Topic: IOU-BLoC (Business Lines of Credit) [Prequel thread - probing for interest] (Read 6357 times)

Glad to hear it.  We have secured LoC both in USD and BTC from private lenders.  There is a willingness out there among lenders for more realistic interest rates.  I think your platform could move bitcoin lending to the next level.

No updates in a while. We're getting close. I think I'm going to tell the designers I'm not currently interested but will re-examine. There's too much uncertainty with how thing's will change with Pirate gone - whatever "gone" even means -- I don't want to over-invest without knowing what's happening.

IOUCoin is getting very close to a beta launch, now. I'm hoping by the end of the week, but could certainly be later. Upon launch, I'd like to invite interested participants to take away the dev's bonus.

He will be allotted a 50BTC completion bonus. For up to two weeks after beta launch, two selected pen-testers with code (PM/Skype me with references, please!) and users in general would be appreciated to break the site, find security holes, and look around for minor stuff we messed up.

The rewards will be roughly as follows:
5-10BTC = Major business-breaking flaw which has been demonstrated to work. This would include being able to log into others' accounts, using our hot wallet somehow without authorization, being able to send other users' emails, any db compromises, being able to change your balance, being able to delete the "hot" site.
3-5BTC = Business-breaking flaw which could reasonably happen, but is only theoretical and is unable to be demonstrated. This would include any 5-10BTC flaws which have evidence of being able to be done, but have not been satisfactorily demonstrated.
1-3BTC = Consequential, but not devastatingly-bad breaks, theoretical or proven. This would include being able to "deface" the website, finding the IP address of our BTC client, finding a way to DoS our email server, being able to place fake withdrawal requests which would be handled manually, account errors, insecure resources.
.1-1BTC = Cosmetic stuff, unclear phrasing, minor site errors ("I get a 404 error when clicking the credit rating link on so-and-so"). Please don't ask me for coins because you found an unnecessary comma or "that" somewhere.

If the completion bonus is fully run out, I'll pay out-of-pocket from non-allocated funds. Supplied fixes will be appreciated with gratuities out of my pocket (just don't go crazy - I ain't rich!). If you've proven ability to do something which'd be catastrophic (able to somehow do more damage than the hot wallet's worth [100BTC max]), extra funds will be provided, probably based on whatever you ransom the solution for.


ETA: "BitMit Charity" will likely become a reality, but it's unlikely to be ready by 2013. I'm considering temporary solutions.

ETA2: I will not be requiring public disclosure of finances. However, I'll still require them, and that'll stay between us.

I like this Idea seems like it will be a great service to the community.

I asked for a quote from http://cspixelfoundry.com/ after enjoying some of their work -- Idunno if my budget's reasonable or not. From speaking with others, it sounds like I'm "in the ballpark," though I'm definitely in the low end of that ballpark.

Tosaki will be away for a while, but he sounds interested. I need to re-collect my thoughts on that idea... "BitMit Charity" is very unlikely to be ready by the time of IOUCoin's beta launch. However, I think it'll be implemented eventually, and I'm excited about it.


Beyond that, I need to figure out what to have the dev work on once "Phase 1" (the stuff in the mockup) is complete. There are a whole bunch of experiments which could be tried...

1) Implement, distribute, advertise centralized "IOU-BTC" debt/currency units. Literally, an IOU based on a depositor's BTC deposited, backed by my credit and assertion that a depositor holds an xBTC CD maturing on some future date. There are a few different ways it could be implemented... A depositor could sell shares of their deposit to a company or individual where I'll send x shares' worth of the deposit to the person who bought the notes from the depositor, the notes could be sold to the depositor and used as a representative currency where the amount of BTC can be redeemed any time after the CD matures, or we could just issue them as .8%/wk bond units where they'd be a predictably deflationary medium of exchange which could be redeemed after a year or something like that for the proper amount of BTC. I haven't thought too much on this... it sounds pretty dangerous if implemented improperly, and may not be used if the website does not have public pentesting done, at least. Capital required to establish trust (independent, professional audits - professional pen-testing with results released publicly - open-source software) would be too great, but maybe I'm overestimating how much trust needs to be established beyond "it's worked for x months without issue, so it's probably pretty safe."

2) Implementing, advertising "Democratic Deposits" -- depositors would be allowed to choose exactly where their deposit goes, with restrictions (a choice must be made at the time of the deposit, and must be from a list of opportunities I present). With just that info, it doesn't sound at all beneficial to me, but perhaps I could give interest & insurance rates based on the choice they select. If you choose an opportunity I consider low-risk, you receive reduced interest, but your deposit is fully insured (or perhaps even over-insured). If you choose a high-risk, high-yield opportunity, you receive significantly more interest, but your deposit will only be partially insured or completely uninsured if that opportunity/lendee defaults. Nobody would be forced to take part of "Democratic Deposits," you could get the general rate by depositing in the BDK general fund, with deposits guaranteed, as all are currently.

3) Focus on miners, implement mining pool for data mining. I believe they'll be my bread & butter, especially as ASICs come into the game and people seek to upgrade. A LOT of useful information could be gathered by asking a miner to mine at the "IOU pool" for 30 minutes prior to receiving a loan offer, which would result in significantly lower rates for them, and a higher level of confidence from me that they won't default. If the miner ends up rejecting the offer I submit to them, I get to keep the 30 miinutes' worth of mining income, which'll probably be nothing unless the pool acts as a pass-through, GPUMax-style. This might be expensive to implement - I have no idea.

4) Implement Ghetto P&P Exchange into IOUcoin site. I'm not particularly interested in this, beyond just having information listed in a more readable manner to only depositors, instead of having to deal with BBCode and the service listed publicly.

5) Something you suggest?

I've submitted crude mockups to tosaki of BitMit with regards to how I'd like to see charitable giving implemented so charities actually USE BTC instead of cashing out for USD. Will update if I hear anything.

Cheers,
Ben

It's about 21-40 days away from a "closed beta" launch, and maybe 30-60 days from an open launch, which is when it'll enter "Phase 2" of development which'll add a bunch of functionality beyond loans and deposits I did not originally outline.

How is BLoC going? Do you know when you will launch?

Yes, ToS is a placeholder 

Public disclosure of business will not be a requirement if there is not enough demand, but it's something I'd really like to encourage in the community, but maybe I'm just throwing a tantrum. It takes us a month to make 10% on a "sale" at pretty darn high risk much of the time, and we need to disclose what we're making every time. Meanwhile, a non-finance goods/service provider can take a 30-70% margin and are never called usurious cunts because nobody even knows what their margin exactly is. 

Interesting.  I assume the "terms" page is simply a placeholder?  I can't imagine anyone accepting to signing over all legal rights.

For TangibleCryptography, the public disclosure of accounting ledger is a non-starter.  We have no issues with disclosing that to someone under an NDA but monthly detailed accounting to the public?  To include our competitors?  To include our clients ("hey this is exactly after cost how much TC profited off you")? Never going to happen.   I can't see any serious business accepting that requirement either.  Now summarized monthly reports to the public and full details to entity under NDA (w/ penalties for breach to include "accidental breach" and/or "hacked")?  Maybe.

Development is humming right along. 

Here's my ugly-ass mock-up of yore intended for the dev (view-only - I don't believe it allows you to read comments regarding hover link text and some other explanations) : https://docs.google.com/presentation/pub?id=15XarwZgJZtEt2Uvq_AR7Hz4XPeYu9w0dugo_dq-xDy8&start=false&loop=false&delayms=3000

Some of that's obviously been changed, and it shouldn't be considered final, or even a "Darn Good" idea of what the site will do or look like at launch. There is no short-term intent to deal with USD at all, for example. However, you could request a BTC loan, then use IOU exchange services (I'll surprise the dev with plans for integration, later) for near-immediate USD deposits into various US banks (PNC and ING on the short-list, feel free to make other requests -- NO BofA!) and CUs (so long as they support Shared Branching). Some additional surprising withdrawal and deposit options (think physical!) will likely be added within six to twelve months. Account security as implied on the site will not be what is used.

I still haven't talked to Tosaki about integrating charity functions... Trying to figure out where I fleshed that idea out a bit. I think the bulk of it is probably buried somewhere in Skype. I'll look for it tomorrow when I wake up.


Cheers,
Ben

Fantastic idea. A much needed service for many well established and trustworthy borrowers.

The rates would have to be high enough, however, that biz uses it for its intended purpose. Otherwise someone could just borrow to the hilt and arb the interest rate.

interesting idea i hope to see this in the future

I'm thinking about scrapping the USD option entirely. There are high fees involved (less Dwolla or GoxUSD, and then you'D need to spend some time getting "real" USD), there may soon be serious competition there (doing it legally and with a focus on startups, which is a bit on my toes -- I was kind of on the fence about how legally gray it is to "personally" offer an LoC with USD), I'd be exposed to exchange risk (I count profits in BTC, not USD), but it could take away something many customers need pretty darn soon.

Bills necessary to pay now often are not in Bitcoin. In fact.... unless you use a BTC hosting site, or maybe that landlord in LV - I'm not sure there are any possible immediate bills, just immediate things you could buy - but probably don't "need." So.... that's a bit tough. If you're experienced with OTC transactions, maybe it wouldn't be too tough to get USD from BTC without major fees, but then you have a BTC-denominated USD loan, and then you expose yourself to massive exchange rate risk, which is not favorable to me. Alternately, you could get a BTC loan from me, then use that BTC to secure a very low interest rate from someone who's willing to loan you USD (not me).

Idunno - we'll see how it develops, and worst-case scenario, I have a relatively powerful and user-empowering deposit-collection site. I could always just limit the amount of USD loans I make to the amount of USD deposits I take in, but I doubt that would be much, if any.

Dev has close to free reign, now. I'm just getting stupid-busy. Registration (made to handle two types of accounts -- personal deposit-only accounts, and business accounts), credit reports (partially), login, is ready. Of course, the most complicated & time-consuming stuff is still to be done. Will post a link when able to do credit reviews. Need to spend more time tweaking the formula. Late August, possibly some time in September, I think sounds reasonable. The dev's workload has increased in a way since I haven't been able to provide reliable-enough communication to be efficient lately.

I missed the edit. PM me if you'd like. I have coins looking for a good home.

Interesting


Edit: I could really use such service right about...... now

Change One: A minimum payment will be due every two weeks. More than anything, this is a pulse check, but also ensures the lendee is at least minimally solvent. This will be something like 5BTC or 2.5% of total balance - whichever is higher.

Change Two: Becoming an e-wallet service is now being considered as a far-future goal. Bitcoin clients are being claimed to allow users to "be their own bank," yet there is neither way to auto-pay a set amount to an address after specific durations, nor an ability to "link" an account to allow trusted entities to require minimum payments. There are services out there where auto-pay would be very beneficial, both for the users and the service-providers.

Change Three: This project will be renamed IOU-BLoC. This is not due to anything significant, just covering my ass as "BDK" grows in scope and assets.

Change Four: Instead of requiring companies publish their financials with information up-to-date at most 6 months ago, companies which choose to allow IOU-BLoC to auto-publish financial documents the company submits will be granted a 5% reduction in interest rate (5% is separate from Credit Rating Modifier, so if the prime rate were .001%/day, and with your Credit Rating Modifier, it's .002%/day, permitting auto-publication results in a .00005%/day reduction, not a .0001%/day reduction). ETA: Changed my mind. The formula will be extremely simple now, and give a heftier bonus to those who choose to have BDK automatically publish submitted financial information. Instead of (((Prime*Credit Modifier)*.95)+((Prime*AutoPublish Modifier)*.05)), it will now be (Prime * Credit Modifier * AutoPublish Modifier). So, assume you're given an "AA" credit rating. The modifier for this particular rating is 1.1. Assume you also autopublish. Your given interest rate will be, assuming we keep the prime rate @ .001%/day, (.001*1.1*.95) or .001045%/day.

Change Five: It is now in the long-range scope to grant LoCs to individuals. Along with this will be a more complex credit rating scheme.... This will not be considered until other lenders start providing similar services. It may be considered that BDK should use the Big Three credit ratings in establishing creditworthiness of individuals who have showed no significant creditworthiness in the Bitcoin community. I may consider options which would allow me to report defaults.

Change Six: I had no initial intent to bring on a designer. I still do not -- not at first, anyway. However, this is now a long-term goal, when BLoC has justified its costs.

Change Seven: There will be no implementation of loan acceleration. That is, loans cannot be recalled by IOU-BLoC, except that minimum payment in case of having the LoC frozen will be something like 25BTC or 5% per 2 weeks, or whatever is higher.


I would guess IOU-BLoC could be launched early August.

True enough, but that starts increasing your workload quite a bit, unless you have an eidetic memory and can easily recall the different peculiarities of everyone's voice.

There's an easy way to make phone verification very difficult to fake. Place a call with registrants prior to authorizing them. Record the conversation. Use the voice as reference for verifying future calls. That said, I don't oppose requiring a public pgp key. It can be done, and I have no problem placing barriers to entry. It's not as though I have more coins than I can put to work -- it's much more important those coins go to the proper home.

Submarine sandwich.

Glad to see this in the works. To be honest, I think you should require PGP. It adds an extra layer of solid security, and would make me feel more comfortable than simple phone verification. I don't think it would be a major barrier to entry; most serious Bitcoiners already use PGP and those that don't really should.