Silk Road forums
Support => Customer support => Topic started by: bullmarkets4ever on April 20, 2013, 12:28 am
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I posted the other day about "when a transaction is completed" how the BTC and USD amount are trued up when Finalized.
The answer I got made sense for the most part. But now I have another issue: I had an order go terribly wrong.
Here's my new dilemma:
Lets say i bought 100 of product "x" for $1000USD & 10BTC - so for this example each product is $10/per and each BTC is $100.
As a buyer I cannot hedge, and as explained to me the transaction "took place when ordered"... however, my order is totally fckd up, and the BTC (keeping with the example in easy math) went from being worth $100 to $150. If/When i finalize I'll be out my 10BTC, which no longer equals the cash price agreed upon when the order happened, so in this example my product when TRULY finished/finalized will've cost me (using my example variables) $1500 vs the agreed upon $1000.
How / Why is there no way as a buyer to pay the cost of the item as a CASH TOTAL, requiring the amount of BTC needed at the time to transact, and then have the system correct vs the current rate of BTC at Finalize time so that isn't money gone/wasted/taken? Why can't buyer's Hedge?
I assume the vendor still gets that full 10BTC, so now he has $1500 instead of agreed upon $1000. He was also hedged in case the scenario went the other way, in this order I'm referring too... so he was protected, I assume.
Unless the hedge doesn't protect the vendor from gains, only depressions in BTC rate: if that's the case where does that other $ go? Does SR take more than the standard fee in these cases, or does the vendor get lucky.
Or better yet, is there a way, especially when my order got totally fckd, and I kept careful documentation of, that I can cancel the order and at least end up only paying what was originally agreed upon. If that's not an option I'm going to find myself in a resolution situation.
Please, please advise.
I'm stuck. I want to get the vendor paid (even though they totally blew it on several occasions on this order), and I want to understand how I don't have to take the "cherry on top" of this order, by ultimately paying WAY more for my incorrect product than what the "current" and agreed to USD$ price is/was.
Thanks So Much in Advance!!
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You have to check each individual listing, most will be hedged, other are not.
Its an option for the vendor, to hedge or not to hedge. Much love.
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Thanks for your reply.
I'm hoping for some more feedback.. from one-and-all.
I'm not sure I understand.
Are you saying if the vendor hedged then they hedged for both of us.. me the buyer, and himself the seller?
So when I finalize, it won't take out the "10BTC," used to originate the order, it will only take out the correct USD worth of BTC, at the now higher BTC rate, from my account? Is that right?
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Correct.
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Okay.
So I finalized.
BTC has gone up.
I purchased a hedged item.
And we're both hedged.
I bought a hedged product at (example: $1000): when do the BTC (USD$ amount for item was10BTC then, but only 5BTC now) get adjusted and reapplied to my account?
I know the vendor doesn't get the full 10BTC, because he hedged.. for both of us. He only gets his e.g. $1000. And in my account history this transaction shows up as the USD amount paid, opposed to other purchases I've made that show the BTC amount paid.
So I should be getting the difference in BTC back, because the BTC rate has gone up since the deal was ordered. Which as it happens is a significant amount of BTC/USD.
How long until that will show up in my account?
Thanks My Peeps!!
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It doesn't work like that, go and read the SR wiki on hedging.
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Please help!!! What can I do if I put an order through with a vendor. They ask me to FE. Then I say no thanks that's not what we agreed on cancel the order. They then say...we cannot let you cancel the order as you will leave bad feedback your just going to have to wait 17 days or till SR shuts us down. I'm a new buyer and new to SR but after reading forums, have learnt to smell a scammer!!!! So please what can I do as I can't cancel the order myself and don't want to leave the money in there with the volatile BTC fluctuations. This scammer needs to be shutdown. Also after reading the sellers guide, some products they are selling aren't allowed.
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I am amazed at how many buyers are making posts stating how they are being screwed out of money because the BTC has gone from $100 per coin when they placed the order to $150 when they finalized.
It seems to me its like a US tourist going to Canada, where the exchange rate between the Canadian $ and the US $ is let say 1.25. They buy something using their US$ that costs $125 CAD$ using $100 US as their payment, they spend a couple days doing tourist things while the exchange rate jumps to 1.5, so they decide to go back to the retailer asking for the $25 they are owed. (My math may be off a little, but you get the idea). I think 'Fuck You' is probably the mildest thing the Retailer is going to tell you.
When you buy something off SR, you are really buying that product in US$, BTC is simply the medium you use to complete that purchase. Hedging of the item is simply a promise by SR to pay the Vendor the value of the original order in US$ (converted to BTC) at the time of the order, not the value of the BTC used to purchase the item when it finalizes. For the buyer it means if the order is cancelled they get back BTC worth the value of the order in US$ at the time they placed it. If BTC go up they do not get BTC at the appreciated value. That amount goes to SR, as they are taking the risk, as it could easily go the other way. What about all those orders hedged when the value of BTC was over $200 and then dropped to $100? I don't see buyers lining up to pay SR or the Vendors the money lost on those transactions.
Yes, it can be frustrating to see the $100 worth of BTC you used to purchase your item go up in value to $200. On the other hand there is also that sense of relief that once you have placed your order for $100 worth of items and the BTC value halves overnight, that you won't be required to go buy more BTC to cover the loss.
If you are looking to make money from BTC go somewhere else and play the market, otherwise just be happy you have somewhere you can actually go to buy this stuff at all and stop trying to act like you are being ripped off.
Unfortunately a lot of buyers weren't here before we had hedging and I think some of the older users have also forgotten how many vendors and buyers lost large sums of money the last time BTC fluctuated this much. A large number of vendors simply cancelled all their orders and those that didn't lost thousands of dollars honoring orders that were worth $100 when they were placed yet they ended up getting only $50 by the time the order finalized. Buyers found themselves with BTC worth half their value because the Vendors cancelled the order rather than take the loss themselves.
The system isn't perfect, but it does work 90% of the time, so be happy with you have instead of trying to get your hands on phantom BTC that were never yours to begin with.
Lastly, to 'Dissappointed Buyer'. Please don't hijack threads, it's rude. Your posting has nothing to do with the OP's post. I suggest you go back and read the Vendors profile and after you have done that, and confirmed that the Vendor does not require FE, you can send a polite PM to SR support explaining your situation and see what they say, yelling scammer simply because the vendor asked for FE, regardless of what you believe you agreed to, is not the way to resolve the situation.
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I am amazed at how many buyers are making posts stating how they are being screwed out of money because the BTC has gone from $100 per coin when they placed the order to $150 when they finalized.
It seems to me its like a US tourist going to Canada, where the exchange rate between the Canadian $ and the US $ is let say 1.25. They buy something using their US$ that costs $125 CAD$ using $100 US as their payment, they spend a couple days doing tourist things while the exchange rate jumps to 1.5, so they decide to go back to the retailer asking for the $25 they are owed. (My math may be off a little, but you get the idea). I think 'Fuck You' is probably the mildest thing the Retailer is going to tell you.
When you buy something off SR, you are really buying that product in US$, BTC is simply the medium you use to complete that purchase. Hedging of the item is simply a promise by SR to pay the Vendor the value of the original order in US$ (converted to BTC) at the time of the order, not the value of the BTC used to purchase the item when it finalizes. For the buyer it means if the order is cancelled they get back BTC worth the value of the order in US$ at the time they placed it. If BTC go up they do not get BTC at the appreciated value. That amount goes to SR, as they are taking the risk, as it could easily go the other way. What about all those orders hedged when the value of BTC was over $200 and then dropped to $100? I don't see buyers lining up to pay SR or the Vendors the money lost on those transactions.
Yes, it can be frustrating to see the $100 worth of BTC you used to purchase your item go up in value to $200. On the other hand there is also that sense of relief that once you have placed your order for $100 worth of items and the BTC value halves overnight, that you won't be required to go buy more BTC to cover the loss.
If you are looking to make money from BTC go somewhere else and play the market, otherwise just be happy you have somewhere you can actually go to buy this stuff at all and stop trying to act like you are being ripped off.
Unfortunately a lot of buyers weren't here before we had hedging and I think some of the older users have also forgotten how many vendors and buyers lost large sums of money the last time BTC fluctuated this much. A large number of vendors simply cancelled all their orders and those that didn't lost thousands of dollars honoring orders that were worth $100 when they were placed yet they ended up getting only $50 by the time the order finalized. Buyers found themselves with BTC worth half their value because the Vendors cancelled the order rather than take the loss themselves.
The system isn't perfect, but it does work 90% of the time, so be happy with you have instead of trying to get your hands on phantom BTC that were never yours to begin with.
Lastly, to 'Dissappointed Buyer'. Please don't hijack threads, it's rude. Your posting has nothing to do with the OP's post. I suggest you go back and read the Vendors profile and after you have done that, and confirmed that the Vendor does not require FE, you can send a polite PM to SR support explaining your situation and see what they say, yelling scammer simply because the vendor asked for FE, regardless of what you believe you agreed to, is not the way to resolve the situation.
Most of what you say is accurate, and contextual to the point of this thread.
In fact I agree with almost everything you said.
However, tourists don't have the option to "Hedge" their purchases while abroad.
Spending 'cash' and hedging an investment / purchase are not the same.
SR offers a hedge to sellers, at a4% fee. To claim SR is losing money on their hedge program is ridiculous.. and impossible.
Sellers are protected, but buyers are not. For SR to appropriate these funds when they could as easily give them back to the buyer is not the topic of this thread.
My question is why is the "hedge" only a partial hedge? Why not introduce some protection to the buyer?
This was my last post in a similar thread I started
** moderator may want to merge these two
This must've come up before.
I see an issue here. A fallacy.
If the vendor hedges he is protected from the BTC value going down, but there is no protection to the buyer for the value of BTC going up.
I contend this should not be the case.
The reality of how the system sits now provides no shelter whatsoever to buyers. A price is agreed to when an order is placed... yet a buyer can end up paying two, three, four,.. ten, times more when when they complete the transaction. The seller gets paid in USD, but the buyer is stuck paying in BTC -- that absolutely should not be the case on "Hedged Orders."
A true hedge would protect the seller if the value decreases, and they buyer if the value increases. After all, as was pointed out, the transaction takes place in US currency. To say "SR takes a loss" is not accurate in practice or in theory: the business would not operate, or take the risk of operating at a loss, hence the 4% fee charged the vendor. The hedge tool is a money maker for SR (read:fact). Them hedging orders, especially in cases like this, is the biggest money maker on the road:
- their transaction Fee,
- the 4% Hedge Fee,
- and the incremental 100% increase (in USD) they assumed on this unprotected buyer's (unhedged) BTC.
I maintain a hedge should protect both ends.
And the net-net of the transaction should be:
1) the USD amount agreed upon, paid to the seller at Finalization
2) the USD amount agreed to be paid, withdrawn from the buyer's escrow at Finalization, the delta returned to the buyer.
Anything other is not a hedge at all.
Otherwise buyers could work side deals on hedged orders by having the vendor cancel when the BTC has gone up, and then they split the profit by rebooking the order at the current price, at the now inflated BTC rate.
A Buyer's Hedge should be introduced.
This way SR can still make money on us all at 4% flat fee, but a psuedu-hedged order (in point of fact -- half-hedged) wouldn't go right into their profits pile, and buyer's as well as sellers have protection. One other option would be to have the buyer and seller both pay half of the hedge fee, and both get equal (yet opposite) protection... seller protection from losses due to deflation, buyer protection from losses due to inflation.
My logic is sound.
And the end result I'm suggesting (not the workaround rebook to equally split the USD value associated to a BTC increase) is the only equitable way to transact on hedged deals.
Is it possible to improve SR by making this an option?
I doubt DPR / SR would object to flat rate 4% additional charge on a per-buyer-transaction-basis; they'd make more than they do from appropriating the buyer's vulnerable, unprotected BTC.
Please advise.
Thanks!!
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There is a problem in your logic. What makes you think there is any profit in a hedge for a vendor, all the profit goes to silkroad, the site that facilitated your purchase. Silkroad makes enormous amounts of profit via hedging, vendors make none, they lose 4% of every transaction. Silkroad takes no risk at all because everyone gets charged the 4% generating profit, that in the long run will be far superior then any losses it could take.
Furthermore, when you bought the bit coins what were they worth? $100
When you spent them (made a purchase) what were they worth? $100
What does a hedged vendor get? $100
Doesn't matter if bitcoins are now worth $150, that means silkroad made a potential $50 profit, depending on if they cash them out right now or not.
Why would silkroad want to share its $50 in profits with you? they wouldnt, who wants to give away money?
If you have a problem and feel that your losing money, why not just hold onto your bitcoins and not spend them on the silkroad? you can play with bitcoins and speculate the value and make profit all you want.
I for one and an unhedged vendor, i have made probably 50k in speculating that the value of bitcoins will go up, and only selling higher then what then what they were when i received them. I will sit on my coins for weeks if i have to during slumps. and always make sure to exchange at least at 5% higher then original value.
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I'm dealing with the same thing, the vendor never said they didn't ship to new accounts and waited three days to refund my purchase. I lost an entire bitcoin between the time I placed the order and when I received my refund. Seems like Silkroad now heavily favors its sellers over the buyers.
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There is a problem in your logic. What makes you think there is any profit in a hedge for a vendor, all the profit goes to silkroad, the site that facilitated your purchase. Silkroad makes enormous amounts of profit via hedging, vendors make none, they lose 4% of every transaction. Silkroad takes no risk at all because everyone gets charged the 4% generating profit, that in the long run will be far superior then any losses it could take.
Furthermore, when you bought the bit coins what were they worth? $100
When you spent them (made a purchase) what were they worth? $100
What does a hedged vendor get? $100
Doesn't matter if bitcoins are now worth $150, that means silkroad made a potential $50 profit, depending on if they cash them out right now or not.
Why would silkroad want to share its $50 in profits with you? they wouldnt, who wants to give away money?
If you have a problem and feel that your losing money, why not just hold onto your bitcoins and not spend them on the silkroad? you can play with bitcoins and speculate the value and make profit all you want.
I for one and an unhedged vendor, i have made probably 50k in speculating that the value of bitcoins will go up, and only selling higher then what then what they were when i received them. I will sit on my coins for weeks if i have to during slumps. and always make sure to exchange at least at 5% higher then original value.
No, my logic is sound.
You're paraphrase, or mistaken understanding of what I wrote (in as lay tems as possible) is what's faulty.
I don't know where you get me attributing "sellers profiting from hegding," that was never stated.
What I did state is that sellers are fully hedged, protecting their initial profits against a shortfall in the BTC.
My argument was for the buyers to be hedged as well.
Which is a valid request for many reasons, not the least of which is as another vehicle of profit for the SR.
Agreed, SR makes huge amounts of money (as I'd stated).
Agreed the hedge tool is one instrument of profit for SR (as I'd stated).
Your example of BTC value vs the transaction of a purchase vs the USD value of that transaction is both invalid and non sequitur; without going into much more detail on how you altogether missed the point of the post, and butchered your own example I will say:
If, as you proposed, BTC were worth $100 when exchanged for, and spent at the same $100 value, and vendor gets his hedged amount, and then BTC rise in value to $150, then in point of fact, SR would NOT stand to make "a potential $50 profit," they would make a $50 premium for every BTC accounted for in the initial price/payment for that transaction! If, similar to the exact example I'd provided initially, the purchase was for 10BTC, then the delta is now $500. Now $500 has just rolled into the kitty... the seller who hedged doesn't get it, and the buyer who initially bought objectA for Xamount of $, has now paid a price equal to X+$500; the hedged vendor gets his full payout in USD, but the buyer is stuck paying out in BTC for the exact same transaction... the buyer is unprotected, whereas the seller has the option to hedge for a 4% fee.
The entire point was that a hedge should protect both sides... however that needed to be arranged:
hedge cost-sharing, additional fee for buyer's hedge, whatever..
Your comments about "sharing money" and "not buying things on SR" and "speculating for profit," were the most misguided and impertinent (and amusing) bits of your entire attempt to speak to the actual question / subject.
But thanks for participating ;)