Silk Road forums
Discussion => Silk Road discussion => Topic started by: theupsman1 on March 27, 2013, 07:51 pm
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HI,
Wondering something. I bought something a while back and the seller went inactive and left it processing for like 5 days or so. So I pressed cancel and am 2 bit coins down. I understand this is hedged against market price of coins but where has the other 2 coins gone then? Does the seller get them? does SR get them?
Thx
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Yeah hedged just means that the coins you pay are at that point essentially converted to market value and not held as bitcoins. So when a vendor hedges he get the market value of the coins at the time of purchase not the actual number of bitcoins spent. SR takes a slice for the hedging service but otherwise your full market value of the coins is either returned to you or paid to the vendor upon completion of the order.
To put it another way:
10 BC spent at $10 per BC = $100
SR Takes the hedged coins and sells them for $100
5 days later you cancel your order.
SR Takes the $100 dollars and buys 5 BC which are now trading at $20 each.
You are refunded the 5 BC - the hedging fee and once again have $100 worth of BC to spend.
Now the actual selling of the coins may or may not happen, but what is happening is that SR is taking on the risk of the currency falling in price. They win big time if they keep all the coin and the coin goes up in price but loose hard if it goes from $80 to $40 overnight. The seller only ever gets any coin if the sale is completed. In this case anything missing from the total dollar value spent at the time the order was cancelled is going to SR. I think the buyer gets stuck with SR's commission if they cancel the order but not so if the seller cancels the order. Never noticed too much of a difference though.
Hope that helps a little.
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Yes that makes perfect sense thanks. I guess as long as the buyer re-spends the coins immediately with another seller then they incur no loss.