Topic: [BTC-TC] CIPHERMINE.B1 - a virtual corporate bond with a 22% fixed-fiat APR - page 5. (Read 27544 times)

Dear All,

Thank you for your patience during my absence / honeymoon. I have just made two retrospective dividend payments:

• 3/11/2013:  2.929 BTC
• 10/11/2013: 2.616 BTC

However, I've just noticed an error in my spreadsheet though so I've actually just overpaid you all, and did so for the one before that. The dividend payments using the 30 day weighted moving average price on those dates should have been:

• 27/10/2013: 30d $160/BTC -> 2.933 (not 3.30) BTC
• 3/11/2013: 30d $180/BTC -> 2.572 (not 2.929) BTC
• 10/11/2013: 30d $240/BTC -> 1.903 (not 2.616) BTC

Apologies for this error. I will amend next week's payment to correct it (ie. I will deduct 1.437 BTC from next week's). I am flying back out to Berlin this afternoon (I've literally only just got back from Indonesia) but at the weekend will be making an announcement regarding the new exchange home for CIPHERMINE and CIPHERMINE.B1. The securities will soon be liquid and tradeable again.

I've not had time to review the responses to this thread in my absence. To the last post though: the bond is denominated in BTC, but the interest is denominated in fiat (EUR €340/week). You can use this to check the above calculations quite trivially if you wish. You are correct insofar as BTC appreciates the BTC yield does indeed fall.

My point was that when the trajectory of the market is upwards, the weighted 30 day average lags behind the current actual spot price, which means that in a rising market you actually get more in fiat terms. Last week's payment of 1.903 BTC was calculated with a 30-day price of $240, but at that time the price was actually closer to $330/BTC, so in fiat-terms the interest was more like €470 than €340. In a falling market the 30d average would also lag behind, and in that scenario you would get less in fiat terms.

To be honest it is a lot simpler if you just think of the interest as fiat, which is exactly what it says on the tin (see title of OP; "fixed-fiat APR").

Kate.

Since many people are still confused about the extent to which the bond is, from a BTC-denominated yield perspective, a gamble on a fall in the value of BTC versus fiat, it seemed worth clarifying the following:


From the overall yield perspective, this is entirely false.

The only sense in which it is partly true is when comparing currency conversion based on the 30-day average versus currency conversion based on spot. In this partial sense, it makes no difference whether BTC is rising or falling against fiat -- it matters only whether spot is above or below the 30-day average, and this may occur regardless of whether the rate is rising or falling at any given reference point. When spot is above the 30-day average, converting fiat-denominated interest to BTC somewhat benefits the bondholder versus having just used conversion at spot, and when spot is below the 30-day average, converting fiat-denominated interest to BTC somewhat benefits the interest payer versus having just used conversion at spot.

But the discrepancies between spot and the 30-day average are overlaid atop the far more significant underlying structure: from a yield perspective, when BTC rises against fiat, bondholders suffer in BTC-denominated terms, and when BTC falls against fiat, bondholders gain in BTC-denominated terms. From a yield perspective, for bondholders the instrument is and always has been a gamble on a fall in BTC versus fiat.

I confirm I received 2 payments to my public address as described.

Dear All,

I've actually made two payments; one for 0.1 BTC and the second for 3.0 BTC. I've never used our dividend payment script for BTC so wanted to check it worked with a smaller amount first.

Please let me know if you've not got what you think you should have got:

• x 0.1 / 100,000
• x 3.0 / 100,000

Kate.

PS. Note that the divis go to the public withdrawal address you've specified on BTC Trading Co, not the private withdrawal address which is on a different tab.

On the contrary; I am using Bitcoincharts' 30-day moving price average as per the contract. Last Sunday it was $135/BTC.

Last week's I have rounded down to 3 BTC to make calculations easy for checking that everything was working. The difference (0.446 BTC) will be made up with this week's (ie. tomorrow's) dividend. Apologies, I should have explained that better.

When the market is rising the bondholders benefit, and quite significantly with the recent rapid rise. When it is falling, CipherMine benefits.

As previously mentioned though, we are going to have to defer the dividends due on the 3rd and 10th of November. They will be paid out around the 15th of November. A weakness in our current system is that only I can really issue the dividends. One of the features we are implementing with the new exchange is the facility for there to be authorised "administrators" of a security who can do things like this when the principal is on leave. Those deferred dividends will still be calculated at the 30 day moving average price at the date they should have been issued.

Kate.

Apologies, I retracted that statement about non-minor shareholders.

Everyone will be looked after, no matter how small or large. We are in the late stages of creating a new exchange in partnership with a few other major issuers. We will migrate this security across when it is complete.

There will be some "down time" while we send dividends manually, but be assured they will continue.

Apologies for the delays in the promised 3 BTC by the way. I'm on an extremely slow Internet connection here and since I'd not had my Bitcoin client open for quite a while and it is taking an eternity to sync the block chain. Left it running all last night and still not done! Will send the 3 BTC divi from last week ASAP, and this weeks should be on time.

Kate.

Problem with delaying dividends in this case is that they depend on EUR rates against BTC, and these have been varying wildly. If you pay with today's EUR/BTC rates, bondholders will end up with less BTC than they would last Sunday. If the bondholder's intention was to keep their BTC, they will have lost money.

On the other hand, if the bondholder meant to convert back to EUR and EUR appreciated against BTC, they will also have lost money upon conversion.

I can imagine unforeseen circumstances forcing a delay but you must realize it causes unnecessary problems to investors and restricts their ability of deciding how to keep their earnings. In my opinion, if you must absolutely delay payment you should take the most favorable rate in account - from the day it was supposed to be paid and from when it was actually paid.

kate should seriously answer junkonator's question.

Apologies for the lack of dividend last Sunday. Unfortunately I ran out of time before my honeymoon.

I will be sending last week's dividend soon (currently sight seeing in Bali, so when we get back to the hotel this evening) and will send the regular one on Sunday.

This will be the first proper payment with the BTC dividend script. I'm making it exactly 3.0 BTC so you should all be able to work out what you should get:

  x 3.0 / 100,000

Please let me know in this thread if you don't get what you expect.

After that I'm going to have to delay the next two dividends (ie. 3rd & 10th of November) and will pay them with the dividend on the 17th. I decided it would be better to do this rather than try to teach one of the guys while I'm away.

Kate.

If you go to CM's topic on litecoin.net, you'll see the custom utility was used to pay CM's dividends, but the bond was forgotten. Apparently Kate is on a honeymoon trip but this is no excuse.

Also I wonder what we'll get in BTC when she finally pays since BTC has appreciated considerably against EUR since Sunday.

No, I did not get a dividend either.  Kate and company were supposed to be paying divs per a 'custom' utility but have not seen anything either.I stand corrected.  I received the dividend but it was hidden with a bunch of other 'traffic'.

Does anyone know if dividends been paid last Sunday?

Between all the CIPHERMINE threads on litecoinforum and here I still haven't found a definitive statement on what will happen to non-"major shareholders"' of CIPHERMINE.B1. This is important to many people cashing out on DMS pairs, as a percentage of the proceeds is paid in CIPHERMINE.B1.

Will CIPHERMINE.B1 be traded on the exchange you're creating?
Will the dividends be sent the same way you tested with the CIPHERMINE sendmany experiments?

I have made statements but on CIPHERMINE's litecoin forum thread and Litecoin Global news page rather than here. I am giving a full update tomorrow along with the dividends. Unfortunately I have been extremely busy this week (I'm getting married a week today and had a board meeting and my PhD viva last week) so the announcement of closure has come at a rather bad time!

Anyway, the headline is that we shall continue to pay interest/dividends regardless.

Kate.

How come every other asset manager has come out with definitive statements as to how they will respond to the BTC-TC shutdown but you have yet to do so?

Well CIPHERMINE itself is only listed on LTC-Global.  What happens with the bonds will logically follow on from whatever happens with CIPHERMINE itself.

I'm one of the largest holders (either largest or 2nd largest) of these bonds (on behalf of DMS) so obviously I'm as concerned as everyone else with what will happen.  What I DO know is that Kate IS actively looking at various alternatives - there's a private sub-forum for LTC-Global issuers where various discussions are ongoing.

So whilst I can't give you any actual hard news (as, to the best of my knowledge there isn't any) I can, hopefully, reassure you that at least Kate and her team ARE actively looking into and discussing various options.

+3 i am wondering me why Kate is publishing news of procedere only on LTC-GLOBAL and not on BTC-TC where bonds are listed.
Btw a listing on BitFunder (or Havelock) will be best way for all .... i believe in Ciphermine

+2, all other bond/fund/stock operators are considering a move to either BF or Havelock, so there shouldn't be any discussion of closure or hostile buybacks, as this hasn't affected the underlying business whatsoever

+1

The bonds have a face value for a reason, there should be no talk of discounting that.

BTCT/LTCG's closure does not affect their regular business operations (unless their business operations happen to require regular dilution of shares to stay afloat...)