Bitcoin Forum
December 04, 2016, 12:19:06 PM *
News: Latest stable version of Bitcoin Core: 0.13.1  [Torrent].
 
   Home   Help Search Donate Login Register  

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.

Pages: [1]
  Print  
Author Topic: Borrowing GLBSE Shares  (Read 781 times)
FreeMoney
Legendary
*
Offline Offline

Activity: 1246


Strength in numbers


View Profile WWW
May 29, 2012, 03:13:10 AM
 #1

I'm surprised to not see any talk of this. I'll kick it off with an offer and my idea of good terms.

I'd like to borrow up to 2000 shares of FZB. I am willing to do amounts down to 100 shares, but for simplicity will wait a day to see if I get a large offer first.

I will pay any dividends issued during the time I am borrowing the shares.

I will pay a monthly fee at the beginning of each month until I return the shares.

You can request your shares back at any time and I will return them within one month but will not pay another monthly fee after your request. I will still pay any dividends.

I will pay GLBSE transfer fees.

Unfortunately I have only a finite amount of bitcoins so I want to give myself an out. I reserve the right to give 10x the btc price of the shares at the time of the loan in place of returning the shares.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
1480853946
Hero Member
*
Offline Offline

Posts: 1480853946

View Profile Personal Message (Offline)

Ignore
1480853946
Reply with quote  #2

1480853946
Report to moderator
Advertised sites are not endorsed by the Bitcoin Forum. They may be unsafe, untrustworthy, or illegal in your jurisdiction. Advertise here.
BinaryMage
Hero Member
*****
Offline Offline

Activity: 546


Ad astra.


View Profile
May 29, 2012, 03:25:37 AM
 #2

Only two reasons I could understand this:

1. You, for whatever reason, wish to control a certain amount of FZB shares for voting purposes.
2. You, for whatever reason, believe FZB will go up more than an order of magnitude in value in a reasonable timeframe.

The first seems unlikely, as 2k shares is a near-negligible amount of voting power unless you control other shares.
The second seems more reasonable, but 10 times seems excessive.

What am I missing? Can you explain your logic here?

EDIT: Ignore this. Just a short. Apparently I didn't read carefully enough.

-- BinaryMage -- | OTC | PGP
bitfoo
Donator
Sr. Member
*
Offline Offline

Activity: 289



View Profile
May 29, 2012, 03:32:00 AM
 #3

Only two reasons I could understand this:

1. You, for whatever reason, wish to control a certain amount of FZB shares for voting purposes.
2. You, for whatever reason, believe FZB will go up more than an order of magnitude in value in a reasonable timeframe.

The first seems unlikely, as 2k shares is a near-negligible amount of voting power unless you control other shares.
The second seems more reasonable, but 10 times seems excessive.

What am I missing? Can you explain your logic here?

BinaryMage, maybe this thread will make it clear?

BinaryMage
Hero Member
*****
Offline Offline

Activity: 546


Ad astra.


View Profile
May 29, 2012, 03:35:01 AM
 #4

Only two reasons I could understand this:

1. You, for whatever reason, wish to control a certain amount of FZB shares for voting purposes.
2. You, for whatever reason, believe FZB will go up more than an order of magnitude in value in a reasonable timeframe.

The first seems unlikely, as 2k shares is a near-negligible amount of voting power unless you control other shares.
The second seems more reasonable, but 10 times seems excessive.

What am I missing? Can you explain your logic here?

BinaryMage, maybe this thread will make it clear?

Oh, never mind, I misread the final clause in his post and it threw me off. Makes much more sense now, thanks!

-- BinaryMage -- | OTC | PGP
FreeMoney
Legendary
*
Offline Offline

Activity: 1246


Strength in numbers


View Profile WWW
May 29, 2012, 04:01:57 AM
 #5

Only two reasons I could understand this:

1. You, for whatever reason, wish to control a certain amount of FZB shares for voting purposes.
2. You, for whatever reason, believe FZB will go up more than an order of magnitude in value in a reasonable timeframe.

The first seems unlikely, as 2k shares is a near-negligible amount of voting power unless you control other shares.
The second seems more reasonable, but 10 times seems excessive.

What am I missing? Can you explain your logic here?

BinaryMage, maybe this thread will make it clear?

Oh, never mind, I misread the final clause in his post and it threw me off. Makes much more sense now, thanks!

Yeah, I think the price is going down. Maybe not in dollar terms, but I like the short vs BTC.

I looked earlier in the day for a thread like that and didn't see it. Looks like it popped up about an hour before me. If the powers decide we don't need both I'll remake my offer over there.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
FreeMoney
Legendary
*
Offline Offline

Activity: 1246


Strength in numbers


View Profile WWW
May 29, 2012, 04:33:12 AM
 #6


The main problem with this is that GLBSE is not JUST a stock exchange, but a stock exchange, broker and depository institution. GLBSE holds everything. They will probably object.

This is essentially all about leverage. Just paying a monthly fee of 1% you could control 10,000 bitcoins with 300 bitcoins for 3 months. If your asset drops 7% you are out 700 bitcoins + 300 in fees after 3 months. What do you do then? This presents an extreme risk to the lender. It's easy to get in so deep.. lets just say real world brokerages and banks worth billions have had to close their doors because they did deals like this without properly calculating or monitoring client's leverage via margin requirements.

If GLBSE offered this service (margin accounts) you would need to sign an agreement that the GLBSE can step into your account and execute trades for you at any time. That's the only way this could ever work. So if I were to vendor brokerage services to you, then you would have to have an account with me and you would be issued margin on that account. So lets say you hold 1,000 shares of gigamining "through me". That means I hold them and pay you the dividend when *I* get it. Once we have that set up, I'll say ok, I'll issue you a 90% margin requirement. I'll loan you the value of stock up to 90% of the value of your account with me. Then I'd charge you 1% on that. Would you trust me to do that for you?

From Nefario's point of view it looks like an asset swap, so I don't see how this would be against TOS, but I would read it again before actually doing this.

I don't see why GLBSE would object, I'd like to hear Nefario's stance, but it seems GLBSE can safely ignore it completely. It will just be someone sending an asset as far as they are concerned. They never claim to enforce this sort of deal and I don't think anyone would expect them to. Maybe they could (if they don't say something that covers it already) explicitly state that they are not responsible for any promises made by third parties.

I didn't intend this as leverage for myself, but that is a good point. If someone is thinking in terms of "I know I'm right about the price going down so I just need to cover the fee." they are a terrible person to do this type of business with.

I think using a cap like I offered is a reasonable thing. If the maximum loss is both made explicit and the lender determines the borrower is good for that amount (or at least factors the chance of default in). In my offer the most I could lose is 2000x10xcurrent price which is a bit under 2000BTC. I don't intend to actually expose myself to that. Perhaps I'll only sell half below 1.50 and some not until 3. Point being that I don't actually expose myself to the max loss until and unless I actually sell (and not the -max- loss unless I sell them at 0, which I don't intend on doing).

Lower factor buy out clauses seem like a good idea. Ideally you would pick the point where the lender thinks it is so unlikely to reach that they aren't giving up hardly any expected value. For a lot of thing this might be as low as 2x.

Another thing we could explore is swaps. They could be used to reduce the one sidedness of the trust issue which might be good in some cases.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
FreeMoney
Legendary
*
Offline Offline

Activity: 1246


Strength in numbers


View Profile WWW
May 29, 2012, 04:40:12 AM
 #7

I'm just getting in to GLBSE now and it reminds me of bitcoin in the beginning. It's incredible how things have changed. Instead of Bitcoin being the tiny thing traded vs the 'real' dollar. Now Bitcoin is relatively rock solid and can act as the -real- thing vs a host of assets.

Play Bitcoin Poker at sealswithclubs.eu. We're active and open to everyone.
Pages: [1]
  Print  
 
Jump to:  

Sponsored by , a Bitcoin-accepting VPN.
Powered by MySQL Powered by PHP Powered by SMF 1.1.19 | SMF © 2006-2009, Simple Machines Valid XHTML 1.0! Valid CSS!