Topic: [Havelock] Bitcoin Difficulty Derivative (BDD) - page 41. (Read 290235 times)

Period 30, Day 9 Report - February 5, 2015

Balance Post Divs: BTC 175.71820672

Total Units: 29236

NAV/U: BTC 0.00601033

Period 30, Day 8 Report - February 4, 2015

Balance Post Divs: BTC 176.29010120

Total Units: 29039

NAV/U: BTC 0.00607080

Period 30, Day 7 Report - February 3, 2015

Balance Post Divs: BTC 176.28316464

Total Units: 28751

NAV/U: BTC 0.00613137

Excellent. Good luck, g

We are alive and well.  We should be back online in a couple of hours.

Any idea about whether Havelock is still among the living ? Site has been offline for a while now.

Yes, this is pretty much what the PMBs (perpetual mining bonds) of last year and 2012 did - the operator betting against their customers that the difficulty would increase. Up until now, that's worked out pretty well for them.


I posted a long explanation of my thought process behind why this is happening / happened - mostly that the hardware financed during high-BTC times was continuously hitting the market and further driving the difficulty up and the price down.

Period 30, Day 6 Report - February 2, 2015

Balance Post Divs: BTC 176.70827703

Total Units: 28538

NAV/U: BTC 0.00619203

Face it; for the last 12 months there´s a perfect inverse correlation between production capacity (hashrate) and price of product (BTC). When you have such an insane business model it becomes a question of which runs out first buyers of product (and cloud mining contracts) or bankers to finance the production. The only way of prolonging the mess (ponzi scheme if you will) is to be short your own product.

All I´m saying twentysomething is that your instruments there at Havelock reflect this perfectly.

I wasn´t in any way implying that you were running a ponzi scheme, just describing how an operator would basically go about it. "The operator pays out the dividends and keeps the B.SELL dividends for himself mostly." No, this does not refer to you personally but rather to operators of those schemes.

Obviously since we´re discussing a virtual if you will type of scheme they have other instruments for hedging. I´m not saying they´re using YOUR instruments.

Since it´s a ponzi scheme it makes perfect sense for them to be short their own "product". Which is fine as long as difficulty goes up but if it goes down for weeks or months the hedge disappears and the scheme soon collapses. It´s no coincidence that so many schemes have been giving up the ghost lately and even some supposedly legit operations have been hiccuping it seems.

I disagree with you here; people use 'Ponzi' as a very broad term and this is not what BDD is at all. A Ponzi Scheme, named after Charles Ponzi, takes new payments in and uses those new payments to pay existing fundholders a fictitious profit. Normally a Ponzi Scheme is accompanied by hype regarding high interest or guaranteed returns.

BDD takes new payments and uses it to pay new fundholders. Each day I publish the value per unit of MINE/SELL so everyone knows exactly how much each unit pair is worth.

I don't like using the word 'bet' because it invites gambling comparisons, so that's what I call unitholders 'speculators'. But essentially BDD is a bet on the difficulty; which way it will go - I take 2% up front to manage and publish updates.

Right now, you can see that people are betting heavily on MINE - those that purchase MINE at market are now calculating that their maximum return is under 10% (it varies based on the price of the last sale of course).

I see the reason for your comparison - the 'what goes up must come down' of the inevitability of mining in the current ecosystem - but I feel the need to express that that is not Ponzi-like and I do not benefit (directly) by the difficulty increasing, decreasing, or going sideways. Same with price - at $1 or $10,000, BDD works the same way.

Though it does have a defined endpoint, it has always been more fair, in my eyes, than cloud mining. There's no minimum price of mining viability, maintenance fees, or miner's luck to take into account - just cold, hard math. If you want to support the network or tell people that you're a miner, that's great and I respect that desire - but today's mining ecosystem is littered with the corpses of projects that were either a loser for the consumer, the company, or both (CEX.io, Cloudhashing, PBMining) or outright scams masquerading as a mining operation (Paycoin/ZenHash/Hashstaker/GAWza).

This is basically a cloud mining ponzi scheme is disguise. No no, don´t get me wrong I´m not accusing twentyseventy of anything at all. They´re just showing us how it´s done. And obviously when BTC has fallen enough to wipe out all the conventional operations - this will be the last guy standing.

When difficulty is steadily increasing at a fast pace the ponzi is doing great. The operator pays out the dividends and keeps the B.SELL dividends for himself mostly. Not so when difficulty goes into a decreasing trend. Then the B.MINE dividend just has to increase, there´s no hedging from B.SELL and at some point the scheme just isn´t sustainable anymore.

Thanks guys! Been an interesting experiment so far for sure.

Period 30, Day 5 Report - February 1, 2015

Balance Post Divs: BTC 177.69196208

Total Units: 28418

NAV/U: BTC 0.00625279

Happy BDDay. Crazy that it's been one year already!

LoL 2 post in 1 day had me worried there for a sec,  oh and happy B-Day. Here's hoping for  another year  

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Happy BDD Anniversary everyone! 

Period 30, Day 4 Report - January 31, 2015

Balance Post Divs: BTC 179.02110829

Total Units: 28355

NAV/U: BTC 0.00631356

Period 30, Day 3 Report - January 30, 2015

Balance Post Divs: BTC 180.71644123

Total Units: 28350

NAV/U: BTC 0.00637447

Period 30, Day 2 Report - January 29, 2015

Balance Post Divs: BTC 181.97107247

Total Units: 28277

NAV/U: BTC 0.00643530

Period 30, Day 1 Report - January 28, 2015

Balance Post Divs: BTC 182.23686545

Total Units: 28054

NAV/U: BTC 0.00649593