Pages:
Author

Topic: . - page 19. (Read 67478 times)

donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 26, 2012, 12:54:12 AM
Here's some more info for you guys:

I just put these numbers in the spread sheet and saw that, you made 3113.95 from your sale.
The average price is 3113.95 / 3000 = 1.038
At that price, you are losing money for this round of PPT.A.

Case 1 - Sell 3000 shares of PPT.A at 1.038 with 960 btc tied in insurance money (tied up earning 0 interest)
  no default: PPT makes 113.95
  default: PPT loses 960

Case 2 - Put 960 btc with pirate
  no default: PPT makes 960 * .28 = 268.8
  default: PPT loses 960

Difference is 268.8 - 113.95 = 154.85
So you are effectively losing 155 bitcoins for this round. Your loss for if pirate defaults is the same.
Like I said, you may need to rethink the lowest price that you will sell bonds at.


Perhaps I am missing something, but nowhere can I find the statement that they must actually hold .32 BTC per bond in a wallet instead of in investments or in Pirate himself. All that is stated is that they will pay 0.32 BTC per bond if Pirate defaults.

They don't need to, but it doesn't affect the numbers, because they have to pay it out if pirate defaults. You can strike out the line (which I did in the quote above) and just compare the 2 cases. Instead of selling 3000 shares at 1.038, they should instead invest 960 btc with pirate because the profit would be greater with the same loss if pirate defaults.

If what you are saying is that they should do case 1 AND case 2 at the same time, then that means if pirate defaults they will lose 1920 bitcoins. Then in that case, why not just put 1920 btc with pirate instead?

hero member
Activity: 560
Merit: 500
Ad astra.
May 26, 2012, 12:48:04 AM
Effective interest rate affects how much PPT makes. So how is it "not really relevant in regards to PPT's profits"?

As for your second statement, I already showed that for this round of PPT.A even when pirate does not default, they effectively lose money. In other words, they don't make as much as they could have by not selling the bonds.

Not relevant to the existence of positive profits or negative profits. (Certainly relevant to the amount)

As for your second paragraph, see my above post. Wink (We're leapfrogging a bit)
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 26, 2012, 12:45:41 AM
No sane person would purchase a bond above 1.28, ergo I concluded it was unnecessary to include that possibility in my calculations.

Technically you are certainly correct, but we could bring up any number of extremely improbable conditions and discuss this subject endlessly to no end whatsoever.

Fair enough. Let me respond to your original post again.

Effective interest rate is not really relevant in regards to PPT's profits.

If Pirate doesn't default, they make money. If he does, they lose money. This is true regardless of whether the bonds are bought at 1.0 or 1.25; the amounts change but the fact of it does not.

Effective interest rate affects how much PPT makes. So how is it "not really relevant in regards to PPT's profits"?

As for your second statement, I already showed that for this round of PPT.A even when pirate does not default, they effectively lose money. In other words, they don't make as much as they could have by not selling the bonds.
hero member
Activity: 560
Merit: 500
Ad astra.
May 26, 2012, 12:39:26 AM
Here's some more info for you guys:

I just put these numbers in the spread sheet and saw that, you made 3113.95 from your sale.
The average price is 3113.95 / 3000 = 1.038
At that price, you are losing money for this round of PPT.A.

Case 1 - Sell 3000 shares of PPT.A at 1.038 with 960 btc tied in insurance money (tied up earning 0 interest)
  no default: PPT makes 113.95
  default: PPT loses 960

Case 2 - Put 960 btc with pirate
  no default: PPT makes 960 * .28 = 268.8
  default: PPT loses 960

Difference is 268.8 - 113.95 = 154.85
So you are effectively losing 155 bitcoins for this round. Your loss for if pirate defaults is the same.
Like I said, you may need to rethink the lowest price that you will sell bonds at.


Perhaps I am missing something, but nowhere can I find the statement that they must actually hold .32 BTC per bond in a wallet instead of in investments or in Pirate himself. All that is stated is that they will pay 0.32 BTC per bond if Pirate defaults.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 26, 2012, 12:32:52 AM
hero member
Activity: 560
Merit: 500
Ad astra.
May 26, 2012, 12:32:18 AM
That's wrong. If you paid 1.32 for a bond, PPT only puts 1 btc with pirate to make the 1.28 btc needed at the end of 4 weeks. They pocket the .32 if pirate doesn't default. If pirate does default, they don't lose money because they pay your the .32 they pocketed.

What?

No one has paid 1.32, and we have 0.32BTC per bond in a secure wallet earning zero to cover the event of default.  

We "pocket" the difference between the 1.00 and average price and that compensates for having 4k BTC tied up and goes to the PPT.DIV payouts.

I didn't say anyone paid 1.32. I was responding BinaryMage saying that no matter at what price the bond is sold, PPT will lose money if pirate defaults. I was just showing that if the bond was sold above 1.32, PPT makes money either way.

No sane person would purchase a bond above 1.28, ergo I concluded it was unnecessary to include that possibility in my calculations.

Technically you are certainly correct, but we could bring up any number of extremely improbable conditions and discuss this subject endlessly to no end whatsoever. However, for the sake of your appeasement, I have edited my post to reflect this extremely remote possibility.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 26, 2012, 12:21:40 AM
That's wrong. If you paid 1.32 for a bond, PPT only puts 1 btc with pirate to make the 1.28 btc needed at the end of 4 weeks. They pocket the .32 if pirate doesn't default. If pirate does default, they don't lose money because they pay your the .32 they pocketed.

What?

No one has paid 1.32, and we have 0.32BTC per bond in a secure wallet earning zero to cover the event of default. 

We "pocket" the difference between the 1.00 and average price and that compensates for having 4k BTC tied up and goes to the PPT.DIV payouts.

I didn't say anyone paid 1.32. I was responding BinaryMage saying that no matter at what price the bond is sold, PPT will lose money if pirate defaults. I was just showing that if the bond was sold above 1.32, PPT makes money either way.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 26, 2012, 12:19:21 AM
I replied to the main pirate thread, but I think this should also be posted here:

etc


Thanks for looking and thinking about this.  The point you've demonstrated is that there is a benefit, and it's materially above 1.02.

BTW I used 1.07^4 to make the comparison more realistic.

also, as a question, how did you get 41% return for someone investing at 1.00 and receiving 1.28?

At 1 btc per bond, it's as if they put .32 on the side and paid .68 for the bond.
.96 return (1.28 - .32) on a .68 investment is 41%.
.96 / .68 = 1.41

Their gain equals your loss. Because instead of selling the share at 1 btc, you could have instead invested .32 of your PPT.DIV capital with pirate directly. Here's the math assuming no compounding interest:

Case 1 - Selling a bond at 1 btc
  no default: PPT makes nothing.
  default: PPT loses .32

Case 2 - Investing PPT.DIV's .32 with pirate
  no default: PPT makes .32 * .28 = .0896
  default: PPT loses .32

So if pirate defaults, your loss is the same. If pirate does not default you are effectively losing .0896 per share because that's the money you otherwise would have made if you put the insurance money with pirate.
And your effective loss is the exact same as what the buyer of your bond gained. Here's that math:

Case 1 - Buyer buys PPT at 1 btc
  no default: buyer makes .28
  default: buyer loses .68

Case 2 - Buyer invests .68 directly with pirate
  no default: buyer makes .68 * .28 = .1904
  default: buyer loses .68

The effective gain of the buyer is .28 - .1904 = .0896
See how that's the same as what you (the PPT bond sellers) effectively lost? The math works out beautifully.
Bottom line, if you sell shares for less than 1.07, it is a losing proposition. (assuming no compound interest)
With compound interest, the break-even value is a bit lower than that.

P.S. I went to MIT
hero member
Activity: 518
Merit: 500
May 26, 2012, 12:08:42 AM
That's wrong. If you paid 1.32 for a bond, PPT only puts 1 btc with pirate to make the 1.28 btc needed at the end of 4 weeks. They pocket the .32 if pirate doesn't default. If pirate does default, they don't lose money because they pay your the .32 they pocketed.

What?

No one has paid 1.32, and we have 0.32BTC per bond in a secure wallet earning zero to cover the event of default. 

We "pocket" the difference between the 1.00 and average price and that compensates for having 4k BTC tied up and goes to the PPT.DIV payouts.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 25, 2012, 11:56:25 PM
Wow, I overpayed. Looks like they went down to almost 1.0 with this issue. Someone got a good deal.

Yes, Did 3000 bonds sell or just everything above 1 BTC?

Thanks

Wow, at 1, the effective interest rate is 41.2%
You guys are losing money this way. Even doing compounding, you can only make 31.1% interest from pirate. You may need to rethink how low you are willing to buy your bonds at.

Effective interest rate is not really relevant in regards to PPT's profits.

If Pirate doesn't default, they make money. If he does, they lose money. This is true regardless of whether the bonds are bought at 1.0 or 1.25; the amounts change but the fact of it does not.

That's wrong. If you paid 1.32 for a bond, PPT only puts 1 btc with pirate to make the 1.28 btc needed at the end of 4 weeks. They pocket the .32 if pirate doesn't default. If pirate does default, they don't lose money because they pay your the .32 they pocketed.
hero member
Activity: 518
Merit: 500
May 25, 2012, 11:50:33 PM
I replied to the main pirate thread, but I think this should also be posted here:

etc


Thanks for looking and thinking about this.  The point you've demonstrated is that there is a benefit, and it's materially above 1.02.

BTW I used 1.07^4 to make the comparison more realistic.

also, as a question, how did you get 41% return for someone investing at 1.00 and receiving 1.28?
hero member
Activity: 560
Merit: 500
Ad astra.
May 25, 2012, 11:43:30 PM
Wow, I overpayed. Looks like they went down to almost 1.0 with this issue. Someone got a good deal.

Yes, Did 3000 bonds sell or just everything above 1 BTC?

Thanks

Wow, at 1, the effective interest rate is 41.2%
You guys are losing money this way. Even doing compounding, you can only make 31.1% interest from pirate. You may need to rethink how low you are willing to buy your bonds at.

Effective interest rate is not really relevant in regards to PPT's profits.

If Pirate doesn't default, they make money. If he does, they lose money. This is true regardless of whether the bonds are bought at 1.0 or 1.25; the amounts change but the fact of it does not.

EDIT: This is assuming no one buys the bonds for above 1.28, which would be vastly improbable.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 25, 2012, 11:37:35 PM
Wow, I overpayed. Looks like they went down to almost 1.0 with this issue. Someone got a good deal.

Yes, Did 3000 bonds sell or just everything above 1 BTC?

Thanks

Wow, at 1, the effective interest rate is 41.2%
You guys are losing money this way. Even doing compounding, you can only make 31.1% interest from pirate. You may need to rethink how low you are willing to buy your bonds at.
donator
Activity: 1654
Merit: 1351
Creator of Litecoin. Cryptocurrency enthusiast.
May 25, 2012, 11:23:22 PM
I replied to the main pirate thread, but I think this should also be posted here:


I was looking at this earlier today


From https://bitcointalksearch.org/topic/m.922493
Quote
Case 1, invest 110 coins in PPT at a buy in price of 1.05 (104.8 bonds)
Payout is either 134 coins for a profit of 24 coins, or in the event of a default, you receive 32 coins for a net loss of 88.

Case 2, Also starting with 110 coins, reserve 32 coins as self insurance, and put 88 coins into an uninsured scheme.
Position is either 32 + 78 * 1.28 = 134 (also a profit of 24) including weekly compounding, or you retain the 32 coins you started with.

Depends on the price you pay.  Call it what you will, but buyers below 1.05 will be better off "mathematically".

For those that do not have access to 2000 coins and a 7%/week account, you'll also be better off.

This is OT for this thread.

Your calculations are wrong. For case 1, if pirate defaults, you get 33.536 coins back because you had 104.8 bonds at .32 each.
By my calculation, break-even is 1.07 when your uninsured investment is non-compounding pirate rate of 28% return in 4 weeks.

Case 1:
107 coins to buy 100 PPT bonds at 1.07
  no default: 100 * 1.28 = 128
  default: 100 * .32 = 32

Case 2:
Keep 32 coins on the side and use 75 coins to invest in an uninsured 28% pirate program
  no default: 32 + 75 * 1.28 = 128
  default: 32 + 0 = 32
hero member
Activity: 866
Merit: 1001
May 25, 2012, 09:09:24 PM
I think I got in at the last minute at 1.05 did have the, at 1.085 and decided to change a minute before.
legendary
Activity: 1274
Merit: 1004
May 25, 2012, 09:02:17 PM
Wow, I overpayed. Looks like they went down to almost 1.0 with this issue. Someone got a good deal.
hero member
Activity: 518
Merit: 500
May 25, 2012, 08:39:36 PM
not sure if better to post here or on the GLBSE thread but https://glbse.com/asset/view/PPT.A the price & volume charts show info from about 24 April to 15 May, perhaps from the original PPT-A, anyway it makes it confusing - I imagine especially for newbies

I agree (and had been wondering about that.  Plus on the market charts it's going to be additive, so the 30-day totals are going to look weird too.)
donator
Activity: 3052
Merit: 1110
May 25, 2012, 08:33:24 PM
not sure if better to post here or on the GLBSE thread but https://glbse.com/asset/view/PPT.A the price & volume charts show info from about 24 April to 15 May, perhaps from the original PPT-A, anyway it makes it confusing - I imagine especially for newbies

hero member
Activity: 518
Merit: 500
May 25, 2012, 08:27:54 PM

So, in the first scenario, are the bonds redeemed for 1 BTC or 1.28 BTC?

Also, have you and your other partners revealed your real life identities? Where?

Answer A: 1.28
Answer B: My identity is pretty easy to determine, as are some of the others - would you like to meet me face-to-face?
sr. member
Activity: 367
Merit: 250
May 25, 2012, 08:24:09 PM
The bonds will have a face value of 1.28 BTC exactly 27 days 22 hours after the close of the bond auction, on Saturday morning at 12 AM UTC.

(...)

These bonds will be partially insured and backed by a cartel of some of the most reputable and well known BTC lenders in the lending forums:  BurtW, PatrickHarnett, dollartrader, hashking, imsaguy and ineededausername.  

In the event that BS&T stops payments and returns the principal and interest to date or changes its terms and conditions so that the intended pass through of interest is either stopped, pays lower interest or at a schedule that does not align with the PPT bonds the bonds will still be redeemed for their full face value on their scheduled redemption date.  PPT and the above mentioned backers will cover any shortfalls from the capital reserves of PPT.

In the case of a total default event by BS&T (failure to return our funds to us) you will receive 25% of the face value of the bonds from the capital reserves of PPT (0.32 BTC per bond).

So, in the first scenario, are the bonds redeemed for 1 BTC or 1.28 BTC?

Also, have you and your other partners revealed your real life identities? Where?
Pages:
Jump to: