Topic: P - page 40. (Read 78397 times)

please update your contract on GLBSE from 5% to 6.5%

For those who disagree with MrTeal, perhaps have a read of http://www.investopedia.com/university/bonds/bonds3.asp#axzz1vfLeO8Ge

It was just the first google result I came up with. I've only skimmed it, but it looks to provide a better explanation than I could give right now for those who are interested.

Long-term yield predictions are really irrelevant anyway - 100 BTC invested now at BS&T and reinvested every week, at 7% interest, would exceed the entire available supply of Bitcoins in less than three and a half years.

8 BTC is to list an asset.

You pay .5% if you take an order from the order book, and 0% if you place an order in the order book and someone else takes it.

No, the average weekly dividend will be exactly 0.065BTC per share even without reinvesting. The average weekly dividend will be (0.065/X)*100% where X is the purchase price. If I buy 1 bond for 1.02, what is my dividend in the first week? 0.065BTC. My investment is 1.02BTC. ROI is 6.37% that week. The second week I earn another 0.065BTC. My investment is still the 1.02 BTC. Weekly ROI is 6.37%. My total dividends are 0.13BTC. Average dividend is 0.065BTC. Investment is as always 1.02BTC. Average weekly ROI is 6.37%...... The 520th week's dividend is 0.065BTC. My investment is still the 1.02 BTC. Weekly ROI is 6.37%. My total dividends are 33.8BTC. Average dividend is 0.065BTC. Investment is as always 1.02BTC. Average weekly ROI is 6.37%... Ad nauseam until Pirate defaults, bitcoin becomes worthless or 33.8BTC is enough for me to cash out and buy one of the Virgin Islands, complete with harem of virgins.

Wow... arguing the mathematics of a function... math class anyone? 

I agree with MrTeal. There is an inverse relationship between price and yield. The higher the price you pay, the lower your yield. It doesn't change with time. Also, if you pay 1.02 for a 1.00 face value bond, you may have to factor in a 0.02 capital loss to maturity as well, unless you can sell it to a greater fool.

that's assuming there won't be huge bidwall above

Indeed...
In the scheme of things, to get 0.065BTC every week for 1 bitcoin or 1.02 doesn't really impact the profit loss much at least in my books.
2483;2533;2643 is massive and I will live with the difference happily.
You have a much higher chance of losing bitcoins for other reasons and Pareto would suggest to focus on those aspects with the biggest potential.
This is way way too minute in my opinion.

Your initial investment does get closer to 6.5% over time. There is just a 2% initial investment fee, and if you want to reinvest your dividends you will have to pay it. (simple version)

That still doesn't change the fact that the rate of return is constant. Let's for a moment assume you can buy fractions of a share, to make the numbers easier. If you followed the strategy you propose of buying more bonds with the dividends, this is what you'd see. Numbers were rounded for ease of reading but full precision was kept. Purchase price was assumed to be 1.02, so the initial investment was 102BTC.

At the end of the 20 weeks, you have 344.03 shares and are earning 22.36 BTC per week. If you had a Pirate account that earned 6.5% interest and reinvested the proceeds, after 20 months the same 102BTC initial investment would produce 359.41BTC. It never converges toward being equal to 6.5% interest.

If you reinvested everything into shares at 1.02, at the end of the year you'd have 2483.9 shares and be getting 161.45BTC dividends. If you sold those shares at 1.02, you'd have 2533.6BTC. Compare that to just investing in an account that pays 6.5% weekly interest you'd have 2643 in the bank.

Don't get me wrong, I bought some of these and I like the idea, I just don't want people to get the wrong idea
It's not like your effective dividends will converge to 6.5% over time. If you buy [email protected], you earn 6.5BTC the first week which is a 6.37% return, and that doesn't change. It's not like it will start out lower and over time approach 6.5%.

8 BTC? I thought that fee was for listing an asset?

If it really does cost that much to purchase a share, I'm out.

As dividends are only paid once a week, goat can also only issue shares once a week - if somebody buys them right now at 1.05 he's probably quite in need, so to say...

if/when goat releases more shares he said they would be at 1.02BTC/share

Looking on GLBSE it shows the asking price at 1.06 plus a fee of 8 btc the first time you purchase a type of share. Why is everyone talking 1.02?

If you buy 100 shares for 200 BTC, all you have to do is act like you started 15 weeks later. 

In the end it depends on your reinvestment strategy. As shares will _always_ be available at ~1.02 (I still would prefer 1.01 by the way, I don't really see where 2% fees come into play!) you can buy 6 additional shares from the first dividend, 6 more shares from the 2nd dividend etc.

If you buy 100 shares for 102 BTC, after 1 single dividend all you need to do is to buy the remaining 2 shares and donate the rest to charity/GLBSE/... and act as if you started 1 week later.

You'll receive 6.5% of the NOMINAL VALUE of the bond, which is 1BTC. Independently of how much you pay for it.

That's what I was getting at. The returns if you buy at 1.02 aren't 4.4% for the first week as Raphy said since it's not like Goat is buying back the bond at 1.065. The return also doesn't change or approach 6.5% over time. It's always going to be (0.065/X) weekly, where X is what you pay for the share. If shares sell for 1.02, you'll get 6.37% return weekly on your investment.

those numbers are true but put it this way. The bond is only (and always) worth 1BTC. Say you buy 50bonds at 100BTC well you can try to sell them higher but you can always sell them back to goat at 1BTC. No matter what you pay for the bond your always getting 6.5% of their true value, not 6.5% of what you pay to acquire the bond.

In your scenario your paying 200BTC for 100 bonds which are valued at 100BTC. (each bond = 1 BTC)