Topic: crazy but maybe necessary. (Read 2172 times)

For some reason poker chip comes to mind, but I see what you're saying with a mixed table now (and extreme volatility in a certain currency). Don't mix tables (never seen a game where someone throws in dollars, yen, and e-gold in the same hand)...start with slots lol.

Why does this need to be instantaneous? Isn't the risk tiny if you allow a lag in transaction execution?

A bot can execute offsetting trades on Mt. Gox. You are only at risk for as much BTC as you need to hold on Mt. Gox to execute the offsets.

BTC Depositor sends you n bitcoins and specifies a minimum selling exchange rate E and order expiration time T. If the order is successful, you sell n bitcoins on Mt. Gox and top up your Mt. Gox balance with the customer's n bitcoins. Your net bitcoin holdings are unchanged. Customer has to wait for Mt. Gox trade to occur before using his balance. If unsucessful, customer can try again or choose to have his BTC refunded.

BTC Withdrawer specifies a maximum exchange rate B for m USD held on your site expiring at time T. If the order is successful, you buy m/B bitcoins and send them to the customer. Your net bitcoin holdings are unchanged.

In both cases you deduct Mt. Gox commisions.

You just need to hold enough bitcoins on Mt. Gox to be able to buy BTC for withdrawing customers.

The risk can be arbitrarily small if you like, e.g. only transfer USD to Mt. Gox once a customer places a withdrawal order and don't allow them to place limits on the exchange rate. Withdrawals will be slow and customers will get whatever Mt. Gox is offering for USD at the time of sale. Deposits would still be pretty fast I think.

Good to hear from a player. I'm working on it...........although in all honesty it looks like I picked the worst day possible to try to roll something like this out. I'm now addicted to watching what's going on with this forum and the ticker price and counting exactly how much I would have just lost. Mostly I'm pissed because integrating with Bitcoin was fun and it's the only deposit/withdrawal method that's truly, completely instantaneous. If it were stable; or when it becomes stable, this will make a lot more sense.

Just a note because I think people don't see it from our POV -- as a casino, we would be in the full-time business of buying and storing your Bitcoins. We receive them not in exchange for a good, but in exchange for cash which the player holds forever until they cash out. That puts us very long on whatever currency the player deposited with. Obviously we could offset that if there were a market to hedge against, but it's hard to sell the quantities we're talking about fast enough to make it effective. We could turn around and sell some kind of derivative, but in fact we're not a ponzi scheme and we just make money off a percentage -- not off of speculation. More honest than wall street. On the other hand, a balanced store of value for BTC would be a good thing for the currency right now -- this economy lacks an ecology of long-term investments to dampen the volatility. So maybe we should deal in BTC bonds...I don't know, I guess in a way that's what I'm suggesting.

Hi,

I'm a professional poker player and would gladly switch from my current main site to one accepting bitcoin (if it has a decent volume of games). Obviously depositing, playing in and withdrawing BTC would be ideal, but if you feel the market is too small for that, your median value idea could be a temporary workaround to kind of get you started and support bitcoin a bit. I don't see any immediate flaws with it other than it's kind of counter-intuitive to casual players.


Anyway please make this work, ok? 

If we take peoples Bitcoins at the Mt. Gox market rate, and turn it into our own value -- non-currency -- whatever you want to call it, they will then sit down at a poker table with other people who deposited Neteller, Moneybookers, Visa, etc. and play for what everyone at the table assumes to be equal value. At the end of that, if the BTC currency is worth half what the people who deposited with Visa paid, we have to make up the difference.

What you're recommending only makes sense if BTC is the only currency we support. Otherwise, all casinos act as de facto baskets.

Yeah...it's called value, and that's what currency is when its not currency or when its moved or such. Blackjack hand or apples, you "create your own currency."

You're a casino; a bet and payoff are just proportional relations caused by a set of events. Your int BlackJackGame(int) is assigned USD because thats what you use. Try a drop down, contingent upon users funds. On payout, use currency that went in. It's math...or it should be....

Why not let the customers handle the risky exchange business?  

Facilitate low-cost BTC and USD deposit and withdrawal + make trading cheap -> traders will join the site to profit from the bid-ask spread.

Allow people to deposit BTC at the site and make BTC/USD trades with other customers. Poker games are all in USD.

Major problem would be avoiding fraudulent deposits of USD, since you could be scammed if someone deposited a bunch of stolen USD, traded it for BTC, and withdrew. Not sure how easy/hard this is to mitigate accepting questionable transfers of USD? Maybe only allow traders to deposit money via bank wire?

Floating point issues: Well, then just denominate in bitcents or millibits?

Yeah, unfortunately managing currency risk day-to-day is outside the scope of what we're prepared to do at the moment.

re: tehcodez... As far as denominating in a 'unit-less' system, that basically means creating our own currency. That's impossible if we have more than one deposit/withdrawal method. We become a defacto exchange regardless. With EUR USD fluctuations it's not so bad.

re: Serge... I also understand that perspective, and I think a lot of people here would agree and only want to play for BTC at the table. Aside from the floating point issues (our software would have a problem with 0.001/0.002 NL Hold'em), we are still talking about a site with other real currency floating around. We could spin off a BTC-only skin (1000:1) if the market would bear it, but I don't see it happening too soon; for now it would be BTC in, BTC out, USD at the tables. We'd still be the first to do it.

Don't make any exchanges.  If I come to poker table with btc I expect to play with btc and if I win to leave with btc.  Exchange rate differences should be left behind before entering the site.  If this model  isn't working out for you then i'm not sure how you would be able to operate your casino without getting in some kind of trouble either on exchanges or for dealing with USD.
I wouldn't want to convert BTC to USD to play poker then to convert USD back to BTC to take out my chips.

If you deal in BTC, you deal in BTC. The solution to stabilize it for you, is the same as for any other business dealing with volatile commodities, farmers for example do this: You sell short options on that volatile commodity and problem solved.

Denominate your games into a unit-less system, then manage currencies with respect to the account.

Separate running a casino from running an exchange...

So-
I'm in a position to open my casino to BTC anytime. Problem is, we denominate in USD. If BTC tanks, we go with it.
The only approach I can think of is to peg the player's withdrawal rates to the median rate at which that player deposited. In other words, you put in 1BTC when it's at $20 and 1BTC at $30, for a total of $50 in the system; if you try to withdraw right then, you get 2BTC back. If the BTC tanks to $5, you still have $50 in the system, but you can't extract it for 10BTC. You can only extract it at your median rate, which is $25:1BTC...so all you get back is 2BTC. This would prevent people from using us as a permanent buyer in down cycles, which we obviously don't want.
Maybe it would actually be good for the market in the long run. Cut out the speculation and add a high quality business. Thoughts?