Silk Road forums

Discussion => Silk Road discussion => Topic started by: incogmagnito on March 20, 2013, 07:22 am

Title: Question on escrow
Post by: incogmagnito on March 20, 2013, 07:22 am
Hello,

I have just finalised two orders and have noticed that while both vendors had their prices in USD at the time of transaction my balance went down by an amount in BTCs that was based on the exchange rate at that time. Now BTC is 30% higher, so when I released cash now did vendor get 30% more? If not then who gets this windfall?

Thank you!
Title: Re: Question on escrow
Post by: Ron Swanson on March 20, 2013, 07:50 am
depends if they use hedging, this is from the sellers guide:

Unfortunately, the Bitcoin exchange rate isn't as stable as we would all like it to be, and can fluctuate wildly in a matter of hours, let alone the days or weeks it takes for a package to arrive. Because of this, there is a real danger that the Bitcoins being held in your escrow account will lose value by the time your customers finalize their orders. So, we've given you the option to hedge the future payments you are expecting from escrow such that the dollar value of the payment doesn't change as the Bitcoin exchange rate changes.

For example, someone purchases one of your 10 btc listings. The dollar value of the order when purchased is $100. Now, a week later when the transaction is finalized, those 10 btc are no longer worth $100, they're worth $50! Because you hedged the escrow, you won't get paid 10 btc, you'll get 20 btc equaling the original value of $100. Of course, the opposite is also true. If Bitcoins appreciate in value while your payment is in escrow, you'll get fewer Bitcoins, but they will still equal the original dollar value.
Title: Re: Question on escrow
Post by: incogmagnito on March 20, 2013, 11:32 am
Thank you.

This is from vendors side.

But I am a buyer, BTC 1.28 got deducted 4 days ago.
I finalised today and goods were pegged to the dollar.
By today's rates vendor got about 1 BTC.
Where did the rest of 0.28 go?
I do not seem to get them back ... Or am I barking up a wrong tree?
Title: Re: Question on escrow
Post by: Ron Swanson on March 20, 2013, 11:42 am
no you won't get that back. sr keeps any extra i assume to use for when rates drop and they have to give vendors more money because they used hedging. going to dig out the bit from the buyers guide see if that makes more sense..

For example, a seller is hedging the escrow for a 10 btc order you place with them, and the dollar value of your order when you purchase it is $100. Now, let's say your order never arrives and your vendor agrees to a full refund, but those 10 btc are no longer worth $100, they're worth $50! Because your vendor hedged the escrow, you won't get a refund of 10 btc, you'll get 20 btc equaling the original value of $100. Of course, the opposite is also true. If Bitcoins appreciate in value while your order is in escrow, your refund will be fewer Bitcoins, but still equaling the original dollar value.

When checking out, you will see which orders will be hedged and which won't. After the order is placed, your escrow balance will reflect the dollar value of your hedged orders and the Bitcoin value of your unhedged orders. All hedged orders are hedged as soon as the order is placed. So when getting a refund for hedged items, don't be surprised if the number of Bitcoins you get back is not the same as the amount you paid.

basically the amount you pay at checkout is final unless you end up getting a refund. as a buyer that's the only time you really need to worry about hedging.
Title: Re: Question on escrow
Post by: Dingo Ate My Drugs on March 20, 2013, 12:11 pm
no you won't get that back. sr keeps any extra i assume to use for when rates drop and they have to give vendors more money because they used hedging. going to dig out the bit from the buyers guide see if that makes more sense..

For example, a seller is hedging the escrow for a 10 btc order you place with them, and the dollar value of your order when you purchase it is $100. Now, let's say your order never arrives and your vendor agrees to a full refund, but those 10 btc are no longer worth $100, they're worth $50! Because your vendor hedged the escrow, you won't get a refund of 10 btc, you'll get 20 btc equaling the original value of $100. Of course, the opposite is also true. If Bitcoins appreciate in value while your order is in escrow, your refund will be fewer Bitcoins, but still equaling the original dollar value.

When checking out, you will see which orders will be hedged and which won't. After the order is placed, your escrow balance will reflect the dollar value of your hedged orders and the Bitcoin value of your unhedged orders. All hedged orders are hedged as soon as the order is placed. So when getting a refund for hedged items, don't be surprised if the number of Bitcoins you get back is not the same as the amount you paid.

basically the amount you pay at checkout is final unless you end up getting a refund. as a buyer that's the only time you really need to worry about hedging.

yea Silk Road gets it. Which is fair enough because they can easily lose massive amounts of money as well.