kakobrekla: Yeah should prolly bump the initial bet to .1 instead.
mircea_popescu: The problem I see is this : forcing bets removes their signalling capacity. If I increase the minimum I just remove meaning from money.kakobrekla: How is it more forcing than now?
mircea_popescu: Now it’s just 0.01, which means we suck the meaning out of a cent. If minimum becomes 0.1, we suck the meaning out of ten cents. which may be too much, basically this might be one of those situations where regulation is a loser. Might be why the “2 BTC minimum on sports bets” thing introduced last year nigh on killed sports. That may need to be taken off. But basically… it never occurred to me that in point of fact BitBet’s minimum acts as a tax. And a lot of other things in here never occurred to me. I’m still reeling over the whole pile.
As you can see from the logs above, the endlessly fascinating economic experiment that is the BitBet prediction market continues.i
What’s on the discussion table at the moment is the minimum size of the initial bet chipped in by a new wager’s propositioner, called a zero-confirmation or “0CONF” bet, which is required for an otherwise reasonable prop to be accepted by the moderators. This minimum is currently 0.01 BTC, or a bitcent, except for sports bets, where it’s a whopping 2 BTC.ii
As to MP’s theory that that this out-sized minimum bet requirement killed sports betting, a conclusion that’s sorta hard to argue with, it’s entirely likely to be the case that this is because BitBettors, like men in general, broadly fall into two categories :
- Those for whom 2 BTC, ~$CDN 630 at current rates, is no big deal and a fair price for some lulz, and
- Those for whom it’s many weeks of groceries and therefore not to be gambled with either fecklessly nor recklessly.
Furthermore, these two categories of bettors (and men), which we’ll call “Bigs” and “Smalls,” differ in more than just the virility of their bank accounts – they also differ in their personal interests and gambling predilections.
Now perhaps this may come as a surprise to those less familiar with North American sports betting, but two whole coins is approximately an order of magnitude too far into the Bigs category for the demographic who typically bets on sports, who by and large tend to be Smalls. Quite simply, Joe “The Sports Fan” Johnson isn’t nearly wealthy enough to justify a 2 BTC 0CONF. This is more than just my own finger on the pulse of sports bettors speaking, this is also the dearth of sports bets in the past year, since the rule changed for this one category. If the young men in my meatwot are any indication, $200 for an NFL fantasy pool is HUGE money. And these are diehard sports enthusiasts we’re talking about here, none of whom are hungry for their next meal but none of whom are millionaires either, and they’re far more accustomed to $20 – 50 bets, perhaps $100 at the outside. ‘Tis just the going rate for sports bets for people who live and breath the stuff, people who tend to be Smalls.
Sure, you there are still a few Bigs sprinkled in amongst the sports bettor ranks – such as the more established and deeper pockets who find themselves at the horse track on a particularly blue-skied August afternoon surrounded by dolled up young lasses wearing summer hats the size of umbrellas and sunglasses the size of facemasks – and here it’s entirely conceivable that you’ll see a few or even a few dozen large plunked down on Mystical Mystery or Rootin’ Tootin’, but that’s live sports betting, which is really more like going to the cinema. This in-the-moment aspect has an electricity to it that plays a very real role in the visceral feedback that makes a large wager like this worthwhile.iii
But on BitBet, not only are we talking about online gambling that lacks such physical interaction, but the betting is by necessity longer-term and it therefore lacks the same instantaneous rush of adrenaline that most sports bettors are accustomed to. Additionally, on account of the frequency of betting opportunities (many) and their typical timeframe for resolution (short), sports bettors tend to make smaller wagers anyways. The icing on the cake is that, as it turns out, there’s decidedly little overlap between the type of geekiness required to grok Bitcoin and the type of geekiness required to memorise every sports stat in the world. Strange but true.
The type of geekiness that Bitcoin attracts turns out to lend itself far more readily to politics, economics, and finance, eg. men inclined to short scams, wager on commodity prices, and pick Presidential candidates. In turn, these men are more likely to be Bigs – that is, considerably wealthier, worldlier, and far more accustomed to wagers in the thousands and tens of thousands of dollars that resolve months and even years down the line – that is, the type to find itself in BitBet’s “Highroller” category.
In essence, sports betting is more likely to be of interest to Smalls who can only rarely see their way over the tall wall of a 2 BTC tax.iv So that’s the first point.
The second point is a bit deeper, but really just an extension of the first. To which, from The strange case of the six hundred dollars and other stories :
The meaning of words does not matter at all, the only point of any interest in this post-post world we live in being “how much money says so”.
This is true. How much money says X matters a great deal more than anything else. But I think it goes further than that still, because how much money says X is so tightly intertwined to whose money is saying X. Perhaps this goes without saying, but the man behind the mask key matters a great deal. That the subtle differences in the structure of two Bitcoin price props was enough to kick off a 50:1 difference in bets wagered, largely due to network effects that culminated around the nuanced yet evident superiority of one prop over the other, speaks volumes to this point. Such are the marvels of the market that it can so readily tease out the lemma from the palea – the even slightly smarter from the slightly dumber.
Because yes, while it’s true that “money talks and bullshit walks,” in Bitcoin more than anywhere else, there are still plenty of coins out there that’s in the hands of bullshit vendors and fools, whether they understand themselves to be such or not and whether their less-than-capable clutches have been liberated of the burden of responsibility yet or not. Over time, sound money settles into the hands of those who are more frequently (and proportionately!) correct in their statements because they’re remunerated commensurately, but this is a slow process. In the interim, “poorly financed” bets are really those put forward by poor financiers, which is to say, idiots, if only relatively so. So is it really any wonder that bets made by idiots don’t receive market interest ?v I mean, it’s not like they can lobby for special favours from Washington to cover up their ineptitude. Unlike elsewhere.
So while it may some day soon be the case that 0.01 BTC is in the hands of none but the elite, it is presently and demonstrably the case that $3 worth of bitcoin isn’t beyond the reach of even the humblest forumite. As a result, bets made by the unworthy and inexperiencedvi are still accepted by BitBet’s moderators, but their subject, wording, and 0CONF size are more than sufficient market signal to inform further action. This isn’t to be solved by anything other than Father Time. For now, it just is.
Aren’t prediction markets the bomb ?
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- BitBet is a perimutuel bitcoin betting service listed on MPEx.↩
- A rule that’s the direct result of this little adventure, if you’ll recall, though one that doesn’t seem to be enforced terribly strictly as 1 BTC initial bets were accepted for the only two sports bets currently active – the Redskins and McDavid bets.↩
- Yes, there are also dentists, doctors, and lawyers with bookies, but these people are married to their meatwots and know their bookies IRL. Hell, they probably have lunch together every second Tuesday. Additionally, this class of man, what with the family and the professional career, has never had the 100 hours needed to research Bitcoin properly.↩
- While a 2 BTC 0CONF requirement on every bet would most certainly increase in the meaninglessness of a larger pile of satoshis, that this minimum threshold is currently applied only to sports wagers would seem to be a tax only on the Smalls – which is to say, the poor.
Furthermore, as MP readily points out himself, this tax doesn’t accomplish what it intends to :
The actual utility of the guaranteed BitBet seeding is very low : it will take a bet from 0.01 to 0.2 maybe, but that’s about all it’ll do. There’s no leverage in guaranteed behaviours. A point which again has been hinted at – guess why “aid” sent to Africa does little of anything ?
Oh, and yes, foreign aid has been assuaging your guilt and ruining lives… since forever. And yes, coerced taxation and redistribution is a scam. Wake up and smell the coffee.↩
- And similarly, is it really any wonder that MP’s bets are covered every. single. time ?↩
- When did you ever try perimutuel betting before BitBet came along ? ↩