Topic: [DONE] Selling Bitcoinica&#039;s debt. 35 btc loan. (Read 1992 times)

Quote from: OneEyed on July 28, 2012, 02:53:16 PM

yes but the 50% back doubles that, so 32btc, if you thrust me 100% that im keeping my word.

You got your math wrong

If there is a 40% chance that the 40 BTC are sent back, and a 60% chance that they are not (meaning the lender will receive only 15 BTC), then the expected value is 40*0.4+15*0.6=25. So it would be a bad operation to give you 30 BTC for this.

If P is the probability of Bitcoinica money being paid back (between 0, default, and 1, certainty), then people should buy this option for no more than 80*P/(P+1). So, if lenders think that there is a 40% chance that Bitcoinica pays back, they should not pay more than 22.85714286 BTC in any case. And even that would mean a 0% loan for many months in the "mean" case.

With a 10% chance of payback, the maximum that a lender should lend is 7,27272727 BTC.

We came to the same conclusions, just phrased differently (e.g. I said "lose 5" you said "EV of 25"), except for that last bit. The maximum the lender should lend is 17.5 BTC. You forgot the 15 BTC guarantee.
.1 * 40 + .9 * 15 = 17.5
Obviously, the lender is also losing time value and is the one running the risks. The factor of most importance, in any case, is how much the lender trusts kokjo and Bitcoinica to keep their words.

its not a 15btc back guarantee, its a 50% back guarantee. i understand the math now.

kokjo

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Activity: 1050

Merit: 1000

You are WRONG!

new terms:
25 btc loan.
75% garenteed payback by christmas(18,75 btc).
full 40 btc repayment when/if bitcoinica pays me back.

the math are:
chance*(debt-loan)+(1-chance)*(-loan+payback*loan)

so on a 30% chance that bitcoinica will payback, lender wins.

Fair?

nimda

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Activity: 784

Merit: 1000

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yes but the 50% back doubles that, so 32btc, if you thrust me 100% that im keeping my word.

You got your math wrong

If there is a 40% chance that the 40 BTC are sent back, and a 60% chance that they are not (meaning the lender will receive only 15 BTC), then the expected value is 40*0.4+15*0.6=25. So it would be a bad operation to give you 30 BTC for this.

If P is the probability of Bitcoinica money being paid back (between 0, default, and 1, certainty), then people should buy this option for no more than 80*P/(P+1). So, if lenders think that there is a 40% chance that Bitcoinica pays back, they should not pay more than 22.85714286 BTC in any case. And even that would mean a 0% loan for many months in the "mean" case.

With a 10% chance of payback, the maximum that a lender should lend is 7,27272727 BTC.

We came to the same conclusions, just phrased differently (e.g. I said "lose 5" you said "EV of 25"), except for that last bit. The maximum the lender should lend is 17.5 BTC. You forgot the 15 BTC guarantee.
.1 * 40 + .9 * 15 = 17.5
Obviously, the lender is also losing time value and is the one running the risks. The factor of most importance, in any case, is how much the lender trusts kokjo and Bitcoinica to keep their words.

OneEyed

full member

Activity: 154

Merit: 100

yes but the 50% back doubles that, so 32btc, if you thrust me 100% that im keeping my word.

You got your math wrong

If there is a 40% chance that the 40 BTC are sent back, and a 60% chance that they are not (meaning the lender will receive only 15 BTC), then the expected value is 40*0.4+15*0.6=25. So it would be a bad operation to give you 30 BTC for this.

If P is the probability of Bitcoinica money being paid back (between 0, default, and 1, certainty), then people should buy this option for no more than 80*P/(P+1). So, if lenders think that there is a 40% chance that Bitcoinica pays back, they should not pay more than 22.85714286 BTC in any case. And even that would mean a 0% loan for many months in the "mean" case.

With a 10% chance of payback, the maximum that a lender should lend is 7,27272727 BTC.

nimda

hero member

Activity: 784

Merit: 1000

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Quote from: nimda on July 28, 2012, 02:12:23 PM

Quote from: kokjo on July 28, 2012, 01:17:04 PM

Quote from: Raoul Duke on July 28, 2012, 12:59:52 PM

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

None of that will solve the "i will return nothing before bitcoinica pays me back." problem, because the most certain is that you won't get a dime back.
Even if you guarantee 50% back by Christmas, they will still lose.

i know, but i though someone might be willingly to take that risk...

i would take the offer of loan 30btc payback 40btc, and 50% (15btc) by christmas, if i had btc enough, and the loan taker was a reputable forum member.

Quote from: nimda on July 28, 2012, 02:12:23 PM

Basically, you're offering gambling on a Bitcoinica payback. The problem is, you have the wrong odds. 35/40 is 87.5% Roll Eyes

Personally I think Bitcoinica has a 10% chance of paying back, so I'd buy your debt for less than 4 BTC. Not 35.

i think there is about 30-40% chance they will payback, but i kind of need the money now, thats why i tried to sell their debt.

You value their debt too high then. You'll find very few people who think that Bitcoinica has a 40% chance of paying back, and even if that is the case, the debt is worth no more than 16 BTC.

yes but the 50% back doubles that, so 32btc, if you thrust me 100% that im keeping my word.

Well...
60% of the time, the loaner would get 15 BTC back on their 30 BTC loan. That's -15 BTC. * 60% = -9.
40% of the time, the loaner would get 40 BTC back on their 30 BTC loan. That's 10 BTC. * 40% = 4.
Add them up, and on average, over an infinite number of universes, 40% of which Bitcoinica paid back their customers in full, the loaner would lose 5 BTC.

This is with the IMO very optimistic 40% odds.

For anyone considering this, if I thought Bitcoinica had X% chance of paying back, and the price of the debt was Y, I would not buy 40 BTC of debt with 15 BTC guaranteed payback if
X*(40 - Y) + (1 - X) * (-Y + 15) <= 0
So my 10% odds comes out to 17.5 as the maximum I'd be willing to pay.

kokjo

legendary

Activity: 1050

Merit: 1000

You are WRONG!

Quote from: kokjo on July 28, 2012, 01:17:04 PM

Quote from: Raoul Duke on July 28, 2012, 12:59:52 PM

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

None of that will solve the "i will return nothing before bitcoinica pays me back." problem, because the most certain is that you won't get a dime back.
Even if you guarantee 50% back by Christmas, they will still lose.

i know, but i though someone might be willingly to take that risk...

i would take the offer of loan 30btc payback 40btc, and 50% (15btc) by christmas, if i had btc enough, and the loan taker was a reputable forum member.

Quote from: kokjo on July 28, 2012, 01:17:04 PM

Basically, you're offering gambling on a Bitcoinica payback. The problem is, you have the wrong odds. 35/40 is 87.5% Roll Eyes

Personally I think Bitcoinica has a 10% chance of paying back, so I'd buy your debt for less than 4 BTC. Not 35.

i think there is about 30-40% chance they will payback, but i kind of need the money now, thats why i tried to sell their debt.

You value their debt too high then. You'll find very few people who think that Bitcoinica has a 40% chance of paying back, and even if that is the case, the debt is worth no more than 16 BTC.

yes but the 50% back doubles that, so 32btc, if you thrust me 100% that im keeping my word.

nimda

hero member

Activity: 784

Merit: 1000

0xFB0D8D1534241423

Quote from: Raoul Duke on July 28, 2012, 12:59:52 PM

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

None of that will solve the "i will return nothing before bitcoinica pays me back." problem, because the most certain is that you won't get a dime back.
Even if you guarantee 50% back by Christmas, they will still lose.

i know, but i though someone might be willingly to take that risk...

i would take the offer of loan 30btc payback 40btc, and 50% (15btc) by christmas, if i had btc enough, and the loan taker was a reputable forum member.

Quote from: Raoul Duke on July 28, 2012, 12:59:52 PM

Basically, you're offering gambling on a Bitcoinica payback. The problem is, you have the wrong odds. 35/40 is 87.5% Roll Eyes

Personally I think Bitcoinica has a 10% chance of paying back, so I'd buy your debt for less than 4 BTC. Not 35.

i think there is about 30-40% chance they will payback, but i kind of need the money now, thats why i tried to sell their debt.

You value their debt too high then. You'll find very few people who think that Bitcoinica has a 40% chance of paying back, and even if that is the case, the debt is worth no more than 16 BTC.

kokjo

legendary

Activity: 1050

Merit: 1000

You are WRONG!

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

None of that will solve the "i will return nothing before bitcoinica pays me back." problem, because the most certain is that you won't get a dime back.
Even if you guarantee 50% back by Christmas, they will still lose.

i know, but i though someone might be willingly to take that risk...

i would take the offer of loan 30btc payback 40btc, and 50% (15btc) by christmas, if i had btc enough, and the loan taker was a reputable forum member.

Basically, you're offering gambling on a Bitcoinica payback. The problem is, you have the wrong odds. 35/40 is 87.5% Roll Eyes

Personally I think Bitcoinica has a 10% chance of paying back, so I'd buy your debt for less than 4 BTC. Not 35.

i think there is about 30-40% chance they will payback, but i kind of need the money now, thats why i tried to sell their debt.

nimda

hero member

Activity: 784

Merit: 1000

0xFB0D8D1534241423

Basically, you're offering gambling on a Bitcoinica payback. The problem is, you have the wrong odds. 35/40 is 87.5% Roll Eyes

Personally I think Bitcoinica has a 10% chance of paying back, so I'd buy your debt for less than 4 BTC. Not 35.

Raoul Duke

legendary

Activity: 1358

Merit: 1002

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

Quote from: Raoul Duke on July 28, 2012, 12:48:53 PM

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

None of that will solve the "i will return nothing before bitcoinica pays me back." problem, because the most certain is that you won't get a dime back.
Even if you guarantee 50% back by Christmas, they will still lose.

kokjo

legendary

Activity: 1050

Merit: 1000

You are WRONG!

hi! bitcoinica still owes my 40 btc.
i would like to take a 35 btc loan, and return 40 btc if/when bitcoinica pays back my 40 btc.
i will return nothing before bitcoinica pays me back.

Maybe Zhou Tong or the Bitcoin Consultancy will loan you the 35 BTC, because that's an awfully bad deal for anyone else lol

Good luck Tongue

how low do you think i should set the price before someone makes a offer? 30btc? 20btc?
should i provide 50% back guarantee by christmas?

Raoul Duke

legendary

Activity: 1358

Merit: 1002