Topic: IOU-BLoC (Business Lines of Credit) [Prequel thread - probing for interest] (Read 6349 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.

We've talked about security quite frequently. It's our top priority (well... profits are my top priority, but that necessarily requires security), and the dev is familiar with infosec.

Accounts will only be allowed one whitelisted address. It can only be changed with a 48h wait after the request, and I'll be personally calling the phone number on the account's file as 2FA. All transactions beyond simply viewing account information will require a short code from the person logged in which will never be emailed, so even if an account-holder's email account is compromised and they've used the same password on another site where the login info was leaked, a malicious person should be unable even to request a loan to the account-owner's BTC address. A phone call will also be placed to the number originally registered with if the request is in a large amount.

I will note that I will be liable for malicious actions by unauthorized users, not the account-holders - but that liability's limited to not charging interest on a "fake" loan unless coins were sent to a BTC address other than the account-holder's. If a malicious person requests 100BTC to the account-holder's BTC address, the account-holder would be liable for that 100BTC. If a particularly nefarious person were able to compromise the db and change the BTC addresses (the hot wallet ofc wouldn't be hosted on the app server), then I would be liable for the principle of the loan since the account-holder didn't receive the coins. By keeping a relatively small amount of coins in the hot wallet, my maximum risk is pretty low, but will allow those auto-loans to occur without me needing to be online 24/7. Of course, if it is compromised, it's a pretty darn good warning (and cheap, relative to what others have needed to pay) to me that everything needs to come down while we investigate and resolve the problem.

A PGP key will be requested, but not required, upon registration. A valid phone number, however, will be required. As to companies opening up their books, an NDA would be accepted, but companies wishing to keep their BLoC unfrozen must publish their financials to the public, and those records can be no more than 6 months out of date. Businesses will be required to file monthly with me, and they can opt to keep that private or have it automatically published on the public side of BDK-BLoC to fulfill their public disclosure requirement. I'll pull that requirement if enough companies refuse based on it that I have significant idling funds, but that's never a problem, even now. The credit rating is broken down into 10 categories which will also give the public a bit of an idea of the financials of the company (how the credit rating is calculated will be published in the mock-up, and the exact meaning of the numbers will be published when BDK-BLoC launches).

I think it is a great idea.  We have been considering using a line of credit to acts as a buffer allowing us to complete sales "instantly".

By having funds at the exchange when a seller deposits coins, we can sell the same number at the exchange and thus avoid currency risk during the 6 confirms.   The main reason we haven't done this is it would make us very long BTC.  The traditional lending forum is looking for rates aproaching 1% per day which is simply not viable for any serious enterprise.   3% per month may be useful for our needs.

My only fear (and it is more for you and your investors) is the hot wallet.  Is instant 24/7 funding that important to risk a Bitcoinica type event.    I see you also have a cold wallet.  It is unlikely we will ever need hot wallet access.

A couple things from the business owner perspective.

Funding requests should be strongly secured and verifiable.  Nothing less than PGP signature should be accepted.  I can't imagine a worse nightmare than someone impersonating our company, getting funds, and then you seeking repayment from us. 

Another security option for businesses would be a hardcoded disbursement address provided at the time the business requested the LoC.  If that option is chosen funds can never be disbursed to any other address without a new contract.  The hardcoded address would be included in the contract and pgp signed by both parties.  This would make any sort of impersonation attack a moot point.

Lastly if you wish us to open our books I assume you will be comfortable signing an NDA.

There will be a hot wallet, too, but it won't ever contain more than 150BTC, so if someone had the clearance, they'd be able to request <100BTC and have it sent to them immediately after they request it (assuming the hot wallet isn't empty and they have a LoC available). Automated CD sales and repayment should be cheap to have implemented, too, so if an entity had reserves, they can quickly send it to me, I'll pay them a % interest multitudes superior to a USD bank (BDK is not a bank, btw, and never will be [I'm based in the US - claiming BDK is a bank is probably something like a 5-year prison sentence and $100k fine] -- all loans are personal loans to and from me, and I'm legally disallowed from creating a demand deposit scheme, which I wouldn't want, anyway). I already do CDs with pen & paper, and that's a pretty quick process. No need to calculate a bunch of different rates each month, even -- I can set a prime rate as appropriate, and everything else can automatically adjust.

So by reading the chance of implementation score the minimum "BDK-BLoc" will be :

A cold wallet with thousands of BTC that business and can view  and that you can decide to do whatever you want with. 


Seriously ,  its a great idea.   

I would integrate deposits into the same website/business and then you will be  a real bank!

Any ideas or criticisms -- now's a great time, even if you think they may be absurd, or would cut into my bottom-line. I figure I should have the mock-up and formulas complete by next week, and the dev already has much of the complicated core infrastructure complete from other projects, though neither of us have fully committed to each other just yet. I don't plan on bringing a designer in unless I have lack of demand, which isn't a problem even while I'm only using "pen&paper," so the site will likely look pretty ugly and basic, but with some maff-intensive infrastructure underneath making it seem a fair bit simpler than it is. Launch may be just 4-8 weeks away.

I'll post the mock-up when finished (6/20 maybe? We're house-hunting and will be away more than usual this week). Primary objective is to make lendees feel empowered with information, and making sure nobody's getting hit with something they don't understand. I want to be very up-front to prevent time-consuming disputes in the future, and I certainly don't want business partners feeling like they were treated unfairly, because I want their business. Additionally, security is extremely important. I want to feel very confident someone's BSing me or was negligent in the extreme if they claim a malicious person made a loan in their name. Not only will it be impossible for an account to request withdrawals to any BTC address but the one they've whitelisted (48h mandatory wait & phone call to the number registered with the account if you request it to be changed), but having your email account compromised will not allow a hacker to make loans to your own address, either.

In the second tier of objectives, I want BDK to force transparency in the market. BDK-BLoC will permit automatic publishing of businesses' financial reports if their account opts in, fulfilling their public disclosure responsibility without having to do much manually. Additionally, I want BTC to be known as a legitimate medium of exchange, and that includes having BTC associated more with generosity than drug & firearms sales (not that I have anything against 'em). CD-holders will be allowed to choose a % of their interest to donate to a charity. Additionally, lendees are permitted to donate up to 5% of what would otherwise be BDK's profits on the interest of their loan to charity of their choosing.


Cheers!

Talking with the dev, and getting pretty excited about this. I'm creating a detailed mock-up (Google spreadsheet with links, so it shows what users would see), all the formulas for him. A fair chunk of the core infrastructure necessary, he's already developed for other services. Additionally, implementing the ability for the site to securely sell CDs is no problem. If someone wants to make a deposit, it's as simple as clicking a button, choosing which duration-to-maturity you want and how much you want at next maturity date (interest-only, partial-principal+interest, full repayment, or full reinvestment/renewal), receiving an address, and sending coins from your client to the given address. You won't need to interface with me at all to loan to me, and in many cases, I won't need to interface with you if you want a loan from me.

None of the private keys will be on the app server, and the wallet for everything (less the hot wallet, which is used exclusively for smaller "auto-loans") is offline, so we use an alerter system to keep everything automated, and customers knowing exactly the status of their money. Password recovery can be automated, but only if you remember certain critical information (which won't be in your email account unless you circumvented certain protections by writing down and saving information there). Otherwise, if you can't remember your password or critical info, you'll probably have to request I call you (but only with the address Loan requests can't be made without a 4-digit PIN code (very long delay between retries). BTC addresses will be whitelisted and locked without a phone call, so there's effectively no risk at all of a malicious person making a loan to a themselves with your account, even if they've managed to break into your account. By requiring a valid phone number and requesting a gpg key, I can be pretty confident I'm talking to the true account owner even in a catastrophic event.

Repayments for loans is super-simple, and I think people will appreciate the detail and transparency with credit reports. Everything's totally transparent for the users -- they can see and confirm pretty much everything before taking an action. There will be a lot of maffs, but it'll be broken down for users. Additionally, there's no reason I can't allow current trusted lendees to sign up without business information, too.

I'll also be receiving a few thousand coins soon which I can use to pay the dev & keep for lending. There's really no limit to what this site can do. It could handle everything from charity registrations vying for a % of loan arb, to allowing companies to post investor information all in one place and opt to have their financials they send to me released publicly each month, to even allowing a referral system for depositors. Letting individuals have accounts for smaller LoCs or deposits only is minimal trouble. Lots of exciting stuff which could be done.

There'd be a small fee for reviewing the potential lendee's information, assigning scores, and creating an account for him. ~3BTC

A LoC doesn't guarantee the money will be there to lend at all times, however (at least, not at the normal rate). I was figuring I'd keep 150BTC or so in the hot wallet for the <100BTC auto-transactions while there are only a few BDK-BLoC accounts, refill as needed and keep the rest as cash-on-hand (~1kBTC) or in liquid investments (~4kBTC). For >100BTC loans, it may be necessary to levy more interest on those who request 1kBTC+, because it means I'll probably have to sell some investments at a loss. The website could display something like "amount available to loan at base rate" which would be the cash I have on hand, and then "amount available to loan at Tier 2 rate" which would be what I have in liquid investments (or  for cases where I have to dip into my GoxUSD reserves to pay a loan in BTC), then "amount available to loan at Tier 3 rate" which would be what I have in relatively illiquid investments. So, the base rate would be Prime + Modifier for credit rating. Tier 2 would be the same, but with a higher up-front fee, perhaps 4% of principal (I forgot to mention this in the OP -- there's a %principal small fee for new loans, because it'd be stupid for me to free up 2kBTC to loan someone, then have them repay just 2002BTC the next day). Tier 3 would again be the same, but with a dramatically higher up-front fee, perhaps 25% of principal.

This way, it discourages lendees from taking out more money than I can easily lend unless they truly need it, but it's also there for them in case of emergency.

If someone owes me money, it'd be pretty stupid of me to damage their business and create outlandish fees, reputation damage not even considered. I want a symbiotic relationship with my lendees, not a parasitic one.

Loan acceleration is often used for loans on a fixed payment schedule. If the lendee misses a payment date, the loan can sometimes be recalled in full within, say, 72h. This is to ensure that in times of economic hardship, the contract between lender and lendee is fulfilled first, as red flags have popped up that the lendee may be insolvent. Not everyone is liable to have their loans recalled in the potential mechanism I've described, and the max 50% is only for the most risky lendees. Lendees who have liability of their loan being recalled would be notified immediately if their credit rating drops.

I think I will reword it so the LoC needs to be frozen first, a default to occur, and the credit rating below a certain threshold. With a frozen LoC, there are then minimum interest payments which must be made on certain dates to ensure the amount owed is less than the maximum LoC. If the lendee defaults on weekly payments to bring outstanding debt below their LoC, then the loan can be recalled. The penalty rate would be high (double daily interest rate, perhaps), but could likely be negotiated away if the lendee shows he's actually working on repaying. It's not like I give a damn about collecting punitive fees (fees like that are why I stopped using the local bank where I live and now do all my checking [including mailing checks] with a six-branch CU two states away), I just don't want a lendee to get to that point.

But - the line between encouraging and discouraging lendee failure is blurry. I don't charge late fees on fixed loans, because I care much more about receiving principal of the loan than pissing off the person who has the power to pay me $1500 or $0 for maybe $100 extra in fees to account for the opportunity cost of lendee payment delay. It's not too difficult to make the case that punitive fees, repossession, and other actions lenders could take to reclaim something from the lendee are often not the best choice. There are many cases of foreclosed homes being gutted, all copper taken, the building in terrible condition otherwise, and then the bank sits on these properties.... and they sit, and they sit, ignoring the property they took, and then eventually they get around to listing a house which's since been used by local kids as an indoor batting cage for 1/10 the outstanding balance of the mortgage. Since I wouldn't be holding collateral, people deposit with me based on reputation even knowing I give a relatively low rate, and taking legal action would be an enormous (and extremely expensive) pain in the ass, I really don't care to jerk my lendees around.[/list]

Is there a facility fee? or is it free to have 1000BTC of credit sitting doing nothing? 

(Starfish waves back)

Interesting proposition.

Having the automated loan would be very useful. Now that I'm starting to grow my mining business I'm starting to see opportunities that could pass by without funding instantly. Being pre-verified for a LOC and having access to BTC or PPUSD for those times there is a deal not in BTC would be very useful.

IOU-BLoC (formerly BDK-BLoC) is an idea I've been tossing around for a few days. I am not sure how far I want to take it, because having a website done right will be expensive. My envisioning of it:

(small number in parentheses indicates how confident I am the features/rules in the bullet point will be implemented - 0=0% chance, 10=100% chace)

• (6)BDK-BLoC will be hosted online, with a hot wallet, and allow loans to be made automatically without my manual approval (24h max of 100BTC, though lendees may reduce or disable the max amount per 24h for "automatic loans"). Obviously, a business needs to be approved for a BLoC before they can take out "automatic" loans.
• (9)Lines of credit can initially extend up to 5kBTC (most will have a LoC around 250-1500BTC). These lines of credit are established once a business registers and submits necessary info (this will require opening books to me) and the LoC will be adjusted as appropriate when businesses submit monthly financial reports. Failure to submit documents in a timely manner each month will result in a freeze of the LoC, and potentially a recall of the loan if the credit rating of the business is not particularly good. Businesses without sales to show are not eligible for a LoC.
• (7)Businesses are permitted to pay off their debt in full or in part via the website. Repayment will go to a cold wallet. Thus, an alerter system needs to be implemented which allows the website to confirm payment's been made.
  
• (10)The website will allow businesses to see their line of credit, how much cash-on-hand BDK has available to make loans with, their interest rate, what they have out (as well as repay information), and see a transaction log.
• (10)BDK-BLoC will also have a cold wallet holding thousands of BTC. Businesses will be required to submit the request, and I'll check to make sure everything's in order within 48h, and extend that credit to them - no questions, no hassles. A minimum of 8 hours must elapse before the loan is made (an email will be sent to the address the business-owner signed up with immediately after the request is made), to ensure the person who requested the loan is the actual business-owner.
• (8)2FA will be implemented, but not required. Those who don't take advantage of 2FA will be required to wait the 8 hours stated above for >100BTC requests, while those with 2FA enabled on their account will have their loans processed as soon as I review the information and approve the request.
• (9)Aside from BTC, businesses may also request PPUSD/DwollaUSD/GoxUSD loans. The LoC for these will be greatly reduced (at least for the first few months of BDK-BLoC's existence), though the interest charged per day will be significantly reduced compared to BTC. There is currently no intent to work with fiat banks beyond that (wires, direct deposits, etc). The USD loan process will never be automated, and will require I manually approve every request.
• (8)Modifiers for LoC and credit rating include (not limited to) debt-to-equity ratio, monthly sales, credit history, duration of business operation, and how publicly-known the operators and equity-holders of the company are.
• (8)BDK will set a Prime Rate and assign both credit ratings and "market cap tier" to businesses who've submitted necessary information.
• (8)There will be a small one-time fee (3BTC, perhaps) to have information reviewed and categorized by me. Your business's credit rating and "market cap tier" can be listed and used for other purposes with other individuals should you choose. It's important to note that a credit rating assigned by me only reflects my opinion of the information made available to me.
• (9)The prime BTC rate will likely be the equivalent of 2-5% monthly (likely around .1% daily). Prime USD rate would be 1-3% monthly (significantly below .1% daily).
• (7)Interest is calculated daily and compounds. Payments also amortize, and would thus reduce interest due per day, even if only partially repaid. There are no maximum loan durations for outstanding debt accumulated through the BLoC program. Thus, there are no late fees to worry about unless a business's LoC has peaked or been frozen, in which case, there'd perhaps be a bill due every week to bring the business back under their max LoC.
• (4)Any business with an established LoC will be required to publish their financial information to the public. This should be a quarterly or monthly report, and only needs to be current up to six months ago (so, say it's August, you wouldn't be *required* to publish any information more recently than February of the same year). I'll admit this is an auxiliary goal of BDK-BLoC for my own personal reasons, and isn't very relevant to BDK-BLoC's success, IMO.
• (10)I can choose to freeze a LoC at any time I choose. Additionally, if similar services pop up, I reserve the right to sell your business's debt to another bank. Obviously, you'd get a lot of notice, detailed reason, and your loan would retain the original terms.
• (3)I reserve the right to call up to 50% of a business's outstanding BDK-BLoC debt once per 30 days for any reason (some may have heard of this concept as "loan acceleration"). The called debt must be paid off within 48h, or penalties will accrue. Businesses will be alerted via every communication mode they listed if a recall is initiated. Debt recalls can only occur is a business is below a certain credit rating, and the max recall % gradually increases to 50% for those with a poor credit rating, while those with a mediocre credit rating may only have a max recall % of, say, 25% per 30 days. Businesses will be explicitly alerted to this rule if their credit rating falls into the threshold where recalls may occur.

I haven't discussed this much with anyone, yet, so please ask in this thread if you have any questions. Constructive criticisms appreciated (please be detailed and "prove" why my initial envisioning is a poor business decision). In particular, I need thoughts on how to semi-verify a company's financial numbers without being too invasive for a relatively low LoC (compared to LoCs a legal business could get from a bank). I haven't decided how to handle mining ops, yet -- originally, I only intended this to be for businesses who deal with sales and end-users. I'm thinking I'll get quotes from a dev I trust within the next few weeks after working up better documentation of my vision instead of just this jumble of ideas.   There are currently no plans by me to establish a LoC for consumers. I believe this service could launch as envisioned within two months of me committing to it. Cheers!


It's worth re-stating that "BDK"/"IOU" is absolutely not a bank.