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Author Topic: Maybe everyone here will learn a lesson about pre-orders  (Read 3410 times)
jjshabadoo
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January 13, 2013, 04:55:23 AM
 #1

I nearly fell victim to this bullshit myself. Fortunately, I got my credit card refund out of bASIC over a month ago.

I saw the writing on the wall and knew this shit was going to get ugly. I was supposed to actually help Tom put the units together. We had phone calls and numerous communications. Then the communication got slower and the delays started. Something didn't smell right.

Maybe every other vendor will ship, but it wouldn't surprise me if some don't.

Funding a business venture with pre-order money is bad business. It's especially bad business if you are the one putting up your money.

THERE IS NO REASON FOR ANY SANE PERSON TO BE A CAPITAL INVESTOR AND NOT RECEIVE AN EQUITY STAKE OR INTEREST PAID ON YOUR CAPITAL!

If you give a business your money in advance and there is no specific, contracted date for you to receive your product, then YOU are a capital investor. Especially if there isn't even a working documented prototype.

Simply getting a "place in line" is not good enough. You should be compensated for assuming so much risk. Yet the foolish people on this forum justified this bullshit for months.

How long has BFL held money now? 6 months? Go ahead justify away, but the amount of money the folks who paid BFL in June have now lost is ridiculous.

It's called opportunity cost and those folks have lost plenty of opportunities, namely their BTC are worth nearly three times as much as when they sent them to BFL 6 months ago.

If everyone had simply made these companies show a working device before they parted with their money, all of this bullshit could have been avoided.

I bet if this had been the community's response, these companies would probably have already delivered. You see, in business, when you actually need to produce a product to get paid, it kind of acts as a motivating factor.

Just because bitcoin is a decentralized currency with no central authority, does not mean the ecosystem has to function like the wild west. A little ethics and some informed consumers would go a long way toward widespread adoption of bitcoin.

Unfortunately, I see more people interested in easy money. No wonder why more money has been made in bitcoin through scamming and drug dealing than anything else.


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January 13, 2013, 05:23:19 AM
 #2

I saw the writing on the wall and knew this shit was going to get ugly. I was supposed to actually help Tom put the units together. We had phone calls and numerous communications. Then the communication got slower and the delays started. Something didn't smell right.

I'm kind of embarrassed that I waited as long as I did to request a refund.  I feel like I just *barely* made it out unscathed (aside from missing out on ~20% gain in BTC value).

In retrospect, the hosting plan announcement should have been enough evidence for me to decide to get out.  It said 3 words about the product, and the rest was diversion.

There were many small signs before that too.

"All safe deposit boxes in banks or financial institutions have been sealed... and may only be opened in the presence of an agent of the I.R.S." - President F.D. Roosevelt, 1933
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January 13, 2013, 05:37:52 AM
 #3

The bottom line is people should never give anyone money in advance to simply purchase a product.

A deposit? Sure, especially on a product which is custom made. Although ASIC's are only custom when originally designed.

If these companies had enough capital to fund the development of their products through their first production run, then there was NO good reason for them to accept pre-orders.

They could only be doing this for nefarious reasons, either to squelch competition or because they were lying about their capital position.

Again, I could understand if they needed to match their initial production run with expected demand, then they would take a deposit to be sure their customers were serious.

The only ASIC project which had the right to take pre-order capital was block eruptor run by friedcat. That project was clear about risk and will be paying a return to their investors for that risk.
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January 13, 2013, 05:45:38 AM
 #4

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.
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January 13, 2013, 05:52:12 AM
 #5

That's BS. These projects didn't NEED to happen in the first place. The 51% thing has been debunked as a viable threat because the attacker shoots themselves in the foot.

Someone would have come along and developed an ASIC on their own regardless.

I still stand by my original post. If these companies needed pre-order money to FUND an ASIC, then they should have offered terms which reflected the true risk of the project by paying equity or interest on the customers capital investment.

Pre-orders are for established products were the demand outstrips supply.

Pre-orders are NOT an ethical way to raise capital for a start-up project.

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January 13, 2013, 06:01:34 AM
 #6

I disagree.

ASIC preorders are high risk but they are also high reward.

Take for example Avalon's first batch, which is expected to ship 300 66Gh/s units.  This will double the network hashrate.  A single $1300 unit will return $2200 in a month ($1460 if ASICMINER brings another 20 TH/s online).  This is a ridiculous return on investment that is more in line with investing in a startup than purchasing a consumer product.

I placed early preorders with all three vendors.  I did this with the assumption that my payment would be used to fund development.  I also assumed that I risked losing my money to scams or simply a failure to deliver due to technical issues.  When I ordered the upgrade to my FPGA minirig, I factored in a 10-20% chance that BFL was pulling a long con into my calculations.  The potential benefits of receiving the first batch of 1TH/s miners out-weighed this risk.  If there was no risk, why wouldn't the ASIC companies just mine themselves until it was only marginally profitable, and then sell units to the general public?

There are two optimal points in time to buy ASICs:
1) First in line (high risk, potential for high reward)
2) After the product has shipped (low risk, low but more deterministic reward)

Everything in between is only slightly less risk than being first in line, with significantly less reward.  Should you preorder an ASIC now? Probably not... why not wait until someone delivers instead of handing over your coins to get in the back of a huge lines?  However, I believe that early ASIC orders, while speculative, had a positive expected value.

With regards to customers who placed orders with BTC, it is unfortunate for them that BTC has more than doubled, but no one could have predicted that.  The exchange rate could of moved in the other direction.  There were many opportunities to hedge this risk.

(I just requested a refund from bASIC)

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January 13, 2013, 06:23:13 AM
 #7

None of the ASIC manufacturers has a working prototype yet. When any of them have some, they will need to undergo rigourous stress testing before any serious manufacturing can begin.

My bet is Avalon's 110nm will ship first, but will also be the first to be unprofitable at it's higher Wattage consumption. (Feburary/March).

BFL i think will be next, their 65nm will be the best bet if they ever actually deliver and don't go bankrupt first. Flawed chips, wont even prototype until January IMO. (March/April).

bASIC 90nm structure should avoid the pitfalls of a 65nm process. But now redesigning PCB, offering higher GH/s to appease punters. Has been awfully quiet recently other than saying 'sorry not been around lately mega busy'. Gut feeling says he may have bitten off more than he can chew. (March/April) if he doesn't run off or refund everyone by then.


Hate to say it, but it seems my gut feeling 6 weeks ago was correct.

I've yet to see any real level of professionalism from any of these ASIC manufacturer's thats been deserved of any pre-order investment captial.
None of them have convinced me yet they are capable of running businesses handling 6 figure turnovers.
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January 13, 2013, 06:44:19 AM
 #8

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.

Bullshit. BFL and other vendors could have gotten private venture capital. Instead they preyed upon the overeager bitcoin nerds who could not see beyond the insanely high hash rate estimates for the different "ASIC" products listed.

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January 13, 2013, 07:06:31 AM
 #9

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.
Bullshit. BFL and other vendors could have gotten private venture capital. Instead they preyed upon the overeager bitcoin nerds who could not see beyond the insanely high hash rate estimates for the different "ASIC" products listed.
Umm I thought in the initial anouncement, BFL stated that they DID receive a private venture capital investor?

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January 13, 2013, 07:08:00 AM
 #10

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.
Bullshit. BFL and other vendors could have gotten private venture capital. Instead they preyed upon the overeager bitcoin nerds who could not see beyond the insanely high hash rate estimates for the different "ASIC" products listed.
Umm I thought in the initial anouncement, BFL stated that they DID receive a private venture capital investor?

This is what I heard as well.
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January 13, 2013, 07:09:18 AM
 #11

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.
Bullshit. BFL and other vendors could have gotten private venture capital. Instead they preyed upon the overeager bitcoin nerds who could not see beyond the insanely high hash rate estimates for the different "ASIC" products listed.
Umm I thought in the initial anouncement, BFL stated that they DID receive a private venture capital investor?

If they did then I don't see why they needed to take pre order monies so far in advance. That makes no sense.

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January 13, 2013, 07:23:23 AM
 #12

This is a unique time in Bitcoin's history. I don't imagine this will be repeated again. I think you lack perspective in not realizing that these products would have not been created without the pre-orders. It simply was not possible. In the future you would be a fool to preorder. Most understand that this process was a gamble. Some will win and some will lose.
Bullshit. BFL and other vendors could have gotten private venture capital. Instead they preyed upon the overeager bitcoin nerds who could not see beyond the insanely high hash rate estimates for the different "ASIC" products listed.
Umm I thought in the initial anouncement, BFL stated that they DID receive a private venture capital investor?
If they did then I don't see why they needed to take pre order monies so far in advance. That makes no sense.
It's the very first sentence of their initial announcement:
Quote
Largest SHA256 Hardware Manufacturer Acquires Venture Capital Funding

Later on down the announcement:
Quote
Butterfly Labs, the largest market provider of SHA-256 hardware, is now backed by private venture capital, and looking forward to continuing its operations

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January 13, 2013, 07:45:10 AM
 #13

private venture capital = Bitcoin community.


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January 13, 2013, 07:48:50 AM
 #14

ASIC preorders are high risk but they are also high reward.

This.  A first-run of ASICs for a young startup is very high risk, even excluding the possibility of being a scam.

My method was pre-ordering from all vendors, in the hopes that one of them would actually ship.


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January 13, 2013, 09:25:44 AM
 #15

I saw the writing on the wall and knew this shit was going to get ugly. I was supposed to actually help Tom put the units together. We had phone calls and numerous communications. Then the communication got slower and the delays started. Something didn't smell right.

I'm kind of embarrassed that I waited as long as I did to request a refund.  I feel like I just *barely* made it out unscathed (aside from missing out on ~20% gain in BTC value).

In retrospect, the hosting plan announcement should have been enough evidence for me to decide to get out.  It said 3 words about the product, and the rest was diversion.

There were many small signs before that too.

FWIW, the hosting thing is my brainchild and was not meant as a diversion.  I just thought we were close enough to a ship date that it could be announced.  Tom actually announced it ahead of me - there were still details left to be worked out. 

I still see it as a good potential business and may yet offer it as a service - that is if my credibility isn't totally shot with this crowd  Undecided

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January 13, 2013, 09:29:23 AM
 #16

I saw the writing on the wall and knew this shit was going to get ugly. I was supposed to actually help Tom put the units together. We had phone calls and numerous communications. Then the communication got slower and the delays started. Something didn't smell right.

I'm kind of embarrassed that I waited as long as I did to request a refund.  I feel like I just *barely* made it out unscathed (aside from missing out on ~20% gain in BTC value).

In retrospect, the hosting plan announcement should have been enough evidence for me to decide to get out.  It said 3 words about the product, and the rest was diversion.

There were many small signs before that too.

FWIW, the hosting thing is my brainchild and was not meant as a diversion.  I just thought we were close enough to a ship date that it could be announced.  Tom actually announced it ahead of me - there were still details left to be worked out. 

I still see it as a good potential business and may yet offer it as a service - that is if my credibility isn't totally shot with this crowd  Undecided

so much for the plan.

also, while we're on topic...i guess the late refund requests will have low chance of receiving refunds?

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January 13, 2013, 09:49:26 AM
 #17

I still see it as a good potential business and may yet offer it as a service - that is if my credibility isn't totally shot with this crowd  Undecided

Sorry Dave, but everybody who give up control over it's mining hardware is a fool. For me it's the same than keeping my bitcoins at a 'bitcoin bank'.

Your involvement in Toms long con makes things even worse.
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January 13, 2013, 10:28:02 AM
 #18

also, while we're on topic...i guess the late refund requests will have low chance of receiving refunds?

Well based on this...

Quote
Tom did not show up for our meeting this morning, where he was asked to provide several pieces of information regarding BTCFPGA.  All evidence I have leads me to believe he left town   I have no idea of his location.



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Monero
"The difference between bad and well-developed digital cash will determine
whether we have a dictatorship or a real democracy." 
David Chaum 1996
"Fungibility provides privacy as a side effect."  Adam Back 2014
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ninjaboon
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January 13, 2013, 10:51:27 AM
 #19

All this crazy drama had me raising a cc chargeback today.

The bad thing is that it's going to be harder to convince new potential investors about Bitcoin investments.

Bad news spreads like wildfire.

mezzomix
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January 13, 2013, 11:02:32 AM
 #20

Yes. Trendon, Tom and all the others are damaging bitcoin as much as they can. It's hard to tell anybody about the advantages of bitcoin with all those scammers.
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