Silk Road forums

Discussion => Newbie discussion => Topic started by: poopypants8888 on August 20, 2013, 09:33 pm

Title: RE: Volatility and hedging of BTC in account QUESTION
Post by: poopypants8888 on August 20, 2013, 09:33 pm
Hi,

I feel like all I do is ask questions on here and take up alot of your time so I'll make this brief and to the point:

I am slightly confused as to how the extreme volatility of the BTC market affects SR. If I were to buy, for example, 1 bitcoin at 100$ and one week later the amount jumped to 125$, I would have 125$ BUT would all the prices on SR also be raised in proportion or by using market fluctuations, could I actually get more than what I originally bought in for?

Thanks for everyone's help while I've been on here!
Title: Re: RE: Volatility and hedging of BTC in account QUESTION
Post by: The Fun Roulette on August 20, 2013, 09:54 pm
Yes, the listings on SR automatically adjust based on the value of the BTC. The vendors enter a dollar amount for a listing, and the BTC price for that listing is automatically calculated. For instance, if a listing is posted for 100 dollars and the value of 1 BTC is 100 dollars, the listing's price will display as 1 BTC. But if the BTC value suddenly rises to 200 dollars, the listing's price will display as 0.5 BTC.
Hope this helps, best of luck.
Title: Re: RE: Volatility and hedging of BTC in account QUESTION
Post by: Annex on August 21, 2013, 02:01 pm
The hedging that your refering to is only in transactions and only if the vendor opts in for it (extra fees apply) Basically it holds the dollar amount attached to you transaction at the time of purchase. Here's an example to explain;

X purchases product from Y worth 1BTC - Transaction is hedged by SR (extra fee paid by Y)
Exchange rate at the time of purchase; 1BTC = 100USD

Order arrives to X
X finalises order, funds release to Y
Exchange rate at time of release 1BTC=50USD
Instead of Y getting 1BTC as originally paid for, Y gets 2 because at new exchange rate 2BTC=50x2=100USD

Equally though, if the value of the BTC goes up, SR keeps the extra and the vendor gets the BTC amount attributable to the initial dollar value.

In the short term, it looks like SR are taking on all the risk for a small fee (how nice of them) but if you look at the worth of a BTC from day 1 to now.... It would be a freaking sweet money maker

Really, you can look at it like SR are getting paid for other people to take the long term risk for them..... Fucking Brilliant


Annex