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Author Topic: Glossary of Financially-Correct Terms  (Read 4160 times)
jjdub7
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June 07, 2013, 09:26:16 PM
Last edit: June 09, 2013, 04:11:51 AM by jjdub7
 #1

Asset prices:

support level - bid wall
resistance level - ask wall
yield/return - the amount returned to the owner of a security over a given period of time, commonly expressed as a percentage per period

return on investment (ROI) - a measure of the efficiency of a given investment, expressed as the gain on investment (both in terms of price appreciation and yield) divided by the cost of the investment:

ROI = (final price + yield)/initial price

Forex (foreign exchange) rate - the market rate for the purchase of one currency for another
Monetary base - present supply of a currency in cash
Market cap - the present value of a currency's monetary base expressed in terms of another currency

Stocks: (ownership of company, or in many cases in the BTC community, ownership solely of a company's future profits - not the actual mining equipment/other assets)

share - one unit of a stock
shareholder - holder of said stock
dividends - payments to shareholders
equity - BTC or other money invested, represented by share price and backing assets

Bonds: (ownership of an individual or company's issued debt, distinct from stocks)

bond - one individual unit of debt
coupon payment - interest payment on said debt; returns that are analogous to the dividends paid out by stocks

perpetual mining bond (PMB) - a non-expiring bond that pays regular coupons proportional to a specified mining output (e.g. 1Mh/s worth of mining output per day); better for short-term investments as a substitute for wallet storage, but can be risky in the long run, as the principal is never repaid

Types of Money:


M0 - cash; in the case of crypto-currencies, the actual currencies themselves

M1 - checking/demand deposits; in the case of crypto-currencies, central server-managed services for which you do not have the private encryption keys to your account, but from which you can withdraw your funds at any time from a hot wallet or similar reserve

M2 - long-term assets backed by debt or equity; in the case of crypto-currencies, stocks such as ASICMINER or bonds such as PAJKA, TAT's VM, or JAH

Feel free to suggest other terms and I'll add them.  This topic is for informational purposes only.


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June 07, 2013, 09:39:08 PM
 #2

Yield: The amount returned to the owner of a security over a given period of time

Return on Investment: A measure of the efficiency of a given investment. Expressed as the gain on investment (both in terms of price appreciation* and yield) divided by the cost of the investment

*a lot of people on these forums forget about the price appreciation part when calculating "ROI"

Those are the only two you missed that I have seen used here with any regularity.

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June 07, 2013, 09:54:03 PM
 #3

How about "fx rate" for BTC/USD etc, instead of "price"

Also the Bitcoin "market cap" is actually the "Monetary Base" or M0 (Cash) which is the number of bitcoins in circulation.
The commonly quoted USD amount of bitcoin outstanding is the Monetary Base (USD equivalent).

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June 08, 2013, 12:13:17 AM
 #4

Good points, added everything.  Also I have a few of my old accounting textbooks so I could do more financial terms as well if people want that.  Always happy to help out.


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June 08, 2013, 02:57:15 PM
 #5

Hey I thought this might be the correct place to ask as google yielded useless results: On the bitfunder discussion page people keep referring to "PMB"

 eg " I just think long-time the PMB is worthless to buying..... What's your thoughts here? ?
I just selling out all my PMB assets......."

So what does PMB mean in this case?


EDIT" the quote if from here: https://bitcointalk.org/index.php?topic=223442.180
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June 08, 2013, 03:03:09 PM
 #6

Hey I thought this might be the correct place to ask as google yielded useless results: On the bitfunder discussion page people keep referring to "PMB"

 eg " I just think long-time the PMB is worthless to buying..... What's your thoughts here? ?
I just selling out all my PMB assets......."

So what does PMB mean in this case?


EDIT" the quote if from here: https://bitcointalk.org/index.php?topic=223442.180

I think in this context it refers to a "Perpetual Mining Bond", which is a "bond" in the sense that you loan money to the issuer in exchange for shares, but unlike regular bonds there is no payoff date (hence the "perpetual"), and they are linked to output of a mining operation. Usually these have a set hash rate per bond and they pay out as dividends the "profits" from that hash rate of mining. One just has to look at the historical difficulty rate to see why these are not a good investment.

Use CoinBR to trade bitcoin stocks: CoinBR.com

The best place for betting with bitcoin: BitBet.us
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June 08, 2013, 03:09:33 PM
 #7

OH ok thank you that sounds right.
Regarding smart investment or not: I realise that for most traders it is a bad investment as the value and dividends will decrease over time, I however do not trade so often, my reason for investment is purely for short term growth + storage i.e. instead of all my BTC just sitting in a wallet atleast here it gains some value....... is my thinking incorrect? ( 1 bond costs ~0.0072BTC at the moment, 1 bond = 1Mhash, daily dividends.).
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June 09, 2013, 04:08:33 AM
 #8

PMB's can be a good or bad investment depending on your preferences for risk and yield.  Some good things about PMB's are that they generally retain their value with little volatility while difficulty remains constant and pay out coupons on a daily basis with high predictability.  The bad side of this is that the coupon payments are difficulty-based, so as difficulty rises, the payments decrease.  These properties generally make PMB's a better short-term investment for those who have 'loose' BTC in an account, as the value of the principal can remain constant and earn interest, as opposed to remaining stagnant.


.BITENNY.
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