Topic: [BitFunder] btcQuick - Bitcoin Sales Service - page 42. (Read 94233 times)

I was going to invest... good thing I waited some time. It might well be all well and good, but not making good on deadlines is not a shiny start by any means.

Why would bitfunder have to approve anything before you pay dividends?

We are awaiting the review and approval of our P&L from bitfunder. As soon as we have everything ready for our investors we will post the P&L and the 1st week dividend. I will post another update tomorrow @ 12:00 PM MST.

Thanks,
-Ascension

"Today" is almost over according to my timezone. Any updates on when the dividend can be expected? Or should we expect it for end of tomorrow/a few more days?

Cheers,
VJ

You are covering the issues surrounding these investments very well.

However there is a consideration that we need to make here. In a market or economy where the majority currency is not being deterred by inflation, under a growing population, companies will become lower valued unless they are growing at a rate larger than the overall economic growth.

Almost nothing affected by nature or humanity grows or declines at a predictable rate, however it may be somewhat bounded. What this really means is that there will be growth spurts and declines possibly around another, more predictable rate.

So right now, while BTCitcoin is screaming ahead, it seems like holding USD cash can be a problem for btcQuick. However, the other direction will happen. At that time, everyone will want to sell BTCitcoin and there won't be enough USD unless you are ready. The trick is to manage the company in such a way as to mitigate the risks involved, and make a profit from predictability. If you can predict the peaks and valleys, you stand to make substantial profit. If not, well...

So what is btcQuick doing to predict the needs and the market?

Thanks

Dividend payment will be made today as to include sales from yesterday.

Thanks,
-Ascension

Where is the April 8th dividend payment?

Well, the first four dividends were supposed to come out weekly.

Ummm the dog ate it. He had family issues. He'll do it soon! Etc.

Although the first div payment is a month away, I don't see why people volunteer deadlines if they fail to meet them. It's slack and disrespectful to investors...

FYI in the Bitfunder profile it does state "2013 March - $ 2,741.64 USD (Est. 21.08461538 BTC)"

Has P&L been posted? If yes, where?

Nope, missed the last part heh. Thanks Logik.

Did you catch this post on the previous page, TradeFortress?

Was the ask at 0.0001 pulled?

Yes - that's, in theory, a very good to resolve the exchange-rate issues and stabilise BTC value of assets/capital.

But anyone who has to go to BTCJam to raise funds at 3% per month is unlikely to have had that option available.  Unfortunately most "investments" don't give proper consideration to that sort of isse - and investors end up with massive, undisclosed, exposure to exchange-rate movements.

There are a few issues with it in practice:

1.  Sourcing USD-denominated credit.

I faced a similar ssue myself - I run a small LTC-denominated trading fund which conducts most of its trading in BTC-denominated assets.  If I took no action then we'd either not be able to do most of our trade or end up with 80%+ of capital effectively denominated in BTC - meaning fund value would almost entirely be determined by the LTC/BTC exchange-rate.  I addressed that by selling BTC-denominated bonds - with most of our BTC denominated investments effectively done with that bond capital (not all - we have to keep some BTC exposure ourselves to ensure bond-holders' debt is safely covered if LTC crashes AND we make fairly heavy trading losses).  I maintain an exposure level of around 15% to BTC.  So if LTC rises vs BTC (as has just happened dramatically) then a doubling of the exchange-rate ends up only losing around 10% of value rather than 40%.

But here is where we run into a problem for anyone trying to the same in terms of BTC/USD.  I have no problem raising explicitly BTC-denominated capital that's transacted in LTC (the bonds have a face value in BTC, but are sold/traded/bought back in LTC).  But I expect there'd be little interest here in bonds with a face-value in USD (but transacted in BTC) which is actually a bit of a paradox as the same people who wouldn't touch an openly USD investment will happily throw their funds at one that's providing the same exposure covertly (and, in many cases, without even fully realising it).  Personally I'd rather take on a specific risk (e.g. exposure to a certain currency) where the issuer had identified the exposure and was properly ensuring clearly defined exposure than take it on where the issuer hadn't properly considered the situation.


2.  Cost

If the shares aren't sold denominated in USD and USD-denominated capital is raised seperately then there's going to be an interest-rate associated with servicing that USD-denominated debt.  Is that going to leave anything at all for investors who bought shares?  I can't see anyone on here buying USD-denominated debt (bonds/loans/whatever) for trivial rates.


3.  Duplication/Lack of use of capital

Linked to both the above is the issue of what is actually done with shareholders' capital if it's no longer being used to conduct business?  Would people invest if their investment was just being used to pay off existing debt and line the issuer's pockets (taking a significant multiple of total profit to date as an up-front payment as well as a huge share of equity is lining your pockets) whilst capital for actual trading was going to be raised via new debt which, being debt not equity, would get paid first from earnings and have first claim on assets?  There'd still have to be capital raised from share sales - to ensure backing for debt in the case of trading losses.

This is actually the issue I ran into - that funds from actual investors in the fund were largely sitting idle, with 90% of them just sitting around as collateral for the bondholders' capital that was actually being used.  I had plans for how to address that - but the recent massive rise in LTC price has effectively solved it for me (by increasing the value of LTC assets such that they no longer represent such a minority of investment - coupled with buying back of units to reduce LTC-denominated capital, with the higher rate meaning bonds are still very well protected).  And the problem was never quite so severe for me - as at least I was always doing some significant LTC-denominated trading, whilst a business such as this has all active capital (that actually in use rather than reserved for use) in USD (specifically, in the process from payment by a purchaser until it becomes liquid in the hands of the issuer and can be converted).

I'm not sure what the solution is - though something like what I discuss above is definitely one approach.  The real problem is the continuing insistence of companies that are effectively fiat-denominated (i.e. all active assets/capital are in fiat) to list in BTC because they can't raised capital elsewhere.  Ones such as this are (probably unintentionally) deceptive - as on the face of it they can appear to be BTC-denominated.  But in practice the only BTC exposure they have is from inactive capital which, if a significant part of total capital, means they've compounded one error (misidentifying exposure) with another (raising excessive capital so that earnings are diluted).

I mention my fund/bond to illustrate how a similar situation was addressed - not to try to get investment.  The fund is buying back rather than selling units (we have more capital than we need due to LTC's rise) and no new bonds have been issued for a few weeks.  LTC has quadrupled vs BTC this week.  Without the bonds, units in the fund would have lost ~60% of face value in LTC and gained only around 40% if valued in BTC.  With the bonds they've lost under 20% of face value in LTC and approximately trebled in value if valued in BTC.  That's why managing currency exposure is key - without it, a rise in LTC vs BTC would be a disaster for my investors as they'd take heavy losses in LTC without any large gain from the currency's own increased strength/value.  Of course there IS a flip-side to it - if LTC falls vs BTC then investors DO lose value as a result (LTC value of units rises a small bit, BTC value drops a lot) but that's what they should expect from investing in something in currency X - that the price is largely unaffected by changes in exchange-rates and the value (expressed in any other currency/measure) moves broadly in line with the fortunes of currency X.  And that's what investors in all these USD-denominated in practice but pretending to be BTC investments are NOT getting - the ability to manage their own exposure to different currencies.

It seems to me that what a service like this needs is a revolving line of USD credit. Just a thought.

btcJam Loan has been repaid - https://btcjam.com/listings/2143

Thanks,
-Ascension

I hope to have the P&L posted tomorrow.


Thanks,
-Ascension

Thanks for the answer.

The problem is that it doesn't address the fundamental problem that sellers of BTC face.  Which is that any holdings in USD are going to lose value any time BTC rises - and you can't avoid having holdings in USD because when someone busy from you, you don't get the USD immediately to exchange back.  What you're doing may, on the surface, appear to solve the problem - but in fact it just moves it AND amplifies it.

Let's forget, for a second, about your BTC reserves - they keep the same (BTC) value no matter what happens.  And let's look at what happens when BTC gos on a rise (which is the time you'll get most buyers).

Say the rate is 1 BTC = 100 USD
And you have 5k USD ready to replace purchases.

Someone buys 10 BTC (for 1k USD + markup).

You now buy 10 BTC and have made a profit of the markup.

You now have 4k USD left and 1k USD pending with Google.

Now BTC rises to 110 USD.

Whilst you replaced the BTC at same price you IMMEDIATELY take a loss on the whole 5k USD you're holding (expressed in BTC).  That is actually a BIGGER hit than if you'd held 0 USD and not been replacing BTC until the funds arrived from Google.

It's actually NOT possible to maintain a fixed BTC value of assets if you hold ANY significant assets in USD - any float you hold to buy replacement BTC with is immediately making the BTC valuation of assets move as the exchange-rate moves.  And you face a second dilemma if you try to do this as well.  If you hold most of assets as BTC and only a minority as USD then what do you do if you have a bunch of orders and run out of (immediately usable) USD to replace BTC?  Do you stop selling?  If so, then ALL BTC you hold over your target USD value to hold are completely unused (as you can't ever replace them as USD reserves will exhaust before they're reached).  The only purpose they serve is to allow maintenance of same trade volume (in USD) if BTC price falls.  But, of course, if BTC price falls then having held a ton of BTC in case it happened isn't exactly something to congratulate yourself on.

This seems to be a structural issue with a lot of BTC-selling vendors.  If BTC rises then you can happily trade away making a profit on every trade - but then when you come to do accounts you'll find you've actually made a loss (in BTC) due to your USD reserves driving value down.

There's two fundamental ways to address it:

1.  Be a USD-valued company.  You'd then hold only USD, buying BTC and shipping them based on orders.  Value would be stable and profits actual - but only measured in USD.
2.  Be a BTC-valued company.  You'd never hold any USD for any longer than necessary - zero USD floats of any kind.  They key then is to set the correct markup on sales.  That's comprised of 3 elements:
a)  The profit you want
b)  The costs of doing business
c)  A margin to cover the average expected rise of BTC during the period you're FORCED to hold USD between a sale and being able to purchase BTC with the received payment.

c) Is what is routinely being ignored and/or underestimated.  If it takes 2 days from the time a customer buys BTC until the time you manage to buy BTC with those USD then you have to markup by the average you expect BTC to rise in those 2 days.  It's my view that a lot of companies are just ignoring this and acting as though the BTC/USD exchange-rate can be treated long-term as being essentially random so that no markup is necessary.  That's pretty clearly untrue.  If BTC succeeds in gaining use then it HAS to rise long-term - and that MUST be priced in.

The impact of ignoring that is NOT trivial.  If your reserves are the correct size then at any given time a significant part of them WILL be in USD.  Holding an extra USD float just makes the situation worse in 2 ways:

1.  It increases the change in BTC valuation of your assets caused by exchange-rate movement.
2.  If strictly adhered to it artifically restricts your ability to actually trade.

The question then becomes what is the markup to apply for c)?  Answer to that depends very much on how long it takes you to convert received USD into BTC.  If it's only hours then not too much.  If days then quite a lot.  And your value will STILL only be likely to be stable in the long-term : in the short-term there's absolutely nothing you can do to prevent it short of not using the majority of capital (when absolute losses remain identical - just appear less when expressed as a percentage).  The slow nature of converting USD payments to BTC is what causes the problem - until a way around that is found I'm not seeing how selling BTC can be profitable in a rising-BTC environment at the sort of pretty small markups you (and others) charge.  You make profits on transactions but a loss overall (when expressed in BTC) and so would probably be better off running completely in USD so at least investors consciously chose to short BTC by investing.

1. Will the remaining capital from the BTCjam loan be in the company's wallet or is the issuer taking all funds already in the wallet himself?
A wallet holdings of about 200 BTC at the time of IPO remains in the companies' stocks in additional to the new stock from investments.

When the March statement is posted, it will include the exact starting and end BTC holdings amount as I do not have that on hand at this moment.

You are probably wondering why there is only about 200 BTC instead of at least the 300 BTC from the btcJam loan.
The process of repurchasing coins has been a manual one. There were a few occurrences of large price spikes between the
time of coin sales and repurchase. Our new site has an automated system to purchase replacement BTC as they are sold to
remedy this problem.

2. Would be nice if issuer could confirm Ukyo's statement that BTC value doesn't change - i.e. all idle funds are held in BTC.
Yes, as funds are made available to us by the processor (currently Google), they are transfered into the exchange of choice where we
maintain our USD holdings. Increasing USD holdings at the exchange relative to BTC pricing allows us and our automated system to have the funds needed to instantly repurchase coins at a proper price when sold.

btcQuick's intention are to not maintain a USD balance except for the use of purchasing BTC as stock to avoid losses due to change of price during client payment transfers. Without this USD holding, like mentioned beforehand, btcQuick could suffer losses of stock quantities due to price changes.

3. Third batch offering?
The 3rd batch of shares has been delayed until the issuer feels there is a market demand.
Any remaining shares of the second batch will also be taken down at or around the time of the March statement on or within a few days of Monday, April 1st 2013.