Topic: [LTC-GLOBAL] The Litecoin Global Virtual Stock Exchange - Public Beta - page 9. (Read 21380 times)

I think it's better when trading platform is separate from verification/insurance/rating stuff.

When exchange is separate from these things you have a separate market for verification/insurance/ratings. Market means competition. So if one rating agency fucks up, another will replace it.

But if it is done for everybody by exchange, there is no big incentive for an exchange to offer best services because it already has monopolist position by being an exchange.

Also, insurance always cuts from profit, and so it should be investors/issuer's choice whether to use insurance. Again, if exchange enforces that, it would be like bundling a service nobody wants.

The idea with keeping collateral is simply bullshit. If 10% of money is reserved for compensation in case of failure, it would be just easier for investors to invest 90% of money they wanted to invest and keep 10% in their wallets. It's the safest.

Insurance implies existence of insurance pool. Which means that successful companies will subsidize failed ones. Do I need to explain why not everybody wants this?

It would be cool if equipment, land and other property could be used as collateral, but realistically that would require lawyers.

Bug causing multiple trade notification emails has been fixed.

Busy night of coding.

- Your own orders are now highlighted on the order book.
- The number of your shares that are reserved now show up next to the quantity on the ticker.
- All ask orders now get cancelled if your share balance is insufficient to cover them.
- Bid orders are now cancelled if your LTC balance is insufficient.  It cancels them starting with the lowest bid and works it's way up.  Thus leaving the orders most likely to be filled.

Cheers.

I think seperation of securities according to their business type is more suitable rahter than just risk evaluation. After these seperation you can ask different requirements for different sectors. There also may exist such a scam market after some proof.

Possible markets:
Mining: Companies , Bonds
Commodity : Silver , Gold , Platinum
Investment Funds:
Pass Through Funds:
Real World Companies:

Possible Requirements:
Mining :
a) Proof of mining equipment (photos or mining performance)
b) Electricity bill( to understand really mines or not)

Commodities:
a) Photos of commodities periodically
b) Feedbacks from physically sold commodities

Investment Funds:
a) Maybe some api link for

Pass Through Funds:
a) ? Can be added

Real World Companies:
a) ? Can be added

Also please keep in mind that if you put so much regulation to the system , this can prevent people to issue new securities.

@markm: I dont know google's IPO , but I can talk about fb's one. Someone who bought shares from fb's IPO is either dont know economics or -dont offense- stupid. FB or companies like these ones are going to public just for being richer. They dont care public's benefits.
Also, there are ~10 million LTC around(~equals $400 k). Even as you said securities should go public after some good profit performance in past  , then I dont think $400k is not enough for 10 that kind of companies. So you cannot compare these companies with /litecoins ones. But I agree with you , their should be some mechanisms to prevent scams or at least decreasing them

It seems evident that identification isn't worth much, it might deter some scammers but serious offenders will either not give a damn (like pirate, possibly, if he is really Trendon Shavers as he is thought to be) or will have professionally forged ID.

So it seems much more important to be able to seize assets of theirs than to know or even care who they are.

This is actually all part of why I like to be able to set things within a virtual universe in which the assets of the players are where I can grab them and where the players who have invested in armies and fleets and so on can grab them. Seeing how much scamming happens in EVE Online I wanted to find a way to create a game universe in which not all investments would be scams. That is I wanted to finds ways to create non-scam investments. I figure that will be a good start toward eventually being able to compete with EVE Online; obviously I also will need to make enough capital with it to be able to also deploy art assets if I ever want to attract the folk to whom eyecandy is more important than fundamentals but if the fundamentals of finance are unsound raising that capital seems unlikely thus the starting with the financial fundamentals before worrying about the eyecandy.

You gotta make the potential scammers risk something, basically. Even then that will merely force them to plan their scam at a large enough scale for it to pay for that risk plus also make them a profit. For example if you require one bitcoin per share to be in escrow they will aim to pump their shares up to more than a bitcoin each in price so they can run with more than a bitcoin per leaving you holding the one bitcoin per to mollify their victims with.

Maybe you should just call the pink section "scams" and if any ever make it out of there explain "ha ha that one fooled us, the scam was that it was not a scam!"

(It is already clear there are sheetloads of coins out there urgently wishing to invest in scams so this should in no way be an obstacle to their raising vast sums of coins. )

-MarkM-

That's a great argument.  I find myself wanting to agree.

The LTC exchange project in a lot of ways is very similar to a crowdfunding project though.  So with that in mind, I am thinking of maybe dividing things into two markets.

Market A:

A lower risk, higher profile collateral backed 'premium' market, where the asset issuers are required to have X shares in a 'COLLATERAL' fund on the exchange for every X amount of LTC they want to raise.  Funds deposited into this system would be shifted into an offsite cold wallet at regular intervals.

Market B:

A crowdfund (call it pink, to steal GLBSE's example) market, where the assets issued are considered extremely high risk, there is a funding cap, and the trades themselves are more expensive.  (Eg, 2% instead of 0.2%)  The difference in fees (1.8%) would feed an escrow fund dedicated to each asset.  If that asset goes poof, the escrow fund gets distributed to the shareholders.  If the dedicated escrow fund over time is traded enough to surpass the requirements for the collateral backed market, then the asset moves to the higher profile Market A.

Such a system in combination with some basic verification (as a stumbling block for scammers) could be fairly effective.

What might I be missing?  There's always a gotcha. 

TL;DR if you cannot get professional / qualified investor capital to get your operation off the ground and profitable, you ought not be offered to the public on a stock exchange. On a crowdfunding site sure, go begging there, but public offerings should be proven successful companies looking to expand, not the latest scam someone made up and is starting from nothing.

The idea evidently still needs work, but basically I was thinking along the lines of margin accounts initially.

Certain of the assets on the system would be acceptable for use as collateral, and borrowed against.

This way an entity could build up a lot of collateral since each time they buy some they can immediately borrow again half the value of what they just bought. Assuming the things they buy actually go up in value this could grow quite nicely.

Eventually some huge holders of collateral would be in a position to consider branching out into doing the underwriting thing. They would find corps they consider creditworthy, and back them. Obviously they would be able to charge half as much interest if they simply loaned capital to the candidate company, so there would have to be really good reason to "go public" in order to justify also loaning them capital to act as surety to the exchange so they can "go public".

Hopefully this will keep many corps out of public trading entirely at their initial startup; which seems to me to make sense. Think about it, when facebook did their IPO were they a startup or had they already "proven" themselves? When google did their IPO were they a startup or had they already "proven" themselves? Etcetera. It seems a good idea to make it actually cheaper and easier to simply get a commercial loan to do your startup than to additionally borrow more to do an IPO. This way hopefully companies will first get themselves profitable before doing an IPO.

For startuip entrepeneurs there is crowdfunding. A stock exchange ought to be a more sober matter, not just another crowdfunding setup.

Let people get funded and get profitable then worry about whether to go public.

-MarkM-

I like the idea of collateral on the exchange.  Unfortunately it works against the core function that the public offering is a mechanism to raise funds for the asset issuer to accomplish some goal that they couldn't accomplish on their own.

What ratio would you use?  10 to 1?  They have to have 1 LTC worth of collateral for every 10 LTC they raise?

What else could people put down as collateral?  I have a feeling that most of what someone could put down isn't going to translate well into international internet operations.

An approach I am thinking of using is simply to make sure you have plenty of collateral of theirs on hand to confiscate in the event they default/scam.

That is, only allow people who have significant holdings on your server already to issue assets.

In a way this kind of comes back to the underwriter idea since if the person who wishes to issue and asset lacks collateral themselves they can find themselves an "underwriter" who is willing to put up the collateral...

-MarkM-

All of your orders are summarized on the portfolio page now.

Cheers.

If you are getting people to send their ID they should hold it next to their face so you can compare it to other photos they send.

Their Utility bills or other paperwork they should write down the date and their security name as a timestamp.

Sending a postcard to their address containing a code they need to enter onsite is also good.



http://www.greenid.com.au/  theres also services like this.

+1

I read through a bunch of GLBSE threads about why they do the verification and the effect it has had on the system overall.  I've just about come full circle now.  LTC is a lesser target for scams/fraud at the moment because it is worth significantly less than BTC, but as that changes I'm pretty sure we're going to need some kind of verification requirements.  The types of verifications I've come up with:

(mostly stolen from GLBSE)
- LinkedIn profile  (require XX number of references?)
- Facebook profile (require XX number of friends?)
- Government issued ID
- Utility bill
- Phone call
- Fax number
- Email address

I have thought of a couple other creative verifications:

- Ebay feedback (require XX positive feedback)
- Credit Card address verification  (I charge their card $1, run the address, make sure it matches.)
- Postal mail (with a BOLD, "do not forward" on the letter)
- Using a paid phone number address search on top of the above mentioned phone call.
- For companies, BBB and DnB references.

And for asset issuers that really want their users trust, the ultimate would be:

- Granting access to an Equifax/etc credit report by providing access to their equifax.com or equivalent account.


Can anyone else think of any to add to the list?

Comments I've seen from nefario suggest GLBSE would be interested in that, and would like to offload the verification process, expense, and risk.

It just seems that without identity verification the community needs some way to rate different securities.

One way to get around this is letting people link to their bitcoin-otc profile or other ways to import rep.

There is a business case for someone to start a verification company.

What if I required that you own XX number of shares to be able to post on an asset?  Eg, you have to own at least 0.05% of the outstanding shares before you can post?

Thus if there were 1000 shares outstanding, you'd have to own 5, or if there were 10,000 shares outstanding, you'd have to own 50.

I thought about that.  I really wanted to do that, and asset issuers can already post notifications (which get sent to asset holders via email as well) but it seemed risky to me to allow asset holders to post back... it could really easily get ugly and I don't currently have time to moderate.

Maybe with a well defined policy of what's acceptable and a few volunteer moderators we could pull it off?

I'm definitely stoked about how well it's been doing.  I sold the initial shares for 25 LTC, now they seem to go for more like 60 LTC, so that's good.  The people that took a risk early on are getting a good reward, that makes me happy.    People that buy in now at 60 LTC, etc, will in turn hopefully see a similar reward as the exchange grows.  I've had lots of PM's asking if I have plans to take the site into BTC, so I'm very optimistic about the future of the site.

Just to give everyone an idea of where my current plans are, I do not have any short-term plans to go into BTC.  I have a couple of non-trivial security features that need to be integrated first, like Google Authenticator.  I want to make sure the site is tested, proven, and solid before even considering risking anyone's BTC.

It also seems to be good for LTC for the moment, having an exchange like this will bring value to LTC and hopefully in time we'll see a lot of cool LTC projects being funded through the exchange.  For LTC to succeed there needs to be a robust economy and I'm looking forward to providing a key tool at the core of that economy.

I do, briefly want to touch on one key difference between LTC-GLOBAL and GLBSE, which is that I am doing -zero- verification of the assets that are being posted there.  The only barriers to entry currently are:

- 250 LTC,
- that the contract be legible english,
- that the asset be legal in Benton County, Oregon, USA
- and that you agree to the LTC-Global Asset Issuer Terms.  (which mostly tells the issuers that if they lie, or do not fulfill the contract, etc, then the asset will be frozen.)

I know a possible verification system is on the TODO list, but I have to be honest, I do not believe that I could adequately verify applications in a way that would not be easy to forge.  Thus I am not currently certain that I will ever do a verification system.  It seems like a can of worms that could open up LTC-GLOBAL to possible litigation.  Maybe that will change down the road when LTC-GLOBAL is a full time job for someone and they can travel to visit each applicant to see their operation in person.   



The TL;DR version:

PLEASE, PLEASE, PLEASE, do not invest more than you can afford to lose. LOOK CLOSELY at the assets before you hit the 'BUY' button.  Do some research, send the asset issuer an email, ask questions, BE CAREFUL, etc.

Cheers.

Something that might be good is a mini-forum for each asset which shareholders and asset issuers can post in for feedback and to provide updates.

The ltc-global stock price is looking healthy,have to be happy about that   

Hah, forgot to push the new code from dev to live.  It's live now.