Oh, we were discussing break-even in comparison to simply investing 960 BTC with Pirate, not general break-even for a non-default.
Who is investing this 960 BTC?
The PPT group. When they issued PPT.A, they put 960 BTC in the insurance fund. We are stating that it would have been more profitable to simply invest that 960 BTC in Pirate.
Because PPT would earn more if they took the 960 btc and invested directly with Pirate since they are risking to lose that anyways if pirate defaults.
Sure, but if Pirate defaults they will loose 960 to you, not to Pirate. If they invest the insurance to Pirate they'll loose 1920 since they promised to pay you 0.32 BTC / share.
Investing the 960 BTC in Pirate instead of running PPT.A, not in addition to.
Case 1 - Sell 1 share of PPT at 1+x (if sold at 1.038 then x=.038)
no default: PPT makes x+.03 (.03 is the extra you get for compounding)
You seem to assume they'll invest no more than one BTC / share. If they sell for more than 1 BTC / share, why wouldn't they invest it all?
Less loss if BS&T defaults.
(Patrick, if you feel this discussion is OT, just say so and we'll stop.)