I've just posted the draft version of a document outlining a forex-focused fund which we're considering offering:
https://bitcointalksearch.org/topic/direct-btc-growth-forex-volatility-focus-333851
Questions, comments, etc. are very welcome!
Topic: [BTC-TC] BTC Growth: Capital Growth via Hedge Fund-Style Investing (Read 251447 times)
November 14, 2013, 12:55:35 PM
October 23, 2013, 06:11:27 AM
Dr Greg is correct about the nature of a hedge fund.
In this situation, the structure of the BTC Growth fund allowed investors to mostly survive the massive market crash that wiped out many investments. I would be surprised if anyone elses diverse portfolio did anywhere near as good as BTC Growth.
Of course the odd person that was mostly in just 1 or 2 investments may have done better but for a diverse fund I can't imagine anyone doing as well as the doctor.
Greg, I hope you return with another investment opportunity at some point.
In this situation, the structure of the BTC Growth fund allowed investors to mostly survive the massive market crash that wiped out many investments. I would be surprised if anyone elses diverse portfolio did anywhere near as good as BTC Growth.
Of course the odd person that was mostly in just 1 or 2 investments may have done better but for a diverse fund I can't imagine anyone doing as well as the doctor.
Greg, I hope you return with another investment opportunity at some point.
October 23, 2013, 05:15:07 AM
Any future plans with funds Greg or are you gonna wait till things settle a bit?
Returning to an exchange-traded, hedge fund-style offering will have to await some clarity from the folks operating exchanges. (For a non-exchange-traded fund, I did float the idea earlier of covering KYC/AML via a transaction run through PayPal, but the impression I had was that I'd have my work cut out for me trying to articulate the rationale for using PayPal.)
In addition, part of what made the original BTC Growth fund possible was the availability of individual equity options on BTC-TC; Havelock lacks them, and BitFunder (where the options offering was even weaker than BTC-TC's anyway) appears now to be nearly dead in the water.
Having said that, the forex derivatives space still offers some very nice opportunities. It's a shame that BTC Growth had to end when it did, or participants could have benefited tremendously from our forex derivative positions as a result of the big move in BTC/USD that began just a few days later. (For example, a simple unhedged long in the December BTC/USD futures contract has returned around 65% in less than 2 weeks.)
Last but not least, I've also been running the numbers for something potentially new and different in the real estate space, but I don't have anything to announce about that just yet.
We'll see...
October 23, 2013, 04:58:44 AM
...the whole purpose of a hedge fund is that it's hedged, you're supposed to be prepared to make money in down markets...
Before making a fool of yourself any further -- and wasting the time of everyone else using this thread for more constructive purposes -- perhaps you should go and educate yourself about what it actually means to be hedged.
For the benefit of other readers, I would point out that generally speaking, hedge funds tend to outperform on a relative basis during down markets and underperform on a relative basis during up markets. Outperforming during down markets does not necessarily mean making gains in absolute terms; it can mean that, obviously, but at the expense of further reducing performance during up markets. (The paradigm example of the latter is an unhedged short, which can generate gains during down markets but at the expense of unlimited losses when the market turns.)
...And then you lost 75% of their money.
Regarding the whole "making a fool of yourself" problem which you seem to have whenever you post in this thread, you're off by two orders of magnitude. As jedunnigan has already pointed out, the fund lost 0.76% during the closure procedure, not 75%. Relative to its IPO value, the fund lost a total of around 11.6% during the market chaos that wiped out several times that much from the broader market and from all but a handful of individual equities.
Contrary to your ludicrously ill-informed rant, that is the benefit of hedging.
October 23, 2013, 12:19:09 AM
Our fund has now completed the process of exiting all positions, finishing with a NAV per share of 0.08838512, a change of -0.76% from our last monthly report. As previously announced, the full NAV of the fund will be distributed shortly in the form of a dividend.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
Lol. You people should have listened to me.
After your rigmarole earlier you don't really have a right to say that, sorry. Also, the whole "told ya so" doesn't make you cool, especially when your predictions weren't correct.
You had grand claims that the man didn't know how to manage his fund etc... etc..., but when the going got tough he handled it as well as possible and helped people cash out as quickly and at as low a loss as possible. How this makes you right about him is beyond me.
75%? The fund was down .76% from the last months report. It started at .1, didn't it? Your math... sucks?
October 22, 2013, 10:18:41 PM
Lol. You people should have listened to me.
While I ordinarily try and avoid wasting my breath responding to such a widely disparaged troll, I would suggest, Ytterbium, that you should step right up if you can point to any other fund of similar size which did a better job of not losing other people's money while the broader market was cratering.
Hahahah, what a dumbass response. You claimed, incorrectly obviously - that you had some sort of experience that would help you make sound investment choices. Also the whole purpose of a hedge fund is that it's hedged, you're supposed to be prepared to make money in down markets. A) Clearly you weren't properly hedged and B) Didn't know what the fuck you were doing.
Sure, all other "funds" lost money, and that's because all of these funds were bad ideas from the start. Amateurs playing around with other people's money.
(And by the way, it's not like the money just disappeared, obviously someone made money off of these shares)
Oh, gotta love the "widely disparaged troll" line. A few people in this thread disparaged me for criticizing this hair-brained scheme. And then you lost 75% of their money.
October 22, 2013, 04:04:31 PM
Any future plans with funds Greg or are you gonna wait till things settle a bit?
October 22, 2013, 03:11:47 PM
Lol. You people should have listened to me.
While I ordinarily try and avoid wasting my breath responding to such a widely disparaged troll, I would suggest, Ytterbium, that you should step right up if you can point to any other fund of similar size which did a better job of not losing other people's money while the broader market was cratering. Sure, it's trivially easy to 1) stay in cash and plan on zero growth or 2) run a tiny fund and make large percentage gains via little more than setting "noob traps", as I described them earlier in this thread. And of course many people who dabbled in Bitcoin equities for a few months prior to the meltdown have also allowed themselves to confuse a bull market with their own investing genius.
But like I say, if you can point to any other fund of a relevant size that did any actual investment and did a better job of not losing money while the broader market was going to hell in a handbasket, then step right up.
If not, maybe you should try a little harder to find a thread where you can make a contribution that will reflect more positively on you.
October 22, 2013, 02:39:01 PM
Our fund has now completed the process of exiting all positions, finishing with a NAV per share of 0.08838512, a change of -0.76% from our last monthly report. As previously announced, the full NAV of the fund will be distributed shortly in the form of a dividend.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
Lol. You people should have listened to me.
October 22, 2013, 02:14:35 PM
Our fund has now completed the process of exiting all positions, finishing with a NAV per share of 0.08838512, a change of -0.76% from our last monthly report. As previously announced, the full NAV of the fund will be distributed shortly in the form of a dividend.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
...
Payment of the final dividend brings NAV to zero and officially marks the end of the BTC-GROWTH fund. Thank you again for the opportunity to operate the fund, even if only for a brief time.
Lol. You people should have listened to me.
October 16, 2013, 12:10:33 PM
Last time i checked BTC(and other cryptocurrencys) was considered of no value from a governement standpoint where i live, so no AML or simular things should be needed...
Unfortunately, not everyone lives in a jurisdiction where they can simply say no AML is needed.
...a few cents worth of transaction probably wouldn't qualify for AML laws
Again, the point is not the size of the transaction, but the identity verification which PayPal will already have performed for all verified accounts.
...couldn't anyone register how many paypal accounts they liked way back without any checks done at paypal, they just needed a emailadress to link to each account...
As far as I'm aware, none of this is true for a verified PayPal account.
October 16, 2013, 11:00:34 AM
Now that the original exchange-traded BTC Growth fund is no more, I've been pondering some other ways of managing membership structure that could enable a fund to be independent of the vagaries of an exchange, reduce the overheads associated with KYC/AML compliance, and also avoid turning it all into an admin-by-email nightmare.
I know that PayPal is almost universally hated across all of Bitcoin-land, but if something involving PayPal isn't just an immediate deal-breaker, I'd be grateful for any thoughts people might have on the following...
What would folks think of a system which required a small PayPal payment as a precondition for participating in a fund? This could offload the whole KYC/AML aspect of dealing with individual participants onto PayPal: to the extent that PayPal can be counted on to have established the identity of their customers, and to be adhering strictly to any and all KYC/AML requirements in every jurisdiction in which they operate, a fund provider could simply point to the PayPal transaction as having established the identity of the participant. My thinking is that this would obviate the need to handle any type of identity documents by saying, in effect, "if your details are good enough for PayPal, they're good enough for us".
The second benefit of a PayPal-based setup is that I already operate some sites which use a membership management system that integrates with PayPal: people pay a fee to become members of a site, and their details are then organised by a membership management system which I know to be fairly usable. By leveraging this same type of membership system, I could reduce at least some of the hassles associated with managing direct participation in a fund.
(None of this would do a thing for liquidity, of course: it would only be suitable for a fund with a fixed initial period of commitment, as distinct from a fund where people could just trade in and out at will.)
Would trying to involve PayPal in something like this just be a silly idea? Is it something people would consider trying?
Last time i checked BTC(and other cryptocurrencys) was considered of no value from a governement standpoint where i live, so no AML or simular things should be needed here as long as stocks, dividends and so on is denominated in cryptocurrencys, also trades between a cryptocurrency and fiat ends up in the same category as you buy/sell something of no value, therefore you cannot use losses to reduce taxes and no tax has to be paid on profits from it. I know that PayPal is almost universally hated across all of Bitcoin-land, but if something involving PayPal isn't just an immediate deal-breaker, I'd be grateful for any thoughts people might have on the following...
What would folks think of a system which required a small PayPal payment as a precondition for participating in a fund? This could offload the whole KYC/AML aspect of dealing with individual participants onto PayPal: to the extent that PayPal can be counted on to have established the identity of their customers, and to be adhering strictly to any and all KYC/AML requirements in every jurisdiction in which they operate, a fund provider could simply point to the PayPal transaction as having established the identity of the participant. My thinking is that this would obviate the need to handle any type of identity documents by saying, in effect, "if your details are good enough for PayPal, they're good enough for us".
The second benefit of a PayPal-based setup is that I already operate some sites which use a membership management system that integrates with PayPal: people pay a fee to become members of a site, and their details are then organised by a membership management system which I know to be fairly usable. By leveraging this same type of membership system, I could reduce at least some of the hassles associated with managing direct participation in a fund.
(None of this would do a thing for liquidity, of course: it would only be suitable for a fund with a fixed initial period of commitment, as distinct from a fund where people could just trade in and out at will.)
Would trying to involve PayPal in something like this just be a silly idea? Is it something people would consider trying?
I guess the USA or the UK where your based might have a different view on BTC(and other cryptocurrencys) even thou the standpoint probably isen't finally tested in courts of the highest instance in either USA or UK yet.
Involving Paypal money denominated in USD or another fiat on the other hand would probably just complicate things for no added benefit, even if a few cents worth of transaction probably wouldn't qualify for AML laws looking into the company receiving those transactions. But people would still need to have a paypal account or register one to be able to send those micro-transactions so that would just be an unnecessary complication added.
Paypal also has some ridicules fees so why use such company and couldn't anyone register how many paypal accounts they liked way back without any checks done at paypal, they just needed a emailadress to link to each account, so having people use paypal as a way of living up to some AML things is probably pretty useless....
October 16, 2013, 05:04:09 AM
I'm not fond of legalese and certainly not an expert but the PayPal plan, although plausible at first does not seem feasible to me. If I'm not wrong Paypal AML requirements only kick in after transmitting certain amount, 1.7k euro or similar. Accounts are trivial to setup with VBB/VCC and this is a common practice...
PayPal "Verified" status requirements vary from country to country, but it goes without saying that only verified accounts would be of any use.
Unfortunately, given that the original fund was only capitalised at 2000 BTC, passing on the costs required for consultancies like those would not be plausible unless or until a fund was much larger. I was looking for something ultra-lightweight, rather than something targeted at exchanges and the like, which might have a single day's turnover that exceeded the entire capitalisation of a fund.
October 15, 2013, 11:29:17 AM
...the creation of a financial instrument which, in this case, would have some (albeit nominal) fiat component.
...incorporate a nominal amount of fiat in a private Bitcoin fund offering? The Bitcoin-as-commodity situation in the UK was a bit regulatory plus when you launched the original fund. Might you not compromise that advantage by using Paypal?
...incorporate a nominal amount of fiat in a private Bitcoin fund offering? The Bitcoin-as-commodity situation in the UK was a bit regulatory plus when you launched the original fund. Might you not compromise that advantage by using Paypal?
I'm still thinking this through -- thus the rationale for floating it here and soliciting feedback -- but the way I'm envisioning it, there just wouldn't be any fiat component to a fund. There would be a PayPal fee to become a member of a site, but the only connection between that and an actual fund would be that a fund would be open only to members.
It would be analogous to saying that only members of ABC Car Club are eligible to take part in the XYZ Race at the weekend. That wouldn't mean that PayPal has any involvement in the racing activity, or that racing requires payment of a fee per se.
October 15, 2013, 10:58:46 AM
Greg
I appreciate the quick and thorough response, as always. One further point of clarification/elaboration though.
Hopefully we can be reasonably confident that PayPal complies with the law in all countries in which it operates; if PayPal were found to be breaking the law in any of those countries, that would be rather a big deal, quite apart from any impact on us.
It would be silly to worry that Paypal is anything but fully compliant in all its major jurisdictions for the business that it does. But that doesn't necessarily mean that the information that it passes to you or warrants for you would be sufficient for your KYC under UK law, nor does it necessarily mean that Paypal's KYC/AML obligations will match KYC/AML expectations or obligations for the kind of fund you're proposing. They might, and we might even say that they probably will, but there does seem to be a bit of a dis-analogy. Just because Paypal is on the right side of the law in what it does, that doesn't necessarily mean that a third party that makes use of them would also be on the right side of the law. That being said the more substantial point I wanted to get at there (which I expressed poorly in my original post) relates to regulatory compliance in the creation of a financial instrument which, in this case, would have some (albeit nominal) fiat component.
Actually, on second thought, maybe it would be best to just separate that point out from the Paypal question. What are your thoughts on the additional exposure, if any, that you and potential investors might have if you incorporate a nominal amount of fiat in a private Bitcoin fund offering? The Bitcoin-as-commodity situation in the UK was a bit regulatory plus when you launched the original fund. Might you not compromise that advantage by using Paypal?
I appreciate the quick and thorough response, as always. One further point of clarification/elaboration though.
Beyond that, Paypal may not necessarily be sufficiently compliant with UK law...
Hopefully we can be reasonably confident that PayPal complies with the law in all countries in which it operates; if PayPal were found to be breaking the law in any of those countries, that would be rather a big deal, quite apart from any impact on us.
It would be silly to worry that Paypal is anything but fully compliant in all its major jurisdictions for the business that it does. But that doesn't necessarily mean that the information that it passes to you or warrants for you would be sufficient for your KYC under UK law, nor does it necessarily mean that Paypal's KYC/AML obligations will match KYC/AML expectations or obligations for the kind of fund you're proposing. They might, and we might even say that they probably will, but there does seem to be a bit of a dis-analogy. Just because Paypal is on the right side of the law in what it does, that doesn't necessarily mean that a third party that makes use of them would also be on the right side of the law. That being said the more substantial point I wanted to get at there (which I expressed poorly in my original post) relates to regulatory compliance in the creation of a financial instrument which, in this case, would have some (albeit nominal) fiat component.
Actually, on second thought, maybe it would be best to just separate that point out from the Paypal question. What are your thoughts on the additional exposure, if any, that you and potential investors might have if you incorporate a nominal amount of fiat in a private Bitcoin fund offering? The Bitcoin-as-commodity situation in the UK was a bit regulatory plus when you launched the original fund. Might you not compromise that advantage by using Paypal?
October 15, 2013, 06:51:34 AM
Greg it is clear you are a state actor. Stop trying to idntiy us, bitcoin was anonymous for a reason and you are trying to ruin this. go back to patting down at the airpot
Unfortunately running a fund where the participants are anonymous is not going to survive very long, especially from a UK based financial fund manager.
Bitcoin is anonymous, running a hedge fund is not.
EDIT: This post was done by a hacker that took control over my account. I had not changed my password on bitcointalk and I had an easy one. I have no regained control over the account. Ignore this post.
If a hacker really took over your account you/they would just remove that edit. Duh.
October 15, 2013, 06:49:37 AM
If I'm following you correctly, you seem to be suggesting the use of a single Paypal transaction in order to establish the identity of investors in the proposed private fund, and that you intend this to be some kind of nominal fee with the substantive transactions taking place in Bitcoin later on?
Yes, the fee aspect would be deliberately inconsequential -- just a small charge to become a member of a site for a specific period of time. The important aspect would be to establish that Person A who has just become a member of the site is really Person A, according to PayPal.
If so then, in and of itself, that sounds fine (I am not so attached to my pseudonymity as others here, I suppose), but would you not then need to link the Paypal account to a Bitcoin wallet?
Once a person had become a member of a site, then anything else that needed to be done could be handled directly via that person's account on the site. (The idea is that this is done in connection with a payment flow that creates an account for the person on the site. This is something I do all the time with other PayPal-integrated membership sites in the health professions.)
There have been some troubling accounts of Paypal freezing completely legitimate Kickstarter accounts in the name of anti-fraud/AML...
Yes, clearly that would be something to avoided, since it would shoot the whole thing to pieces.
Beyond that, Paypal may not necessarily be sufficiently compliant with UK law...
Hopefully we can be reasonably confident that PayPal complies with the law in all countries in which it operates; if PayPal were found to be breaking the law in any of those countries, that would be rather a big deal, quite apart from any impact on us.
To answer your primary question though, the idea of using Paypal for ID verification doesn't strike me as a deal-breaker persay. I certainly find it far more palatable than turning over copies of my passport, credit card and driver's licence to WeExchange (A totally outrageous suggestion, in my books. That's more than enough information to facilitate identity theft)...
Me too: it seems crazy to me to hand over all those details to a pseudonymous entity with zero accountability. I've verified many different accounts using scanned copies of identity documents, and on every single occasion except for two, those receiving the documents were happy to have a big 'CONFIDENTIAL' splashed across my signature and photograph, so that you could still see it was me and could still see it was my signature, but you would find it much harder to use it to create a convincing fake document. The two exceptions? One was Mt Gox, and the other is WeExchange. Well, Mt Gox lacks any kind of credible data protection or data retention policy, but WeExchange is so far below the standard of Mt Gox that it's not even funny.
October 15, 2013, 06:12:54 AM
Greg
If I'm following you correctly, you seem to be suggesting the use of a single Paypal transaction in order to establish the identity of investors in the proposed private fund, and that you intend this to be some kind of nominal fee with the substantive transactions taking place in Bitcoin later on?
If so then, in and of itself, that sounds fine (I am not so attached to my pseudonymity as others here, I suppose), but would you not then need to link the Paypal account to a Bitcoin wallet? A signed message on the blockchain could be used to establish the link in one direction, but how would you corroborate it on the Paypal side? And are you quite sure that Paypal's KYC/AML is something you want to count on? There have been some troubling accounts of Paypal freezing completely legitimate Kickstarter accounts in the name of anti-fraud/AML. That could be a problem if the kind of activity you're proposing were construed as crowd-funding by Paypal. Beyond that, Paypal may not necessarily be sufficiently compliant with UK law and might, in fact, add additional regulatory exposure as you'll be accepting 'real money' as part of the setup of the fund.
To answer your primary question though, the idea of using Paypal for ID verification doesn't strike me as a deal-breaker persay. I certainly find it far more palatable than turning over copies of my passport, credit card and driver's licence to WeExchange (A totally outrageous suggestion, in my books. That's more than enough information to facilitate identity theft). But I'd like to hear more about how you envision the logistics of this working.
If I'm following you correctly, you seem to be suggesting the use of a single Paypal transaction in order to establish the identity of investors in the proposed private fund, and that you intend this to be some kind of nominal fee with the substantive transactions taking place in Bitcoin later on?
If so then, in and of itself, that sounds fine (I am not so attached to my pseudonymity as others here, I suppose), but would you not then need to link the Paypal account to a Bitcoin wallet? A signed message on the blockchain could be used to establish the link in one direction, but how would you corroborate it on the Paypal side? And are you quite sure that Paypal's KYC/AML is something you want to count on? There have been some troubling accounts of Paypal freezing completely legitimate Kickstarter accounts in the name of anti-fraud/AML. That could be a problem if the kind of activity you're proposing were construed as crowd-funding by Paypal. Beyond that, Paypal may not necessarily be sufficiently compliant with UK law and might, in fact, add additional regulatory exposure as you'll be accepting 'real money' as part of the setup of the fund.
To answer your primary question though, the idea of using Paypal for ID verification doesn't strike me as a deal-breaker persay. I certainly find it far more palatable than turning over copies of my passport, credit card and driver's licence to WeExchange (A totally outrageous suggestion, in my books. That's more than enough information to facilitate identity theft). But I'd like to hear more about how you envision the logistics of this working.
October 15, 2013, 04:05:38 AM
If you are insistent on KYC, PayPal is not going to solve your problem from the eyes of the SEC.
And what good do you think KYC will do you exactly? Do you plan on barring US-based persons? Because that's what matters. Not what addy is on their PayPal address, but where they reside when they purchase the shares. If you logged the IP and made sure it wasn't US-based and then used a service like miicard to verify people's identity, then you'd be on to something.
And what good do you think KYC will do you exactly? Do you plan on barring US-based persons? Because that's what matters. Not what addy is on their PayPal address, but where they reside when they purchase the shares. If you logged the IP and made sure it wasn't US-based and then used a service like miicard to verify people's identity, then you'd be on to something.
I'm not talking about shares, and I'm not talking about the SEC. I'm talking about a prospective privately operated, non-exchange-traded, non-securitised fund. Anyone who wants to run any type of private fund -- be it private equity, buyout fund, hedge fund, whatever -- needs to have their KYC/AML in order, and that basic requirement has nothing to do with the SEC, nothing to do with securitisation, and nothing to do with the distinction between US and non-US entities.
October 14, 2013, 10:48:48 PM
If you are insistent on KYC, PayPal is not going to solve your problem from the eyes of the SEC.
And what good do you think KYC will do you exactly? Do you plan on barring US-based persons? Because that's what matters. Not what addy is on their PayPal address, but where they reside when they purchase the shares. If you logged the IP and made sure it wasn't US-based and then used a service like miicard to verify people's identity, then you'd be on to something.
And what good do you think KYC will do you exactly? Do you plan on barring US-based persons? Because that's what matters. Not what addy is on their PayPal address, but where they reside when they purchase the shares. If you logged the IP and made sure it wasn't US-based and then used a service like miicard to verify people's identity, then you'd be on to something.
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