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  #21  
Old 9th December 2017, 06:02 AM
blackdog1 blackdog1 is offline
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  #22  
Old 9th December 2017, 05:16 PM
walkermac walkermac is offline
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I came up with many of the same concerns in the article upon researching bitcoin myself. A bitcoin evangelist would tell you that there is a solution in the works for many of the issues (transaction time and costs are expected to be sorted within the next few months) and there's a couple more that the author has gotten wrong:

* bitcoin mining won't run out 'til 2140 so having concerns about being held over a barrel by miners for our transaction costs when it's that far in the future is a bit silly. Presuming our species still exists, the device you have will likely be powerful enough to run any transaction-checking tasks in the background; you'll be rewarded in bitcoin for doing so and it will look just like interest. Current transaction costs and time are certainly an issue, but the soon-to-be-implemented Lightning Network is anticipated to make a big difference here.

* bitcoin is accepted wherever credit cards are as there are credit cards which can access your cryptocurrency (not just bitcoin)

That being said, I think other cryptocurrencies do a better job of things now and that there are more in development which will be better still.


One positive of holding bitcoin that is rarely noted is that you can get other cryptocurrencies for free. Anytime someone forks bitcoin (i.e. makes another version) they copy the blockchain up to a certain point, before splitting off and doing their own thing. If you're holding bitcoin at the split, you now hold the same amount in the new currency. Bitcoin Cash (presently worth $1500 per coin) and Bitcoin Gold ($260) are amongst the foremost. There's around half a dozen more forks coming within the next month. Some are jokes, some are hopeful of being bought by people who don't know one bitcoin variety from another, and some are genuine attempts to improve upon the product.

Some new-to-market alt coins have also developed interest by initially distributing to bitcoin holders (targetted advertising). Prove you hold bitcoin and you get a pro-rata gift of their currency to hold and hope, or to trade away for immediate profit.


People have different risk thresholds (I get short of breath when something's over $5 $1 50c). If you're wasting money on a gambling market where you don't have an edge, there's an argument that you're better off hoping the crash is a ways off yet and throwing that cash crypto's way. I'd certainly put $10 into bitcoin ahead of a poker machine....

Not sure if people here realise that you don't have to buy a whole coin. It's divisible to the hundred millionth (a unit called a satoshi). People give this amount away for playing games or watching ads (google 'bitcoin faucets'). I've acquired 19 satoshi mostly by accident (equivalent to 0.003c! )
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  #23  
Old 9th December 2017, 08:19 PM
Lord Greystoke Lord Greystoke is offline
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Quote:
Originally Posted by walkermac
If you're wasting money on a gambling market where you don't have an edge, there's an argument that you're better off hoping the crash is a ways off yet and throwing that cash crypto's way. I'd certainly put $10 into bitcoin ahead of a poker machine....



Indeed.

Cheers LG
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  #24  
Old 10th December 2017, 10:50 PM
Chrome Prince Chrome Prince is offline
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There's way too much ramping of cryptocurrency all over the place. You don't have a tangible asset. Who's to say what 1 Bitcoin et al is worth, other than those trying to make money out of it. Personally if you get in on these things early and get out, you can make a motza, but the current value of Bitcoins are way over the top. What happens when the market dumps all it's stock because they've made their money?

Reminds me of The Sopranos or Gordon Gecko
https://youtu.be/rEpbfSlMVco

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  #25  
Old 22nd December 2017, 12:14 AM
walkermac walkermac is offline
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Quote:
Originally Posted by Chrome Prince
There's way too much ramping of cryptocurrency all over the place. You don't have a tangible asset. Who's to say what 1 Bitcoin et al is worth, other than those trying to make money out of it.
Is that any different than how we presently determine the value of foreign currencies with respect to each other?

The intrinsic value of a Bitcoin is the cost to mine it. Currently the market value is far and above this cost which includes the purchase of specialist hardware (nowadays), time and electricity. The price of the latter can vary widely by location and is part of the reason mining operations have consolidated into farms in areas where electricity usage is cheap. Some estimates have the mining cost at approximately $USD1200 - using barrels of oil as a unit of energy requirements. This value will be doubled in around 2-3 years when the bitcoin rewards are halved again.

This differs from a $20 note, for example, which has an intrinsic value of....a few cents. It has extrinsic value "because of a government's order or fiat that the currency must be accepted as a means of payment". Currencies used to be gold-backed and on a US dollar bill you'd find written: "This note is legal tender for all debts, public and private, and is redeemable in lawful money at the United States Treasury or at any Federal Reserve Bank". 'Lawful money' meant gold and silver coins, Treasury notes and Treasury bonds. The bill today only says: "This note is legal tender for all debts, public and private".

This is a huge bone of contention for libertarians, doomsday preppers and residents of countries with poor governance. Many find their governments less trustworthy than a widely distributed network of individuals driven by a shared interest. From an individual's perspective, historians might agree to some extent.

In 1933 USA, it was made illegal to hoard more than $100-worth of gold (unless you were a jeweller, dentist, etc). The following year the US Government "revalued gold from $20.67/oz to $35.00/oz, raising the amount of paper money it took to buy one ounce, to help improve its economy". The world consequently traded their gold for US dollars - as foreign exchange rates were fixed - and the USD eventually became the de facto world currency since no-one else had enough gold of their own anymore to back their own currencies. It did wonders for the US economy and their influence; didn't do any favours to people who held their wealth in USD and hoped to spend it overseas - their government almost halved their fortunes.

The system in place today, where trading in differing currency pairs finds a price equilibirium amongst them all, has been the standard since the early 70s. Nixon took away the gold backing of the US dollar in 1971 (due to overvaluation). It could be said that currency has been mostly imaginary since then, given that reserve banks can just direct more money to be printed, rather than acquire more gold.


Bitcoin is more than likely being priced incorrectly by the market though. The co-founder of bitcoin.com was recently reported to have sold all of his holdings due to his disappointment with how bitcoin is developing/stagnating. It's a new asset to most people however and there's little indication from our past history (in shares for example), that we're especially skilled at immediately and accurately determining value. The upcoming crash will just be part of the price discovery
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  #26  
Old 22nd December 2017, 02:11 AM
walkermac walkermac is offline
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And here's another blockchain-based betting solution: Wagerr (www.wagerr.com). Reading from their White Paper:

Like the others it's decentralised, bringing trustless betting and smart contracts to online gambling.

These guys are particularly anti-government, contending that regulation is a protection racket and make a point of noting that no personal information is required or stored by them.

Coins are stored in a wallet where rewards are earnt for confirming transactions on the blockchain. Oracle Masternodes earn 50% of the fees collected and set events and betting contracts, retrieve sporting outcomes data and validate the results that trigger payouts.

They're intending to offer peer-to-peer betting (e.g. amongst friends - 2% fee), multi user betting (e.g. a betting exchange - 4% fee) and peerless betting (6%).

The last case is an interesting one: it doesn't require a complementary transaction to forge a contract. Instead, if you win, new coins are minted to pay out your bet. There is protection though from the coins you hold being worth less and less: 48% of betting fees are destroyed. As is the bulk of your stake in a losing peerless bet.

"Because losing bets destroy more coins than winning bets generate coins on the network, an intrinsic advantage is created for all WGR holders in terms of coin supply. Specifically, on a losing bet of 100 WGR, 96.88 WGR would be destroyed; by contrast, on a winning bet of 100 WGR, only 94 WGR would be generated. This imbalance constitutes the house edge of approximately 3%". (They're using a 6% betting fee in this example)

We've noted with some of these other offerings that you're gambling twice by putting your money in: once on the sport result and once on your winnings being worth the same upon cashing out. They think they've cracked it: "if price falls dramatically, significantly more outstanding supply is destroyed with every bet, because bets now require more WGR. Conversely, if price rises dramatically, significantly less supply is destroyed. Over time, this leads to less market volatility and an asset value that more accurately reflects both adoption and usage". It reads like you make $10 bets but there'll be an internal exchange that says $10 is equivalent to x WGR tokens. The price-linked economy they've put in place aims to keep this exchange rate constant.

...but then in the next section they flip and write: "sports bettors who buy Wagerr when its price is low may choose to use it for betting when
the value is high to get even more value per token". Sounds like they're trying to have it both ways... Or maybe they're presuming that the value only goes up? It's true that the more betting activity, the more coins are destroyed, the more the remaining coins are worth - but what happens if growth stops? WGR is being speculated upon in the markets as well (x5 growth the past month) and is as susceptible to manipulation and speculation as any other. They just seem to be adding problems by not being able to purchase tokens at a set price... That's the price for decentralisation, I guess.

Here's something I hadn't considered before using blockchain bets: betting markets can't close by the clock. They need to close in enough time for the transaction to be committed to the blockchain (and confirmed by enough subsequent transactions following it). They can estimate how long this process takes, but they can't close a market at kick-off, for example.

All major sports are planned to be supported, including horse racing. Live betting is a little further down the line. Beta starts mid-January with head-to-head betting to begin late first quarter.

Not for me. Novel idea setting up their own economy, rather than currency. It'll be interesting to see if it makes a difference
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  #27  
Old 2nd February 2018, 03:42 PM
walkermac walkermac is offline
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Some reporting today regarding the bookmaker Neds offering a cryptocurrency-based betting service. All operations are in the cryptocurrency (rather than the bitcoin being converted to fiat for use first). You load your account using bitcoin, you stake in bitcoins and are paid out in bitcoins. It looks like they've implemented their own system rather than licensed any of the others I've previously talked about in this thread.

Loading your account with bitcoins seems to mean transferring the ownership of them to Neds. They will also pay some of the transaction costs (it was reported here: http://www.afr.com/business/gamblin...20180131-h0r7aq, to be up to 2.5% of the costs, but it seems more likely to be up to 2.5% of the value transferred - confirmed in FAQ). No word on whether there are any deductions on cashing out (to pay the transaction cost of moving the bitcoin from Neds wallet to your own; you'd imagine it would be much the same).

I can see that they track deposits and withdrawals on the blockchain, but it appears that bets and payouts could only be tracked internally. This makes sense from the perspective that there wouldn't be transaction costs on each bet, but....it's not particularly safe. Just like an exchange, Neds's wallet would be the target of hackers and - according to the blockchain - the bitcoin you deposited with them is now theirs, not yours.

It's perhaps interesting that they're announcing this product during the current dip/crash. The bitcoin price is just under $USD9000 right now, whereas it peaked at $USD20,000 in mid-December. Their model is a little dangerous to their business. Imagine loading your account with bitcoin at the current price and then using it to bet when it could be back at its All Time High. Your place bet on Winx at $1.01 would become equivalent to $2.25 odds - and Neds would potentially have to purchase further bitcoin on an exchange to payout winners, or have to rely on more punters having deposited crypto in the meantime (which sounds scarily reminiscent of something...).

I guess it would work if they were sitting on a large reserve of a bitcoin and that would perhaps be a good idea - so long as you were sure the price was going to rise. It looks like the Tether thing is about to (finally) blow up so there's no surety of that, for the short term at least.

They also say in the article that they may look to other cryptocurrencies in the future. Would they keep a reserve for each? It would be very appealing for them to use a fractional reserve; somewhat confident that there won't be a "bank run" where all the clients try to get paid out all at once. In isolation this may be fine, but what if the bitcoin price crashes and there's a rush of people trying to rescue their funds from Neds before the value goes down?

I really don't like this at all.... You get no benefits from the blockchain, your funds aren't yours anymore, they're not accessible and remain at risk if there's a bank run. Per the ATO, bitcoin is an asset for capital gains tax purposes. Unless you never convert it to fiat, you'd be liable to pay tax on your winnings when you sell on an exchange. It only appears to be a worthwhile product for people who are bitcoin-rich but cash-poor. As much as they say in the articles that it's not just a stunt, I'm not sure there's many people yet for whom this is a good product.


Their crypto site is live now: https://crypto.neds.com.au/

Their FAQ says their units of the currency are MilliBitcoins (i.e. a thousandth of a bitcoin) but that you can bet in increments of 0.001 MilliBitcoin (i.e. one millionth of a bitcoin).
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  #28  
Old 2nd February 2018, 04:41 PM
walkermac walkermac is offline
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You know you've been reading about the Wild West of crypto too much when you think: "Oh no! Neds could also use their stock of bitcoin user deposits to day/margin/futures trade or margin lend, putting punters' funds at even greater risk!"

I presume that their regular deposits just sit in a bank account and do nothing. Don't know why it would be different just 'cause it's crypto...
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  #29  
Old 2nd February 2018, 05:51 PM
darkydog2002 darkydog2002 is offline
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If Warren Buffet says run and keep running I should think that would be wise advice.

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  #30  
Old 5th February 2018, 02:43 PM
walkermac walkermac is offline
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And Ned's cryptobetting site is no more. The Northern Territory Racing Commission has said no dice:

"[T]he Northern Territory Racing Commission sent an email to all corporate bookmakers registered in the territory, including Neds, on Friday evening asking for it to be stopped.

'The chairman of the Racing Commission ... is intending to issue a formal communique to all sports bookmakers and betting exchange operators licensed in the NT if currently transacting in cryptocurrency (for example Bitcoin, Ethereum and the like) for their wagering operations to immediately cease and desist,' the email said".

It's a little odd. The UK has allowed cryptocurrency wagering since late 2016 (https://calvinayre.com/2016/08/03/b...line-licensees/). It'll be interesting to read the rationale behind banning their licensees from doing so as well. It gives even more ammunition to those entities trying to entirely circumvent these gatekeepers.
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