[Mpex.co] The Scientology of Bitcoin Finance?

[ex-trader]

I think the thread title is misleading, in that I don't think Mpex is a scam. It seems to offer securities and people buy them - job done.

However the more relevent question is whether it is over-valued and that would seem to be the case. MPOE is trading at 0.00079937 per share with 1bn shares = 800k BTC (or a staggering 1bn USD roughly).

The income is massively volatile but appears as follows:

Oct 261 BTC
Sept 21 BTC
Aug 1779 BTC

So for the last 3 months the total was 2,061 BTC, which if annualised is 8,244 BTC

Thus for the last quarters data ONLY the stocks would seem to be trading at 97x earnings or a div yield of 1.0%. This seems incredibly low in Bitcoin world, compared to most stocks that yield 10-30%.

I await any corrections from MPOE-PR.

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[DrGregMulhauser]

Part of what makes your idiocy so delicious is your amusing expectations to be instructed for free, forcibly, while kicking and screaming.

I'll make you kick and scream, sure, but I ain't instructing your bulbously barren head.

The rest of us here on planet Earth will take your latest playground antics as an admission that your claims regarding never hedging options positions while simultaneously never entering naked options positions are every bit as laughable as they appeared when you first made them -- while your allusion to MPBOR smacks of proof by reference to converging irrelevancies.

[jimmothy]

I think the thread title is misleading, in that I don't think Mpex is a scam. It seems to offer securities and people buy them - job done.

I don't feel as though the title is misleading and here's why:

Securities are traded but have little value and produce little returns. Of course besides s.mpoe which I an having a hard time understanding exactly where the dividends come from.

I have a feelinh that mr popescu is using the 30btc registration fees to pay dividends. If that is the case then it is most definitely a scam. If he is  earning his entire dividends using the options bot then it is not a scam but an elaborate gambling scheme.

I could be wrong and those 30btc may go to a legit cause that actually creates value in some way but I simply can't figure it out.

[pand70]

Which is why MPEx is valued at about 5% of all Bitcoin and JPM at about 0.0x% of all fiat.

Sorry for asking but that guy compares MPEx (whatever that is) with JP Morgan? Is he for real or just kidding?
I stopped reading after that so i can't really tell.

[MPOE-PR]

I could be wrong and those 30btc may go to a legit cause that actually creates value in some way but I simply can't figure it out.

It keeps you out.

[Rannasha]

I think the thread title is misleading, in that I don't think Mpex is a scam. It seems to offer securities and people buy them - job done.

I don't feel as though the title is misleading and here's why:

Securities are traded but have little value and produce little returns. Of course besides s.mpoe which I an having a hard time understanding exactly where the dividends come from.

I have a feelinh that mr popescu is using the 30btc registration fees to pay dividends. If that is the case then it is most definitely a scam. If he is  earning his entire dividends using the options bot then it is not a scam but an elaborate gambling scheme.

I could be wrong and those 30btc may go to a legit cause that actually creates value in some way but I simply can't figure it out.

Dividends for S.MPOE come from profits of MPEx. Those revenue comes primarily (two-thirds according to the october report) from
1) registration fees.
2) trade fees on MPEx.

So what are people primarily trading on MPEx? Well, S.MPOE shares. That's right, most of the profit of S.MPOE holders comes from getting new people to join and trade S.MPOE shares.

While unlikely to be intentional, this makes it more and more of a pyramid scheme.

[ex-trader]

I have a feelinh that mr popescu is using the 30btc registration fees to pay dividends. If that is the case then it is most definitely a scam. If he is  earning his entire dividends using the options bot then it is not a scam but an elaborate gambling scheme.

Those fees are income and are paid as dividends. Provided all the income is legitimate and is paid away after expenses there's nothing about it thats a scam.

The fact that some people are willing to pay 97x earnings is not a scam it's stupidity, but the market price is not determined by the operator, but by the buyers/sellers.

I cannot believe I'm defending them given how much abuse their PR throws out, but nevertheless I do seem to be..... !

[jimmothy]

I have a feelinh that mr popescu is using the 30btc registration fees to pay dividends. If that is the case then it is most definitely a scam. If he is  earning his entire dividends using the options bot then it is not a scam but an elaborate gambling scheme.

Those fees are income and are paid as dividends. Provided all the income is legitimate and is paid away after expenses there's nothing about it thats a scam.

The fact that some people are willing to pay 97x earnings is not a scam it's stupidity, but the market price is not determined by the operator, but by the buyers/sellers.

I cannot believe I'm defending them given how much abuse their PR throws out, but nevertheless I do seem to be..... !

You might not consider this a scam but I and many others do. When your main source of revenue is from your users "stupidity" you know you are not running a legit operation.

Considering mr popescu spends all his time recruiting new users and blog viewers I am still going to stick with my first conclusion that this is nothing but a scam/scheme.

[MPOE-PR]

However the more relevent question is whether it is over-valued

This question is at the very least ancient. Is S.MPOE really worth that much ?! That was back in Dec 2012, and at the time,

For another instance, critics are quick to point out that the BTC is traded on MtGox at 13.5 dollars or whatever it is traded at, which would put S.MPOE somewhere around 8 million dollars, which would be excessive.

So for the last 3 months the total was 2,061 BTC, which if annualised is 8,244 BTC

Why annualize when you have monthly reports going back all the way to before anyone here had even heard of Bitcoin? Just add up the months.

Thus for the last quarters data ONLY the stocks would seem to be trading at 97x earnings or a div yield of 1.0%. This seems incredibly low in Bitcoin world, compared to most stocks that yield 10-30%.

And compared to pirate's bank or to what some guy dreamt while asleep among cockroaches and potato chips these other things you call stocks (but aren't in any way stocks) are also showing a very poor yield.

The important point to understand here is that yields are whatever they are, and promises of variously packaged scams cannot be compared with what the yields are, or be part of a discussion of yields. What happens on MPEx is Bitcoin finance. What happens everywhere and anywhere else is pure gemology.

I can appreciate that to a multitude of financially illiterate folk (such as for instance Dr. BombyHead above) the difference is invisible. That's fine, but it also does not make the difference go away.

[jimmothy]

However the more relevent question is whether it is over-valued

This question is at the very least ancient. Is S.MPOE really worth that much ?! That was back in Dec 2012, and at the time,

For another instance, critics are quick to point out that the BTC is traded on MtGox at 13.5 dollars or whatever it is traded at, which would put S.MPOE somewhere around 8 million dollars, which would be excessive.

So for the last 3 months the total was 2,061 BTC, which if annualised is 8,244 BTC

Why annualize when you have monthly reports going back all the way to before anyone here had even heard of Bitcoin? Just add up the months.

Thus for the last quarters data ONLY the stocks would seem to be trading at 97x earnings or a div yield of 1.0%. This seems incredibly low in Bitcoin world, compared to most stocks that yield 10-30%.

And compared to pirate's bank or to what some guy dreamt while asleep among cockroaches and potato chips these other things you call stocks (but aren't in any way stocks) are also showing a very poor yield.

The important point to understand here is that yields are whatever they are, and promises of variously packaged scams cannot be compared with what the yields are, or be part of a discussion of yields. What happens on MPEx is Bitcoin finance. What happens everywhere and anywhere else is pure gemology.

I can appreciate that to a multitude of financially illiterate folk (such as for instance Dr. BombyHead above) the difference is invisible. That's fine, but it also does not make the difference go away.

More advertising your nonsense filled blog.

I will ask again. How do you make money? You can't just say "finance" and expect people to buy it.

[MPOE-PR]

More advertising your nonsense filled blog.

I will ask again. How do you make money? You can't just say "finance" and expect people to buy it.

I can however say "none of your business, piss off" and expect you to do so.

[jimmothy]

More advertising your nonsense filled blog.

I will ask again. How do you make money? You can't just say "finance" and expect people to buy it.

I can however say "none of your business, piss off" and expect you to do so.

But you are the one asking us to pay you 30btc for a service which we have no idea how it operates and how it creates revenue.

Or should we just take your word for it and fork over the 30btc, invest in s.mpoe, and see how it goes?

[MPOE-PR]

But you are the one asking us to pay you 30btc for a service which we have no idea how it operates and how it creates revenue.

Or should we just take your word for it and fork over the 30btc, invest in s.mpoe, and see how it goes?

I am asking you no such thing. It's a bad habit to imagine yourself at the center of the world. In day to day reality, MPEx is worth about a billion dollars and nobody gives a shit what you think on this, or any other topic.

[jimmothy]

But you are the one asking us to pay you 30btc for a service which we have no idea how it operates and how it creates revenue.

Or should we just take your word for it and fork over the 30btc, invest in s.mpoe, and see how it goes?

I am asking you no such thing. It's a bad habit to imagine yourself at the center of the world. In day to day reality, MPEx is worth about a billion dollars and nobody gives a shit what you think on this, or any other topic.

Really? I'm not the one with a yellow ignore button. For those wondering it means he has been ignored by many trusted members.

Also you tell me to piss off in my own thread? I give you a chance to defend your "financial operation" but you either choose not to or you simply can't.

And I completely agree that it is a bad habit to imagine yourself at the center of the world. But seriously take a look in the mirror. Everything you have said revolved around how much superior you are to us simple minded folk and how your operation is the beating heart of bitcoin.

Get real.

[kingcrimson]

But you are the one asking us to pay you 30btc for a service which we have no idea how it operates and how it creates revenue.

Or should we just take your word for it and fork over the 30btc, invest in s.mpoe, and see how it goes?

I am asking you no such thing. It's a bad habit to imagine yourself at the center of the world. In day to day reality, MPEx is worth about a billion dollars and nobody gives a shit what you think on this, or any other topic.

It is not even worth 1 million. Your site is trash and a running joke in the bitcoin community. You are a clown.

[DrGregMulhauser]

I can appreciate that to a multitude of financially illiterate folk (such as for instance Dr. BombyHead above)...

Until such time as you are capable of magicking up anything other than a fairly tale to explain how a competent options market maker can simultaneously never hedge option positions and never enter a naked option position, it will remain the case that the primary source of gross financial illiteracy being spewn all over innocent bystanders here is you.

The genuinely competent know when to acknowledge they've made a mistake. They also recognise when they've stepped over the boundary that separates healthy and even entertaining assertiveness from merely spewing logical incoherence and last-ditch defensiveness. It's a shame you seem to be blind to that boundary.

If you have some competence to show, and you'd like to take a stab at rescuing your previous assertions from logical incoherence, then have it it. If not, perhaps it would be worth considering whether all PR really is good PR after all -- or whether sometimes it actually matters whether you have something worthwhile to contribute.

[BitHub]

i think he needs the money to finish his sex change to finally become MPOE-PR


He's the Chelsea Manning of the Bitcoin world.

[MPOE-PR]

Until such time as you are capable of magicking up anything other than a fairly tale to explain how a competent options market maker can simultaneously never hedge option positions and never enter a naked option position, it will remain the case that I'm fucking retarded.

19:18:24 mircea_popescu: ahaha that dr greg forum guy is hysterical.
19:18:40 mircea_popescu: "how one never enters naked options positions, while simultaneously never hedging options positions"
19:18:57 mircea_popescu: aka, "how does one not steal clothes while also not returning them"
19:19:15 mircea_popescu: forum muppets never heard of this mystical concept of, you know... like having money ?

via.

Split sides eagerly await your doubtlessly clever and well-grounded retort.

[DrGregMulhauser]

19:18:24 mircea_popescu: ahaha that dr greg forum guy is hysterical.
19:18:40 mircea_popescu: "how one never enters naked options positions, while simultaneously never hedging options positions"
19:18:57 mircea_popescu: aka, "how does one not steal clothes while also not returning them"
19:19:15 mircea_popescu: forum muppets never heard of this mystical concept of, you know... like having money ?

Split sides eagerly await your doubtlessly clever and well-grounded retort.

Despite my better judgement warning me it is an utter waste of my time to respond to such ongoing flailings and desperate attempts to lower the tone of the conversation, on this occasion I will accept the invitation to explain the inherent idiocy of claiming to provide competent options market making services while never hedging options positions and never entering naked positions.

By definition, an options market maker is a guaranteed buyer, and a guaranteed seller. The market maker does not get to decide, in advance, whether they're going to be buying or selling, and the market maker does not get to use a crystal ball to tell them, in advance, what demands are going to be made either to buy or sell options or to deliver or to take delivery of the underlying.

As a result, any competent market maker -- who, being competent and all, is not going to introduce inordinate levels of counterparty risk -- continually adjusts positions both in cash and in the underlying entity which are sufficient to cover their obligations created by ongoing sales and purchases of options. That's in addition to ongoing adjustments to bids and asks across option chains so as to accommodate changes in the price of the underlying and fluctuations in demand for the options. In my original example, when they're short a call, they might ensure that short position is balanced by a long in the underlying -- and, notably, maintaining that long position, whose price moves inversely relative to the short position, is the very definition of hedging. To the extent the position is covered, it is hedged -- by definition. Someone who claims otherwise either does not understand the meaning of the words, or they hope that you don't.

(I'm simplifying quite a bit here. More generally speaking, options market makers keep a lid on directional risk, or delta risk, via a range of strategies, including using futures. They also keep a lid on risks associated with the other Greeks -- gamma, vega, and theta -- but we're dealing here with someone who claims to provide competent market making while ignoring the obvious delta.)

The types of adjustments I've just outlined explain why, generally speaking, competent market makers tend not to lose large amounts of money: a competent market maker is not merely gambling with a pot of underlying capital by buying and selling options willy-nilly, hoping to make a killing on the bid/ask spread. On the contrary: their entire operation is designed and delta hedged so as to avoid wild swings in the net value of their position and to provide a service which is both extremely reliable for market participants -- by virtue of continually ensuring their ability to deliver on their obligations -- and highly profitable to themselves.

Merely "having money" and providing a bit of options market making without a grasp of the basic mechanics of risk management in the activity does not make one a competent market maker; it makes one a gambler.

Merely "having money" and occasionally losing large sums while options market making does not make one a competent market maker; it makes one a source of counterparty risk.

The bottom line is that out in the real world of finance, a supposed market maker who not only failed to grasp the concept of delta-neutral hedging but actively promoted their lack of hedging activity as some sort of good thing would be laughed out of the room -- or more likely just ignored. Only here, where Bitcoin finance remains in its infancy, can someone swagger in without a clue about even basic delta hedging, point to a big bag of money, and attempt to browbeat and intimidate folks into thinking that that somehow implies they know what they're doing and can be relied upon as a safe counterparty.

[MPOE-PR]

Despite my better judgement warning me it is an utter waste of my time to respond to such ongoing flailings and desperate attempts to lower the tone of the conversation, on this occasion I will accept the invitation to explain the inherent idiocy of claiming to provide competent options market making services while never hedging options positions and never entering naked positions.

By definition, an options market maker is a guaranteed buyer, and a guaranteed seller. The market maker does not get to decide, in advance, whether they're going to be buying or selling, and the market maker does not get to use a crystal ball to tell them, in advance, what demands are going to be made either to buy or sell options or to deliver or to take delivery of the underlying.

As a result, any competent market maker -- who, being competent and all, is not going to introduce inordinate levels of counterparty risk -- continually adjusts positions both in cash and in the underlying entity which are sufficient to cover their obligations created by ongoing sales and purchases of options. That's in addition to ongoing adjustments to bids and asks across option chains so as to accommodate changes in the price of the underlying and fluctuations in demand for the options. In my original example, when they're short a call, they might ensure that short position is balanced by a long in the underlying -- and, notably, maintaining that long position, whose price moves inversely relative to the short position, is the very definition of hedging. To the extent the position is covered, it is hedged -- by definition. Someone who claims otherwise either does not understand the meaning of the words, or they hope that you don't.

(I'm simplifying quite a bit here. More generally speaking, options market makers keep a lid on directional risk, or delta risk, via a range of strategies, including using futures. They also keep a lid on risks associated with the other Greeks -- gamma, vega, and theta -- but we're dealing here with someone who claims to provide competent market making while ignoring the obvious delta.)

The types of adjustments I've just outlined explain why, generally speaking, competent market makers tend not to lose large amounts of money: a competent market maker is not merely gambling with a pot of underlying capital by buying and selling options willy-nilly, hoping to make a killing on the bid/ask spread. On the contrary: their entire operation is designed and delta hedged so as to avoid wild swings in the net value of their position and to provide a service which is both extremely reliable for market participants -- by virtue of continually ensuring their ability to deliver on their obligations -- and highly profitable to themselves.

Merely "having money" and providing a bit of options market making without a grasp of the basic mechanics of risk management in the activity does not make one a competent market maker; it makes one a gambler.

Merely "having money" and occasionally losing large sums while options market making does not make one a competent market maker; it makes one a source of counterparty risk.

The bottom line is that out in the real world of finance, a supposed market maker who not only failed to grasp the concept of delta-neutral hedging but actively promoted their lack of hedging activity as some sort of good thing would be laughed out of the room -- or more likely just ignored. Only here, where Bitcoin finance remains in its infancy, can someone swagger in without a clue about even basic delta hedging, point to a big bag of money, and attempt to browbeat and intimidate folks into thinking that that somehow implies they know what they're doing and can be relied upon as a safe counterparty.

It's good that you know words. It's funny that you believe armchair generals actually matter on the battlefield. Please never change, you've got a good thing going with this unintentional comedy gold. Even if its value is epsilon per megaton, nonetheless you're not going to exceed it doing anything else.