bustabit – The original crash game

[01010100b]

That is only the case for an individual investor that (ab)uses the offsite investment system to risk more than he actually has.

The offsite system is meant to allow investors to lower their counterparty risk and free up liquidity by not depositing their entire investment. I strongly recommend to only use it for that purpose. If you use the offsite system properly or don't use it at all, you never have an expectation of negative growth.

This statement is false, just think about it. Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't. Why would A have -EBG but B have +EBG? Whether they are lying about it is only "revealed" when their onsite gets to 0, so why would A's onsite go to 0 whereas B's onsite doesn't - even before it is known whether they are lying or not? Surely the site can not predict the future of whether A or B will turn out to have been lying, and then set A to -EBG and B to +EBG based on predicting the future. Whether they are at +EBG or -EBG depends solely on their onsite and offsite, obviously...

When you leverage, the expectation is that you are willing to move those off-site coins on site as you lose, so that you do not get margin called. You are at a 2x Kelly maximum (current bustabit rules), which allows for +EBG. That person can expect their bankroll to increase.

Again, this is false, obviously so.

A 50 BTC + 50 BTC fake off-site gives a 4x Kelly

And a 50 BTC + 50 BTC real off-site doesn't?

[1714105483]

1714105483

[1714105483]

1714105483

[RHavar]

Again, this is false, obviously so.

I don't think so. DarkStar's reply makes perfect sense, maybe re-read it again =)

Taking your example: "Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't."

A 50 BTC loss to A is 100% loss of their bankroll, but a 50 BTC loss to B is only a 50% loss. This drastically changes things as a margin call to A is fatal, while B would just be looking at replenishing their onsite investment.

[01010100b]

Again, this is false, obviously so.

I don't think so. DarkStar's reply makes perfect sense, maybe re-read it again =)

Taking your example: "Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't."

A 50 BTC loss to A is 100% loss of their bankroll, but a 50 BTC loss to B is only a 50% loss. This drastically changes things as a margin call to A is fatal, while B would just be looking at replenishing their onsite investment.

I'm sorry, haven't both A and B lost 50 BTC here? So aren't both -EBG? And hence it doesn't matter whether your offsite is real as to whether you'll be +EBG or -EBG? And hence, like I said, Daniel's and DarkStar's claims are simply false?

Maybe let's try this another way: Suppose I invest 50 BTC onsite and 50 BTC offsite. Will I be +EBG or -EBG? And if your response is to ask me "Are you lying about your offsite" then my answer is "I'm not telling you." So go on, will my investment go up (+EBG) or go down (-EBG)?

[01010100b]

The "realness" of your offsite has nothing whatsoever to do with whether your onsite will go up (+EBG) or down (-EBG). If two people have the exact same investment (say 50 btc onsite + 50 btc offsite) then that investment (specifically their onsite) will take the exact same trajectory. Obviously...

Do take that mail I sent you seriously Ryan, because this isn't just wrong but (as BaB currently stands) exploitably wrong.

[01010100b]

Let L = (onsite + offsite) / onsite. Then, given a certain bet distribution D, whether an investor (or the house as a whole for that matter) is +EBG or -EBG is solely determined by L. Specifically, there will be an L* such that for all L < L* the investor is +EBG and for all L > L* the investor is -EBG. Whether the offsite is real or not has nothing to do with this. Furthermore, given the current structure of the bankroll on BaB, there exists a legal (ie in conformance with the rules/limits) bet distribution D such that a player using D will be at +EBG.

[dooglus]

This statement is false, just think about it. Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't. Why would A have -EBG but B have +EBG?

Great question.

These are the situations of your two investors:

 * A has 50 BTC in total, it's all on-site, but he lies about having another 50 BTC offsite just to get more exposure to the action. He is willing to risk 2% of his 50 BTC on every bet. He's risking 1 BTC per bet of his 50 BTC.

 * B has 100 BTC in total, He is willing to risk 1% of his 100 BTC on every bet. He's risking 1 BTC per bet of his 100 BTC.

Immediately it should be obvious that A's position is riskier than B's. A is risking 2% of his bankroll on the first bet, whereas B is only risking 1% of his bankroll.

The "realness" of your offsite has nothing whatsoever to do with whether your onsite will go up (+EBG) or down (-EBG).

But we're not concerned with whether our "onsite" grows. We only care about our net worth. (EBG = expected *bankroll* growth, where "bankroll" means "coins you actually own"). In A's case his onsite is the same as his net worth, whereas in B's case his net worth is the sum of his onsite and offsite. I think that's the point you're missing. As A loses his onsite he risks an ever increasing percentage of his net worth until he ends up being margin called. As B loses his onsite he tops it up with the coins which were offsite until now, and avoids the margin call. A goes bust, B doesn't.

[quickmaffs]

the maximum profit per game has been lowered to 1.125 % of the bankroll

inb4 "dishonest and shameful"...

This does not excuse the past dishonest and shameful behavior, but this is a good move and one of the right steps towards helping protect investors.

While they didn't come right out and admit to their mistakes, at least they're acknowledging the fact that it wasn't right the first time around by doing this.

[01010100b]

This statement is false, just think about it. Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't. Why would A have -EBG but B have +EBG?

Great question.

These are the situations of your two investors:

 * A has 50 BTC in total, it's all on-site, but he lies about having another 50 BTC offsite just to get more exposure to the action. He is willing to risk 2% of his 50 BTC on every bet. He's risking 1 BTC per bet of his 50 BTC.

 * B has 100 BTC in total, He is willing to risk 1% of his 100 BTC on every bet. He's risking 1 BTC per bet of his 100 BTC.

Immediately it should be obvious that A's position is riskier than B's. A is risking 2% of his bankroll on the first bet, whereas B is only risking 1% of his bankroll.

The "realness" of your offsite has nothing whatsoever to do with whether your onsite will go up (+EBG) or down (-EBG).

But we're not concerned with whether our "onsite" grows. We only care about our net worth. (EBG = expected *bankroll* growth, where "bankroll" means "coins you actually own"). In A's case his onsite is the same as his net worth, whereas in B's case his net worth is the sum of his onsite and offsite. I think that's the point you're missing. As A loses his onsite he risks an ever increasing percentage of his net worth until he ends up being margin called. As B loses his onsite he tops it up with the coins which were offsite until now, and avoids the margin call. A goes bust, B doesn't.

Well yes, but as B moves coins from his offsite to his onsite then his L (as per post above) changes. Let's consider the simplified situation where A and B have the same investment (say 50 btc onsite and 50 btc offsite), A is lying and B isn't, and B will move his offsite to his onsite when he gets margin called (ie when his onsite reaches 0) and not before. While it is true that B will be able to recover whereas A won't, the probability of their onsite going to 0 is the same since they have the same investment, up until the point where B actually starts moving his offsite to his onsite both A and B will evolve in tandem. So if A has the expectation of negative bankroll growth and going bust then B has the same expectation of his onsite going down too.

Sure, the moment B actually moves some coins from his offsite to his onsite the analysis changes since A and B won't have the same investment anymore, but as long as that doesn't happen B has the same (short-term) expectation of losing his onsite as A does. If A can expect to go bust then B can expect to lose his onsite as well, irrespective of whether B will be able to recover again afterwards or not.

The assumption that B will replenish his onsite with his offsite as he takes losses doesn't hold in real life, there will be a delay before B logs in and makes those changes, and the bankroll can change by a lot very fast - before B might be able to react by moving coins from offsite to onsite. My argument above applies to a constant offsite.

[quickmaffs]

This statement is false, just think about it. Suppose there are two investors, A and B, and each have 50 btc onsite and 50 btc offsite. A is lying about it but B isn't. Why would A have -EBG but B have +EBG?

Great question.

These are the situations of your two investors:

 * A has 50 BTC in total, it's all on-site, but he lies about having another 50 BTC offsite just to get more exposure to the action. He is willing to risk 2% of his 50 BTC on every bet. He's risking 1 BTC per bet of his 50 BTC.

 * B has 100 BTC in total, He is willing to risk 1% of his 100 BTC on every bet. He's risking 1 BTC per bet of his 100 BTC.

Immediately it should be obvious that A's position is riskier than B's. A is risking 2% of his bankroll on the first bet, whereas B is only risking 1% of his bankroll.

The "realness" of your offsite has nothing whatsoever to do with whether your onsite will go up (+EBG) or down (-EBG).

But we're not concerned with whether our "onsite" grows. We only care about our net worth. (EBG = expected *bankroll* growth, where "bankroll" means "coins you actually own"). In A's case his onsite is the same as his net worth, whereas in B's case his net worth is the sum of his onsite and offsite. I think that's the point you're missing. As A loses his onsite he risks an ever increasing percentage of his net worth until he ends up being margin called. As B loses his onsite he tops it up with the coins which were offsite until now, and avoids the margin call. A goes bust, B doesn't.

Well yes, but as B moves coins from his offsite to his onsite then his L (as per post above) changes. Let's consider the simplified situation where A and B have the same investment (say 50 btc onsite and 50 btc offsite), A is lying and B isn't, and B will move his offsite to his onsite when he gets margin called (ie when his onsite reaches 0) and not before. While it is true that B will be able to recover whereas A won't, the probability of their onsite going to 0 is the same since they have the same investment, up until the point where B actually starts moving his offsite to his onsite both A and B will evolve in tandem. So if A has the expectation of negative bankroll growth and going bust then B has the same expectation of his onsite going down too.

Sure, the moment B actually moves some coins from his offsite to his onsite the analysis changes since A and B won't have the same investment anymore, but as long as that doesn't happen B has the same (short-term) expectation of losing his onsite as A does. If A can expect to go bust then B can expect to lose his onsite as well, irrespective of whether B will be able to recover again afterwards or not.

The assumption that B will replenish his onsite with his offsite as he takes losses doesn't hold in real life, there will be a delay before B logs in and makes those changes, and the bankroll can change by a lot very fast - before B might be able to react by moving coins from offsite to onsite. My argument above applies to a constant offsite.

I'm surprised that nobody has accused me of being you yet.  I had a lot of similar material being written up into my scam accusation against them.

I find it weird that they keep purposely avoiding the question you seem to be asking which is what makes 10 separate negative growth bankroll scenarios turn into a positive one if all combined?

[RHavar]

My argument above applies to a constant offsite.

Your argument does indeed seem pretty reasonable under this assumption, but I don't think the assumption itself holds. For instance in my investment in bustabit, I am using some offsite -- and when the whale was winning, I started moving money from offsite to onsite (by depositing). I didn't even want to risk the possibility of a margin call (as it would suck to be an investor during all the downfall and then potentially miss out on a recovery). And now the site has (more than) recovered, I have taken that money back out of the site (to lower my CP risk, and keep bitcoin where I feel they are most secure).

Further more, that's exactly what the offsite system is designed to do. You can (mis)use it as a leverage system, but it's going to have ugly properties.  I think in a perfect world bustabit would have both an offsite system (like it does) as well as a leverage system (where you can state your max risk %)

[quickmaffs]

My argument above applies to a constant offsite.

Your argument does indeed seem pretty reasonable under this assumption, but I don't think the assumption itself holds. For instance in my investment in bustabit, I am using some offsite -- and when the whale was winning, I started moving money from offsite to onsite (by depositing). I didn't even want to risk the possibility of a margin call (as it would suck to be an investor during all the downfall and then potentially miss out on a recovery). And now the site has (more than) recovered, I have taken that money back out of the site (to lower my CP risk, and keep bitcoin where I feel they are most secure).

Further more, that's exactly what the offsite system is designed to do. You can (mis)use it as a leverage system, but it's going to have ugly properties.  I think in a perfect world bustabit would have both an offsite system (like it does) as well as a leverage system (where you can state your max risk %)

Surprised he didn't negative tag you and call you an idiot to try and make you just go away.

I quoted and highlighted some points made for future use.

[devans]

Well yes, but as B moves coins from his offsite to his onsite then his L (as per post above) changes. Let's consider the simplified situation where A and B have the same investment (say 50 btc onsite and 50 btc offsite), A is lying and B isn't, and B will move his offsite to his onsite when he gets margin called (ie when his onsite reaches 0) and not before. While it is true that B will be able to recover whereas A won't, the probability of their onsite going to 0 is the same since they have the same investment, up until the point where B actually starts moving his offsite to his onsite both A and B will evolve in tandem. So if A has the expectation of negative bankroll growth and going bust then B has the same expectation of his onsite going down too.

Sure, the moment B actually moves some coins from his offsite to his onsite the analysis changes since A and B won't have the same investment anymore, but as long as that doesn't happen B has the same (short-term) expectation of losing his onsite as A does. If A can expect to go bust then B can expect to lose his onsite as well, irrespective of whether B will be able to recover again afterwards or not.

You are correct: If an investor is not prepared to move his offsite investment onsite, then he potentially faces negative EBG–like A does in your example.

Consider this scenario: All investors initially set their offsite to be as high as permitted. The overwhelming majority of the bankroll is provided by investors who are not prepared to move their offsite investment onsite if necessary, e.g. because they don't actually own the coins. Only a single investor will move his offsite investment onsite before he is margin called. In this example, the majority of investors are overleveraged and can expect to be eventually margin called. The bankroll as a whole clearly has a negative EBG.

However, this risk is borne solely by the overleveraged investors. Each round, our "compliant" investor is risking 1.125 % of his total investment, which is 1.5x his expected value of 0.75 %. Therefore, he has a positive EBG for all bets, regardless of whether his fellow investors end up being margin called or not.

Eventually, the other investors will be margin called. As the total bankroll shrinks, the compliant investor's stake will increase until he is the only investor, but the risk to his bankroll will stay the same.

Since the investor will move his offsite investment onsite before he is margin called, it makes no difference whether he uses the offsite investment system or not. Not even being margin called and letting time pass before moving his offsite investment back onsite will cause him to have a negative EBG. There is an opportunity cost of being margin called, but he will continue to have a positive EBG, assuming that any sequence of EBG+ bets is also EBG+.

[quickmaffs]

Well yes, but as B moves coins from his offsite to his onsite then his L (as per post above) changes. Let's consider the simplified situation where A and B have the same investment (say 50 btc onsite and 50 btc offsite), A is lying and B isn't, and B will move his offsite to his onsite when he gets margin called (ie when his onsite reaches 0) and not before. While it is true that B will be able to recover whereas A won't, the probability of their onsite going to 0 is the same since they have the same investment, up until the point where B actually starts moving his offsite to his onsite both A and B will evolve in tandem. So if A has the expectation of negative bankroll growth and going bust then B has the same expectation of his onsite going down too.

Sure, the moment B actually moves some coins from his offsite to his onsite the analysis changes since A and B won't have the same investment anymore, but as long as that doesn't happen B has the same (short-term) expectation of losing his onsite as A does. If A can expect to go bust then B can expect to lose his onsite as well, irrespective of whether B will be able to recover again afterwards or not.

You are correct: If an investor is not prepared to move his offsite investment onsite, then he potentially faces negative EBG–like A does in your example.

Consider this scenario: All investors initially set their offsite to be as high as permitted. The overwhelming majority of the bankroll is provided by investors who are not prepared to move their offsite investment onsite if necessary, e.g. because they don't actually own the coins. Only a single investor will move his offsite investment onsite before he is margin called. In this example, the majority of investors are overleveraged and can expect to be eventually margin called. The bankroll as a whole clearly has a negative EBG.

However, this risk is borne solely by the overleveraged investors. Each round, our "compliant" investor is risking 1.125 % of his total investment, which is 1.5x his expected value of 0.75 %. Therefore, he has a positive EBG for all bets, regardless of whether his fellow investors end up being margin called or not.

Eventually, the other investors will be margin called. As the total bankroll shrinks, the compliant investor's stake will increase until he is the only investor, but the risk to his bankroll will stay the same.

Since the investor will move his offsite investment onsite before he is margin called, it makes no difference whether he uses the offsite investment system or not. Not even being margin called and letting time pass before moving his offsite investment back onsite will cause him to have a negative EBG. There is an opportunity cost of being margin called, but he will continue to have a positive EBG, assuming that any sequence of EBG+ bets is also EBG+.

Quoting and highlighting.

[01010100b]

Well yes, but as B moves coins from his offsite to his onsite then his L (as per post above) changes. Let's consider the simplified situation where A and B have the same investment (say 50 btc onsite and 50 btc offsite), A is lying and B isn't, and B will move his offsite to his onsite when he gets margin called (ie when his onsite reaches 0) and not before. While it is true that B will be able to recover whereas A won't, the probability of their onsite going to 0 is the same since they have the same investment, up until the point where B actually starts moving his offsite to his onsite both A and B will evolve in tandem. So if A has the expectation of negative bankroll growth and going bust then B has the same expectation of his onsite going down too.

Sure, the moment B actually moves some coins from his offsite to his onsite the analysis changes since A and B won't have the same investment anymore, but as long as that doesn't happen B has the same (short-term) expectation of losing his onsite as A does. If A can expect to go bust then B can expect to lose his onsite as well, irrespective of whether B will be able to recover again afterwards or not.

You are correct: If an investor is not prepared to move his offsite investment onsite, then he potentially faces negative EBG–like A does in your example.

Consider this scenario: All investors initially set their offsite to be as high as permitted. The overwhelming majority of the bankroll is provided by investors who are not prepared to move their offsite investment onsite if necessary, e.g. because they don't actually own the coins. Only a single investor will move his offsite investment onsite before he is margin called. In this example, the majority of investors are overleveraged and can expect to be eventually margin called. The bankroll as a whole clearly has a negative EBG.

However, this risk is borne solely by the overleveraged investors. Each round, our "compliant" investor is risking 1.125 % of his total investment, which is 1.5x his expected value of 0.75 %. Therefore, he has a positive EBG for all bets, regardless of whether his fellow investors end up being margin called or not.

Eventually, the other investors will be margin called. As the total bankroll shrinks, the compliant investor's stake will increase until he is the only investor, but the risk to his bankroll will stay the same.

Since the investor will move his offsite investment onsite before he is margin called, it makes no difference whether he uses the offsite investment system or not. Not even being margin called and letting time pass before moving his offsite investment back onsite will cause him to have a negative EBG. There is an opportunity cost of being margin called, but he will continue to have a positive EBG, assuming that any sequence of EBG+ bets is also EBG+.

Yes you are right. What is -EBG for A is really just variance for B but B keeps being at long-term +EBG as long as B actually moves his offsite to his onsite as needed. That's where my analysis went wrong, and it is hence probably not exploitable after all.

[fiscorcle]

Not sure what the argument is here? Investors who cannot or are not willing to make capital calls are essentially just gambling that variance will swing their way

[Lionidas]

Not sure what the argument is here? Investors who cannot or are not willing to make capital calls are essentially just gambling that variance will swing their way

Exactly. ;

I have seen the site profit go low and in the chat area of the site those players are crying about their investments turning to sh*t.

But those same ones who are winning so much do comeback later on to throw away those winnings and more into the site.
This is what the site owner relies on them doing and so do those investors.

So I do not know what the argument they are having is about either.

[quickmaffs]

Not sure what the argument is here? Investors who cannot or are not willing to make capital calls are essentially just gambling that variance will swing their way

My argument is that RHavar and devans lied and deceived investors about the kelly criterion that they were being exposed to.

This led to a much higher negative expected bankroll growth ratio than expected and the time-to-bust, as well as the time management window, were subject to different extremes than advertised.  

The playing level for investors was not at all the same as RHavar, despite him consistently claiming lying so.  Unless you had inside knowledge, communication, top of the pyramid dilution benefits, and access to own funds deposited like Rhavar, you were at a great disadvantage.  

Some investors were greatly hurt by all of this.

• RHavar and devans tried to cover the whole thing up and never once admitted that it could be their fault
• RHavar and devans refused to make changes before, claiming there was no rhyme or reason for doing so
• RHavar and devans continued to solicit for a higher bankroll, leading to higher profits for them
• RHavar and devans created a predatory system where investors were punished for leaving
• They used different results at different times to try and back their claims, trying to state that it applied to the entire bustabit history
• They negative tagged people that spoke out about them  
• They resorted to insults instead of discussions
• They used their friends and status to bully people
• They misquoted and puts words in people's mouths in an attempt to change the narrative
• They selectively answered parts of people's questions while ignoring others
• They never took any replies serious and answered in the most sarcastic and condescending way, even though they are in charge of millions of dollars

The main problem is that RHavar and devans' egos are so inflated that they are willing to continue making crucial errors that negatively affect users for significant amounts of money rather than admit they made mistakes and seek a solution.  

It is this reason why both RHavar and devans should both be negative tagged themselves so that investors do not fall prey to their dishonest and shameful actions.

[game-protect]

My argument is that RHavar and devans lied and deceived investors about the kelly criterion that they were being exposed to.

This led to a much higher negative expected bankroll growth ratio than expected and the time-to-bust, as well as the time management window, were subject to different extremes than advertised.

If true, then the criminal offense of Fraud by false representation is committed!

(1) A person is in breach of this section if he—

(a) dishonestly makes a false representation, and

(b) intends, by making the representation—

(i) to make a gain for himself or another, or

(ii) to cause loss to another or to expose another to a risk of loss.

(2) A representation is false if—

(a) it is untrue or misleading, and

(b) the person making it knows that it is, or might be, untrue or misleading.

(3) “Representation” means any representation as to fact or law, including a representation as to the state of mind of—

(a) the person making the representation, or

(b) any other person.

(4) A representation may be express or implied.

(5) For the purposes of this section a representation may be regarded as made if it (or anything implying it) is submitted in any form to any system or device designed to receive, convey or respond to communications (with or without human intervention).

[RHavar]

Not sure what the argument is here? Investors who cannot or are not willing to make capital calls are essentially just gambling that variance will swing their way

Now that I think I understand what 01010100b is saying, if I understand correctly he was saying if people abuse the offsite feature and put themselves into leveraging, it can cause them to be in negative expected bankroll growth when a whale is betting (true enough) and if enough people do it, it'll put the overall bankroll in negative during a whale betting (true enough, even though it'll only affect the people who have leveraged themselves that way). However I think he made the same mistake I struggled with too, which was thinking that if the bankroll is -EBG that would allow a player to be +EBG.  Fortunately (for investors) this isn't the case, so there's no real abuse avenue.

So there's actually no real issue, just investors need to be aware if they're going to use the offsite feature (especially if they aren't using it as intended) it can easily backfire and the variance will take them out.

But as always, it's really great people verifying and double checking things. Especially valuable when people like Luxo42 find mistakes, which is something I always appreciate (as honestly, my math skills are a lot weaker than 01010100b's and Luxo42's, I've just been working on this problem domain for quite a while)  

[JackpotRacer]

Some investors were greatly hurt by all of this.

• RHavar and devans tried to cover the whole thing up and never once admitted that it could be their fault
• RHavar and devans refused to make changes before, claiming there was no rhyme or reason for doing so
• RHavar and devans continued to solicit for a higher bankroll, leading to higher profits for them
• RHavar and devans created a predatory system where investors were punished for leaving
• They used different results at different times to try and back their claims, trying to state that it applied to the entire bustabit history
• They negative tagged people that spoke out about them 
• They resorted to insults instead of discussions
• They used their friends and status to bully people
• They misquoted and puts words in people's mouths in an attempt to change the narrative
• They selectively answered parts of people's questions while ignoring others
• They never took any replies serious and answered in the most sarcastic and condescending way, even though they are in charge of millions of dollars

The main problem is that RHavar and devans' egos are so inflated that they are willing to continue making crucial errors that negatively affect users for significant amounts of money rather than admit they made mistakes and seek a solution. 

It is this reason why both RHavar and devans should both be negative tagged themselves so that investors do not fall prey to their dishonest and shameful actions.

very interesting posting because all the points would even fit to another site and the owners who scammed their Investors!

So there's actually no real issue, just investors need to be aware if they're going to use the offsite feature (especially if they aren't using it as intended) it can easily backfire and the variance will take them out.

But as always, it's really great people verifying and double checking things. Especially valuable when people like Luxo42 find mistakes, which is something I always appreciate (as honestly, my math skills are a lot weaker than 01010100b's and Luxo42's, I've just been working on this problem domain for quite a while)  

maybe the best would be to stop offering the offsite feature for Investors