be able to repay customers trading options in any event.

The bondholders table mentions total capital. I'm assuming that is capital held by your company, which was raised through bond sales? (Usually it's lumped together with cash in the assets section, and listed in this section as a liability).

MPOE bonds work a little different from "normal" bonds. Someone interested in participating has to notify (such as via email) the sum they intend to deposit, the address they want payments made to and the interest rate they seek. Once the sum is sent it will figure starting with the next full month (so, sending on the 5th or 19th does the same thing basically). At the end of each month, MPOE calculates how much BTC it would have needed (retrospectively), sorts the bonds ascending by interest rate asked and strikes a line through the one that fills the need. Everyone above the line gets the same interest rate as the last bond accepted. Everyone under the line (including the portion of the struck through bond not needed) gets nothing.

So, armed with that: total capital is always going to be = to the needed sum, as calculated. This list is itemized by receiving address, so people can see themselves on the list. Any shortfall that has to be made up (such as the 1,961.31822035 BTC) is applied proportionally to all bonds listed, and the new list is published (so everyone can keep track of their bonds' value).

the Enterprise Value of the company is just share value * # of shares, or BTC0.000527 * 1,000,000,000 = BTC527,000. That does seem ridiculously unrealistic.

The first part is judiciously correct: MPOE/MPEx retains 0 capital etc. The second part is certainly debatable. On one hand, the open market is the open market. On the other hand, a lot of money is a lot of money. The matter is discussed a little more for instance in the "Why S.MPOE is worth more than MtGox" article but in the end the truth is we just don't know.

Historically, MPOE existed as a public company and had shares out before MPEx was created. The shares were allocated in batches, using a double blind auction model (the batch size and a cutoff date were announced, then anyone interested would deposit as much BTC as they wanted - very similar to how bonds work, just a 999 ending - and then on the cutoff date the share block was divided proportionally by sums contributed).

There were two such issues (March and April. The first batch was 1,000,000 shares, the 2nd 4,000,000 shares. The first went for ~9k satoshi each, the 2nd for ~2.x k each (so in between 20% and 4% of current prices). MPOE.ETF, a GLBSE traded etf and also the highest gain GLBSE asset of all time made ~1200% over its (four month) lifetime by subscribing investor funds and then selling the resulted MPEx shares. The price has been more or less on a growth curve since then, not without its ups and downs.

So, to get back to the original question...I dunno. It is what it is.

On the other hand, if we use the most recent dividend payout of BTC433.9709647

On the yet another hand, September dividends were close to 5k, which in the same model would make it be worth over 800k. The fact of the matter is dividends fluctuate wildly, and possibly investors are attracted by perspectives more than just dividends alone. Still...your guess is as good as mine/ours.

Hope that wasn't too long a read.

[Rassah]

Wow, thanks for all the details! That explains it all much better now. Regarding how your bond system works, that's exactly the setup I am thinking of in the business idea I'm working on: let the market set your rates. Awesome


Also, be careful with the moon rocks. They're pure poison.

[MPOE-PR]

Wow, thanks for all the details! That explains it all much better now. Regarding how your bond system works, that's exactly the setup I am thinking of in the business idea I'm working on: let the market set your rates. Awesome


Also, be careful with the moon rocks. They're pure poison.

The who?!

[Rassah]

Wow, thanks for all the details! That explains it all much better now. Regarding how your bond system works, that's exactly the setup I am thinking of in the business idea I'm working on: let the market set your rates. Awesome


Also, be careful with the moon rocks. They're pure poison.

The who?!

We're not just banging two coconut halves together was what Cave Johnson from Portal 2 said. A bit before saying that he got his company to buy moon rocks, mixed them into a drink, and poisoned himself.

[MPOE-PR]

We're not just banging two coconut halves together was what Cave Johnson from Portal 2 said. A bit before saying that he got his company to buy moon rocks, mixed them into a drink, and poisoned himself.

Oh, oh. I was using it straight.

[Giftsforcoins]

I'm starting up a new company accepting only bitcoins and I searched through the forums and thought this would be the best place to initially get some input. My website takes in btc and sends back giftcards, brand new and fully loaded. Along with giftcards, I'm looking to expand into gifts like movie tickets and other small purchases that can be sent in regular envelopes to make shipping cheap and easy.
The site is still being updated but I did some pricing updates today. Let me know your thoughts, if any. The site is www.giftsforcoins.com

What isn't listed on the site yet is tax and shipping are included in the price. The price you see is the price you pay! 

This is also my first post outside the noob section so I hope I did everything right.

[rini17]

This is also my first post outside the noob section so I hope I did everything right.

I respectfully disagree. Please make this announcement in a new topic, perhaps in Services subforum

[Giftsforcoins]

This is also my first post outside the noob section so I hope I did everything right.

I respectfully disagree. Please make this announcement in a new topic, perhaps in Services subforum

I can do that as well. Thanks for the help

[MPOE-PR]

Maybe if I bump this I won't have to link it in quite as many braindamaged threads introducing "most popular in the Universe" nonsense.

[Akka]

Maybe if I bump this I won't have to link it in quite as many braindamaged threads introducing "most popular in the Universe" nonsense.

Do you rally believe this?

My bet: Effect of pumping this on number of braindamaged Threads created: = 0.

But thanks for trying