Topic: Who Pays What? - page 10. (Read 36787 times)

Haha Pat, I would hope so Do you mind elaborating how that works exactly, or if you'd rather not make this set of criteria public for abuse, explain how you mitigate the possibility of someone sending you manipulated information that favorably fits your credit rating criteria?

There is more to it than that.

Thanks, I was just wondering since Ziggistar seemed to have popped up here on March ( https://bitcointalksearch.org/user/ziggistar-54441 ) and I was wondering how he achieved a AAA if you say he has been around here a long time. For the second part when calculating assets and all that, do people just give you a list of numbers that you simply take as true or is there more diligence in making sure the numbers are realistic/truthful?

Currently it is a preliminary rating.  As set out in the mechanics and metrics which I am awaiting permission to publish.  There is an issue with the information that goes into the liquidity metric that I am waiting to sort out, until then it is just that, preliminary.

Essentially, they have relatively low liabilities to total assets, have been around a long time and haven't had many problems/issues.  They scored a base AA rating and get an additional two notches for ID and disaster recovery resulting in a preliminary "AAA-".

He posted the mechanics of how he comes up with credit ratings earlier in this thread.

How are you justifying ziggistar's AAA rating?

A couple of credit ratings and other minor updates in the OP.

I have done a little more work on credit ratings, and corrected an error I had in the above post.

The following sets out a sample calculation for Starfish BCB.

Base Data

Liabilities	Monthly Income	Bad Debts	Current Liab	Liquid Assets	Assets	Time in business
18426	2000	10	13759	11302	33825	7

Results

.	.	Liabilities /	Bad debt ratio	Liabilities /	Current_liabilities /	Time in	Weighted	.	.
Who	When	monthly income	Bad debt ratio	Assets	Liquid_Assets	"business"	Score	Modifiers	Overall
Starfish_BCB	13-Jul-12	9.21	0.5%	54.5%	121.7%	7	.	+3	.
Rating	Score	4	5	4	5	5	4.6	.	AA

Added Brendio's 32-day deposits

https://bitcointalksearch.org/topic/bib-guaranteed-term-deposits-cds-4-7-per-32-days-availability-0-btc-91536

^^^i think Neo is much more 'real' than Mr Anderson.

bitcoinmax minimum has been dropped to 5 btc.

Thank you Patrick, your credit rating system is a neat idea.

Maybe another modifier I will take into account is regarding the true identity of the issuer.
I tend to trust much more in a person who is not afraid of revealing his/her identity in the real world ^TM.

In order to let my investors know that I am a trustworthy person in which they can trust, I provide them details of my identity as I am not going to risk my credibility and my own physical body running off with their deposits.

Some examples of the links some people tend to ask me before investing in my risk-free deposit at 2% 1.5%/w are:

• LinkedIn profile
• Personal Blog
• Secure Email
• Twitter account
• Facebook account
• Bitcoin over-the-counter ratings
• GPG Signatures from people that know me personally.

These are some of the things I also asses before making a deal with other bitcoin traders although different people have different approaches and your mileage may vary.

Thank you for the great reply.

There are a heap of things that could be asked, and that is part of a due diligence any investor should look at.  What I am most (and others should be) interested in is financial ability to repay.  A ponzi operator is unlikely to disclose sufficient information to get a rating (or a good one).  Growth metrics and disclosure are useful (I have some, as do some others) and these do not always indicate scamming behaviour.

Also, there is a nice underlying (implicit) point that lying on credit score information would be noted and would provide a huge red flag for any investor.

How someone makes their income/return is less of an issue if they have reserves, and I would expect someone investing purely on GLBSE capital gains to have a few extra problems over someone that regularly lends funds.

Size of the business doesn't necessarily lower risk, but it does have an impact.  For example, I have 150 addresses in my client list, so it could be based on number of client accounts and/or volume.

BTW for a good read, search for "Corporate credit criteria"  http://www.nafoa.org/pdf/CorprateCriteriaBook-2008.pdf

Patrick's list of ideas for credit scores is a good start. There are some more items that could be added along the lines of verifying that they are actually engaged in a business or are running a Ponzi. 

Some ideas:

-Shows signs of engaging in a business (ex. a lender that has threads on the forum vs one who has no evidence of lending out the money).  This item is critical.  Business model is described in detail.  (Ex. you lend out money, show us a volume of money that is lent out, the rates, and maybe even the approximate amount and term for each loan - without saying who it goes to).

-Business model does not involve "speculation". Speculation is a zero sum activity and will not produce a steady (or even positive) rate of return over the long run.

-Offers an unreasonable rate of return.  Offers a rate of return greater than other people in the industry (ex. someone who knows bitcoin mining should estimate the best rate of return currently available using GPU, FPGA, and BFL technology and the best pool (or GPUMax) - if someone claims they are mining with a bigger return rate then be suspicious.)

-Rate of return is more stable than you'd expect based on their business model (Bernie Madoff provided very stable returns).

-Comparison of the size of their previous business activities (which gained them trust) to the current scope of their operation.  Are they doing the long con?

-Ask the operator if they think BCST is engaged in a business/operation that makes money how Pirate says it does or is a Ponzi?  Ok, this is probably controversial and should just be rated as a "Y" or "N" or "I don't know" and not given a positive or negative score.  Personally I'd count it as evidence of engaging in a Ponzi, but someone could lie about it and other people who like Pirate's operation might feel favorable towards them.

-Business has exponential growth.  The business grows at a rate faster than the dividends/interest.  By contrast if someone has a one-time offer for business and then doesn't accept new funds, they might be running a scam, but it isn't a ponzi (unless they ask for funds at a later date).

Any other signs for detecting Ponzis? 

(fixing a couple of small formatting issues)


How about something like "XYZ would be useful" or "I'd like to know if someone has all my money tied up in an illiquid asset on GLBSE", or "wtf does income have to do with it?"

Maybe more interesting is how people might value or discount rated offerings and if other deposit takers actually want to disclose (even at an aggregated level), this information.

Oh, credit ratings. Very nice indeed. Great job, Patrick.

It's taken longer than planned to get around to this, but it is a topic I have been asked about three times in the past week, in reference to alternatives and how trustworthy various deposits are.  Assessing Bitcoin-deposit takers and interest providers is quite different to the real world as many of the metrics do not apply very well, especially as there is unlikely to be interest and depreciation, or large operational income.  It is also desirable to keep things simple and brief where possible.  Therefore, I propose to use the  following metrics to form the basis of ratings:

Financial
Liquid Assets: Those able to be redeemed within 48 hours - includes cash held at an exchange.
Assets: Typically investments in fixed term deposits or extended as loans.
Investments: Stocks, bonds and investments in BTC enterprises that are not necessarily liquid.

Nett Income: Average monthly income for the last 3 months.
Bad debts: Total of bad debts to Assets for the last 3 months.  

Current Liabilities: Payable within 1 month.
Term liabilities: Payable later than one month.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments.

Non-Financial
Identity verification (generally accepted people know who you are in real life)
Length of time in "business" (months)
Operation of limits on accounts.
Disaster recovery procedures (Y/N)
Prior late or missed payments within the last six months.

Ratios

-------------------------------	AAA	AA	A	BBB	BB	B	C
Liabilities / monthly income less than	3	6	9	12	18	24	-
Bad debt ratio less than	0	2	4	6	8	10	-
Current_liabilities_/_Liquid_Assets_less_than	1	1.5	2	2.5	3	5	-
Liabilities_/_Assets_less_than	0.5	0.75	0.9	1	1.1	1.25	-
Time in "business" months	12	6	5	4	3	2	1

Modifiers - to move from one category to another takes three points.
ID verified: +1
Account limits: If current limits maintain or improve ratios, +1, otherwise -1.
Disaster recovery: +1
Prior late/missed payments: -3 per event.


Example updated and is posted below.

Also as usual, comments welcome.

English is not my best language, really.
The translation takes about an employee.

But the offer had to be revised. It is this type but it remains under better conditions.
Yes please, that the somebody else.

Hi Smart - you misunderstand - I was in no way linking your offering to the one listed in that other thread which looks very insecure.

My misunderstanding is potentially in the translation from your offering and another I am aware of (ZiggyStar) and I will pm you in the next few days for some clarification.

The new investment would act as an expansion possibility. The calculation was set very low. We have long been on the market since early 2011. Offered by such https://bitcointalksearch.org/topic/mybitcoinbank-89635 we have nothing with this!
For over 1.5 years, there were no complaints about us, and all users get their money back. The fund will be revised again as announced in the current form.

Edit: The history follows

Greeting
Smart

Over in securities Stochastic does a very good table of weekly returns for all GLBSE offerings.  I would not want to duplicate his very excellent piece of work, but I'll add the link to the OP.

https://bitcointalksearch.org/topic/glbse-stochasticallycom-dividend-returns-updated-12-times-a-day-74711