Gauging interest: A mining contract marketplace.

[Ferroh]

https://ferroh.com/mining/intro


Most of this service's features are complete, but if you vote against using this, then it can be put on the backburner while other projects are completed instead. Your vote matters.

If you don't think it's a good idea, please just vote "I won't use this". We'll build something else.

Note that there are some differences from what you might expect from a mining contract:

• A 1GH/s mining contract produces bitcoins as if it were a 1GH/s mining rig that has no downtime, no stales and no variance. The number of bitcoins that a contract produces depends on network difficulty only, and no other factors.
• Contract seller funds must be held in escrow while they hold the contract.
• Ferroh will pay interest on contract seller funds that are held.
• Contracts can generate a maximum payment to the buyer of 1.5x the purchase price (necessary to be able to guarantee that sellers can fulfil their obligations in every scenario).
• Contract durations vary, there are only ever two durations available.
• A 3 month or longer contract duration is always available.
• All contracts are bought and sold in BTC, however automatic BTC->USD conversion is available to contract buyers, prices set based on aggregate bitcoin exchange prices.
• You can cancel contracts that you've sold by buying contracts of equivalent hash rate.
• You can cancel contracts that you've bought by selling contracts of equivalent hash rate.
• Buyers do not have to trust the sellers or vice versa, Ferroh arbitrates everything and guarantees that contract obligations will be met.

Please voice any questions or concerns

---

The "Introducing Mining Contracts" link I posted 6 months ago seems to have been mysteriously deleted from reddit.com/r/Bitcoin. That is frustrating and I wonder if Theymos can weigh in on that.

You may recognize the previous Ferroh Mining Contract service.

You may also recognize Ferroh's D3 gold buy/sell service (no longer in operation due to friction with Blizzard-Activision).

[Ferroh]

[rockxie]

Good idea.

Interested.

[Nefario]

How does this compare to contracts available on GLBSE?

[Tim Johnson]

How does this compare to contracts available on GLBSE?

The GLBSE has less limits. You can and choose who to mine with. Bad contracts are met with failure. Good contracts continue to be sold. A Gigahash from Sarah may be worth more than a Gigahash from John.

Ferroh requires all fund to be held in escrow among other rules. A Gigahash is a communal unit. All Gigahashes are forceably equal. If somehow some contracts are bad, every contract is diminished unless Ferroh pays out of pocket.

[Ferroh]

How does this compare to contracts available on GLBSE?

They aren't very similar, so it's tough to compare them.

First of all, these are nothing like buying stock in a mining company on the GLBSE, since those depend on how that company performs. The only unknowns with a Ferroh mining contract is network difficulty, and what the price of contract will be in the future (you could buy a contract just to sell it later at a higher price, or sell a contract just to buy contracts later at a lower price).

As for actual mining bonds on the GLBSE:

Ferroh mining contracts are fixed length contracts, they are not open ended like GLBSE stuff typically is. Selling a contract in the Ferroh mining marketplace means depositing 50% of the price of the contract to guarantee that you can pay if things move against you (i.e. difficulty falls or doesn't rise fast enough), and Ferroh pays you interest on funds that are held.

Buying a 1 GH/s Ferroh mining contract for example, is identical to buying 1 GH/s of mining equipment (that has zero downtime, zero stales, and zero variance). The amount of bitcoins you get depends only on mining difficulty. Whether it was worth it to buy that contract depends on how much you paid, and how much mining difficulty changes.

[FreeMoney]

How does this compare to contracts available on GLBSE?

The GLBSE has less limits. You can and choose who to mine with. Bad contracts are met with failure. Good contracts continue to be sold. A Gigahash from Sarah may be worth more than a Gigahash from John.

Ferroh requires all fund to be held in escrow among other rules. A Gigahash is a communal unit. All Gigahashes are forceably equal. If somehow some contracts are bad, every contract is diminished unless Ferroh pays out of pocket.

This seems contradictory. If all funds are held in escrow then they are force ably equal. It's just like a USD/BTC market, commodity on both sides.

@OP, yes, I'd play. It's a good idea I hope you follow through with it.

[Tim Johnson]

How does this compare to contracts available on GLBSE?

The GLBSE has less limits. You can and choose who to mine with. Bad contracts are met with failure. Good contracts continue to be sold. A Gigahash from Sarah may be worth more than a Gigahash from John.

Ferroh requires all fund to be held in escrow among other rules. A Gigahash is a communal unit. All Gigahashes are forceably equal. If somehow some contracts are bad, every contract is diminished unless Ferroh pays out of pocket.

This seems contradictory. If all funds are held in escrow then they are force ably equal. It's just like a USD/BTC market, commodity on both sides.

@OP, yes, I'd play. It's a good idea I hope you follow through with it.

The thing is miners have to pay Ferroh a huge sum in advance and trust Ferroh is going to do things right.

Assume I'm a miner. Why am I going to pay out a huge sum to Ferroh and trust him when I can setup contracts I control on the GLBSE for only $80?

[Andrew Vorobyov]

Unauthorized.
During this production stage, most users will not have access to some features of the site, including this one.

We'll send you an email when Ferroh has new features for you!

[eldentyrell]

You can get the same effect with the ability to short BTC and buy/sell difficulty futures.

Since the [much larger] non-mining part of the bitcoin world demands the ability to short BTC, it would make more sense to create a difficulty futures market than to duplicate that functionality.

With the upcoming block reward halving, I'm sure there are oodles of speculators who'd like to bet on its effect on the difficulty.

[Andrew Vorobyov]

This post is to gauge interest during this last phase of development, not to release the service Sorry!

I don't get it... Is your site working or not?

[Ferroh]

This post is to gauge interest during this last phase of development, not to release the service Sorry!

I don't get it... Is your site working or not?

Well the site works fine, but the mining contract marketplace service is not launched yet. If the response is positive, it will be launched around next week. If not, then it may not be launched at all.

[Andrew Vorobyov]

If the response is positive, it will be launched around next week. If not, then it may not be launched at all.

Don't listen to anyone - just do what feels right...  You will always find clients

[FreeMoney]

You can get the same effect with the ability to short BTC and buy/sell difficulty futures.

Since the [much larger] non-mining part of the bitcoin world demands the ability to short BTC, it would make more sense to create a difficulty futures market than to duplicate that functionality.

With the upcoming block reward halving, I'm sure there are oodles of speculators who'd like to bet on its effect on the difficulty.

Part of the idea here is to give new Bitcoin users an attractive way to get into buying bitcoins.

New Bitcoin users understand mining far better than they understand difficulty futures, and even if contracts end up slightly overpriced, users that buy contracts will get some bitcoins.

Some users view buying a contract with USD simply as a way to get bitcoins over time. Difficulty futures don't appeal to those people, in my experience.

Oh, I didn't realize you were handling USD. Doesn't that make it a lot harder and riskier for you?

Do you think you can handle USD better than the current exchanges? Why?

[streblo]

• Ferroh will pay interest on contract seller funds that are held.

What's your interest rate?[/list]

[rjk]

Bolt this onto GPUMAX and you will have the most epic win ever.

[FreeMoney]

Oh, I didn't realize you were handling USD. Doesn't that make it a lot harder and riskier for you?

Do you think you can handle USD better than the current exchanges? Why?

All contracts are bought and sold in bitcoins only, but in order to attract the users that want to simply get bitcoins by spending dollars, automatic USD->BTC conversion based on aggregate market rates is available on the contract buying side only.
The way this works is that you click a "USD" button, and all of the ASK prices are displayed in USD, and your buy panel displays USD. Bid prices and the sell panel still display BTC.

This means that you cannot withdraw more USD than you deposit (since there is no way to obtain USD in your Ferroh account or move USD into a Ferroh interest paying account). That should make us a much smaller blip on the AML investigator's radar while we seek greater legitimacy (as a money transmitter) in the eyes of the Canadian government.

That's interesting. I wonder why there aren't more sites that only go one way? Seems like that would let people have less regulatory headache like you say.

[mc_lovin]

I'd rather use GLBSE.

[Ferroh]

I'd rather use GLBSE.

I appreciate the feedback

GLBSE does not offer this service, or a service like it.

I'll work on showing users immediately how different this is from GLBSE bonds/shares up front before launch, since this seems to be one of the common misconceptions so far.

[Sukrim]

One of the few reasons (besides betting on difficulty changes) for buying a mining contract e.g. on GPUMAX would be that I as the buyer receive "fresh" Bitcoins, ideally with as few hops from the coinbase transaction as possible. Will you do this, or will people buying contracts then get any random (potentially "dirty") BTC?