What matters more to me is the ultra-steady 1.9% edge line because that's indicative of longer term profits and this month - the last few days in particular- have shown it getting pretty close to flat.
Can someone remind me why we care about the 1.9% margin? I mean, if I wanted to make 1.9%, on average, for a term of say one year, then I might as well keep my fiat in the bank and not assume the risks associated with the stock price or SD being out-competed. Not to mention the risk associated with BTC/USD rate that apparently influences SD share price.
The thing is, SDICE doesn't pay 1.9% per year, it pays 1.9% per bet, on average.
So far, they've been running for less than a year, and have taken around 3.6 million BTC in bets.
The share price is somewhere around 0.00368, and there are 100 million shares.
That means their market cap is around 360k BTC.
So in less than a year, they've taken 10 times their market cap in bets, and so are expected to have profited about 19% of their market cap, not 1.9%.
Does your bank pay 19% per year?
Hi dooglus,
First of all many thanks for your statistical analyses. Your work is of great value to me.
I think the calculation you made is not representative as btc was a lot less valuable the first half year than today. So saying, look how much btc it made, gives a wrong picture, as it looks like that's a lot of money, but in fact, it's a lot less.
If you look at it in USD, that 3.6 million bets x 1.9% edge = 68k btc expected profit since start, but if you convert that monthly into the amount of USD that was (at the exchange rate at the end of every month) you get a total of $1,420,000 expected returns made. Current valuation is 360k x $60 = $24,000,000, so that's only around 5%. And yesterday with btc at $90, it was only around 3%.
I think the calculation is also not setup right. To look at the returns from a certain investment, you don't look at current value, and past income. You look at price payed at the time, and past income. Than the picture looks very good. For example people that entered around first IPO in August 2012 with shares at 0.0032 and btc around $10, valued the company at the time at $3,200,000. Since then the expected total USD returns have been also around $1,500,000 so that means they got 30% dividends payed already. If the growth continues at the same pace, and no disasters occur, people that buy today can also expect around 30% dividends for the coming year.
Ofcourse, this is just the topping. The real value sits in the growth you buy. It has sevenfolded it's USD earnings since IPO. From an average of $30k per month around IPO to an average of $210k per month the past months. And since investors value today the company at similar P/E ratios, the value of the company has since that IPO about eightfolded from 3 million to 24 million, eightfolding also your investment you made.
Being conservative, let's say USD earnings will fivefold the coming year. If investors value sdice at similar P/E ratio, that means your investment will go up 5 times. However, do realize that the risk is also big. Sdice will, in my opinion, sooner or later be attacked by government. Even if it survives it, you will still see your investment go down in value by 95% as many investors run for the exit. So if the coming year, no clamp down happens, your chances are high to make 400% + 30% dividends = 430%. Fivefolding your money. If a clamp down happens, or some other disaster such as very bad gambling luck, you lose it basically all. But that's a favorable risk/reward bet. Play and make a chance to fivefold or lose it all. If you are smart, take some money off the table from time to time so that when the clamp down happens you have locked in initial investment + decent profit.
Also I think very important to realize is that the valuation of sdice does not depend on the valuation of btc because the valuation of sdice depends completely on how much money people spend betting. This money is also not dependent on the valuation of BTC. If btc is high, gamblers bet with less btc, but still with the same USD, if btc is low gamblers bet with more btc, but still the same USD amount. So an investment in sdice is very different from an investment in btc outright, and is not correlated, I think. Meaning if btc would not do anything or go down the coming year, I think you can still expect sdice to fivefold.
(Do note that avg USD amount per bet has actually gone up considerably from an 3 monthly average of $6 per bet at IPO to a 3 monthly average $22 per bet now. However, this could indeed be explained to the BTC exchange rate going upwards because I make calculation errors in doing only 1 time per month a conversion into usd, instead of realtime conversion in usd. And indeed, for example August 2012 was average of $10 per bet, and this month april is also average of $10 per bet.)
