[BTC-TC] Deprived Mining Speculation (DMS)

[Rannasha]

There was quite some arbitrage opportunity recently, before and after the bot went live. I think I bought several times the coins I have invested in DMS worth of PURCHASE (still not much, but many small batches to transfer) recently to benefit from this.

The particular arbitrage avenue I exploited has ended, at least for now.

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[Deprived]

What is it you think you can do in 2 that suddenly removes 75% of SELLING's value whilst leaving MINING unchanged?

Yes, you're right it doesn't work. It's pretty obvious too, now that I think about it

I didn't mean to multiply everything by four though. Only the mining side. Still, that would destroy the 1:1 ratio between mining and selling for the old shares, and the exchange into new would not work. Well, well.

Well, not dividing SELLING by 4 was one of the possible step 2s.

The high volume of trade yesterday would suggest a lot of people are still finding value in both SELLING and MINING - but at any price point there are going to be some who believe neither offers sufficient profit to be worth investing in.  DMS only works at all because people have different views on the value of MINING/SELLING - if everyone agreed on value then they'd trade a discount to PURCHASE (representing perceived CP risk/time-cost of money) and there'd be zero new sales of PURCHASE other than to the occasional random-clicker.

When MINING is a small portion of PURCHASE there doesn't have to be a HUGE perceived profit on SELLING for it to make sense.  That's because any valuation which makes SELLING worth the vast majority of PURCHASE MUST be based on very large short-term difficulty increases.  Very large short-term difficulty increases necessarily mean very large SELLING dividends in the near future - meaning most of the price paid for SELLING gets returned fairly quickly.

That last point is where a lot of people go wrong.  It's entirely WRONG to turn down an investment just because it can 'only' make 10%, 5% or 1% profit.  Time-scale has to be taken into account.  What's better - an investment that gives 60% profit after a year or one that gives 1% profit after a week (assuming an unlimited availability of both at all times - and that capital is returned at same time as the profit)?  The 1% per week is better - as with compounding it outperforms the 60%.  Percentage profit on its own is meaningless - it needs an associated time-period to be a useful measure.

None of which is to deny that for ANY investor there IS a point at which buying neither of MINING or SELLING makes sense.  But I can't run a seperate version of DMS for every investor based on how they want to price them - people who believe the price now matches their personal valuation (and won't change favourably) and so want to liquidate their position represent a key part of liquidity for the securities.

[Deprived]

Someone was doing arbitrage. So it might not have happened without the bot.

About 6 people were doing frequent arbitrage - I believe one of them may even be using a bot to do it.  Majority of transfers come from a handful of people.

[runeks]

Last increases have been 19%, 20%, 10%, if I recall correctly...

I have the past difficulties up on my site here: http://runeks.dk/bitcoin/diff.txt

They auto-update every time the difficulty changes.

It also shows the length of the difficulty period in question, which is something that some people overlook. When the difficulty increases by, say, 20%, not only is the difficulty 20% higher but the adjustment also happened 20% faster than the 14 days that the difficulty adjustment targets for.

This means that if difficulty increases by 20% each difficulty period, it will be increase by a factor of 380 in one year, and not a factor of 116, which is the result you would get if you assumed a 14 day difficulty period.

Thank you very much, this is what I was looking for.

You're very welcome. I was looking for something like this and couldn't find it so I created it myself.

The storage medium on the server that runs this just died on me though, so it's not updating right now. It will be back up when I get my new storage medium.

[Progressive]

The dividend for SELLING will be today? What is your estimate?

[Hfleer]

What is it you think you can do in 2 that suddenly removes 75% of SELLING's value whilst leaving MINING unchanged?

Yes, you're right it doesn't work. It's pretty obvious too, now that I think about it

I didn't mean to multiply everything by four though. Only the mining side. Still, that would destroy the 1:1 ratio between mining and selling for the old shares, and the exchange into new would not work. Well, well.

Well, not dividing SELLING by 4 was one of the possible step 2s.

The high volume of trade yesterday would suggest a lot of people are still finding value in both SELLING and MINING - but at any price point there are going to be some who believe neither offers sufficient profit to be worth investing in.  DMS only works at all because people have different views on the value of MINING/SELLING - if everyone agreed on value then they'd trade a discount to PURCHASE (representing perceived CP risk/time-cost of money) and there'd be zero new sales of PURCHASE other than to the occasional random-clicker.

When MINING is a small portion of PURCHASE there doesn't have to be a HUGE perceived profit on SELLING for it to make sense.  That's because any valuation which makes SELLING worth the vast majority of PURCHASE MUST be based on very large short-term difficulty increases.  Very large short-term difficulty increases necessarily mean very large SELLING dividends in the near future - meaning most of the price paid for SELLING gets returned fairly quickly.

That last point is where a lot of people go wrong.  It's entirely WRONG to turn down an investment just because it can 'only' make 10%, 5% or 1% profit.  Time-scale has to be taken into account.  What's better - an investment that gives 60% profit after a year or one that gives 1% profit after a week (assuming an unlimited availability of both at all times - and that capital is returned at same time as the profit)?  The 1% per week is better - as with compounding it outperforms the 60%.  Percentage profit on its own is meaningless - it needs an associated time-period to be a useful measure.

None of which is to deny that for ANY investor there IS a point at which buying neither of MINING or SELLING makes sense.  But I can't run a seperate version of DMS for every investor based on how they want to price them - people who believe the price now matches their personal valuation (and won't change favourably) and so want to liquidate their position represent a key part of liquidity for the securities.

Good points.  I do think there would be room for 2 or 3 more similar securites with different specs.  One for every investor who has their own idea for what spec it should have would get ridiculous.  Even 5 I think might be overdoing it.

[FloatesMcgoates]

The dividend for SELLING will be today? What is your estimate?

should be in 8 hours at around .0069 btc/share ( a little higher depending on dms.purchase sales in the last day, may end up near .007)

[kmtan]

i am in some share with DMS. 

[BitThink]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

[stripykitteh]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

[Mabsark]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

The panic sell off after the dividend payout is pretty funny as the price starts rising again pretty much immediately. You're better off waiting until the day after if you want to sell. A look through the trade history will confirm this.

[BitThink]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

Hours before dividend. Still a lot of buy orders hanging there. Would it be more fair if the bidding wall in a certain range be reset after dividend? Otherwise many buyers may suffer a lot.

[BitThink]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

The panic sell off after the dividend payout is pretty funny as the price starts rising again pretty much immediately. You're better off waiting until the day after if you want to sell. A look through the trade history will confirm this.

Maybe it is not due to panic. The price of Purchase drops after dividend. The price of Selling roughly equals Purchase - Mining. So it should drops equally. Otherwise people may buy Purchase and sell Selling for a large gain. The price of Selling only comes back if the price of Mining drops. According to figure in coinflow, the price dropped almost the value of dividend, and the slowly comes back after around 10 days. But we can see that one month ago, the price increased only half of the dividend, maybe due to low hash rate increase.

[BitThink]

Maybe one solution is to lock the fund for a day after dividend paying, and people can only cancel orders in this period. Otherwise at least announce the dividend time one day in advance and warn those buyers leaving buying orders pending. Especially when there's a bot there to help converting Purchase.

[Mabsark]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

The panic sell off after the dividend payout is pretty funny as the price starts rising again pretty much immediately. You're better off waiting until the day after if you want to sell. A look through the trade history will confirm this.

Maybe it is not due to panic. The price of Purchase drops after dividend. The price of Selling roughly equals Purchase - Mining. So it should drops equally. Otherwise people may buy Purchase and sell Selling for a large gain. The price of Selling only comes back if the price of Mining drops. According to figure in coinflow, the price dropped almost the value of dividend, and the slowly comes back after around 10 days. But we can see that one month ago, the price increased only half of the dividend, maybe due to low hash rate increase.

It is due to panic. Speculators want to sell their DMS.SELLING shares before the current price of DMS.SELLING drops below the price they paid minus dividends. They see the buy orders getting filled and the price dropping, which reinforces the panic that they're going to end up taking a loss. When the dust settles, the price starts to rise again and MINING starts to drop.

Go and check the trade history like I said. It's pretty clear that the sell off is due to panic. You can clearly see that if the speculators waited an extra day to sell out instead of doing so right after the div payment, they would have made more profit.

[Mabsark]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

Hours before dividend. Still a lot of buy orders hanging there. Would it be more fair if the bidding wall in a certain range be reset after dividend? Otherwise many buyers may suffer a lot.

Why will buyers suffer? Are you assuming that the new price of DMS.PURCHASE will drop below the current price of DMS.SELLING buy orders?

[Mabsark]

Maybe one solution is to lock the fund for a day after dividend paying, and people can only cancel orders in this period. Otherwise at least announce the dividend time one day in advance and warn those buyers leaving buying orders pending. Especially when there's a bot there to help converting Purchase.

A solution to what problem exactly? Also, we already know when the div will be paid out - the same time it has always been paid out - about 1 hour and 40 minutes from now.

[BitThink]

May I ask a newbie question? After the dividend paid out, will the price of SELLING drop automatically by system? Or it drops due to the market? Is it safe to leave pending buying orders on before dividend paying time? Will they be filled in the huge dip due to the dividend? Thanks.

No, it's the market. If you leave your buying order hanging after the dividend it will be gobbled up within seconds. Caveat emptor.

Hours before dividend. Still a lot of buy orders hanging there. Would it be more fair if the bidding wall in a certain range be reset after dividend? Otherwise many buyers may suffer a lot.

Why will buyers suffer? Are you assuming that the new price of DMS.PURCHASE will drop below the current price of DMS.SELLING buy orders?

I am afraid the answer is yes. Current bid of Selling is 0.002452. The new purchase price will be around 0.022 to 0.021. I think the price of Selling will drop to around 0.0019-0.0018.

[ThickAsThieves]

Would clearing the orderbooks after SELLING div payout be that bad?

[BitThink]

Would clearing the orderbooks after SELLING div payout be that bad?

I think this is also a good solution. Does it work as this now?