.

[MrTeal]

Great operation. Even if Pirate defaults they're only out 478BTC.

Thanks!  Just a note on default, just to be clear, if BS&T were to default today we would be out:

Code:

PPT.A   1,500 x 1.28 = 1,920 and 1,920 * 0.25 = 480
PPT.B   2,000 x 1.28 = 2,560 and 2,560 * 0.25 = 640

        480 + 640 = 1,120 BTC

Interesting. I was basing it on you pulling in 2162BTC from the bond sale, and having to invest 2000 in BS&T to cover those shares. If BS&T goes under you would be responsible for 640 as you say, but since you made an immediate profit of 162BTC you would only be down 478BTC.

I assume that means you're investing the entire proceeds in BS&T now, but really you could keep the 162BTC (154 after fees, if you're paying an 8BTC fee) so that's kind of your money to invest in BS&T, keep or do whatever you want with.

[PatrickHarnett]

Sure, only down 478 coins for this week's bond.  At US$5 that's not even 2 1/2 grand.  Paying out 640 coins is $3k something, and when 8000 bonds are rolling around, and we have the full complement of 2560 coins going down the toilet is . . .

small change, or serious money

Don't kid yourself, the potential for the backers of this bond to lose serious cash is definitely there.  And given the backing funds could be invested in something else, the returns are probably not as high as you think.  However, it gives some people access to decent returns that they might not otherwise be able to access.

[MrTeal]

Sure, only down 478 coins for this week's bond.  At US$5 that's not even 2 1/2 grand.  Paying out 640 coins is $3k something, and when 8000 bonds are rolling around, and we have the full complement of 2560 coins going down the toilet is . . .

small change, or serious money

Don't kid yourself, the potential for the backers of this bond to lose serious cash is definitely there.  And given the backing funds could be invested in something else, the returns are probably not as high as you think.  However, it gives some people access to decent returns that they might not otherwise be able to access.

I'm not questioning the investment, I've bought into both issues and have been quite happy so far. If the passthroughs were all selling for 1.00, you'd still make enough to cover the fee and make about 50BTC on the compounding, but as you said it wouldn't be the best return on 640BTC for a month considering you could all just invest in BS&T directly with it and earn more. Having PPT earn a good return is good for everyone, since if there wasn't an incentive to do it over just investing in BS&T it wouldn't get done.

If you are actually investing the entirety of the 2154BTC you brought in after fees you'll stand to make 264BTC after four weeks on a 640BTC investment, a 40% return with no more risk than you'd face just investing in BS&T directly. If you don't invest overage in BS&T, keeping the extra outside of Pirate's fund helps reduce how much you'd lose if he did default. Either is great. Hopefully it convinces you guys to keep issuing 2000 shares. I made 8.5% in a week on the first round, so I'm happy to keep buying them.

[imsaguy]

I made 8.5% in a week on the first round, so I'm happy to keep buying them.

Buy MOAR!

[Gomeler]

I made 8.5% in a week on the first round, so I'm happy to keep buying them.

Buy MOAR!

Working on it but sadly I don't have enough Bitcoin trees. Need moar trees!

[PatrickHarnett]

I'm not questioning the investment, I've bought into both issues and have been quite happy so far. If the passthroughs were all selling for 1.00, you'd still make enough to cover the fee and make about 50BTC on the compounding, but as you said it wouldn't be the best return on 640BTC for a month considering you could all just invest in BS&T directly with it and earn more. Having PPT earn a good return is good for everyone, since if there wasn't an incentive to do it over just investing in BS&T it wouldn't get done.

If you are actually investing the entirety of the 2154BTC you brought in after fees you'll stand to make 264BTC after four weeks on a 640BTC investment, a 40% return with no more risk than you'd face just investing in BS&T directly. If you don't invest overage in BS&T, keeping the extra outside of Pirate's fund helps reduce how much you'd lose if he did default. Either is great. Hopefully it convinces you guys to keep issuing 2000 shares. I made 8.5% in a week on the first round, so I'm happy to keep buying them.

I'm glad you're enjoying this - it is a good deal.

From my side of things, it's a part of portfolio diversification and as such I don't need to make the absolute maximum from every coin.  So, on that basis, after the huge amount of work that went into round one we were pretty happy, round two was a lot smoother.  And, the return does help compensate.

[Gomeler]

It'll be interesting to see if the market has the capital to absorb another 4k PPT shares. I suspect it does, given the great rates 

[Otoh]

Oh nice, GLBSE now has significantly more attractive graphics than before

[nrd525]

Pirate offers 33.6% in 30 days  (1.07 ^ (30/7)).

The market interest rate in the US (and most other countries) is practically 0% per month  (even if it were 1% it wouldn't make much difference in this case).

So Pirate investors have a 25% expectation of a default per month - assuming the 1.00 BTC value for the 1.00 of BTC Pirate investment is a *market* value (hmm - that is a total leap of faith - so the rest of this analysis is highly debatable).
0.75 (probability of non-default) * 1.336 (expected return after 30 days) = 1.00

(Or to be more precise it is 74.8%, but 75% is a great approximation.)


If we apply this expected default rate to the bond pricing we get the expected value of the bonds:

Default:  0.25 * 0.32 = 0.08
Non-Default: 0.75 * 1.28 = 0.96
Total bond value: 1.04

This could explain why the bonds are selling for > 1.

However, it gets complicated if you include the fact that a Pirate default could trigger additional defaults.  So the guaranteed 0.32 value might not hold up.  Also for these bonds to be valuable, you have to trust two sets of people as either could run away with the money. 



Bets of Bitcoin has more bets on Pirate not defaulting by July 4.  If you think there is a 25% chance of default per 30 days, there is a 43.75% chance of default in 60 days (and as of today a 45% chance by July 4th).  So Bets of Bitcoin seems to be predicting a lower than 25%/30 day default rate.
http://betsofbitco.in/item?id=349

[PatrickHarnett]

However, it gets complicated if you include the fact that a Pirate default could trigger additional defaults.  So the guaranteed 0.32 value might not hold up.  Also for these bonds to be valuable, you have to trust two sets of people as either could run away with the money. 

The 0.32 exists and is sitting separately, not affected by a pirate default.  further, the six people standing behind the PPT offering have more at stake than just a few thousand coins.

[ineededausername]

bump!

[Mousepotato]

In for this...

[imsaguy]

The board of directors meeting ran a bit long tonight.  There are a lot of exciting things in the works to be announced shortly.

The sale tomorrow will be for the full 2000 bonds.

Thank you for all of your support - and see you at the auction tomorrow in less than 24 hours.

woohoo!

[Mousepotato]

Ok I'm too lazy to Google the time zone thing.  However, as I understand it, the auction starts in approx 9hrs 45min from now, no? 7pm California time?

[imsaguy]

Ok I'm too lazy to Google the time zone thing.  However, as I understand it, the auction starts in approx 9hrs 45min from now, no? 7pm California time?

From the OP:

The bond auctions will take place every Saturday morning at 2 AM UTC.  That is every Friday evening at 7 PM PDT, 8 PM MDT, 9 PM CDT and 10 PM EDT.

[Mousepotato]

That doesn't really answer my question, but thanks

[bitfoo]

That doesn't really answer my question, but thanks

California time == PDT, so yes, 7PM California time. 

[Mousepotato]

That doesn't really answer my question, but thanks

California time == PDT, so yes, 7PM California time. 

Thanks!  I wasn't familiar with PDT.

[imsaguy]

That doesn't really answer my question, but thanks

California time == PDT, so yes, 7PM California time. 

Thanks!  I wasn't familiar with PDT.

oh, my bad.  Daylight savings time changes the abbreviations.  PST becomes PDT. CST -> CDT, etc.

[ineededausername]

Cutoff notice

If your bid is under 1.065 BTC, you need to move it up, because that's where the 2000 bond depth cutoff is