Category Archives: General

General blog posts that inform users of recent developments.

Technical Difficulties

Last night a Raid backup server had some issues so everything went to hell. The web site provider seems to have fixed it, but it did prevent me from making any significant progress. I took it offline and tried coding a change-I think that I can reuse what I had done before for weather derivatives.

Also, options seem less interesting now. But we’ll see if I can muster up some more enthusiasm. I need to make spot trades though. I need a merchant API to any existing exchange. They’re out there but they keep access away from the general plebs.

 

Bitcoin Exchange

So today two things happened that felt like my head exploded.  First, an ATM machine is being set up in Toronto specifically for bitcoins. Second, Wired magazine wrote an article where the makers of Coin base suggested there was a need for a Bitcoin exchange. Since I’m in the business of trying to find a marketable need for a mini derivative exchange, this seemed that everything was falling into place.

At once. Before I’m ready.

So the wise thing would be to wait until all the work was perfect and then announce that the product is available to the masses.

Instead, after reading the Lean Startup, I’m just going to throw it out there and see if anyone is interested. Seems a waste to create something no one wants.

And its more fun and exciting this way.

Submit Order

I’ve had the pieces in place for a while, but I finally connected up the dots. Basically, Weather Futures allows a user to select a security (City + Date) and use that security to enter an order.

Weather Options, Celebrities and Traffic don’t work yet. Weather Futures isn’t fully complete either – but I’m further along. Small steps.

Next steps:

  1. Send the order to the exchange
  2. Have periodic updates from the exchange to the web for status updates/trade fills
  3. Have periodic updates from the web to the custody system for settlement
  4. Have periodic updates from the custody system to the web for status updates

Also, once the flow is entered, there appear to be duplicates in the Security database. Three securities exist when there should only be one. Clean-up required.

Disruptive Technologies

A “recent” article on weather derivatives at Time.com – cost for $100k of “Snow Insurance” costs $19,000.

I’m hoping to cut that cost by 97% (if it refers to a Future). For weather options, it’s more difficult to estimate the market price of a Snow put option without critical mass on the exchange.

Forbes has a more recent article. Nobody wants to buy or sell Snow derivatives. Not one was traded in 2013. Perhaps I can offer a new approach?

Kickstarter Detour (Part II)

As I draw closer to pulling the trigger on Kickstarter, it occurs to me that I may need to justify a few things – things that no user would care about (but I’m doing them anyway).

  1. 60 minute settlement: usually, settlement happens behind the scenes and most users don’t really see the impact of this. They know (vaguely) that after selling a stock they own, it might take a couple of days for it to “disappear” from their list of positions. Most exchanges settle T+3 (or Trade Date plus 3 days) which indicates when the two custodians (the guys who hold the stocks on behalf of the user) exchange the money and the shares. It’s invisible, boring and entirely necessary to facilitate settlement without ending up in chaos. Massive Rainfall settles everything within the hour (and it’s easy since it’s all within the same entity).
  2. Three dimensional (3D) securities. Each security has three ways to derive its price – temperature, wind speed and precipitation. At settlement, it needs to be clear which derivation is used to move money around (as well as at expiry). This reduces the number of securities (boring) and makes it trickier to settle/expiry (yawn). This could be brilliant, stupid – but probably just uninteresting. Later we may add more derivations.
  3. https – similar to the heavily encrypted protocols used by all major banks (or all banks, hopefully), I’ve disallowed any non-https connections to my site – even to my blog. This should provide comfort to anyone providing sensitive information to my site. Also – don’t provide sensitive information to my site for the moment. I don’t need it, and when I do, I’ll ask for it.
  4. No short sales, no Icebergs, no AllOrNone, no Client Reporting, small list of cities, blah blah blah – there’s too many things to do all at once. I prioritized what I thought was important. Users will likely completely disagree. So tell me…

So… much… work.