Silk Road forums
Discussion => Newbie discussion => Topic started by: ExtantLiterature on April 22, 2013, 03:21 am
-
At what point during the deal (if it's a hedged transaction) does the buyer receive coinage back if the BTC value has gone up?
-
Not sure I understand your question. Are you cancelling a hedged order?
-
At the point he gets a refund? I don't get your question, please clarify.
-
Not cancelled/refunded. The transaction went great, but I was under the impression that hedged listings meant that if BTC doubled during the time you were in escrow, you would receive some coinage back and the vendor would still only receive the USD that the listing was for.
Maybe I just misunderstood the whole thing.
-
I don't understand how the hedging works tbh.
Lets assume I'm the buyer, I pay 1 btc for something and then I cancel it (but it was hedged and pegged to $$).
So, if the value of bitcoins went down... what happens? What if the seller doesn't have enough bitcoin to pay me the $ value...
I don't understand how hedging could work.
-
Are you asking about an order you've received and finalized on? If so, you don't receive money back for changes in BTC on successful orders. Otherwise, what if the rate went the other way - would you want more btc taken out of your wallet? I wouldn't think so.
Unless there's something I'm missing? Escrow hedging only affects buyers in cases of cancellation or refund, I believe.
-
Hedging will only affect the buyer if the order is cancelled. It would be up to the vendor to decide ether the difference in BTC would be refunded also. Most vendors wouldn't do that. I also think that is fair. It could go both ways as well, where a cancelled order HELPS the vendor in fluctuation.
No different than you buy currency in another country, then trade it back in at a later, and different rate.
-
I had been really curious about this. Thanks for the answers!
-
The way hedging works is that you and a vendor agree on a price in USD for the transaction. So, if you're buying a $5.00 item when BTC is worth $1.00, you commit 5 BTC.
When you finalize or cancel, the vendor (or you, for a cancellation) receives an equal amount of BTC to whatever the equivalent price is in USD. If BTC had risen to be worth $5.00, then when you finalized the vendor would only get 1 BTC and SR would keep the difference. If BTC had fallen to be worth $0.50, then the vendor would have gotten 10 BTC and SR would have covered the difference.
Make sense?
Hedging basically guarantees that you will get a fixed amount of USD when the transaction is finalized or cancelled based off the current average price on Mt. Gox, regardless of fluctuations during the duration of the transaction.
-
The way hedging works is that you and a vendor agree on a price in USD for the transaction. So, if you're buying a $5.00 item when BTC is worth $1.00, you commit 5 BTC.
When you finalize or cancel, the vendor (or you, for a cancellation) receives an equal amount of BTC to whatever the equivalent price is in USD. If BTC had risen to be worth $5.00, then when you finalized the vendor would only get 1 BTC and SR would keep the difference. If BTC had fallen to be worth $0.50, then the vendor would have gotten 10 BTC and SR would have covered the difference.
Make sense?
Hedging basically guarantees that you will get a fixed amount of USD when the transaction is finalized or cancelled based off the current average price on Mt. Gox, regardless of fluctuations during the duration of the transaction.
^^ This.
-
no worries ... I just misunderstood the whole process.
my transactions have all been positive, so there's no problems at all. I just figured that if it adjusted for cancellations and refunds, it would adjust for successful completions.
Thanks, guys.
-
I understood hedging until reading this. Now u guys have confussed me.
-
The way hedging works is that you and a vendor agree on a price in USD for the transaction. So, if you're buying a $5.00 item when BTC is worth $1.00, you commit 5 BTC.
When you finalize or cancel, the vendor (or you, for a cancellation) receives an equal amount of BTC to whatever the equivalent price is in USD. If BTC had risen to be worth $5.00, then when you finalized the vendor would only get 1 BTC and SR would keep the difference. If BTC had fallen to be worth $0.50, then the vendor would have gotten 10 BTC and SR would have covered the difference.
Make sense?
Hedging basically guarantees that you will get a fixed amount of USD when the transaction is finalized or cancelled based off the current average price on Mt. Gox, regardless of fluctuations during the duration of the transaction.
Thank you for clarifying, that is very helpful.
-
hedged means locked to the specific USD amount despite the BTC value
-
The way hedging works is that you and a vendor agree on a price in USD for the transaction. So, if you're buying a $5.00 item when BTC is worth $1.00, you commit 5 BTC.
When you finalize or cancel, the vendor (or you, for a cancellation) receives an equal amount of BTC to whatever the equivalent price is in USD. If BTC had risen to be worth $5.00, then when you finalized the vendor would only get 1 BTC and SR would keep the difference. If BTC had fallen to be worth $0.50, then the vendor would have gotten 10 BTC and SR would have covered the difference.
Make sense?
Hedging basically guarantees that you will get a fixed amount of USD when the transaction is finalized or cancelled based off the current average price on Mt. Gox, regardless of fluctuations during the duration of the transaction.
Very good explanation, as I wasn't 100% clear myself. Great reply!