BlockRun.com - Penny auctions on the blockchain

[vlees]

I want to congratulate you on the first auction that made a profit for you guys (the 1 BTC thing).

[dipsy]

Thanks 
We are still down overall, but it takes time to get these things going.

A couple of more auctions are ending soon and we'll then be done for today:

http://www.blockrun.com/auctions/lg-google-nexus-4-16gb-1
http://www.blockrun.com/auctions/1-bitcoin-2

[KingOfSports]

Crapppp I sent .25 from an unsupported wallet I think...I use multibit. I sent .25 on the Nexus and it hasn't shown up as a pending bet
It isn't showing up on blockchain either yet  
I sent from 1Fy1AwqEkXesQAuuzX8LXpiR9UU4xTwDV9 and can screenshot my wallet if needed... I really need a new phone.
I sent with a fee of .0001 which isn't going to help either... darn it.

[dipsy]

If it's not on the blockchain, then it hasn't gone through..

The reason we need you to bid from a supported wallet is so that we can verify that you own the address and send the prize to the right place.

[KingOfSports]

Okay so I assume when it goes through it will be refunded if it shows up after the end of auction, correct?
Multibit transactions when small generally don't show up for some reason on the blockchain until they are confirmed for some reason.

[dipsy]

At present that transaction does not exist, even unconfirmed so luckily it doesn't look like you have spent it.

Bids can't be refunded unless you have bid after the auction ends, otherwise it is unfair on others who are trying to win the product. If a bid goes through after the auction ends, it is automatically refunded. You can see a BTC0.8 bid that was too late was refunded on a BTC1 auction earlier:
http://blockchain.info/address/1Run22BoTPt94XbxoeLA24jxbX7sqPmjc

[KingOfSports]

Okay cool it'll be refunded if it is confirmed after it ends.

[grue]

The problem I have with this is there's currently no way to prove you're not bidding us up.

If you see that iPad Mini for example nearing the end and you're making a net loss on it, you'll add a bid which will cost you nothing and save you from having to give the iPad away.

How can you counter this claim?

There is no way to prove that it's fair. That's why I stay away from these auctions. Note that I don't claim that it's a scam.

this.

game theory says that penny auctions are a net loss for every bidder involved. just don't bother with them.

https://en.wikipedia.org/wiki/Penny_auction

[Welsh]

Well, my reply got deleted when I was asking if you can provide any proof, it seems some of them bids have the same ip.

[dipsy]

I can't stop people bidding under many different addresses.

I understand why you may think we would bid up, but this would be stupid as it would quickly become apparent that nobody ever wins. Why go to the bother of building a site & game mechanic on top of the protocol just to scam people out of a few coins? We hope that it will be profitable in the long-term and make more than a few coins. We will also be releasing more bitcoin projects, so I see my reputation as far more important than a few coins...

Hopefully someone off here will win soon and provide a little reassurance to everyone else 

[grue]

I understand why you may think we would bid up, but this would be stupid as it would quickly become apparent that nobody ever wins. Why go to the bother of building a site & game mechanic on top of the protocol just to scam people out of a few coins? We hope that it will be profitable in the long-term and make more than a few coins. We will also be releasing more bitcoin projects, so I see my reputation as far more important than a few coins...

because it's a really good way to make money. set up a few auctions, let the first few auctions go freely. after that, start inserting your own bids whenever you don't feel that you're making enough money. since inserting your own bids costs you no money (aside for pennies in transaction fees), you can put as much shrill bids as you want. hell, you can probably create fake bidding wars and generate even more profit. and to top it all off, it will look totally legitimate. there is "someone" winning and the transaction shows up on the block chain.

[dipsy]

Do you have any suggestions how we can prove this is not happening?

This is where Bitcoin needs some kind of identity feature in the protocol; so people could only bid from "verified" addresses.

[grue]

Do you have any suggestions how we can prove this is not happening?

This is where Bitcoin needs some kind of identity feature in the protocol; so people could only bid from "verified" addresses.

you can't. that's why the whole penny auction concept is broken. it's free for the auctioneer to bid on his own auction, either openly or through a shrill/proxy. meanwhile, each legitimate player has to pay for each bid he makes, regardless if he wins or not. but each buyer has an incentive to bid all the way up to the market price, so the highest bid will always approach the market price. the only way this will fail is if every bidder gives up. but when that happens, the auctioneer has made insane profits, or if the price isn't high enough to pay for the goods, he can always insert a fake bid (at no cost to him, of course).

Due to the possibility of participants spending a lot of money and still losing an auction, or ultimately spending more than the retail value of the item they end up winning, some analysts have criticized the model or compared it to gambling, even when operating without fraud.[5][6][7][8][9] [...] A penny auction may make the seller a far higher price than the item value.[1]

Potential fraudulent practices which can disadvantage buyers even more include shill bidding, where a human or software (bot) bidder covertly acting for the seller places bids which make legitimate bidders continue bidding where otherwise the auction would end, and simply not sending out goods for which a price, albeit low, has been paid.

no rational person will participate in a penny auction. it's almost a guaranteed net loss for all actors.

[dipsy]

We don't operate in this way as that would be outright theft.

If this was happening, why would we be auto-refunding late bids that didn't get confirmed on time?
http://blockchain.info/address/1Run22BoTPt94XbxoeLA24jxbX7sqPmjc

We have set up a system where we either make a profit or loss on each auction. If people want to play, then we will make money; if they don't we will end up shutting down.

I realise appreciate why there may be some trust issues at this point, but time will show that we are being honest.

[grue]

We don't operate in this way as that would be outright theft.

If this was happening, why would we be auto-refunding late bids that didn't get confirmed on time?
http://blockchain.info/address/1Run22BoTPt94XbxoeLA24jxbX7sqPmjc

We have set up a system where we either make a profit or loss on each auction. If people want to play, then we will make money; if they don't we will end up shutting down.

I realise appreciate why there may be some trust issues at this point, but time will show that we are being honest.

That's a strawman. No one never accused of you of stealing the bids.

[KingOfSports]

Yeah I'm done playing, no way to verify this Rhoman dude who is winning every auction isn't the owner. Of course he bids me up right before it ends.

[Welsh]

I find it strange, that so many auctions have been won, but no verification from any of the winners. Plus I didn't say from different address, I said from the SAME ip address. Unless your connecting to a external server then I don't know what is happening.

I understand your frustration at this point, because you might be running a legit service, but you got to understand others being cautiousness and asking these questions.



Hopefully, we can have some verification soon, but hopefully SOILD evidence.

[grue]

LOL:

500 Internal Server Error
If you are the administrator of this website, then please read this web application's log file and/or the web server's log file to find out what went wrong.

[dipsy]

Rhodon seems to be cleaning us out. I might ask him to take a rest for a few days as it's better that others win too.

And we seem to be down.. There's not a lot I can do right now as about to fly from US to UK. I have pinged my co-founder, so hopefully he will sort it. I hope we are not under attack so that someone can win the auction!

Apologies for the inconvenience.

[dipsy]

We're back: http://www.blockrun.com/auctions/lg-google-nexus-4-16gb-1

Seemed to be a problem with our hosted database provider, sorry about that!