Author Topic: The big question  (Read 8881 times)

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Offline oldman

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With stable tech and good marketing BTS will attract billions of investment over the next two or three years.

If the tech is not superseded by something better, which DPOS kinda makes impossible, global adoption could conceivably push BTS to become the first trillion-dollar crypto.

A trillion dollar market cap for BTS is not so far flung as it sounds.

I like how you said stable tech.  The newest whiz bang features aren't as important as solving a problem, proper marketing, stability and making sure it's easy for different segments to intuitively understand their specific client.

Couldn't agree more.

With financial tools folks just need simple and reliable; nothing should inform the design and code more than ease of use and uptime.

Offline hpenvy

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With stable tech and good marketing BTS will attract billions of investment over the next two or three years.

If the tech is not superseded by something better, which DPOS kinda makes impossible, global adoption could conceivably push BTS to become the first trillion-dollar crypto.

A trillion dollar market cap for BTS is not so far flung as it sounds.

I like how you said stable tech.  The newest whiz bang features aren't as important as solving a problem, proper marketing, stability and making sure it's easy for different segments to intuitively understand their specific client.
=============
btsx address: hpenvy
Tips appreciated for good work

Offline oldman

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With stable tech and good marketing BTS will attract billions of investment over the next two or three years.

If the tech is not superseded by something better, which DPOS kinda makes impossible, global adoption could conceivably push BTS to become the first trillion-dollar crypto.

A trillion dollar market cap for BTS is not so far flung as it sounds.
« Last Edit: November 12, 2014, 03:04:07 pm by OldMan »

Offline nomoreheroes7

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Hm...
I should just put some amount of BTSX publicly and post the transaction done from there on publicly.

I too would like to see this. All this shorting stuff hurts my head. Just tell me what to do.  :)

merockstar

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Hm...
I should just put some amount of BTSX publicly and post the transaction done from there on publicly.

you mean like let us see the tonyk investment strategy in action?

I think I would benefit from that.

zerosum

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Hm...
I should just put some amount of BTSX publicly and post the transaction done from there on publicly.

Offline arhag

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I will say it for a third (and final) time, the necessary soft collateral is about 10 BTSX if you have your  system fully automated. For a manual system 1K to 3.5K BTSX  should do just fine!


First time I heard this claim. But I get what you are saying now. Thanks. You trade off between the amount of soft collateral you need to hold and the number of transactions you to have to submit (and thus transaction fees you need to pay) to cover all of your shorts. Since the transaction fee is so low compared to the sums we are dealing with here, the soft collateral necessary can be very small. Thus, estimating the soft collateral and transaction fees as negligible does give much better results. Adding in the effect of the small amount of soft collateral still necessary and the transaction fees for this process is a fun exercise for another day. And of course more interesting than either of those would be the effect of interest.

I find both calculations ((1)maximizing min soft collateral/tx fees and (2) what are the  implication of interest paid on the total return of this model) interesting and fun  :)
I will speculate that you do too.

Yup. I do want to add one more thing though. I still wouldn't consider this investment strategy conservative even when ignoring interest. We have seen plenty of times how frequently cryptoassets can drop more than 50% from peak to trough. If your reshorting point ends up near the peak, you could end up losing a large chunk of your stake because you will be forced to cover at a loss. Even worse, the 30 day period means that you can also lose a little bit during the periods when the cryptoasset is relatively stable but has a slight downward slope for a prolonged period of time (months). You have to include the probability of being caught in these unfortunate situations during your shorting interval as part of your estimates on returns if you want to be accurate.

zerosum

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I will say it for a third (and final) time, the necessary soft collateral is about 10 BTSX if you have your  system fully automated. For a manual system 1K to 3.5K BTSX  should do just fine!


First time I heard this claim. But I get what you are saying now. Thanks. You trade off between the amount of soft collateral you need to hold and the number of transactions you to have to submit (and thus transaction fees you need to pay) to cover all of your shorts. Since the transaction fee is so low compared to the sums we are dealing with here, the soft collateral necessary can be very small. Thus, estimating the soft collateral and transaction fees as negligible does give much better results. Adding in the effect of the small amount of soft collateral still necessary and the transaction fees for this process is a fun exercise for another day. And of course more interesting than either of those would be the effect of interest.

I find both calculations ((1)maximizing min soft collateral/tx fees and (2) what are the  implication of interest paid on the total return of this model) interesting and fun  :)
I will speculate that you do too.

Offline arhag

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I will say it for a third (and final) time, the necessary soft collateral is about 10 BTSX if you have your  system fully automated. For a manual system 1K to 3.5K BTSX  should do just fine!


First time I heard this claim. But I get what you are saying now. Thanks. You trade off between the amount of soft collateral you need to hold and the number of transactions you to have to submit (and thus transaction fees you need to pay) to cover all of your shorts. Since the transaction fee is so low compared to the sums we are dealing with here, the soft collateral necessary can be very small. Thus, estimating the soft collateral and transaction fees as negligible does give much better results. Adding in the effect of the small amount of soft collateral still necessary and the transaction fees for this process is a fun exercise for another day. And of course more interesting than either of those would be the effect of interest.

zerosum

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Short version:[let me know if you think something else not addressed is biggie]
-Current collateral provides security for up to 2.25 price drop - that is enough to not need so smooth growth curve as well as to call the approach rather conservative.
-Interest of 5% annually is small compared to 130x price increase - so yes it is not included in my calculation. But even if I do I do not expect drastic changes. If you think one will need constantly offering 40% interest to place a short order this is a whole nuBit of a game.
-In my calculation I just used voluntarily re-shorting at predetermined increase [I used 33% or 50% - I will check exactly, if you want me to]
-On the soft collateral - we have discussed it once already. You thought it is BS, but in practice you need very insignificant amount for that purpose kept in BTS, if you place correct size-wise orders.

Certainly my calculations could be wrong; I am curious enough about this that I will likely do a more thorough analysis another day. But I am fairly confident that it is almost impossible to get 5x gain through just a shorting strategy over the period of time in which BTS rises from $0.02/BTS to $2.50/BTS.

My formula takes into account the minimum amount of soft collateral necessary to cover the short (unless you want to take your chances and let the DAC do it for you exactly 30 days after you opened the short position, but you are far more likely to end up covering at a bad time in the BTS price with that strategy).
I will say it for a third (and final) time, the necessary soft collateral is about 10 BTSX if you have your  system fully automated. For a manual system 1K to 3.5K BTSX  should do just fine!

The smooth growth curve is more about being able to cover and re-short in a short enough time period. You want to reduce the short interval to increase gains from compounding (that analysis ignores the cost of transaction fees but those are not very significant for reasonable lower bounds on the reshorting interval).
Actually my proposal make no use of this. And this is one of the reasons why I call the approach 'conservative'. (stupid approach is maybe a better term, in this context)

If you have long periods of stagnation along with short bursts in the price, you will end up with less BTS than if the growth curve is smooth. As an example, imagine the growth curve looked like irregular steps where it alternated between being flat for some variable period of time and suddenly jumped up to twice its value. The 130x growth would be reached by ln(130)/ln(2) = 7 doubling jumps. If I had 2.5*X BTS, I could hold 0.5*X BTS as soft collateral and use the remaining 2*X BTS as hard collateral for a short position that held 3*X BTS locked as collateral and owed the network X*p BitUSD (where p was the price in BitUSD/BTS at the time of creating the short). If the price doubled some time later, I could use the 0.5*X BTS to buy X*p BitUSD at the new price of 2*p BitUSD/BTS. Then I could use the X*p BitUSD to cover the short and get back 3*X BTS. I would then have 3/2.5 = 1.2 times the amount of BTS I originally had. If I immediately used my new BTS to redo this process to compound gains, I could get a total multiplicative factor on my original investment of (3/2.5)^(ln(130)/ln(2)) = 1.2^7 = 3.6 (which is less than the 5x I showed was theoretically possible in my previous post). More generally, if I reshort every time the price goes up by a certain fractional amount g (so g = 0.50 for the case of reshorting on 50% gains in price), then the multiplicative factor on the amount of BTS would be f = (3/(2 + 1/(1+g)))^(ln(130)/ln(1 + g)). Notice the theoretical best case is right around 5x, but that is at a point where the reshort interval is so small that the transaction fees can really add up.

I am interested in incorporating interest into my formulas. Not sure how important of a role it will play. It is good but it makes some BIG assumption - invest $1000-$1500, decide right then and now you have lost them, follow the strategy till you reach your goal (or really lose those 1K)

To totally honest - Me too!
But if it is already hard enough to get 5x, it will be even less once the interest is added in. Also, don't be too sure that high interests are unlikely. If this investment strategy really is as good as you are claiming it to be and such a sure thing, everyone will want to get in on it. The market will thus force the interest rate high enough until few people remain who still think that the gains from shorting (with the effect of the high interest factored in) are a great deal.

« Last Edit: November 12, 2014, 04:51:04 am by tonyk2 »

Offline arhag

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Short version:[let me know if you think something else not addressed is biggie]
-Current collateral provides security for up to 2.25 price drop - that is enough to not need so smooth growth curve as well as to call the approach rather conservative.
-Interest of 5% annually is small compared to 130x price increase - so yes it is not included in my calculation. But even if I do I do not expect drastic changes. If you think one will need constantly offering 40% interest to place a short order this is a whole nuBit of a game.
-In my calculation I just used voluntarily re-shorting at predetermined increase [I used 33% or 50% - I will check exactly, if you want me to]
-On the soft collateral - we have discussed it once already. You thought it is BS, but in practice you need very insignificant amount for that purpose kept in BTS, if you place correct size-wise orders.

Certainly my calculations could be wrong; I am curious enough about this that I will likely do a more thorough analysis another day. But I am fairly confident that it is almost impossible to get 5x gain through just a shorting strategy over the period of time in which BTS rises from $0.02/BTS to $2.50/BTS.

My formula takes into account the minimum amount of soft collateral necessary to cover the short (unless you want to take your chances and let the DAC do it for you exactly 30 days after you opened the short position, but you are far more likely to end up covering at a bad time in the BTS price with that strategy).

The smooth growth curve is more about being able to cover and re-short in a short enough time period. You want to reduce the short interval to increase gains from compounding (that analysis ignores the cost of transaction fees but those are not very significant for reasonable lower bounds on the reshorting interval). If you have long periods of stagnation along with short bursts in the price, you will end up with less BTS than if the growth curve is smooth. As an example, imagine the growth curve looked like irregular steps where it alternated between being flat for some variable period of time and suddenly jumped up to twice its value. The 130x growth would be reached by ln(130)/ln(2) = 7 doubling jumps. If I had 2.5*X BTS, I could hold 0.5*X BTS as soft collateral and use the remaining 2*X BTS as hard collateral for a short position that held 3*X BTS locked as collateral and owed the network X*p BitUSD (where p was the price in BitUSD/BTS at the time of creating the short). If the price doubled some time later, I could use the 0.5*X BTS to buy X*p BitUSD at the new price of 2*p BitUSD/BTS. Then I could use the X*p BitUSD to cover the short and get back 3*X BTS. I would then have 3/2.5 = 1.2 times the amount of BTS I originally had. If I immediately used my new BTS to redo this process to compound gains, I could get a total multiplicative factor on my original investment of (3/2.5)^(ln(130)/ln(2)) = 1.2^7 = 3.6 (which is less than the 5x I showed was theoretically possible in my previous post). More generally, if I reshort every time the price goes up by a certain fractional amount g (so g = 0.50 for the case of reshorting on 50% gains in price), then the multiplicative factor on the amount of BTS would be f = (3/(2 + 1/(1+g)))^(ln(130)/ln(1 + g)). Notice the theoretical best case is right around 5x, but that is at a point where the reshort interval is so small that the transaction fees can really add up.

I am interested in incorporating interest into my formulas. Not sure how important of a role it will play. But if it is already hard enough to get 5x, it will be even less once the interest is added in. Also, don't be too sure that high interests are unlikely. If this investment strategy really is as good as you are claiming it to be and such a sure thing, everyone will want to get in on it. The market will thus force the interest rate high enough until few people remain who still think that the gains from shorting (with the effect of the high interest factored in) are a great deal.
« Last Edit: November 12, 2014, 03:40:27 am by arhag »

zerosum

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Simple facts:
-You need about $1,000 to buy 55,000 BTS as of this writing.
-Let be somewhat conservative and you assume that BTS will only reach the current market cap of BTC (about 5 billion).

-Now assume you have frown those 1K bucks away and you no longer have them.

Following a very conservative investment strategy [that me knowing what you know can formulate for yourself] and pretty much the only assumption being that BTS will appreciate to 5 billion ($2.50/share), when/if it really does you will be a millionaire.

The remaining questions off course are - Does havening 1Mil makes you rich? I do not know. In my view it does not, but most people will also have a very hard time accepting that you are poor.

To make it work in practice it might  take slightly more than $1000, and you might end up with $750K. But $1250-$1500  should do it for sure... and if the general premise did not materialize, you will have a loss of 1.5K USD...

Not following, 55,000 bts at 2.50/bts is $137,500 isn't it?

That would certainly buy me a second chance at life, but thats no million. Am I missing something tony?
I think you missed the now bold part.

You seem to be claiming that you didn't make a math error. Does that mean you are implying that you have a conservative investment strategy that can grow 55,000 BTS by more than 7x into 400,000 BTS?!

While if you assume you are really lucky with BitUSD shorts to always cover and reshort the short position at a profit within the 30 day period (thus compounding the gains), AND you assume the value of BTS in terms of USD grows in a relatively smooth (averaged over a time period of days) exponential growth curve, AND you somehow are able to get away with not paying any interest on any of the shorts despite all the other people who will be desperate to short BitUSD, then you could in theory just barely grow the 80,000 BTS (what $1500 can buy you today) by the 5x necessary to get it to a value of 1 million dollars as the price goes up from its current day price to $2.50/BTS, but that is also assuming you have a reshorting interval that is no more than 1/200 of the total duration it takes for the price to rise to $2.50/BTS (so if it took 2 years, that would be a reshorting interval of roughly half a week) AND that you somehow perfectly keep just enough BTS outside the collateral to buy the BitUSD you need to cover the short but not any more. Obviously, there are so many questionable assumptions here that it is unlikely for someone to get anywhere close to 400,000 BTS with this strategy, and even if someone was lucky enough to be able to, it could not by any means be called a conservative investment strategy.

Maybe my whole shorting guess isn't what you are talking about. So please enlighten us, how exactly do you plan on growing 55,000 BTS into 400,000 BTS?
I tried posting a long response...due to an issue described here: https://bitsharestalk.org/index.php?topic=11252.0
I lost it. I am not typing it again....

Short version:[let me know if you think something else not addressed is biggie]
-Current collateral provides security for up to 2.25 price drop - that is enough to not need so smooth growth curve as well as to call the approach rather conservative.
-Interest of 5% annually is small compared to 130x price increase - so yes it is not included in my calculation. But even if I do I do not expect drastic changes. If you think one will need constantly offering 40% interest to place a short order this is a whole nuBit of a game.
-In my calculation I just used voluntarily re-shorting at predetermined increase [I used 33%]
-On the soft collateral - we have discussed it once already. You thought it is BS, but in practice you need very insignificant amount for that purpose kept in BTS, if you place correct size-wise orders.

Let me know what you want me to address anything further.

@merockstar - arhag wins this mind reading contest.  :)
« Last Edit: November 12, 2014, 02:55:58 am by tonyk2 »

merockstar

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Simple facts:
-You need about $1,000 to buy 55,000 BTS as of this writing.
-Let be somewhat conservative and you assume that BTS will only reach the current market cap of BTC (about 5 billion).

-Now assume you have frown those 1K bucks away and you no longer have them.

Following a very conservative investment strategy [that me knowing what you know can formulate for yourself] and pretty much the only assumption being that BTS will appreciate to 5 billion ($2.50/share), when/if it really does you will be a millionaire.

The remaining questions off course are - Does havening 1Mil makes you rich? I do not know. In my view it does not, but most people will also have a very hard time accepting that you are poor.

To make it work in practice it might  take slightly more than $1000, and you might end up with $750K. But $1250-$1500  should do it for sure... and if the general premise did not materialize, you will have a loss of 1.5K USD...

Not following, 55,000 bts at 2.50/bts is $137,500 isn't it?

That would certainly buy me a second chance at life, but thats no million. Am I missing something tony?
I think you missed the now bold part.

You seem to be claiming that you didn't make a math error. Does that mean you are implying that you have a conservative investment strategy that can grow 55,000 BTS by more than 7x into 400,000 BTS?!

While if you assume you are really lucky with BitUSD shorts to always cover and reshort the short position at a profit within the 30 day period (thus compounding the gains), AND you assume the value of BTS in terms of USD grows in a relatively smooth (averaged over a time period of days) exponential growth curve, AND you somehow are able to get away with not paying any interest on any of the shorts despite all the other people who will be desperate to short BitUSD, then you could in theory just barely grow the 80,000 BTS (what $1500 can buy you today) by the 5x necessary to get it to a value of 1 million dollars as the price goes up from its current day price to $2.50/BTS, but that is also assuming you have a reshorting interval that is no more than 1/200 of the total duration it takes for the price to rise to $2.50/BTS (so if it took 2 years, that would be a reshorting interval of roughly half a week) AND that you somehow perfectly keep just enough BTS outside the collateral to buy the BitUSD you need to cover the short but not any more. Obviously, there are so many questionable assumptions here that it is unlikely for someone to get anywhere close to 400,000 BTS with this strategy, and even if someone was lucky enough to be able to, it could not by any means be called a conservative investment strategy.

Maybe my whole shorting guess isn't what you are talking about. So please enlighten us, how exactly do you plan on growing 55,000 BTS into 400,000 BTS?

I interpreted very conservative investment strategy to be not about shorting, but fiat to btsx.

I took it to mean he was saying to continue to save a small portion portion of my income into it each time.

If it takes long enough to catch on, I'll have a lot more in the end. Keep buying on dips, holding through bubbles, lowering my average buy in by cost averaging.

But unfortunately you might give me too much credit Tony. What did you mean, am I even close?

Offline arhag

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Simple facts:
-You need about $1,000 to buy 55,000 BTS as of this writing.
-Let be somewhat conservative and you assume that BTS will only reach the current market cap of BTC (about 5 billion).

-Now assume you have frown those 1K bucks away and you no longer have them.

Following a very conservative investment strategy [that me knowing what you know can formulate for yourself] and pretty much the only assumption being that BTS will appreciate to 5 billion ($2.50/share), when/if it really does you will be a millionaire.

The remaining questions off course are - Does havening 1Mil makes you rich? I do not know. In my view it does not, but most people will also have a very hard time accepting that you are poor.

To make it work in practice it might  take slightly more than $1000, and you might end up with $750K. But $1250-$1500  should do it for sure... and if the general premise did not materialize, you will have a loss of 1.5K USD...

Not following, 55,000 bts at 2.50/bts is $137,500 isn't it?

That would certainly buy me a second chance at life, but thats no million. Am I missing something tony?
I think you missed the now bold part.

You seem to be claiming that you didn't make a math error. Does that mean you are implying that you have a conservative investment strategy that can grow 55,000 BTS by more than 7x into 400,000 BTS?!

While if you assume you are really lucky with BitUSD shorts to always cover and reshort the short position at a profit within the 30 day period (thus compounding the gains), AND you assume the value of BTS in terms of USD grows in a relatively smooth (averaged over a time period of days) exponential growth curve, AND you somehow are able to get away with not paying any interest on any of the shorts despite all the other people who will be desperate to short BitUSD, then you could in theory just barely grow the 80,000 BTS (what $1500 can buy you today) by the 5x necessary to get it to a value of 1 million dollars as the price goes up from its current day price to $2.50/BTS, but that is also assuming you have a reshorting interval that is no more than 1/200 of the total duration it takes for the price to rise to $2.50/BTS (so if it took 2 years, that would be a reshorting interval of roughly half a week) AND that you somehow perfectly keep just enough BTS outside the collateral to buy the BitUSD you need to cover the short but not any more. Obviously, there are so many questionable assumptions here that it is unlikely for someone to get anywhere close to 400,000 BTS with this strategy, and even if someone was lucky enough to be able to, it could not by any means be called a conservative investment strategy.

Maybe my whole shorting guess isn't what you are talking about. So please enlighten us, how exactly do you plan on growing 55,000 BTS into 400,000 BTS?
« Last Edit: November 12, 2014, 02:03:16 am by arhag »

merockstar

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Simple facts:
-You need about $1,000 to buy 55,000 BTS as of this writing.
-Let be somewhat conservative and you assume that BTS will only reach the current market cap of BTC (about 5 billion).

-Now assume you have frown those 1K bucks away and you no longer have them.

Following a very conservative investment strategy [that me knowing what you know can formulate for yourself] and pretty much the only assumption being that BTS will appreciate to 5 billion ($2.50/share), when/if it really does you will be a millionaire.

The remaining questions off course are - Does havening 1Mil makes you rich? I do not know. In my view it does not, but most people will also have a very hard time accepting that you are poor.

To make it work in practice it might  take slightly more than $1000, and you might end up with $750K. But $1250-$1500  should do it for sure... and if the general premise did not materialize, you will have a loss of 1.5K USD...

Not following, 55,000 bts at 2.50/bts is $137,500 isn't it?

That would certainly buy me a second chance at life, but thats no million. Am I missing something tony?
I think you missed the now bold part.

I did.

I understand now.

Thanks for the encouragement tony, I will indeed keep at it!