[BTC-TC] Deprived Mining Speculation (DMS)

[xiaopeifeng]

how do i swap a dms.purchase for one dms.mining and one dms.selling?

Send them to DeprivedMining on BTC-TC

OK,thank you.

[xiaopeifeng]

I have 2 questions。
1、The dividends of MINING/SELLING/PURCHASE is very high now,where are they come from?
2、With the rise of difficulty,MINING's value will become smaller;and with the  dividends,PURCHASE's value  will become smaller,too.so when they grow?

[baloo_kiev]

I made about 4 BTC on SELLING last week and immediately the share dropped and has CONTINUED to drop.  I'm actually in the red by about 2 BTC on this investment.  

I guess I just don't understand how it works.

You and me both....I think many people don't.

I have 2 questions。
1、The dividends of MINING/SELLING/PURCHASE is very high now,where are they come from?
2、With the rise of difficulty,MINING's value will become smaller;and with the  dividends,PURCHASE's value  will become smaller,too.so when they grow?

Normally, their price will always decrease!

PURCHASE price ~= MINING price + SELLING price
MINING lifetime dividends + SELLING lifetime dividends = PURCHASE price + % from investment
MINING lifetime dividends = max (5MH/s lifetime mining earnings, 5MH/s 400 days mining earnings @ current difficulty)

P.S. On xiaopeifeng's 1st question. The dividends are and will always be coming from past PURCHASE sales + little % from a part of it invested. Basically, buying SELLING is like selling someone else a perpetual mining bond (PMB): you agree to pay dividends to PMB's buyer because you believe that he will never break even on it.

P.P.S. Another simple explanation. Consider PURCHASE price is 0.04 BTC. Alice wants to buy a 5MH/s PMB for 0.015 BTC. Bob thinks that price is to high (i.e. Alice will never get her coins back from the PMB's dividends). A and B make an agreement. They put a total of 0.04 BTC in a pot: A puts 0.015 and B puts the rest 0.025. A receives dividends from the PMB, while B receives the rest in parts, keeping the pot leftovers at 400-day PMB's dividends at current difficulty. After a long enough time, A will get all PMB's dividends (but no more than the whole pot), and B will get whatever is left.

[xiaopeifeng]

I made about 4 BTC on SELLING last week and immediately the share dropped and has CONTINUED to drop.  I'm actually in the red by about 2 BTC on this investment.  

I guess I just don't understand how it works.

You and me both....I think many people don't.

I have 2 questions。
1、The dividends of MINING/SELLING/PURCHASE is very high now,where are they come from?
2、With the rise of difficulty,MINING's value will become smaller;and with the  dividends,PURCHASE's value  will become smaller,too.so when they grow?

Normally, their price will always decrease!

PURCHASE price ~= MINING price + SELLING price
MINING lifetime dividends + SELLING lifetime dividends = PURCHASE price + % from investment
MINING lifetime dividends = max (5MH/s lifetime mining earnings, 5MH/s 400 days mining earnings @ current difficulty)

P.S. On xiaopeifeng's 1st question. The dividends are and will always be coming from past PURCHASE sales + little % from a part of it invested. Basically, buying SELLING is like selling someone else a perpetual mining bond (PMB): you agree to pay dividends to PMB's buyer because you believe that he will never break even on it.

P.P.S. Another simple explanation. Consider PURCHASE price is 0.04 BTC. Alice wants to buy a 5MH/s PMB for 0.015 BTC. Bob thinks that price is to high (i.e. Alice will never get her coins back from the PMB's dividends). A and B make an agreement. They put a total of 0.04 BTC in a pot: A puts 0.015 and B puts the rest 0.025. A receives dividends from the PMB, while B receives the rest in parts, keeping the pot leftovers at 400-day PMB's dividends at current difficulty. After a long enough time, A will get all PMB's dividends (but no more than the whole pot), and B will get whatever is left.

thank you very much,I understand.

[Lytse]

Any chance for the coupon today? 

[Deprived]

Any chance for the coupon today? 

Put them up now.  Will post report once I've checked wallet balance after dividends matches my spreadsheet.

[Deprived]

Sold   922
Swapped   0
Total   922
Price   0.039416
Total   36.341552
Less Fee   36.2688689
Man Fee   1.088066067

BTC Balance (BTC-TC)    1,376.81420469
11417 LTC-ATF.B1    114.17000000
Coinlenders CD 29/7    202.83479490
Coinlenders CD 13/8    100.42946260
Just-Dice Balance    155.70284875
TOTAL ASSETS    1,949.95131094
   
Outstanding MINING   49462
Outstanding SELLING   49462
Outstanding PURCHASE   2222
Effective Units   51684
   
Block reward   25
Difficulty   26,162,876
Hashes per MINING   5000000
   
Daily Dividend    0.00009611
50 days (Min Liquid)    0.00480554
100 days (Forced Close)    0.00961107
365 days (Buyback)    0.03508041
405 days (IPO)    0.03892484
400 days (Post SELLING div)    0.03844428
410 days (Pre SELLING div)    0.03940539
   
NAV Post MINING Div    1,944.98392502
NAV/U Post MINING Div    0.03763223
Days Dividend Post Div   391.55
SELLING Dividend    -         
NAV Post SELLING Div    1,944.98392502
NAV/U Post Selling Div    0.03763223
PURCHASE selling price    0.03951384
PURCHASE buy-back price    0.03687958

With the J-D investment recovering a lot of its loss NAV/U and the price of PURCHASE has actually increased today.

[FloatesMcgoates]

With the reports, could you maybe put Just-Dice's total site profit at time of report so we can track investment gains in between daily dividends?

[Deprived]

With the reports, could you maybe put Just-Dice's total site profit at time of report so we can track investment gains in between daily dividends?

Yeah I can add that in (it'll be at bottom) - though if a whale is playing at the time I take value it may not match (investment and house profit are changing multiple times per second).  But in most situations it should be pretty accurate as a base-line for working out whether we're up or down since previous report.

House was at about -878 when today's was produced (we're very slightly down from when I grabbed our value now with house at -880).

[Deprived]

LTC-ATF.B1 dividend received.  After conversion back to BTC we received 0.6965398 BTC.

[Deprived]

Sold   327
Swapped   0
Total   327
Price   0.039514
Total   12.921078
Less Fee   12.89523584
Man Fee   0.386857075

BTC Balance (BTC-TC)    1,385.05183112
11417 LTC-ATF.B1    114.17000000
Coinlenders CD 29/7    202.94451305
Coinlenders CD 13/8    100.48358161
Just-Dice Balance    157.79185920
TOTAL ASSETS    1,960.44178498
   
Outstanding MINING   49949
Outstanding SELLING   49949
Outstanding PURCHASE   2062
Effective Units   52011
   
Block reward   25
Difficulty   26,162,876
Hashes per MINING   5000000
   
Daily Dividend    0.00009611
50 days (Min Liquid)    0.00480554
100 days (Forced Close)    0.00961107
365 days (Buyback)    0.03508041
405 days (IPO)    0.03892484
400 days (Post SELLING div)    0.03844428
410 days (Pre SELLING div)    0.03940539
   
NAV Post MINING Div    1,955.44297085
NAV/U Post MINING Div    0.03759672
Days Dividend Post Div   391.18
SELLING Dividend    -         
NAV Post SELLING Div    1,955.44297085
NAV/U Post Selling Div    0.03759672
PURCHASE selling price    0.03947656
PURCHASE buy-back price    0.03684478
   
J-D House profit at report   -523

[bapakece]

Why are you gambling coins

[eltopo]

We're on the house/bank/investment side, not the gambling side.

[odolvlobo]

We're on the house/bank/investment side, not the gambling side.

Technically, both sides are gambling. The difference is that one side expects a positive return, and the other side also expects a positive return.

[eltopo]

We're on the house/bank/investment side, not the gambling side.

Technically, both sides are gambling. The difference is that one side expects a positive return, and the other side also expects a positive return.

True 

[BTCThousandaire]

I'm trying to figure out how this works and which one I might want to invest in. One thing I can't figure out is why MINING has had lower dividends but the price is the same, while the other funds are dropping in price with higher dividends?

[furuknap]

I'm trying to figure out how this works and which one I might want to invest in. One thing I can't figure out is why MINING has had lower dividends but the price is the same, while the other funds are dropping in price with higher dividends?

I just posted an article to attempt to explain how DMS works.

http://coin.furuknap.net/understanding-dms/

I know Deprived is skeptical about the lack of current calculations and has comments on the article, but I'm guessing this place is as good a place as any to have that discussion in the open.

.b

[Deprived]

I'm trying to figure out how this works and which one I might want to invest in. One thing I can't figure out is why MINING has had lower dividends but the price is the same, while the other funds are dropping in price with higher dividends?

In the short-term the drops in price SHOULD occur on the securities that actually get the dividends.  The value of ANY security immediately after it receives a dividend IS lower than the value immediately before the dividend by precisely the amount of the dividend (ignoring any minor adjustment for CP-related reasons).

In the longer term the rational explanation for it would be if those buying MINING believe dividends to SELLING will slow down to a near halt before they exceed the excess NAV over the value of MINING (i.e. difficulty will stop rising rapidly in the not too distant future).  They then make a decent profit quickly when DMS closes and they get a lump sum - or more slowly if SELLING choose not to close quickly and hope difficulty starts rising fast again.

A less rational reason is that the price of MINING is linked to the price of PMBs (in conditions of fast-rising difficulty it has very similar expectation and value to them) so its price tends to get maintained by people buying it because it's cheaper.  People who don't have any particular view of likely medium to long-term scenarios for mining difficulty can buy MINING knowing that at least in the short-term it will be better value than PMBs (costing less for the same dividends) and that acts to stabilise its price a bit.  They don't guarantee themselves a profit doing that but DO ensure that in most (NOT all) scenarios they end up better off than if they'd invested same amount in more expensive PMBs.  And in the scenarios where PMBs perform better in any reasonable time-scale (years not decades) they're pretty much guaranteed a profit from MINING (those scenarios are ones where difficulty stops rising quickly and DMS closes with MINING getting nearly all the funds and SELLING very little).  This is a less rational reason because those buying in this manner are doing so BECAUSE they haven't attempted to work out likely future behaviour - which is irrational (as they haven't considered the possibility that even at the price of MINING, PMBs aren't going to give a worthwhile return).

Different people buy for different reasons - the market price reflects a sort of average of their expectations/beliefs/guesses.  It isn't possible to give an exact reason why the price is at a specific point.  The drops, however, are completely expected if the initial market valuation before them was 'correct'.

[Deprived]

I'm trying to figure out how this works and which one I might want to invest in. One thing I can't figure out is why MINING has had lower dividends but the price is the same, while the other funds are dropping in price with higher dividends?

I just posted an article to attempt to explain how DMS works.

http://coin.furuknap.net/understanding-dms/

I know Deprived is skeptical about the lack of current calculations and has comments on the article, but I'm guessing this place is as good a place as any to have that discussion in the open.

.b

The main thrust of the article considers a scenario where half of mining power vanishes.

It then compares the behaviour of DMS.MINING to a fictional PMB.  And that fictional PMB is generously assumed to have mining power that wasn't in the half that vanished.  When of course there''s a 50% chance it now has no hardware with which to back its operations (or if you assume losses were spread evenly has only 50% of the hashing power it previously had).

Rather obviously if you compare A and B in a disaster scenario and then assume B is immune to all the down-sides then B will come off the better.  So yeah - if you assume godzilla is careful only to stamp on mining hardware that is NOT owned by PMB operators then furuknap's conclusion makes sense - and those scared that godzilla may have a grudge against ASICs should avoid DMS.  If you believe he wouldn't avoid PMBs then you have to value PMBs based on 50% of their hardware having vanished.  At which point you're looking at defaults with some PMBs being worth 0 if the past is anything to go by (exception being any who have proven non-mining assets from which dividends would be paid if godzilla stamps on their rigs).

Assuming that a 50% chance doesn't apply is reckless and not a reasonable assumption to make - it isn't some remote possibility that can be ignored for all practical purposes.  By furknap's definition it's going to apply half the time so MUST be factored in when drawing conclusions (assuming that godzilla is a metaphor for some mining catastrophe such as ASICs dieing after X months of use or whatever - rather than based on some specific information he has that it will apply to some locations not hosting PMBs' hardware).

[furuknap]

The main thrust of the article considers a scenario where half of mining power vanishes.

It then compares the behaviour of DMS.MINING to a fictional PMB.  And that fictional PMB is generously assumed to have mining power that wasn't in the half that vanished.  When of course there''s a 50% chance it now has no hardware with which to back its operations (or if you assume losses were spread evenly has only 50% of the hashing power it previously had).

Rather obviously if you compare A and B in a disaster scenario and then assume B is immune to all the down-sides then B will come off the better.  So yeah - if you assume godzilla is careful only to stamp on mining hardware that is NOT owned by PMB operators then furuknap's conclusion makes sense - and those scared that godzilla may have a grudge against ASICs should avoid DMS.  If you believe he wouldn't avoid PMBs then you have to value PMBs based on 50% of their hardware having vanished.  At which point you're looking at defaults with some PMBs being worth 0 if the past is anything to go by (exception being any who have proven non-mining assets from which dividends would be paid if godzilla stamps on their rigs).

Assuming that a 50% chance doesn't apply is reckless and not a reasonable assumption to make - it isn't some remote possibility that can be ignored for all practical purposes.  By furknap's definition it's going to apply half the time so MUST be factored in when drawing conclusions (assuming that godzilla is a metaphor for some mining catastrophe such as ASICs dieing after X months of use or whatever - rather than based on some specific information he has that it will apply to some locations not hosting PMBs' hardware).

Indeed you're right, and I'm assuming that all ASICs taste the same so Godzilla would likely eat them all without discrimination :-)

The purpose of the somewhat silly example is to show that DMS.Mining doesn't behave like a mining asset unless difficulty keeps climbing. If it doesn't (regardless of whether Godzilla is real), other mining assets will likely rise whereas DMS.Mining would stand still. If this change is large enough or the market gets too excited, DMS.Mining will lose money as a mining asset (because it isn't one) regardless of whether DMS.Selling votes to close down.

I may or may not agree about the possibility of difficulty evolutions, but I also need to consider that the facts are rapidly changing and may look completely different in a few months or a couple of years from now, when the article will still be current but our current assumptions about the likelihood of certain movements are not. As such, I've refrained from speculations about difficulty completely, as I usually do.

.b