Ask HN: advice needed on how to overcome objections to my new Bitcoin product | Hacker News Reader

Ask HN: advice needed on how to overcome objections to my new Bitcoin product

5 pointsantonwinter16 comments

I have developed a software application that literally creates Bitcoins from nothing. Well strictly speaking it looks for arbitrage opportunities on the cex exchange, and sometimes when the market conditions are just right, a couple of simple trades conjures bitcoin out of thin air.

It works, for real. My software conjures money essentially out of thin air.

BUT I have a couple of really thorny problems and I'd like to ask for the help of HN.

1: - no one believes me. They think it's a scam. And indeed it SOUNDS scammy. How the heck to counter this?

2: - people don't trust me. I'm an ordinary middle aged man with a family who has been developing software for more than 20 years. I know I'm trustworthy, but in the bitcoin world, no one trusts anyone. How do I get people to use my software when they are super paranoid about being hacked etc because it seems that everything bitcoin gets hacked.

FYI extra information: my software does not make any great quantity of bitcoin in any given trade - we're talking fractions of a bitcoin each time the opportunity comes up. However I think there's plenty of room to grow this across exchanges and limits on any one users trading limits the amount that can be made.

Any advice welcome. The software is called "coinfinder" and the site is www.bcoinex.com

Thoughts? Advice?

Anton

One thing to note: for the purposes of easy explanation, I have said "bitcoin" above but its actually trading gigahashes which are used by cloud mining to create bitcoin. A future version of my software will automatically exchange the gigahashes for bitcoin so it will be native bitcoin finding.

I've seen a number of scams revolving around forex/sports arbitrage, and it would warm my heart if you could appropriate their marketing techniques for a genuine product. There was one in particular which I read all the copy for in sickly fascination. I couldn't find it again, but if I do I will post it to this thread.

They often have a ticker of out-of-date arbitrage opportunities, to demonstrate their capabilities. Your trial is superior to this in one way, and inferior in another (which is key.) You offer real moneymaking opportunities, proving the value. But potential clients, as you're well aware, do not yet trust you. And running your code requires trust. I think you should take a leaf from the con men's book, and show out-of-date opportunities on your site.

The scammers give an explanation of what arbitrage is, and what "separates" their system from a get-rich-quick scheme. They invoke images of fast cars and big houses. They are, of course, exaggerating to prey on the naive and desperate, but the principle holds for a real product. The wikipedia page you link to is sterile. If it were me, I'd write an explanation which dealt directly with gigahashes, and which sought to excite your customers and inspire them to imagine their pile of BTC growing every six seconds.

These next thoughts are more my own. If your software is any good, people are going to reverse engineer it; why not post the mathematics behind your system on your site? If people can see the basis behind your program, they've a reason to trust it. Even if they don't understand the principles, they'll be reassured to see that there are indeed principles. I'd put up all the personal details you're comfortable sharing. If people can read a bio blurb and see your face, and feel you've made yourself vulnerable, they're much more apt to make themselves vulnerable to you. (Of course, if you put up too much information the vulnerability ceases to be metaphorical.)

Additionally, while I understand you can't compromise your competitive advantage, I'm curious to learn more about your system. Is six seconds an arbitrary number, or did you arrive there empirically? Are you running the tool yourself? How much have you made? What would be the impact if many people started running your tool, and (if their clocks sync up) take advantage of the same opportunities? Would that degrade its utility?

@fabulist, thank your for taking a look and giving real feedback. it is very much appreciated.

in no particular order, the questions you have raised.

Why 6 seconds. cex has a 600 requests per 10 minute limit on their API otherwise they ban the caller. i make sure that I am under that

I already know that others are using triangular arbitrage, in the stock market and I suspect they are also doing it on cex, otherwise I would be getting large numbers of profit opportunities rather than say 20-60 a day i am currently getting. So others doing something similar cant be controlled.

out of date opportunities i am thinking of doing. i can simply report every arbitrage i find to let people see what is happening. Although currently the trial which doesnt need people to even sign up or use cex shows it live as it happens.

I think you are also right into going into the math/detail. originally i have been thinking about keeping it fairly "high" level because most won't want to learn the math, but it may give them a greater sense of it being a real opportunity

thanks again fabulist

No trouble, I'm experiencing similar problems with trust trying to get my pentesting company started. The skepticism is frustrating, if understandable. :)

From what you've said, I'm inferring that when one utilizes an triangular arbitrage opportunity it is expended. If thats so, I would advise extreme caution. This could make scaling painful, as your customers would be using the same algorithm and finding the same opportunities, but only one of them would get the payout. The result would be that the value of your product decreases with the number of customers. Perhaps you could adjust your code so that it queries CEX no more than 600x/10min, and ever 6s on average, but the timing has a random element. This would prevent your clients from syncing with each other. YMMV.

The obvious question is why don't you use your software instead of selling it?

I second this question. If you can make Bitcoins out of thin air, then why are you selling it. How do you make more profit selling it than doing it yourself? Is there anything shady or risky about your process?

I doubt selling it prevents him from doing it himself.

yes, i am running it myself and making a profit, but as i mentioned (in another post) it is a small amount. currently it is about $1 a day with a very small risk. it may grow, but that depends on volume or volatility growing at cex. the profit is directly tied to volume and volatility.

in terms of the risk. triangular arbitrage is in "theory" safe. in that it ONLY trades when there is guaranteed profit. in practice what happens is that other automatic trading bots can place the trade faster than your bot which means you have to wait for the trade to complete. the other risk is that there can be a network problem. the triangular arbitrage needs 3 trades to complete, if only 2 complete and the network goes down, you can be left scrambling to fix that last trade. both the risks seems to be fairly managable from the 1 month or so that i have been successfully going.

so why am i trying to sell it? if i can get $50 straight up rather than wait i will do it. also, "quant trading" from the real world stock market is way way advanced on what this app does, so i have plenty of new trading bots to create and in some fantasy land of mine i would love to be the guy that created the first set of software for it on the bitcoin market

thanks for the input cryptolect

I might also add, that to give an analogy. if bitcoin mining is so good, why do cex sell cloud mining and not keep it for themselves?

As with them the answer is that it is more profitable to build a customer base and profit from them and let them then make a small profit on the mining

Mining is not marketed as risk free though. I have personally made some money through automated inter-exchange arbitrage but I ended up concluding that the risks outweighed the rewards at current time (maybe intra exchange is less risky).

most of the inter exchange arbitrage opportunities are eaten up by the fees and because there can be a time delay across exchanges it also adds risk. The intra trading (especially in my case ) has those risks minimized. there are no fees on cex and the trades happen very fast.

so if you wanted to make more than $1/day with this, could you do it personally?

it sounds like the more people running it will essentially reduce the number of arbitrage opportunities available to everyone else. is this true?

@olalonde,

I am using it. it works quite well, but it is not big money. it makes as much as the volume and volatility of cex. So that works out at about a $1 a day right now. if cex grows, or if there is more volatility then it will increase.

right now i am starting to look the coding for other exchange.

maybe its not something bitcoiners are going to accept because it seems too good to not be a scam or it doesnt seem like there is enough in it to make it worth while.

currently the feedback i get is that people think its a scam

I am thinking of doing a speech at the local bitcoin events but that doesnt seem too scalable

HN actually use replies, rather than @tags. Below olalonde's comment, you'll observe theres a small "reply" link. I can understand how it'd be easy to miss though.

Paul Graham often advises people to "do things that don't scale" in order to get to a large scale. Doing a talk sounds like a cool idea, and if it get onboard your first few customers (or additional customers if you already have some), its a win.

Just an update on the product launch.

I've got a handful of sales coming in which is great. Mostly driven by a post on the bitcoin forum.

People there are certainly raising the trust/hacking issue. I am being open and honest with them and trying to communicate in a responsive manor. Maybe honesty, responsiveness and time will be the key.

Here is a great example of what not to do:

https://coingeneration.com

lol point taken.

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