Topic: [FINISHED] Bet on bitcoin future price here (July 1st, 2011) (Read 13758 times)

I confirm receipt of the bond. Thanks!

I've returned the 50 BTC bond to 18CeiS44ZFP4kXdgzx3yNocwqRqyDZxghu in transaction dea182c9888fe6265b889453015b4826c41ce552548eec692f5740cd24b76a46

+1

Thanks for holding the bond for me mndrix! Without your help, I would have just looked like I was trying to steal bitcoins

I created an address for receiving the bond back from you: 18CeiS44ZFP4kXdgzx3yNocwqRqyDZxghu (I will confirm that address via my personal email from which I have corresponded with you in the past)

There's probably no other forum in the world where trust matters as much as it does here. It used to be that being a "hero member" was synonymous with being trusted here, but now they are a dime a dozen. The OTC web of trust is awesome, but not much use outside of that small circle, as most people (me included) have never used it.

Having a history of projects and successful financial transactions seems to be the best way to build trust here, and that is how I decide who to trust.

It looks like the bet was handled according to the rules.  Unless I hear otherwise, I'll release dacoinminster's bond on Monday.

Looks good to me:
http://blockexplorer.com/address/1945qfobZxdnmVJ6qBd4FgcVcWBhDXKiTV (Betting pool)
http://blockexplorer.com/address/16eg1Qs15Vq7mvpi2fPNQuYzBkhp5DhzNq (payout 5.72 btc)
http://blockexplorer.com/address/1NsvfVxNHzoz484aTSeutayTwGi6VQmqYL (payout 3.84 btc)

Payments were sent this morning, but for some reason my client broke them up into a bunch of separate transactions. You can see them all here: http://blockexplorer.com/address/1945qfobZxdnmVJ6qBd4FgcVcWBhDXKiTV

The wallet had been offline for awhile, and was still downloading blocks when I sent the coins, so maybe that has something to do with it.

It appears that the two winners got the right number of coins though. Netrin, can you confirm that?

This was an interesting experiment, and parts of it may serve as a model for future systems doing similar things. Thanks for participating.

Interesting idea

I used the seconds throughout the calculation and came to the same results:

close time in seconds: 1309521600
total winning weight: 78878.540 = 31683.340 + 47195.200
winnings after commission: 9.5481 = 9.743 * (1 - 0.02)

address: 6eg
wager: 0.160
bid time: 1309226630
weight: 47195.200 = (1309521600 - 1309226630) * 0.160
payout: 5.7128 = 9.5481 * 47195.200 / 78878.540

address: Nsv
wager: 1.165
bid time: 1309494404
weight: 31683.340 = (1309521600 - 1309494404 ) * 1.165
payout: 3.8352 = 9.5481 * 31683.340 / 78878.540

Well, I wouldn't say "days". That would be pure hazard, fit for drunken gamblers, not nuanced gentlemen and ladies like ourselves. I think what we should be aiming for is a price spread that 'predicts' the future market. You must give a sufficient advantage (I say time^2) to early bids, but ideally you should allow for a market to approach the limit of 100% certainty (while rapidly approaching 0% gain).

I agree that bets should be closed at least a few days before the time rolls around.

As the lucky, late, and optimistic moron at $16.5 I'd like to thank Dacoinminster for an entertaining run and in particular, I thank all the losers who took the time and cost to pay the boss. Since I would have been the only one to have benefited from the price above $16 and Mr. 16eg1Q to have benefited from a price below, I can only conclude that we have a market manipulator among us! I can assure you, I have done everything I could since I bought coins months ago, to keep the price as high as possible. I am therefore happy the market agrees with (albeit much lower than) my greatest expectations.

Thank you, thank you, thank you. With my winnings I shall take my girlfriend and two other ladies out for a luxurious coffee (Mr. 16eg1Q if you'd like to join us up where the sun don't set, we'd love to share a cup under the midnight sun). I owe my warm caffeinated happiness to all of you. Thank you.

Dacoinminster, I'd like to propose, should you administer a similar bet again, that you set a closing time on wagers followed by perhaps an hour during which a volume weighted average is calculated, rather than a discreet closing price. I expect a VWAP would be impractical or too costly to manipulate. I think (as long as you are dividing by the total pool rather than the loosing bids) there will always be a variable period after which betting will be unprofitable. So, setting a close time well before the VWAP period would have no negative consequence on the game.

I continue to recommend a compromise to the parimutuel. Perhaps the winnings pool is composed of 100% of the loosing bids and some percentage (50% ?) of the winning bids. And/or weighting by the square (or ^1.5) of the time. I expect these changes would secure early bidders with a great advantage (encouraging early bids) while minimally discouraging later bids, thus increasing the volume throughout the betting period. And more profits for graceless jerks like me and Mr. Market Manipulator 16eg1Q.

EDIT: Because there will be a period of lost winning bets, a closing time before determination and payout will not be necessary. I think it is safe to start the VWAP period before the final close of the market. For example, all bets must be in by 24:00 UTC, where the VWAP is calculated 23:00-24:00 UTC. Betters will likely loose if they wager before 23:00 and I suspect will loose with wagers much earlier still.

The price is still bouncing around $16, so I don't think they were manipulating the price specifically for this. I'm just annoyed that it didn't get back up to $17.30 so I could win.

I realized I can actually download the trades for the time period above from the list of recent trades here: http://mtgox.com/code/data/getTrades.php

Here's the most interesting/relevant chunk of data:

{"date":1309546534,"price":"16.06869","amount":"0.1","price_int":"1606869","amount_int":"10000000","tid":"1309546534570843"}{"date":1309546714,"price":"16.06869","amount":"0.70603902","price_int":"1606869","amount_int":"70603902","tid":"1309546714395447"}{"date":1309546714,"price":"16.065","amount":"19.79800996","price_int":"1606500","amount_int":"1979800996","tid":"1309546714419664"}{"date":1309546714,"price":"16.05011","amount":"0.15","price_int":"1605011","amount_int":"15000000","tid":"1309546714475023"}{"date":1309546714,"price":"16.05","amount":"1.18","price_int":"1605000","amount_int":"118000000","tid":"1309546714499844"}{"date":1309546714,"price":"16.0234","amount":"1","price_int":"1602340","amount_int":"100000000","tid":"1309546714528446"},
{"date":1309546714,"price":"16.02001","amount":"1","price_int":"1602001","amount_int":"100000000","tid":"1309546714548907"},
{"date":1309546714,"price":"16.011","amount":"2.23962072","price_int":"1601100","amount_int":"223962072","tid":"1309546714566519"},
{"date":1309546714,"price":"16.01","amount":"50","price_int":"1601000","amount_int":"5000000000","tid":"1309546714601679"},
{"date":1309546714,"price":"16.0007","amount":"13.91720362","price_int":"1600070","amount_int":"1391720362","tid":"1309546714633848"},
{"date":1309546714,"price":"16.0007","amount":"10.94612668","price_int":"1600070","amount_int":"1094612668","tid":"1309546714691336"},
{"date":1309546857,"price":"16.05101","amount":"1","price_int":"1605101","amount_int":"100000000","tid":"1309546857305532"},

Using a handy unix timestamp converter (http://www.onlineconversion.com/unix_time.htm), I come up with the following sequence of events:

Fri, 01 Jul 2011 18:55:34 GMT: Somebody buys 0.1 BTC at 16.06869
Fri, 01 Jul 2011 18:58:34 GMT: Somebody sells 100.937 BTC all at once, driving the price down to 16.0007
Fri, 01 Jul 2011 19:00:57 GMT: Somebody buys 1 BTC at 16.05101

It's probably a coincidence, but we can't really know for sure. If someone was trying to manipulate the outcome with the big sell, they failed. It could also be that one or more of the buy orders in place right above $16 which stopped the price from going under were also trying to manipulate the outcome, in which case they succeeded.

The price has been dancing perilously close to $16 over the past couple hours. I used https://mtgox.com/trade/history to see that:

Price at 11:55:00 was 16.06869
Price at 11:56:00 was 16.06869
Price at 11:57:00 was 16.06869
Price at 11:58:00 was 16.06869
Price at 11:59:00 was 16.0007
Price at 11:59:30 was 16.0007
Price at 11:59:45 was 16.0007
Price at 11:59:55 was 16.0007
Price at 12:00:00 was 16.0007
Price at 12:00:05 was 16.0007
Price at 12:00:15 was 16.0007
Price at 12:00:30 was 16.0007
Price at 12:01:00 was 16.0007
Price at 12:02:00 was 16.03
Price at 12:03:00 was 16.03
Price at 12:04:00 was 16.03
Price at 12:05:00 was 16.04

Wow. That was incredibly close. If the price had slipped below $16, the 1.165 BTC bet wouldn't have gotten anything!

The two bets described in my last post are the two winners. They have a combined weight of 0.91294606481481481...

The 0.16 BTC bet came from 16eg1Qs15Vq7mvpi2fPNQuYzBkhp5DhzNq, which gets 0.5462407407407... / 0.91294606481481481... = 59.83275% of the winnings, which I'll round up to 5.72 BTC (more than 35x gain!)

The 1.165 BTC bet came from 1NsvfVxNHzoz484aTSeutayTwGi6VQmqYL, which gets 0.36670532407407407... / 0.91294606481481481 = 40.16725% of the pot, which I'll round up to 3.84 BTC (more than 3x gain!)

I would like at least one person to double-check my math. Please take a look at the timestamps here: http://blockexplorer.com/address/1945qfobZxdnmVJ6qBd4FgcVcWBhDXKiTV, the rules in post #1, my calculations in this post and the last one, and try to reproduce my calculations. Post your results confirming or correcting my calculations in this thread. If nobody confirms/corrects my calculations, you guys are going to be stuck with them!

As described earlier, payments will be made Tuesday 7/5 if there is no controversy about any of this.

Looking at the blockexplorer log, it appears that the timestamps are UTC. Pacific Time is currently -7 hours from that (we are in pacific daylight time right now). I noticed that at one point in my original post I said the time would be "PST" which is not technically correct since right now my clock is running in "PDT". I have updated post #1 to just say "pacific time" now, because I did not mean to imply that I would be ignoring the daylight saving adjustment.

On blockexplorer timestamps, this contest ends: 2011-07-01 19:00:00 (12+7=19)

The 1.165 BTC bet came in at 2011-07-01 11:26:44 UTC which was 7 hours, 33 minutes, 16 seconds early, which is 0.31476851851851... days early. If that bet is a winner, its weight will be 1.165*0.31476851851851... = 0.36670532407407407...

The 0.16 bet came in at 2011-06-28 09:03:50 UTC which was 3 days, 9 hours, 56 minutes, 10 seconds early, which is 3.414004629629629... days early. If that bet is a winner, its weight will be 0.16*3.414004629629629... = 0.5462407407407...

I calculate that any more winning bets placed at this time would definitely be unprofitable (unless the price falls below $15.5). At this point, the pot is 9.743 BTC. My 2% is 0.19486 BTC (which does not cover the 0.5 BTC I gave away to inspire early betting), leaving 9.54814 BTC to be split among the winners according to their weights.

Edit: Fixed several mistakes in the calculations above. I will look for at least one person to double-check my math before this is all over.

Today is the day. This should be interesting. There's a new bet of 1.165 BTC placed on $16.50. Current price is $16.

There was a bet on 9/28 of 0.16 BTC on $16, and that person will be the only winner as of now if the price falls under $16. I note that if the price falls under $15.50 before noon today pacific time (2.5 hours from now), there is currently no winner, although I'm sure someone would make a last-minute bid to collect some free BTC if that happened. There are plenty of bets waiting to collect if the price goes up.

I should maybe point out though, that a bet placed 2 hours before this is over is weighted twice as highly as a bet placed 1 hour before it is over

I updated post #1 because I will be offline over the holiday weekend through Monday. I'll be posting the winners and win amounts (by my calculations) here today, and will be distributing the coins TUESDAY if there is no controversy. If there is controversy, I will respond and allow more time for comments to come in before I make payments.

An optimistic moron if you ask me.

Yeah, it looks like you might do pretty well in this contest!


Hmmm. Somebody just bet 1.175 BTC on $17.50

I stand corrected.

However, your system might penalize winners by discouraging new losers (although also discouraging competition, which you'll probably correctly argue is a bigger fear of a early better) because there is little incentive to bet on a position if it is already taken (whether eventually winning or loosing).

Depending on a bet, there are likely more loosing positions than winning positions, so everyone should want an inflated market as long as at no moment is there a position of greater than 50% assurance. If you close the bet well in advance of the moment-of-reckoning, I think your winners would have appreciated more volume. Obviously if you allow betting until the moment-of-reckoning (with no winners loosing) then all bets will accelerate toward the winning position, thus deflating the early winning bids.

I write this forty hours before the close. I've got coins burning in my wallet, but can not rationally choose a position that comes close to the risk (though, I admit the market has shown abnormally low volatility the last three days). On second thought...