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Warning: Moderators do not remove likely scams. You must use your own brain: caveat emptor. Watch out for Ponzi schemes. Do not invest more than you can afford to lose.

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Author Topic: Who Pays What?  (Read 35083 times)
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June 26, 2012, 11:35:12 AM
 #81



The new investment would act as an expansion possibility. The calculation was set very low. We have long been on the market since early 2011. Offered by such https://bitcointalk.org/index.php?topic=89635.0 we have nothing with this!
For over 1.5 years, there were no complaints about us, and all users get their money back. The fund will be revised again as announced in the current form.

Edit: The history follows

Greeting
Smart

Hi Smart - you misunderstand - I was in no way linking your offering to the one listed in that other thread which looks very insecure.



My misunderstanding is potentially in the translation from your offering and another I am aware of (ZiggyStar) and I will pm you in the next few days for some clarification.

English is not my best language, really.
The translation takes about an employee.

But the offer had to be revised. It is this type but it remains under better conditions.
Quote
My misunderstanding is potentially in the translation from your offering and another I am aware of (ZiggyStar) and I will pm you in the next few days for some clarification.
Yes please, that the somebody else.
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July 08, 2012, 04:32:31 AM
 #82

It's taken longer than planned to get around to this, but it is a topic I have been asked about three times in the past week, in reference to alternatives and how trustworthy various deposits are.  Assessing Bitcoin-deposit takers and interest providers is quite different to the real world as many of the metrics do not apply very well, especially as there is unlikely to be interest and depreciation, or large operational income.  It is also desirable to keep things simple and brief where possible.  Therefore, I propose to use the  following metrics to form the basis of ratings:

Financial
Liquid Assets: Those able to be redeemed within 48 hours - includes cash held at an exchange.
Assets: Typically investments in fixed term deposits or extended as loans.
Investments: Stocks, bonds and investments in BTC enterprises that are not necessarily liquid.

Nett Income: Average monthly income for the last 3 months.
Bad debts: Total of bad debts to Assets for the last 3 months.  

Current Liabilities: Payable within 1 month.
Term liabilities: Payable later than one month.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments within the last six months.

Ratios

-------------------------------AAA   AA   A   BBB   BB   B   C   
Liabilities / monthly income less than   3   6   9   12   18   24   -   
Bad debt ratio less than   0   2   4   6   8   10   -   
Current_liabilities_/_Liquid_Assets_less_than1   1.5   2   2.5   3   5   -   
Liabilities_/_Assets_less_than   0.5   0.75   0.9   1   1.1   1.25   -   
Time in "business" months   12   6   5   4   3   2   1   


Modifiers - to move from one category to another takes three points.
ID verified: +1
Account limits: If current limits maintain or improve ratios, +1, otherwise -1.
Disaster recovery: +1
Prior late/missed payments: -3 per event.


Example updated and is posted below.

Also as usual, comments welcome.
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July 08, 2012, 04:34:27 AM
 #83

Oh, credit ratings. Very nice indeed. Great job, Patrick.
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July 08, 2012, 04:38:04 AM
 #84

nice


(fixing a couple of small formatting issues)


How about something like "XYZ would be useful" or "I'd like to know if someone has all my money tied up in an illiquid asset on GLBSE", or "wtf does income have to do with it?"

Maybe more interesting is how people might value or discount rated offerings and if other deposit takers actually want to disclose (even at an aggregated level), this information.
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July 08, 2012, 05:04:11 AM
 #85

Patrick's list of ideas for credit scores is a good start. There are some more items that could be added along the lines of verifying that they are actually engaged in a business or are running a Ponzi. 

Some ideas:

-Shows signs of engaging in a business (ex. a lender that has threads on the forum vs one who has no evidence of lending out the money).  This item is critical.  Business model is described in detail.  (Ex. you lend out money, show us a volume of money that is lent out, the rates, and maybe even the approximate amount and term for each loan - without saying who it goes to).

-Business model does not involve "speculation". Speculation is a zero sum activity and will not produce a steady (or even positive) rate of return over the long run.

-Offers an unreasonable rate of return.  Offers a rate of return greater than other people in the industry (ex. someone who knows bitcoin mining should estimate the best rate of return currently available using GPU, FPGA, and BFL technology and the best pool (or GPUMax) - if someone claims they are mining with a bigger return rate then be suspicious.)

-Rate of return is more stable than you'd expect based on their business model (Bernie Madoff provided very stable returns).

-Comparison of the size of their previous business activities (which gained them trust) to the current scope of their operation.  Are they doing the long con?

-Ask the operator if they think BCST is engaged in a business/operation that makes money how Pirate says it does or is a Ponzi?  Ok, this is probably controversial and should just be rated as a "Y" or "N" or "I don't know" and not given a positive or negative score.  Personally I'd count it as evidence of engaging in a Ponzi, but someone could lie about it and other people who like Pirate's operation might feel favorable towards them.

-Business has exponential growth.  The business grows at a rate faster than the dividends/interest.  By contrast if someone has a one-time offer for business and then doesn't accept new funds, they might be running a scam, but it isn't a ponzi (unless they ask for funds at a later date).

Any other signs for detecting Ponzis? 

Don't day trade.
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July 08, 2012, 05:58:13 AM
 #86

Thank you for the great reply.

There are a heap of things that could be asked, and that is part of a due diligence any investor should look at.  What I am most (and others should be) interested in is financial ability to repay.  A ponzi operator is unlikely to disclose sufficient information to get a rating (or a good one).  Growth metrics and disclosure are useful (I have some, as do some others) and these do not always indicate scamming behaviour.

Also, there is a nice underlying (implicit) point that lying on credit score information would be noted and would provide a huge red flag for any investor.

How someone makes their income/return is less of an issue if they have reserves, and I would expect someone investing purely on GLBSE capital gains to have a few extra problems over someone that regularly lends funds.

Size of the business doesn't necessarily lower risk, but it does have an impact.  For example, I have 150 addresses in my client list, so it could be based on number of client accounts and/or volume.

BTW for a good read, search for "Corporate credit criteria"  http://www.nafoa.org/pdf/CorprateCriteriaBook-2008.pdf
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July 08, 2012, 10:44:42 AM
 #87

Thank you Patrick, your credit rating system is a neat idea.

Maybe another modifier I will take into account is regarding the true identity of the issuer.
I tend to trust much more in a person who is not afraid of revealing his/her identity in the real world TM.

In order to let my investors know that I am a trustworthy person in which they can trust, I provide them details of my identity as I am not going to risk my credibility and my own physical body running off with their deposits.

Some examples of the links some people tend to ask me before investing in my risk-free deposit at 2% 1.5%/w are:


These are some of the things I also asses before making a deal with other bitcoin traders although different people have different approaches and your mileage may vary.

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July 09, 2012, 05:26:05 AM
 #88

^^^i think Neo is much more 'real' than Mr Anderson.

bitcoinmax minimum has been dropped to 5 btc.
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July 09, 2012, 08:35:08 PM
 #89

Added Brendio's 32-day deposits

https://bitcointalk.org/index.php?topic=91536.0
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July 13, 2012, 01:39:56 AM
 #90

I have done a little more work on credit ratings, and corrected an error I had in the above post.

The following sets out a sample calculation for Starfish BCB.

Base Data
Liabilities   Monthly Income   Bad Debts   Current Liab   Liquid Assets   Assets   Time in business
18426   2000   10   13759   11302   33825   7

Results
.   .   Liabilities /   Bad debt ratio   Liabilities /   Current_liabilities /   Time in    Weighted   .   .   
Who   When   monthly income   Bad debt ratio   Assets   Liquid_Assets   "business"  Score   Modifiers   Overall   
Starfish_BCB   13-Jul-12   9.21   0.5%   54.5%   121.7%   7   .   +3   .   
Rating Score   4   5   4   5   5   4.6   .   AA   
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July 14, 2012, 11:24:11 PM
 #91

A couple of credit ratings and other minor updates in the OP.
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July 15, 2012, 09:22:43 PM
 #92

How are you justifying ziggistar's AAA rating?

...مكتوب
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July 15, 2012, 09:27:35 PM
 #93

He posted the mechanics of how he comes up with credit ratings earlier in this thread.

I recommend asking me for a signature from my GPG key before doing a trade. I will NEVER deny such a request.
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July 15, 2012, 09:43:17 PM
 #94

How are you justifying ziggistar's AAA rating?

Currently it is a preliminary rating.  As set out in the mechanics and metrics which I am awaiting permission to publish.  There is an issue with the information that goes into the liquidity metric that I am waiting to sort out, until then it is just that, preliminary.

Essentially, they have relatively low liabilities to total assets, have been around a long time and haven't had many problems/issues.  They scored a base AA rating and get an additional two notches for ID and disaster recovery resulting in a preliminary "AAA-".
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July 16, 2012, 06:03:04 AM
 #95

How are you justifying ziggistar's AAA rating?

Currently it is a preliminary rating.  As set out in the mechanics and metrics which I am awaiting permission to publish.  There is an issue with the information that goes into the liquidity metric that I am waiting to sort out, until then it is just that, preliminary.

Essentially, they have relatively low liabilities to total assets, have been around a long time and haven't had many problems/issues.  They scored a base AA rating and get an additional two notches for ID and disaster recovery resulting in a preliminary "AAA-".

Thanks, I was just wondering since Ziggistar seemed to have popped up here on March ( https://bitcointalk.org/index.php?action=profile;u=54441;sa=showPosts;start=180 ) and I was wondering how he achieved a AAA if you say he has been around here a long time. For the second part when calculating assets and all that, do people just give you a list of numbers that you simply take as true or is there more diligence in making sure the numbers are realistic/truthful?

...مكتوب
Escape the plutocrats’ zanpakutō, Flower in the Mirror, Moon on the Water: brave “the ascent which is rough and steep” (Plato).
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July 16, 2012, 07:27:39 AM
 #96


Thanks, I was just wondering since Ziggistar seemed to have popped up here on March ( https://bitcointalk.org/index.php?action=profile;u=54441;sa=showPosts;start=180 ) and I was wondering how he achieved a AAA if you say he has been around here a long time. For the second part when calculating assets and all that, do people just give you a list of numbers that you simply take as true or is there more diligence in making sure the numbers are realistic/truthful?

There is more to it than that.
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July 16, 2012, 10:38:41 PM
 #97

Haha Pat, I would hope so Smiley Do you mind elaborating how that works exactly, or if you'd rather not make this set of criteria public for abuse, explain how you mitigate the possibility of someone sending you manipulated information that favorably fits your credit rating criteria?

...مكتوب
Escape the plutocrats’ zanpakutō, Flower in the Mirror, Moon on the Water: brave “the ascent which is rough and steep” (Plato).
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July 16, 2012, 10:42:52 PM
 #98

Haha Pat, I would hope so Smiley Do you mind elaborating how that works exactly, or if you'd rather not make this set of criteria public for abuse, explain how you mitigate the possibility of someone sending you manipulated information that favorably fits your credit rating criteria?

+1

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July 16, 2012, 11:04:39 PM
 #99

Haha Pat, I would hope so Smiley Do you mind elaborating how that works exactly, or if you'd rather not make this set of criteria public for abuse, explain how you mitigate the possibility of someone sending you manipulated information that favorably fits your credit rating criteria?

The basic mechanics are in: https://bitcointalk.org/index.php?topic=81542.msg1015968#msg1015968
I've sent ten or twelve requests out to the people that take deposits and have received back two and know a couple of others are in process.  I have even invited Pirate to fill one out, but that was more for fun to see if he would (especially now he's commented in the Dank Bank thread).

There is potential for abuse of the credit rating system, and for people to simply lie.  That wouldn't be a very smart thing to do as that would get them a simple "Z" rating.  There are also a number of other people who will be looking pretty carefully at the information provided and will be able to highlight discrepancies.  As well, over the past year  I've read a lot and done a lot of business, including keeping tabs on the actions of various people as they come into the deposit taking space.

I have been asked to rate issues as well as issuers, and there are some other metrics that might be useful such as size/diversity, but those are harder to account for.  Also, this is very early days for ratings and I've had feedback from one person that it's going to take a few days to clean up their records - a positive step and if someone doesn't know their position, they probably shouldn't have a rating.  As contract, if someone knows their position, that's a positive (fundamental) aspect of ability to take and repay deposits.

Most importantly, I have a lot of information in my possession and know a lot of stuff that I simply can not and will not disclose.

As for Starfish BCB, I know the ratios and rules and I follow them just like anyone else, and in another seven days I have a 10 BTC bad debt roll off and that will affect the numerical score for that item.
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July 18, 2012, 08:35:04 PM
 #100

I'll try to get to this within the next month. Bigger fish to catch for the time being.

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