Comment [#7837]

All Comments

25.91
Created by kr5dit 5 months, 3 weeks ago
[ 25.91 | 0.00 ] [#7837]

Intro

You might wonder what the 'correct' price of kr5dditz are. Not just what they are currently available for on the market, which fluctuates wildly, but what they are worth to you. This is difficult because there are many unknowns regarding how kr5dditz work, how they will work in the future, what the supply of them is like, how that might change, how you can gain or lose them, how popular the site might become, and what work that lazy procrasti may or not put into it (come on, it's in the name!)... If only you could ask Satan how much one kr5dditz is worth, and make decisions based on that as to whether to buy, sell or hold!

Well, I'm here to tell you right here and now, that the almighty Satan is here to help! In this ritual, you will call upon Shannon's Demon, and with Satanic Magicks you will learn the TRUE PRICE OF KR5DDITZ!!! It is your soul!

Ritual Items

What you require to perform the ritual:

  • One Ouija board and a planchette.
  • One quart of goats blood.
  • One live (for now) chicken (a big black cock is best... but a pussy is also good!).
  • Satanic ceremonial sacrificial knife.
  • 5 black candles (for satan) and a green candle (representing money!!)
  • A spare 3.141 minutes a day.
  • A 2.7828 metre diameter chalk image of the following sigil:

LOL JOKES!!! NO!!! Of course not... You don't need any of that (maybe the 3 minutes), and it won't cost you your soul either (kr5ddit itself might, but that's a different story).

Shannon's Demon

Shannon's Demon is an investment strategy created by "The Father of Information Theory", THE GREAT Claude E. Shannon. It was Shannon who eventually solved the mystery of Maxwell's Demon, the problem that entropy would seem to decrease, against the laws of thermodynamics, if a demon would allow fast moving particles to move from a cold box to a hot box, and slow moving particles from the hot box to the cold box. It took a hundred years to solve. The solution is that the demon itself would increase the entropy of the universe because it has to keep track of the particles, and unless it has infinite memory, it must destroy some information that it knows about those particles, which is a thermodynamically irreversible process, which increases entropy. Shannon found the link between information and thermodynamics! It takes energy, and increases entropy, to forget bits! Information entropy!

Shannon was interested in many problems, he proved the perfect secrecy of cryptographic one time pads, he proved the information limits that a noisy channel can carry, he invented error correcting codes, and he even built a juggling machine! However, it was his friendship with physicist John Kelly that would lead them both to apply Shannon's newly discovered Information Theory to the domains of gambling and investment. From this friendship, Kelly created what is probably the most important mathematical function in gambling, the kelly criterion, while Shannon applied his knowledge to Blackjack and realised Shannon's Demon.

You see, what Shannon and Kelly realised is that money itself is information! When you place a bet or buy a stock, you are bringing information to the market. You literally signal your beliefs to the rest of the market. Kelly shows that you should only bet the fraction of your bankroll that represents the marginal information you bring to the market. Gamblers call this marginal information their 'edge'. Bet too little and you are losing out on potential profits, bet too much and you face ruin, even on a bet with positive expectation! Similar ideas apply to the stock market.

Shannon's Demon is named due to its conceptual similarity with Maxwell's Demon. It's a simple function that profits from the fluctuations in value of two different commodities or stocks. Unlike Maxwell's demon, it isn't a paradox or impossible, in fact, Shannon proved that his demon is the optimal zero information investment strategy between two stocks. Meaning, if you know absolutely nothing about the relative value of the two stocks, and they could change value by any (unknown) mathematical relationship or any random distribution or whatever, then you cannot do better than Shannon's Demon. The converse, of course, is that you can do better if you have more information... but it's a good place to start!

Shannon's Demon is also known as a volatility pump.

The Ritual

Shannon's Demon is incredibly simple. It says, if you have two stocks, and you don't know the relationship between them, the best strategy is to hold those stocks in a 50/50 ratio, and rebalance to 50/50 as their relative values change.

That's all there is to it.

This means you will automatically 'buy low' and 'sell high'. If you start with a 50/50 ratio, and the price falls, you must buy at the lower price to rebalance. When the price rises, you must sell at the higher price to rebalance. This is exactly what you want!

Luckily there are no commission or other fees on the exchange to complicate things right now, so you don't have to take any of that into consideration! And given the huge swings in the price of kr5dditz, from a few cents each to a few dollars and back again in just a few days, it seems an ideal stock pair to try Shannon's Demon out on.

Help with the Ritual

I've created a javascript helper app for you at https://kr5ddit.com/static/demon.html.

Optimising the Ritual

There are some things you can do to optimise this though. Instead of just taking whatever price is available on the exchange, you can try to beat the current best price, and buy or sell at that value. Say the current spread is 0.1 and 2.5, and you should sell your kr5dditz for mbtc at either price, then maybe offer 2.3 or even 2 mbtc/kr5ddditz, instead of simply taking 0.1... but be careful, even that 0.1 might disappear! So, you might hedge that by selling some kr5dditz at 0.1, and the then leave the rest at 2.

Always remember that you should use Shannon's Demon as a guide, rather than as an absolute proscription.

Variations on the Ritual

You don't have to hold a 50/50 ratio. You could hold another ratio, depending on your beliefs of the likelihood one will rise relative to the other. If you knew that kr5dditz are only going to become more valuable over time, then you would hold no bitcoins at all... but then you wouldn't be able to take advantage of price drops at all. Maybe you're more comfortable with your bitcoins, so maybe you only want 10% of your holdings in kr5dditz... or (more reasonably) somewhere in between like 40/60 split.

The ratio field in the helper app allows you to do this, put 0 for no kr5dditz, 1 for only kr5dditz, 0.5 for standard 50/50 split, or 0.4 for a bias towards holding mbtc.

Also, maybe you want to hold onto your last kr5dditz, no matter what the price, in which case, just subtract one from your real kr5dditz balance and let the helper do the rest. Maybe you've put a lot of bitcoin in, and don't want to risk so much bitcoin, well, just subtract the part you don't want to risk off that!

Just remember to keep your offsets and ratio consistent, or you lose the buy low, sell high guarantees of the demon, or at least, don't change them dramatically all at once, especially when the new and old values disagree as to whether you should buy or sell.

Again, you don't have to do a perfect balance all the time... If the app says to sell 20 kr5dditz for 1 mbtc, for example, maybe only sell 10 kr5dditz for 0.5 mbtc... Ie, don't go all the way, but only part of the way, and maybe the price will move in your favour and you can get even more profit on your next rebalance! Use the demon as a guide, not an absolute rule.

Finally, use some intuition!!! Remember, you DO have more than zero information here... so there are better strategies than Shannon's Demon... It's just a guide!

More information

I found the following articles pretty reasonable:

There are many others, but now that you know THE TRUE NAME OF THE DEMON, you can do a google search yourself!

Disclaimers

Despite all the positive sounding facts about Shannon's Demon, it does not guarantee that you will make a profit. A long series of price drops will cause you to lose money, in some circumstances even faster than if you hadn't rebalanced at all. It is a system I have used in real life, with other indicators, to trade bitcoins, for example, and I generally have had good results with it, but again, there are no guarantees. Also Shannon is only guaranteed to make a profit in a random walk, which will cross every price an infinite number of times, however, we can safely assume that in the LONG LONG run, the price of kr5dditz will drop to zero and stay there, probably long before the heat death of the universe even! So, in the very long run, this will cost you all your bitcoin... but which will go to zero first, bitcoin or kr5dditz? That's for you to decide! In either case, when using Shannon's Demon, when one of the stocks goes to zero, so does your portfolio... again... BEWARE!

I can offer no guarantees on your eternal soul either.

Conclusion

Alright, that's about all you should need to know now to start buying and selling kr5dditz on the exchange for bitcoin!

With Shannon's Demon you now have one reasonable basis for valuing kr5dditz vs mbtc... If you have kr5dditz but no mbtc, then this strongly suggests you should sell some kr5dditz! If you hold a large amount of mbtc, but few kr5dditz, then Shannon suggests you should buy kr5dditz, and importantly, if you hold a bit of both, then you won't be so easily conned by the admin again into selling all your kr5dditz for just a few pennies each!!

Hopefully, with just two or three of us competing on the exchange, even all using the same method, we should find a consistent and robust price for kr5dditz!

All the best on your trading!

HAIL SHANNON!


[ Reply ]


0.00
Created by TheCatsVagina 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7926]

I attempted to do that, ended up with this result:

https://youtu.be/bSxuXQCEC7M


[ Parent | Reply ]


0.00
Created by kr5dit 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7929]

It's possible your sigil wasn't made with accurate dimensions?

Did you accidentally use feet instead of meters? Satan's punishes those who don't use SI units. Look what he did to that mars lander thing.

Also, I should have mentioned, your sigil should be exactly 'e' meters across... down to the last decimal place... I should have been more specific about that.


[ Parent | Reply ]


0.00
Created by TheCatsVagina 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7961]

OK I did not know it was that hard.

I tried it again and got this:

https://youtu.be/5ytjaMfoF2M


[ Parent | Reply ]


0.00
Created by kr5dit 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7978]

I'm sorry, I lied... I didn't want to tell you the truth...

You put the black candles around the small star and the green candle in the middle of the big star... probably best use 3 black candles and 2 red candles (at the top sides, like horns)...

That's how you summon shannon's demon and untold wealth... black candles around the big star, and a green candle in the small star is summon poltergeists...

I really should have been a bit more specific...

Sorry... Ummm, get home insurance, make sure you're covered for acts of god, gods, lesser gods, ghosts, spirits, demons and lesser demons...

Get yourself a cracked out dwarf, some rope and fire extinguisher... best just sell the house if you can.

Sorry about that mixup!


[ Parent | Reply ]


0.00
Created by kr5dit 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7966]

Yeah, that's right! That's supposed to happen... that's how you know it's working!

Well done!!! You're now on your way to being an investor.

Mostly just try and not think about the "weirdness" (as we like to call it)... well, most all of it really... just follow along the instructions and put all that out of your mind. Meditation and xanax can both help if you get a little stressed out by it.

I don't know if I should bother mentioning... but if your kids go missing into parallel dimensions via vortexes in their cupboards or something (I know... it's very unlikely, it sounds crazy, I hesitate to mention it... but you never know... I'm just saying is all)... ummm, you might need some rope and a cracked out dwarf... best have some of each spare around the house... if you can... just in case that happens... like a fire extinguisher... oh, and also a fire extinguisher... but like I said, best not to think about it otherwise.

You probably want to get house and contents insurance too... you never know... lol.

Welcome to the world of finance!


[ Parent | Reply ]


0.00
Created by kr5dit 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7845]

I am quite serious that you should do this...

Turn some of those kr5dditz into mbtc!

Hedge against downvotes!

Profit from the price fluctuations in kr5dditz!

Trading can make you up to 50% cooler, adds inches, regrows hair and takes years off your wife!


[ Parent | Reply ]


0.00
Created by kr5dit 5 months, 3 weeks ago
[ 0.00 | 0.00 ] [#7838]

I forgot to add the link to shannon's satanic juggling machine.

Lot easier than juggling some of you lot (you know who you are!).


[ Parent | Reply ]