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[ianbakewell]

.

[zkay]

What is your rationale for shorting S.DICE?

[Deprived]

What is your rationale for shorting S.DICE?

His rationale is that he wants to raise funds to invest in some RL venture and wants to sell them so he can.  The shares he already borrowed to sell include ones that are eseentially unshortable (they have a fixed buy-back price).

Basically it's (at least perceived as) easier to raise funds for a business/trading than to just ask to borrow cash unsecured.  Some unknown would stand zero chance of getting a 100 BTC loan filled but a much more signficant chance of raising 100 BTC by listing some sketchy business on an exchange.  Similarly I guess Ian's perception is he has more chnace of raising funds by asking to borrow to short than by asking to just borrow cash in the first place.

[zkay]

I have an opportunity to put cash to work and make a great return in a relatively quick period of time.
I believe I will be able to buy S.DICE back cheaper and save myself some money on the loan.

Ah, I see. Makes sense to me now. You'll have to forgive the question, I'm pretty new to all this. Also don't think my lowly 670 shares are going to do you a whole lot of good.

[koin]

What is your rationale for shorting S.DICE?

there's a few forces working against satoshidice.

satoshidice growth was occurring fastest (in btc terms) when there was no problem doing payouts on 0/unconfirmed.  exploits caused them to do payouts only after a confirmation in many instances.   so satoshidice can no longer provide the same service it provided before.  the price doesn't seem to reflect this change.

the space available in blocks is starting to crowd out microtransactions.  the fees for placing a wager to continue getting confirmed promptly will have to increase.   when considering the higher transaction fees versus payouts satishidice is no longer is as competitive against other bitcoin-based online gaming offerings.

the exchange rate is increasing and the average wager size is decreasing (i.e., a person might still plan to wager $3 at a time.  that used to be about 0.25 btc, now it is less than 0.1 btc.)   but the fees are the same or going up, and are increasing in terms of cost per wager.



now why none of that may matter is satoshidice is so profitable they have a warchest to build or buy whatever competition exists, and market it to more than make up for whatever loss in profits comes from satoshidice decline.  

tl:dr; naked shorting of satoshidice is a crazy risk

[Monster Tent]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

[🏰 TradeFortress 🏰]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

Are you serious?

Bitcoin won't block S.DICE transactions. They are already paying twice the needed fee.

[Deprived]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

Are you serious?

Bitcoin won't block S.DICE transactions. They are already paying twice the needed fee.

There's no such entity as a "Bitcoin" that can choose whether or not to block or not S.DICE transactions.

Any blocking would be done by individual pools.  It would only take one large pool to actively be hostile to S.DICE to make them unable to allow zero-confirmation bets at all.  If a pool discards S.DICE transactions but intentionally allows competing transactions from same source to process then the pool only needs a few % of network power for anyone to profitably attack S.DICE by trying to double-spend any losing bets - the few % of times the pool includes the double-spend (and cancels the losing bet) then outweigh the house edge on the rest of bets.  You underestimate the extent to which some are opposed to S.DICE (not me - obviously).

[usagi]

There's no such entity as a "Bitcoin" that can choose whether or not to block or not S.DICE transactions.

Any blocking would be done by individual pools.  It would only take one large pool to actively be hostile to S.DICE to make them unable to allow zero-confirmation bets at all.  If a pool discards S.DICE transactions but intentionally allows competing transactions from same source to process then the pool only needs a few % of network power for anyone to profitably attack S.DICE by trying to double-spend any losing bets - the few % of times the pool includes the double-spend (and cancels the losing bet) then outweigh the house edge on the rest of bets.  You underestimate the extent to which some are opposed to S.DICE (not me - obviously).

responded to this in the satoshidice thread.

[🏰 TradeFortress 🏰]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

Are you serious?

Bitcoin won't block S.DICE transactions. They are already paying twice the needed fee.

There's no such entity as a "Bitcoin" that can choose whether or not to block or not S.DICE transactions.

Any blocking would be done by individual pools.  It would only take one large pool to actively be hostile to S.DICE to make them unable to allow zero-confirmation bets at all.  If a pool discards S.DICE transactions but intentionally allows competing transactions from same source to process then the pool only needs a few % of network power for anyone to profitably attack S.DICE by trying to double-spend any losing bets - the few % of times the pool includes the double-spend (and cancels the losing bet) then outweigh the house edge on the rest of bets.  You underestimate the extent to which some are opposed to S.DICE (not me - obviously).

When I used the term bitcoin, I meant the 'Satoshi' client / bitcoind. Pools won't be able to shut down SatoshiDICE - only make them require 1 confirm for bets.

[Monster Tent]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

Are you serious?

Bitcoin won't block S.DICE transactions. They are already paying twice the needed fee.

There's no such entity as a "Bitcoin" that can choose whether or not to block or not S.DICE transactions.

Any blocking would be done by individual pools.  It would only take one large pool to actively be hostile to S.DICE to make them unable to allow zero-confirmation bets at all.  If a pool discards S.DICE transactions but intentionally allows competing transactions from same source to process then the pool only needs a few % of network power for anyone to profitably attack S.DICE by trying to double-spend any losing bets - the few % of times the pool includes the double-spend (and cancels the losing bet) then outweigh the house edge on the rest of bets.  You underestimate the extent to which some are opposed to S.DICE (not me - obviously).

SD shares wont be worth anything if they force bitcoin to go through a hard fork rather than just improving how they do things. A  hard fork is the "nuke from space" option.

[Deprived]

The block size issue has the possibility of crippling satoshidice.

Unless they start doing things more efficiently the network will act to defend itself one way or the other against the SD "attack" whether through increased fees or blocking SD transactions altogether. SD may have to invest in its own mining equipment if it wants to continue its wasteful ways.

Are you serious?

Bitcoin won't block S.DICE transactions. They are already paying twice the needed fee.

There's no such entity as a "Bitcoin" that can choose whether or not to block or not S.DICE transactions.

Any blocking would be done by individual pools.  It would only take one large pool to actively be hostile to S.DICE to make them unable to allow zero-confirmation bets at all.  If a pool discards S.DICE transactions but intentionally allows competing transactions from same source to process then the pool only needs a few % of network power for anyone to profitably attack S.DICE by trying to double-spend any losing bets - the few % of times the pool includes the double-spend (and cancels the losing bet) then outweigh the house edge on the rest of bets.  You underestimate the extent to which some are opposed to S.DICE (not me - obviously).

When I used the term bitcoin, I meant the 'Satoshi' client / bitcoind. Pools won't be able to shut down SatoshiDICE - only make them require 1 confirm for bets.

I agree with that - but point is that making them require 1 confirm for all bets would very likely reduce profits: as a lot of people won't gamble if they have to wait an average of 10 minutes to find out whether they won.

I'm not sure HOW you think the client/bitcoind COULD block S.DICE.  Prevent masses of transactions to a single address (no point using specific addresses as new addresses can be generated easily)?  Any such cure would be worse than the 'problem' it's supposed to fix.

If Bitcoin isn't meant to handle the sort of transaction volume S.DICE produces then how is it ever supposed to achieve widespread adoption?

Trying to block S.DICE at the bitcoind level is treating the symptom rather than the illness.

[Deprived]

Woah you guys are getting into some complicated reasoning

I figure it simply like this: BTC is going to continue to rally up and you can only put so much of a $ premium on a brand name

1 000 000 000 shares trading at .0062 says S.DICE is worth BTC6200000 @ $30 = $18,6000,000

Now S.DICE is a nice profitable site with a strong brand... but at 18.6mil I think it is a little over valued.

If the trend of BTC rising continues AND profits of S.DICE decline month on month as they have this month then I'd agree.  But I'm by no means convinced the drop in profits this month are related to the price rise - more like just because the whale ran out of funds.

For those who say 'but it's more profit in USD this month' - who cares.   It's the ratio of dividend : share price that matters not the absolute amount of the dividend.  If you value the dividend in USD then you need to take share price in USD too - which, shockingly, gives exactly the same ratio as if you measured both in BTC.  The yield dropped this month - which is what counts.  If you're valuing based on P/E then if that becomes a trend then price has to fall.

We aren't at that point yet - whether we'll get there is very open for debate.

[poly]

What the bitcoin network could do is make changes to discourage "spammy" transactions like SatoshiDICE. For example, this could be done by weighing the bitcoin days more heavily, and require a more substantial fee if the bitcoin days are lower. This should not be ruled out, but it shouldn't mean the end of S.DICE - just a small to moderate drop in the amount of players.

[Deprived]

What the bitcoin network could do is make changes to disencourage "spammy" transactions like SatoshiDICE. For example, this could be done by weighing the bitcoin days more heavily, and require a more substantial fee if the bitcoin days are lower. This should not be ruled out, but it shouldn't mean the end of S.DICE - just a small to moderate drop in the amount of players.

Problem with that approach is it means penalising ALL small transactions.  Which is pretty dangerous with BTC rising.  Plus it would hurt S.DICE less than others doing similar sized transactions - as S.DICE has sufficient capital to send small transactions from aged coins (wouldn't take much effort for them to use aged coins only for small transactions) whilst many others don't have that luxury.

There's no way to penalise S.DICE specifically without also harming many others - so I'd argue it's probbaly better to put the effort into working towards being able to handle S.DICE type transaction volumes rather than into trying to somehow block S.DICE only to then encounter the same issues again with some other company.

[poly]

Yeah, which is why I said "discourage spammy transactions like SatoshiDICE" - the key word is like :)

[dirksizzlebod]

I have an opportunity to put cash to work and make a great return in a relatively quick period of time.
I believe I will be able to buy S.DICE back cheaper and save myself some money on the loan.

How do you plan to cover the dividend payments each month?  What the rate you're paying people?

You're going to get MURDERED, especially on the dividends, in my opinion.

[Deprived]

I have an opportunity to put cash to work and make a great return in a relatively quick period of time.
I believe I will be able to buy S.DICE back cheaper and save myself some money on the loan.

How do you plan to cover the dividend payments each month?  What the rate you're paying people?

You're going to get MURDERED, especially on the dividends, in my opinion.

The dividends really aren't an issue.  If he gets murdered anywhere it'll be on the exchange-rate if BTC keeps rising vs USD (he's borrowing the money for  USD-denominated purpose).  A 2% dividend/month pales into insignifance if BTC were to rise by 50% between now and May (which is LESS than it's risen in the last two months).

Just hope his "great return" is large enough to justify that risk (some of other stuff he's borrowed and sold is 100% fixed-price in BTC so will in no way fall due to exchange-rate moves).

[kgo]

I have an opportunity to put cash to work and make a great return in a relatively quick period of time.
I believe I will be able to buy S.DICE back cheaper and save myself some money on the loan.

How do you plan to cover the dividend payments each month?  What the rate you're paying people?

You're going to get MURDERED, especially on the dividends, in my opinion.

More importantly selling short has *unlimited* exposure.  The price could go up (in theory) 2x, 4x, 10x, 100x, 1000x.  Would my loan get paid back if the price doubled?

[misterbigg]

If Bitcoin isn't meant to handle the sort of transaction volume S.DICE produces then how is it ever supposed to achieve widespread adoption?

The problem is not the transaction volume, it is that the transactions which SatoshiDICE generates cannot be "pruned", and that the 1-satoshi outputs are economically impractical to ever spend.