Topic: [BitFunder] TU.SILVER -- Interim Report April 12th, 2013 - page 5. (Read 12890 times)

I do not disagree with your intended purpose of the loan, and if it was not linked to the dollar, I would add funding to it.   But with it linked to the dollar, I benefit from a falling BTC/USD and you benefit from a rising BTC/USD.  Security aside, I'll lend dollars for dollars, but when I lend BTC I expect BTC in return, so personally. I'll avoid loans linked to the dollar, or any national fiat. 

Well I'd not go so far as to say there's no such thing as a secured loan - but for something to be 100% secured then whatever's backing it needs to hold a value higher than the loan throughout the entire loan duration.  That rules out pretty much any BTC security.  It can have 100% backing at the start - but can't really guarantee keeping that level of backing given the rate of default around here.

Although BTCJam's claims of 100% backing are inaccurate it definitely IS a step in the right direction.

I actually tend to agree that we're in a speculative bubble - but I don't think we're at (or even particulary close to) the top yet.  Definitly a classic Meow though

Thanks for the vote of confidence.

Continuing on from your line of reasoning, there is no such thing as a secured loan because the value of the securities used to back a BTC loan can decline WRT the price of BTC.

Interesting.

Well for what it's worth I've been speculating a little on the mtgoxUSD price, you may enjoy this little gem I came up with recently: https://bitcointalksearch.org/topic/mtgoxusd-bounce-to-41-drop-to-20-148358

I think we're in a speculative bubble. I may just redo the loan in BTC anyways. Could be to my advantage :>

Actually it's NOT a 100% secured loan (it's 100% backed right now - but not necessarily for the loan duration) - as the majority of the backing is BTC denominated (BTC-BOND).  If BTC falls vs USD then so does the value of BTC-BOND in USD and the security is no longer 100% covered.  To be genuinely 100% secured it would need to be backed by something that had a USD value not a BTC one.  The ESECURITY bonds, on the other hand, ARE valued in USD (though sold in BTC) so should retain the same level of backing regardless of any exchange-rate moves.

To be clear I have no doubt that you'll repay the loan - but your statement is, nonetheless, inaccurate.

Right. My main worry is that if the loan is for investment, how will the person pay it back? I am very suspicious of direct investment loans. I've already seen one person take out a "rep loan" for the purpose of investing in other loans. When one person defaulted on him he couldn't make his payments and defaulted in-turn. That's essentially a scam because the person asking for money is taking a loan but pretending it's investment in a business. I wouldn't go so far as to say they have the full intent to default if their investment goes awry, but it's an unfortunate consequence that many will have to face soon. BTC has been going up recently and people who took out 30, 60 and 90 day rep loans will almost certainly not be able to pay them back.

The other issue is that people who take out BTC denominated loans for the purpose of investment invariably end up investing in something actually denominated in US dollars -- like a mining company, for example. There just aren't that many places you can invest in a pure BTC enterprise. I wonder what the market will be like once we hit the top. People will probably have to start issuing linked loans just to get funded :/

Well, except loans that are for activities directly involving btc - btcQuick, selling bitcoins (except a lot of them are suspicious), and of course a short on BTC.

So if BTC holds or drops, would you have been right to avoid linked loans?

It's just a loan, not intended as a play on currency.

Second point, this is a 100% secured loan with a real payment plan attached to it and it is something which will increase the strength of bitcoin.

It is not a rep loan. It is not a loan to invest in other loans. It's a real loan with a real purpose. You will not find many of these denominated in pure BTC. Any large loan like this take out in BTC is almost certainly a scam, since the interest rate is meaningless due to the volatility in BTC. Essentially EVERY loan becomes a currency play if you think like this.

That's why I like silver. Regardless of how many pieces of paper it takes to buy one, it's always the same amount of silver.

Well it wasn't explain like that in https://bitcointalksearch.org/topic/ann-btcjam-loans-denominated-in-other-currencies-usdeurru-145158 but I do see what you say when hovering over it.  I will just avoid that loan or any other linked loans.

Hover over the MtGOX USD icon:

The loan is only displayed in dollars, it is not tied,  you borrow 50btc you repay 50btc + interest

Yeah - I totally missed that the repayment is based on USD.  That removes the exchange-rate risk from you (and dumps it on the lenders).

Do wonder how many lenders miss it as well - it's rather deceptive of BTCJam to list it as a BTC loan when it's actually a USD loan that's being transacted in BTC.  The amount requested and monthly payments should be listed in USD really (criticism is of the site, not you) as that's what's being lent and repaid.

So yeah - my criticism was unfounded.  Though I DO think it's just very slightly dodgy not to mention anywhere in your loan description that lenders are taking on significant exchange-rate risk.

I think the real problem here is you have misunderstood both what I said about BTC and the loan on BTCjam. I won't quote our recent, audited financial statements, but I will point out that the loan is tied to mtgoxUSD. You must have missed that


Don't think too hard about it. Basically we're a "silver store". We sell silver. Beyond that, if you have any questions I'd be pleased to answer them.

Isn't taking a BTC-denominated loan to buy something (silver) valued in USD rather risky when BTC is rising fast?

You have to pay the loan back in BTC not USD - so if (this is an extreme example just to show the point) BTC were to double between you taking the loan and selling the silver then either:

a)  The funds raised from selling the silver would only pay half the loan back

or

b) You'd have to sell the silver at a 100% markup.

I'd be wary of gambling heavily on BTC not rising - given that you've twice so far made assertions BTC will fall and been totally wrong (the first time you were so convinced you made a new thread about how BTC was going to fall and silver rise - and of course both went in the opposite direction).  Why are you so confident you're right this time that BTC won't rise further?

Obviously if BTC falls then the loan works out very nicely.  But this makes the loan much more a bet on BTC falling than anything to do with silver - the fund could either make a nice profit or lose more than it has available in spare cash depending entirely on how BTC moves vs USD.

(I've ignored here changes in the price of silver - if it falls then it makes the situation worse, if it rises then it improves the situation).

I thought the fund was meant to gamble on selling silver options (was never clear WHERE you could sell covered calls that were covered by silver you personally held) not on the exchange-rate.

Hello. As part of our aggressive, multi-pronged expansion plan, I have initiated the following loan request on BTCJAM:

https://btcjam.com/listings/2172

TU.SILVER Business Development Loan

Amount @ Rate
    ฿50.00000 @ 1.0%
    MtGoxUSD
    105% Secured

Payment
    ฿17.00111
    every 5th of the month

User
    usagi

User Loan Activity
    0 Active, 1 Repaid

Expires
    2013-03-15 00:00
    (in 13 days)

Term
    90 days


Description

TU.SILVER business development loan.

TU.SILVER is the largest precious metals fund in the community, with more than 20 times the liquidity of all precious metals funds combined. TU.SILVER's volume is around 60oz per month.

I usually order 20oz. of silver at a time as coins. However, I can save more than 50% on shipping if I order 50oz. of silver at a time. Additionally we can get a bulk order discount of up to .50 cents per ounce of silver this way. This is very significant when you're trying to attract customers by beating your competitors in price as well as service.

Basically the plan is to buy silver in one form or another in bulk and then sell it for a profit. I suspect my volume would be even higher than 60oz. a month if I could move silver a bitcent lower than I do now.

Please see TU.SILVER's profile page here:
https://bitfunder.com/asset/TU.SILVER

Please see TU.SILVER's audited monthly financial reports here:
http://kongzi.ca/silver/20130224TSR.pdf

Note: This is a 100% secured loan. As it should be.
Note: Loan will be paid back ahead of schedule if we move the silver before then.

Wow, those trades happened 1 second apart, and about 2 or 3 seconds before I canceled the sale order and placed the new price (0.1309).

I guess I'll let the trades stand then. Too much trouble now to unwind it. For future reference, although we only publish financials once a month, I'm always available to answer questions here or via PM. Now that we have published our first audited financial report, I can discuss valuation in PM with any interested investor.

I sold 9 shares at 0.18505 - I really wonder who purchased that without looking at the spot price of silver

More profit for BTCINVEST through!

I'm pleased to present the TU.SILVER February Financial Report, and to announce our first dividend of 0.00128 per share.

February Report: http://kongzi.ca/silver/20130224TSR.pdf

Our internal valuation of TU.SILVER: 0.1309 book value.

Dividend paid: 1.024 over 800 shares *(0.00128 per share or 0.98%).

Please see our report (linked above) for more information. Thanks and good luck.

P.S. to whoever just bought 9 shares at 0.1851, you beat my order cancel by about 5 seconds. Please PM me and we can arrange a partial refund so your purchase price is our listed 0.1309 per share.

Good questions. We buy all silver before we sell it. So our silver holdings are always greater than what's needed to back outstanding shares. As for how much we've sold, there are 800 issued shares and you can tell that there are 524 outstanding shares from the information BitFunder publishes. However that is not a complete picture because we've also sold sliver to customers who have redeemed it for physical metal, and some customers have registered shares held off-market on their behalf by the company.

I tend to avoid discussing specific prices and amounts, because that's our advisor's job. Our current financial oversight advisor is DeaDTerra who is responsible for preparing our monthly financial reports. I can tell you that DeaDTerra has said he will have our financial report for February done any day now. At that time you will be able to see how many ounces we've sold and our book value and probably how it was calculated. I hope that information answers your questions!

My question is simple, exactly how much coins did you sell at what price and what were the silver holdings you got for it at that point. (3 numbers really, n BTC, n USD, n Silver)

Hello all! Quick announcement.

I'm waiting for DeaDTerra to put the finishing touches on our first financial report at which point I will pay dividends! First dividends are slated to be approx. 0.00192260 per share for February, paid this sunday, subject to his approval and/or release of the report to me.

Based on the prices people have bought in over the last week or two, I feel confident investors will be very happy with the report. I've therefore gone ahead and adjusted the ask price to what I've calculated the book value to be. Do you feel TU.SILVER should trade at a multiple of 1 to book value? Well then.

At any rate I stand by to answer any investor's questions. Good luck and happy investing.