Local thread rules:

- This thread is for discussing math, not accusing pirateat40 of running a ponzi scheme or discussing how likely he is to default.
- There is only 1 rule.

For an easier to understand example of the following model, see

this post on how to get 7.5% weekly with the same risk as a direct pirate deposit.

**General**1. An "insured" pirate bond claims to be willing to return part or all of the investor's capital if pirateat40 / Bitcoin Savings and Trust defaults

2. Therefore, if an investor believes the insurer to be honest, the investor's exposure to BS&T is limited to the difference: (Invested_Capital - Guaranteed_Capital)

3. An investor in an insured pirate bond will receive less than 7% weekly (the amount one may receive investing directly with Pirate)

4. Therefore, the return on risk can be expressed as (Weekly_Payment / Exposed_Capital)

5. The insured capital in an insured pirate bond cannot be invested elsewhere by the investor.

6. If the investor did not intend to invest that capital elsewhere, the lost time value of the capital is 0%.

7. However, it is reasonable that the investor might expect 1%/week and a lower risk.

**YARR**1. The last traded price of YARR was 1.89 BTC.

2. If BS&T defaults, the investor will receive 1 BTC. This is the Guaranteed Capital.

3. Exposed Capital is .89 BTC

4. Weekly Payment is 0.06 BTC

5. Return on exposed capital is

6.74157% weekly.

6. Therefore, it is better to invest 8.9 BTC in a passthrough such as BitcoinMax and keep 10 BTC in cold storage than to buy 10 shares of YARR. (Provided, of course, you trust PayB.tc as much as usagi.)

7. There are additional risks and detractors associated with YARR, including:

a. Contract C-4: CPA forces a 1.3 BTC buyback. This can happen at any time without breach of contract, resulting in more than 30% loss in Total Invested Capital.

b. Contract C-5: A pirate-backed issue changes their terms independently of pirate. YARR then changes their dividend payouts, resulting in a loss of market value.

c. CPA defaults independently of pirate, resulting in a total loss of capital.

d. The investor loses the opportunity to invest the Guaranteed Capital elsewhere while invested in YARR. In order to spend it on a WikiSpeed car or invest it in the Dank Bank, one must withdraw it and the Exposed Capital from YARR.

e. Fees might be paid when investing in or withdrawing from YARR.

**Conclusion:** I will be investing in YARR at less than 1.7 BTC.

**PPT.X**1. These bonds do not pay dividends, but are bought back for 1.28 BTC every 4 weeks.

2. For simplicity, we will assume that the investor bought the bond at the IPO.

3. The Guaranteed Capital is 0.32 BTC

4. Let the IPO price be

*j*.

*j* is always greater than 1 BTC.

5. The Exposed Capital is

*j* - 0.32

6. The Weekly Payment is

(1.28 - *j*) / 47. Therefore, the return on exposed capital =

((1.28 - *j*) / 4) / (*j* - 0.32)8. Fancily (word?) enough, when we solve

we get

*j* = 1.07.

9. How about equating this to YARR?

1.07610627

**Conclusion 1**: I will not be investing in PPT.X if it costs me much more than 1.07 BTC

**Conclusion 2**: If you can buy a share of PPT.X for less than 1.07 BTC, and you don't mind letting that 0.32 sit there not gaining interest, then you're getting a better return than investing directly with pirate at his highest rates

and the same risk.

**Conclusion 3**: Buying PPT.X at IPO for less than 1.07611 BTC is better than buying a share of YARR at 1.89 BTC

**Gamma Insured Pirate Pass-Through**This one works like YARR.

Time value of 0%, return on risk 7%: bond price 1.357 BTC

Time value of 1%, return on risk 6.9%: bond price 1.217 BTC

There is no market price for this yet.

**Hashking's 50% insured Pirate deposits at 3.3% weekly****A) Non-compounding**This is the only deposit backed by an insurance where you will be able to see the insurance funds sitting in an address in case of default. As deposits exceed the current insurance allocated I will add more to the insurance address. I will currently start the fund with 4,000 BTC which will allow for 8,000 BTC worth of Deposits.

Because the funds are sitting there, I will say that the 50% insured part has no time-value. Therefore, we can simply double the 3.3 and get 6.6% weekly.

**Conclusion: **it's better to invest half of your money in Hashking's 6.75% deposit and put half in cold storage than to put all of it in the 50% insured pirate deposit.

Example:

put 50 BTC in uninsured; you'll get 3.375 BTC weekly and lose 50 BTC if pirate defaults.

put 100 BTC in partially-insured; you'll get 3.3 BTC weekly and lose 50 BTC if pirate defaults.

**B) Compounding**Due to perfect compounding, how much a lender invests in this program depends on their time frame and how likely they think pirate is to default. See

graphs and details later in this thread.

**Goat's proposed bond**Bond face value 1

Bond sold at 1.5-1.6

Bond pays 0.055% weekly

By now, this is getting pretty easy, so here's the numbers sans-fluff:

Time value 0%, return on risk 7% (upper bond price): 1.785714 BTC

Time value 1%, return on risk 6.9% (lower price): 1.652174 BTC

**Conclusion:** this is also a good deal. Goat has some reputation from issuing other bonds/stocks, such as Tygrr-Bond-B, Tygrr-Bond-P, and Tygrr-Tech.