Hello everyone,
As it seems our "industry" has a problem which is float. We keep on trying to make things happen, despite the fact that most banks and financial institutions wont touch Bitcoin with a fire hose. When it comes to PayPal, Visa & Mastercard the game is even worse as complete shutdown for no apparent reason always occurs.
Well there is a way into the world of finances which is possible, and shutting "us" down would be quite difficult, none the less it would probably cause mayor headlines if such was to happen, as it plays with the foundation of capitalism - the right of ownership (compared to the right of having a merchant account).
It takes significantly more to shut down a company, which is publicly listed, has its shares spread among (X + 1000) shareholders and the company's share price is denominated in the daily price of Bitcoin.
Now you ask, how is this possible?
Well it requires that someone, pegs a public listed company to the Bitcoin price, by issuing a bond, a socalled zero-coupon bond.
Here is how it can go step by step. Mind you, this is all still in theory and would require a great amount of funds.
- Incorporate a company in Europe/Offshore (Europe/Offshore because the SEC regulations for getting a company up and running on a publicly listed exchange is quite harsh).
- Make sure the company memorandum & articles states that the company's sole purpose is to issue bitcoin denominated zero-coupon bonds.
- Make sure the company is owned by a trust with a trustee guardian (this can be a law firm), which is only bound by following the company memorandum & articles by law. Thus CEO influence is down to minimum and only on an administrative level. CEO responsibilities/profit would be paid out on a % basis of the public trade. Same goes for trustee.
- Issue 21.000.000 zero-coupon bonds and peg them to the Bitcoin daily price as per Mtgox.com/Tradehill for indication for starting point (as we assume arbitrage would be done in order to stabilize price all over)
- Trading occurs when a private person purchases a bond by sending Bitcoin to the company account, and receiving the bond OTC, or purchasing it directly on the market for dollar/euro, controlled by the trustee of the company, which is by law bound to execute order to the CEO of issuing a bond. By law the trustee is a regulated entity which will either risk loosing their license to practice or follow suit. Bond is being issued through a broker, that is usually the marked maker (aka. the Bank that helped issue the bonds on the marked to begin with).
- It does not have to be called a bond, which is a debt certificate. The instrument can be something different, a CDO (Collateralized Debt Obligations), which is backed by the company's holdings of Bitcoin. Or it can be one of the myriad of financial instruments that covers the exact need. For more types of bonds and for the sake of debate look here:
http://en.wikipedia.org/wiki/Bond_market#Types_of_bond_marketsNow there are implications with this method. It more or less requires someone that wants to setup and exchange, but wants to be free of the hassle of having their bank account shut down every second month. By running a company, it is based on a complete different set of laws, and closing something like this down, just because someone doesnt like the idea is next to impossible. Actually as far as I know closing down a public company has not happened, apart from bankruptcy.