BTC400 pledged to develop USD/BTC rate prediction market

[killerstorm]

In general, what you said sounds like a good way to do all kinds of betting services.

Well, yeah, I was thinking about it since 2011... My plan was to start with BTC/USD futures, and then to expand into options, prediction market, betting, etc.

Never got around to it, though

I wonder why this kind of thing doesn't seem to be standard by now.

I wonder about that too... Perhaps people simply do not give a fuck.

Even without the use of a mediator this kind of system seems quite good to me. The risk the user of a site like this

In an extreme case the operator of the site could refuse to release anybodies money, but he wouldn't get it either. The whole site could also be shut down by the authorities, with the same result.

Well, it would be great to solve this problem...

For example, it is possible to give a trusted 3rd party an ability to return funds back to user, but only after a large timeout. Say, two years... It is possible that users and this 3rd party will collude, but presumable it will be detected before timeout, and so it is possible to punish this trusted 3rd party before timeout.

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[aan]

In general, what you said sounds like a good way to do all kinds of betting services.

Well, yeah, I was thinking about it since 2011... My plan was to start with BTC/USD futures, and then to expand into options, prediction market, betting, etc.

Never got around to it, though

I wonder why this kind of thing doesn't seem to be standard by now.

I wonder about that too... Perhaps people simply do not give a fuck.

Even without the use of a mediator this kind of system seems quite good to me. The risk the user of a site like this

In an extreme case the operator of the site could refuse to release anybodies money, but he wouldn't get it either. The whole site could also be shut down by the authorities, with the same result.

Well, it would be great to solve this problem...

For example, it is possible to give a trusted 3rd party an ability to return funds back to user, but only after a large timeout. Say, two years... It is possible that users and this 3rd party will collude, but presumable it will be detected before timeout, and so it is possible to punish this trusted 3rd party before timeout.

Would it be possible to return the money automatically after some period of inactivity, without any action by a mediator? This could also be included in the rules of the game, which the user would know precisely when he starts using the site. The site could also be run on any kind of shady web server in any part of the world, without a big risk by the user.

I personally would trust an automatic return of money more than any mediator, who could also disappear etc.

In my opinion, the worst thing in this scheme in general is that the winners have to wait for the losers to release their money. Of course this could be mitigated with the site keeping some amount of buffer funds available. And the buffer would be there just to speed up the payments, and not be an integral part of the operations.

[rpietila]

What if the site did not take care of the BTC at all - I mean if all bets were escrowed with the trusted third party (example: MtGox), which is paid to release the funds after each round. The operator of the site would also need to deposit enough to fully cover all its obligations.

Is there anyone in this world who could be trusted with this much money, without it becoming a risk to the site and its users alike?

[killerstorm]

Would it be possible to return the money automatically after some period of inactivity, without any action by a mediator?

Do you mean as a protection against a case where operator is dead? Yes, it is possible.

For example, user is given nLockTime'd transaction which locks in a year and sends money back to user, but operator has nLockTime'd transction which locks in 11 months and sends money back into escrow.

If operator is alive he will release his transaction and thus will prevent release of funds back to user.

However, it doesn't save user from a malicious operator.

The site could also be run on any kind of shady web server in any part of the world, without a big risk by the user.

I don't think so. Operator still controls payoffs. If private key is stolen, I'm sure you will lose some of your money.

I personally would trust an automatic return of money more than any mediator, who could also disappear etc.

Well, I don't know, it's very unlikely both will disappear at the same time.

In my opinion, the worst thing in this scheme in general is that the winners have to wait for the losers to release their money. Of course this could be mitigated with the site keeping some amount of buffer funds available. And the buffer would be there just to speed up the payments, and not be an integral part of the operations.

Yes.

A different scheme is to use peer-to-peer bets with operator controlling payoff. (So-called contracts.) In this case no wait is necessary. (Winner can claim funds as soon as operator announces who wins.) Also people can simply get money back if operator is dead.

[MPOE-PR]

In general, what you said sounds like a good way to do all kinds of betting services. People not releasing their funds, or not releasing them in a timely fashion, would be just contained in the rules of the game. Some people will probably not release their money even if they get something in return, but that could just be subtracted from the winners amounts.  And in many cases the service provider would be position-neutral, and the site could be run with zero capital. I wonder why this kind of thing doesn't seem to be standard by now.

Even without the use of a mediator this kind of system seems quite good to me. The risk the user of a site like this takes would be that he wouldn't get any of his winnings, but would get his own money back. In an extreme case the operator of the site could refuse to release anybodies money, but he wouldn't get it either. The whole site could also be shut down by the authorities, with the same result.

I guess you fundamentally misunderstand how betting works. If I put a dollar on the line and you put a dollar on the line and then "I get my dollar back" I've just been scammed of a dollar, the one that used to be yours and you lost.

The idea that you're "protecting" my dollar by allowing the other party to steal my other dollar if they wish to do so is ridiculous. I wish no such protection, I wish to have the guarantee that the other party can't control their dollar, so I can win it. The other party wishes the same guarantee about me.

Basically betting is exactly the opposite of this scheme you're proposing. The fact that BitBet is doing thousands in bet BTC a month whereas an implementation of your idea doesn't even exist in practice should be sufficient empirical evidence that you're wrong. Why isn't it?

[killerstorm]

Basically betting is exactly the opposite of this scheme you're proposing. The fact that BitBet is doing thousands in bet BTC a month whereas an implementation of your idea doesn't even exist in practice should be sufficient empirical evidence that you're wrong. Why isn't it?

A lot of betting and trading sites have perished. Bitcoinica, Kronos.io, Mooncoin, Betcoin, Bitscalper...

Is there a reason why BitBet is more secure than any of them? Aside from operator being a buddy of MP.

BitVPS operator was also a buddy of MP, but it turned out he is an asshole, didn't he?

So "being a MP's buddy" is not a good criterion.

There is a more secure design than what aan have described, basically a third party controls whether Alice or Bob will be paid. (It cannot send money to Eve, though.) But if third party dies, Alice and Bob can settle it among themselves.

It is based on hash-locked payout script, I've designed it back in summer of 2011.

Implementation doesn't exist because people are way more interested to make a quick buck than to actually implement something worthy.

Also users are not willing to sacrifice a bit of convenience in the name of security.

[MPOE-PR]

There is a more secure design than what aan have described, basically a third party controls whether Alice or Bob will be paid. (It cannot send money to Eve, though.) But if third party dies, Alice and Bob can settle it among themselves.

This would be the n/k keys thing? Maybe that'd be better, even if to some degree it still requires A/B trust the third party.

[MichaelBliss]

So you are planning to offer some kind of Futures/Options, or at least something, that MPEx is already offering with an (idiot exclusion?) entering fee, if I understand you correctly. (MPEx PR is probably loading the shitstorm canon atm).
Don't get me wrong. You can do/try what ever you think is right. But you are entering a field with a lot of competition from other casinos, that already inflate the area of unproductive businesses.

Nonetheless, if you want to offer your service to the rest of the "members only" userbase of current services, you should get rid off accounts completely, including URL-based user accounts. I think it was the key for the success of satoshi dice, since any idiot, who can use bitcoin, can automatically gamble at SD. They don't even need an URL-based-anything to operate. (MPEx developed this advantage also lately, IIRC). But if your webserver is fucked, you are fucked.

I'm an atheist, though I can certainly understand the religious prohibition against crap like this.  Will your business venture make the world a better or worse place?  This kind of uncreative, greedy mentality and all the get-rich-quick type businesses popping up are a disgrace to the community.  If this is the best people can come up with, you can say goodbye to your economy, standard of living, etc.  Bitcoin or no, if all you can produce in your economy is lottery tickets, you are truly fucked.  Even that 23yr old Avalon guy who calls his customers the bottom feeders of bitcoin is worthy of a lot more respect, at least he produced something of value.  This is just another leach.  Life is short, do something you could be proud of, and your childeren's childeren will be proud you did.  What kind of people do you think get involved with running casinos anyway? 

[killerstorm]

There is a more secure design than what aan have described, basically a third party controls whether Alice or Bob will be paid. (It cannot send money to Eve, though.) But if third party dies, Alice and Bob can settle it among themselves.

This would be the n/k keys thing?

Well, the basic version is just 2-of-3 multisig, however there is a more complex script which would decrease reliance on third party.

Maybe that'd be better, even if to some degree it still requires A/B trust the third party.

It is fundamentally impossible to settle bets securely without trust into a third party.

Almost... I have a sketch of a fully decentralized prediction market design, but it is really complex and still kinda imperfect.

[killerstorm]

I'm an atheist, though I can certainly understand the religious prohibition against crap like this.  Will your business venture make the world a better or worse place?  This kind of uncreative, greedy mentality and all the get-rich-quick type businesses popping up are a disgrace to the community.  If this is the best people can come up with, you can say goodbye to your economy, standard of living, etc.  Bitcoin or no, if all you can produce in your economy is lottery tickets, you are truly fucked.  Even that 23yr old Avalon guy who calls his customers the bottom feeders of bitcoin is worthy of a lot more respect, at least he produced something of value.  This is just another leach.  Life is short, do something you could be proud of, and your childeren's childeren will be proud you did.  What kind of people do you think get involved with running casinos anyway?

Prediction market is not a casino. Have you heard about Futarchy? I'll give you a quote:

Betting markets are our best known institution for aggregating information.

Please read the whole article, though: http://webcache.googleusercontent.com/search?q=cache:W92w_ENQRbQJ:hanson.gmu.edu/futarchy.html+&cd=2&hl=uk&ct=clnk&gl=ua

[MichaelBliss]

So the purpose of this endeavour is to aggregate information, rather than profit from peoples bets?

[rpietila]

So the purpose of this endeavour is to aggregate information, rather than profit from peoples bets?

If this succeeds in its economic mission, to be (one of) the most versatile and most liquid platforms to predict the future exchange rate, there will be benefits to the Bitcoin ecosystem. The idea of people betting for a single dollar outcome is just there for fun and for profit. Other use cases are more professional, such as hedging and speculation. We have to remember that speculation on the price is beneficial to the exchange rate stability. Options offer greater leverage with shorter reaction time and less money down than outright trade in the exchange, and potentially lower fees also. (It is sad that people who should have no business speculating, constantly do it and lose their money, but I can't do much about it.)

I would suggest to read Antal Fekete for the role of futures markets in monetary commodities.

[aan]

In general, what you said sounds like a good way to do all kinds of betting services. People not releasing their funds, or not releasing them in a timely fashion, would be just contained in the rules of the game. Some people will probably not release their money even if they get something in return, but that could just be subtracted from the winners amounts.  And in many cases the service provider would be position-neutral, and the site could be run with zero capital. I wonder why this kind of thing doesn't seem to be standard by now.

Even without the use of a mediator this kind of system seems quite good to me. The risk the user of a site like this takes would be that he wouldn't get any of his winnings, but would get his own money back. In an extreme case the operator of the site could refuse to release anybodies money, but he wouldn't get it either. The whole site could also be shut down by the authorities, with the same result.

I guess you fundamentally misunderstand how betting works. If I put a dollar on the line and you put a dollar on the line and then "I get my dollar back" I've just been scammed of a dollar, the one that used to be yours and you lost.

The idea that you're "protecting" my dollar by allowing the other party to steal my other dollar if they wish to do so is ridiculous. I wish no such protection, I wish to have the guarantee that the other party can't control their dollar, so I can win it. The other party wishes the same guarantee about me.

Basically betting is exactly the opposite of this scheme you're proposing. The fact that BitBet is doing thousands in bet BTC a month whereas an implementation of your idea doesn't even exist in practice should be sufficient empirical evidence that you're wrong. Why isn't it?

I think the method would do something valuable, although it is not a completely straightforward transaction which is based purely on trust.

The multisig protection would at least defend against a catastrophic loss, for example the site getting hacked and everybody losing their money.

Here is another example that jumped to my mind. It is also a kind of a bet. Person A makes a promise to send B a package in the mail and B makes a promise to pay one bitcoin. The other person is in effect betting on receiving the package and the other on getting the money. Person B pays 1.5 bitcoins to a multisig address. After he receives the package, he creates a transaction to pay 1 bitcoin to A and 0.5 bitcoins to himself. Both have an incentive to sign the transaction because they both get more than zero bitcoins.

The situation where either one of them refuses to sign the final transaction is a kind of an outlier which doesn't happen if the participants are acting rationally.

[kangasbros]

I'm an atheist, though I can certainly understand the religious prohibition against crap like this.  Will your business venture make the world a better or worse place?  This kind of uncreative, greedy mentality and all the get-rich-quick type businesses popping up are a disgrace to the community.  If this is the best people can come up with, you can say goodbye to your economy, standard of living, etc.  Bitcoin or no, if all you can produce in your economy is lottery tickets, you are truly fucked.  Even that 23yr old Avalon guy who calls his customers the bottom feeders of bitcoin is worthy of a lot more respect, at least he produced something of value.  This is just another leach.  Life is short, do something you could be proud of, and your childeren's childeren will be proud you did.  What kind of people do you think get involved with running casinos anyway? 

I believe that this kind of speculative tools help to stabilize the exchange rates in the longer run. However I agree that it is more like a belief than a fact.

[psybits]

Would be more than happy to help with copy writing / marketing / PR side of things.

http://bitcoinprbuzz.com

[rpietila]

Would be more than happy to help with copy writing / marketing / PR side of things.

http://bitcoinprbuzz.com

Thank you so much, I already bought a PR-package from you but haven't had time to use it The project is standby, since the bitcoin volatility currently offers us more lucrative possibilities just trading it in other venues, plus OTC-trading.

[psybits]

Would be more than happy to help with copy writing / marketing / PR side of things.

http://bitcoinprbuzz.com

Thank you so much, I already bought a PR-package from you but haven't had time to use it The project is standby, since the bitcoin volatility currently offers us more lucrative possibilities just trading it in other venues, plus OTC-trading.

Of course that's right Let me know when you need it!

[puax]

Interesting.

I hope you know what you're doing. I'm an options market maker, working as a trader at a major investment bank - and this shit is risky. I personally wouldn't trade such a product without 100% initial margin.

[rpietila]

Interesting.

I hope you know what you're doing. I'm an options market maker, working as a trader at a major investment bank - and this shit is risky. I personally wouldn't trade such a product without 100% initial margin.

As outlined in the OP, this is binary options, which is of course 100% "initial margin"

[Bitsaurus]

Thanks for the link above rpietila, it's looks to be an interesting read.