Bitcoin Forum

Hi,

Input & advice requested for new Bitcoin project.

I'm passionate about BTC, I've got 20 years experience as owner of an international, US based investment firm.   We are working on an idea for a large mainstream Bitcoin vehicle that would, at first, work with some large BTC holders.  

My partners and I are from long Wall St. careers and we'd like to discuss some ideas and get advice from large BTC holders about the interest, viability and potential advantages / disadvantages of what we are thinking.  Once aspect of what we are evaluating would benefit from some participants who already own coins.

This is for a completely BTC focused project which would aim to help bring BTC to more main street investment access vehicles like IRAs and also help some large BTC holders maximize and leverage their own holdings while not losing any exposure to their BTC.   -- happy to share my name, bio, verification etc in PM.

Please contact me if you can help  // please also let me know any ideas about the best ways to reach some of the key BTC owners.

Thanks!

B


EDIT:  Verification added on request.  My name is Bruce Fenton, founder of Atlantic Financial Inc. which in 1994 became the Internet's first full service investment firm.

Don't waste your time on this forum. It's just a bunch of broke trolls.

I tried Reddit and got 1000 hate mail messages and a bunch of other people  said to come over here.

Any other ideas?

Yes,

Go to a bitcoin convention, there is one on January 25th in Miami. btcmiami.com. Networking at these conventions would probably be your best bet. The last convention in Las Vegas was a great opportunity and there were many large holders of bitcoin there that would be able to give you the clear advice that you are seeking while actually putting their name behind it.

There are many conventions happening in the bitcoin atmosphere so if you can't make the Miami one try to find something close by!

Thanks, I attended Vegas and I'm booked for Miami as well.   I know there are many large holders attending, what's the best way to reach out to people.   I've done investments for 20+ years and there is a system! everyone knows or can verify me etc.  BTC is so new and wrought with clowns and fraud that people have major distrust.   Reaching out causes even more distrust in some cases.

Ideal might even be to find someone already known and trusted who has those connections and work with him or her.

Yea it's simply not going to be that easy. Apparently you cannot log on to Bitcointalk forums and get anything serious going. Trust me.

Don't ask how much they hold, they won't reply as this information can be used in many ways.
Personally I wouldn't

You should provide verification.
How can we be sure you are not just someone attempting to steal bitcoins ?
3000 bitcoins is a lot of money.

From the Reddit thread:

Quite a few bitcoin supporters are rooting for bitcoins because of a fundamental belief:

that governments, banks and investment firms messes up the economy and make our lives difficult,
bitcoin is an effort to take them out of the equation

If this financial guy actually understands "bitcoin", he would stop bragging about $4.5 billion transactions and Morgan Stanley. This guy say he is "passionate about BTC". Passionate about making money from bitcoins, or passionate about helping the community?

He was asked for some real world qualifications; I'd say that fits the bill. I'm assuming that he's in it to make some money, like many people are around here.

Bitcoin is many things to many people; he's obviously not appealing to those that are waiting for BTC to bring Wall Street to its knees.

Get a last name and we'll talk.

From the reddit thread:


EDIT: Here's his LinkedIn - www.linkedin.com/in/brucefenton. I'm assuming that since he's posting his full name and company on Reddit, this isn't off-limits

If this is the case, people who love bitcoin should not go ahead with this.
This kind of under the carpet dealing is one of the reasons that people hate the 'government' and 'wall street'

Ofcourse people who want to make a quick buck will just go ahead with this.

Technicals of bitcoin price are positive, dont be scared for another drop to 300-400 dollar levels.. This will go up

(Google my username and forex if you would like to know if i have some knowledge about the financial markets)

Good luck all

Actually looks like a decent Q&A over on reddit.

http://www.reddit.com/r/Bitcoin/comments/1u8zco/hi_reddit_20_year_wall_st_geek_and_bitcoin/

Maybe try contacting Greg Mulhauser, he's also an experienced trader.

https://bitcointalk.org/index.php?topic=333851.0

I think I have a plan for a superior offering to those with some key differences.

Also, I would never ask anyone to "give" their BTC

If you are experienced in Forex you should talk a bit before judging.

It's something I think is superior to the other offerings and something I think would be very good for bitcoin overall by expanding the availability, expanding access and also ensuring a large block of coins are not dumped for a while

I did choose my words carefully,.. in my original posting my first sentence was:
If this is the case..

clearly if you have different plans my advice does not apply,

Good luck

Not bragging, I was asked.

I believe banks, governments and investment firms mess up the economy also.   But I also think it's naive to think that something with a market cap of $10 Bn is going to simply skip all mainstream financial systems to achieve this growth.

For BTC to have anything close to a real and significant market cap then it needs to be easy for people to buy using vehicles they understand.

One can hope that the dentist in San Diego who heard about it on the news will learn hoe to buy exposure to BTC or one can make a simply public vehicle so that he can buy that from the broker he's worked with for 2@ years.

As far as making money from Bitcoin, of course I am -- I want to see them grow and succeed and I want early adopters to be rewarded.   Anyone who doesn't want them to be a real part of the economy, to grow or to make money certainly has that right.

you need bullets. But i guess you are a bit late.

Done thanks, my name is Bruce Fenton

That would assist yes but it's not essential as you would suggest. BTC is not just an asset class it's also a currency, and widely adopted currencies do not need investment vehicles to support their use and value.

What BTC really needs is price stability. It needs market-makers, and if your proposed vehicle would directly help in a small way to prevent 15+% swings over a day then it's to be encouraged. As market-cap grows the average daily range should fall in percentage terms but that shouldn't just be an unintentional consequence of a larger market.

Thanks, with this we need 10-20,000 BTC for critical mass for it to work.  I can either try to convince some Wall St, players to buy those coins then participate or I can find holders of coins who see value in the plan.

i'd actually prefer if bitcoins kind of did away with wall st. feelings on here are mixed but i think wall st should "burn to the ground" and rebuild elsewhere, less corrupt.

hv you messaged rpietila? he is one of the biggest bitcoin traders in the world, tends to hang out in the economics sub-forum.

A surprisingly large number of people say that.

There are many aspects that many of us on "the inside" do not like -- such as bailouts and the government regulations which benefit the large players.

There are also many good things about Wall St. -- the Internet and our world would look very different if not for the VC investment and later public offerings of companies like Google, Amazon etc.

When we are talking about Bitcoin which now has one fortieth the market cap of a single large company of the thousands of companies on Wall St - I think it's much more realistic to make change from within the system....typically this is always how disruptive technologies have worked -- alongside old tech.

This is one reason, with my project, I'm looking t have it run, managed, funded and operated by Bitcoin leaders and using Bitcoin.

The most potentially profitable game going on in the BTC world currently seems to be making and selling mining hardware.

There is a certain mining hardware company in California whose name rhymes with Cash Last that has working silicon, but is in dire need of a financial bailout at this very moment.

If they were to receive a sudden infusion of cash right now, they could be in a position to cover their current liabilities that now threaten to destroy them, and go on to become a successful and highly profitable mining hardware company.

Unfortunately for all involved, I doubt that you and your investment partners can move quickly enough to pull this off.

I'll tweet your topic here: https://twitter.com/ThisWeeksCoin

I don't guarantee if You'll get any response, but, if so, I'll be glad.

Good luck with your quest

Actually, why not call up Mt Gox?  They seem to be dry on the outflow so a cash infusion there would be great to bring their outflows back up which would lower their fake hostage price.


And then once you get your coins, you can start moving them out unless Mt Gox has restrictions on that.


If not, you might do well just trying to get ~100 coins each from the 'old money' crowd since that will be seen more as helping grow the market and stabilize the price than a lame cashout.

There is a distant early warning from the Mt Gox price shouting the need for more funds like this but more details of HOW your fund will operate will be needed to really get interest into it.   It seems like you are trying to partner up with a few big players and perhaps offer them some stake in the game (and risk) to create what you are doing

You'd probably have an easier path with the first option.

Why the fuck does everything have to be mining.

I have a hard believing that an Investment Firm CEO struggles with his/her use of periods at the end of sentences.
Yes, I know it's a forum and all, but I work an 8-4 job in an office and I take my writing style home with me.

I think that would add an extra layer of complexity.   This is straightforward for people to get BTC assets into a BTC backed public vehicle.

Its a decent proposal actually.

Ok, and what is exactly the point of this BTC backed public vehicle? You will have 100,000 BTC pool based on which You will issue new securities?

The gain for those who put coins in pool in needs to be a return in some form and should be greater than simple return on bitcoin since they already have that and for those who invest there needs to be a possibility of return as well. Where exactly are these returns coming from if actual owners are gaining regular return of bitcoin appriciation?

Unless You do frictional based current-world-finance allowing people to actually invest a lot more than the worth of the pool? And then trading those.

Large holders are in it for ideology as much as for profit I think and there needs to be a compelling idea of how will bitcoins work in favor of someone while they are holding on to them.

Please explain a little bit, there are so many cool ideas flowing openly I doubt that no one has thought of what You've offering, its more about execution I suppose.

My proposal, let Wall Street provide liquidity around the globe so that people have instant access to markets from their bank accounts and tighten spreads, I think that would be much more beneficial while certainly lucrative. Currently so many people are paying premium in terms of money and time for being able to exchange coins, while Wall Street could provide it with a single margin account :) maybe..

You should also check the idea of colored coins https://bitcointalk.org/index.php?topic=106373.0 and maybe get behind it with big guns cause its future of trading.

My advice is don't trust wall street.

I do not mean to be a jerk off here, but I do not think you worked at MS.  It is likely from your experience summary posted above, that you worked at Dean Witter as a retail broker, smiling and dialing, and received MS cards when they acquired DWD.
Nothing wrong with that, BUT if you built up a book of business of 4.5B, you would have been moved to MS' private client services making several million per year (just like Jim Cramer at Goldman, Sachs when he came out of HBS into GS' PCS group before he started a hedge fund flipping IPOs and trading up a storm).  Somehow, I do not think so.
If you had the backing to buy (which you do not), 10,000 bitcoins, you could make about 4 phone calls and have them in a simple block trade.
I call BS.
You are probably looking for cheap "locates" so you can long/short trade this thing and not risk getting your ass handed to you when there is a squeeze and you cannot deliver the "physical".

The amount of assuming that anonymous people on the Internet will do never ceases to amaze me.

Another internet detective.  Yep, you've got it all figured out.

The attempts at freeloading off others by people with BS credentials that is so prevalent in America is indicative of where the country is headed.
Guess my "assuming" was pretty bang on.
If you had actually worked at MS on the equities floor for even a summer internship, your skin would be a lot thicker.

My skin is plenty thick but the level of ignorance that people have to assume things without basis never ceases to amaze me.   BTW -- what's your real name and credentials/ LinkedIn etc?

Why would you like to know?   Are we starting a business together?
I do not use Linked In because it is useful mostly for trolling stock brokers that want to sell people sketchy income trusts and software salespeople that want to eff your entire business backend up.
My credentials are similar to what you would like others to believe yours are.
But, somewhere along the way, somehow, I gleaned enough common sense to know how to find 20,000 bitcoins (if I actually had the money to buy them) without posting on "craiglist".
You are now leaving no doubt in my mind, that I just saw right through your paragraph of bullshit.

The topic has been going on for a week now, I suppose you have already reached out to several 3000btc holders. So, whatever happens to this topic here doesn't matter anymore. My guess is you plan is on its course.

You have said you wanted to do something about letting "average" people buy exposure to bitcoin. In my opinion, the only "exposure" they actually need is actually buying and using bitcoins, not any sort of "vehicle". The community do not need any investment bank/firm/fund backed "vehicle", only those who wants to make a quick buck needs "vehicle". The best for bitcoin in the long term is LOTS of "average" people, holding a adequate amount each, spending and using them.

The thing I worry most is when one day, a trusted institution started accepting bitcoin deposits and lending them out, and there is no regulatory body to enforce a reserve requirement. Then bitcoin will be dollars all over again.

Less than 20k Bitcoins are traded at Gox these days, translates to about $20M. This is minute in Wall Street. If the Wall Street have enough bitcoins, they could do pretty much anything to the prices, and these large bitcoin holders could be helping.

I just hope you are really doing something good to the bitcoin community.

So you won't say who you are?  

I never said anything about Craigslist....I never said I was looking to buy coins, your other assumptions about the purpose of the coins were wrong ....your assumption about "locates" and long /short is wrong, like much of what you've said it's based on nothing at all ....and I really don't care what you think of Morgan Stanley....I didn't even mention MS in my original post ....only in response to armchair troll keyboard warriors like yourself who claimed I didn't really work for AF, also with no basis.....I was clear elsewhere that I started as a retail broker... that was almost 22 years ago -- I did the job much younger than average and with much better results than average and if you want to judge someone you know nothing about based on the job they had in their 20s which was two decades ago, have at it.   The $4.5-5 bn I did was almost all after MS and by transaction I mean placing money into a LP or other fund which I raised.

I know it's much easier on the Internet, hiding behind anonymity, to mudsling and make accusations ....but when there is no basis in truth and there is no statement the other person has said which is untrue or misleading then it doesn't serve the mudslinger very well.

I really believe that more broad access is key.

There are lots of posts about new ATMs or new merchants accepting....yet all of the BTC on planet earth is still worth less than the teen clothing store The Limited or less than 5% of Nestle. 

I think we really need to get more real, WS sized, capital into BTC and key to this I think are several vehicles like Fortress, Winkelvoss and what I'm researching doing.

For BTC enthusiasts it does not seem a big deal to buy BTC....but for either the institutional investor or the general public....it's a hurdle.   They don't understand private keys, liquidity etc.

Something that allows a dentist in San Diego to call the same broker he has known for 20 years and say "sell 1200 AAPL, buy 900 BTC Fund" is key to increasing market cap and therefor increasing stability.

IMHO I think this is the most key thing to help BTC.....I really believe the price stability is a major barrier for consumers and retailers and I think market size will help that and have it's own benefits.

Can you provide some more info on what you're planning on doing?

Why would I say who I am?  I am not asking people on a public forum for anything.  Especially, a public forum that is inhabited by hackers.
I think highly of MS, it was hard to get a job there in the 90s.  But, you did not work there so it is irrelevant other than they replaced the sign above your door one one day with MWD.  You are the one sensitive about it.
The "craiglist" was an indication of the equivalent of what you are doing....
If you do not want to buy the coins OR to use the coins in any way, you should be able to do what you please WITHOUT any coins.   If you think your idea is so brilliant, you should air it here.   Some strong criticism may actually help you.
If your idea had any credibility, and you only needed 10-20k bitcoins AND could make the person or people that held those coins money, it is VERY easy to find people that have that many coins.  Why don't you hire a high school student familiar with google.  It should not take him more than a day to get you a list of 20 people.  And yes, I think you are a little dense, if you were successful at smiling and dialing in the 90s and you cannot find these people yourself.
Or, your idea a good one mostly for yourself and the easy to find people, do not feel like helping you make money with their coins.   Simply air it.

He hasn't answered why he just doesn't get his backers to buy from Mt Gox

So, he doesn't really have $$$ backers but rather wants to represent a pool of old money bitcoiners to the money bags of wall street to start something.

As I said earlier, the way to do this would be to ask maybe ~10% of holdings from old money types and then get some momentum and perhaps others would add to it.   The reason being, someone with 5000 btc can't really realize their gain anyway since that amount is pretty impossible to actually cash out of an exchange.. sure you can sell 5000 on an exchange but are they about to drain all that cash out of their liquidity to your bank account?  Maybe once.. not 20 times for sure

But the other question will be a hard answer.  What sets the price of bitcoin anyway?  A bot run on mt gox that other bots react to? Coinbase is a headless chicken during fast pumps and crashes triggering very wide spreads trying to save its ass from being exploited. 

The irony is that easier access to cash out would kill the price at least in the short term but then it could get more widespread after that and then the value trend back up.

Or, if things progress as it is now and the current exchanges can survive as is (can coinbase survive in this chaotic climate?), the price can stay pretty high and slowly bitcoins can spread out to the masses.

Which is not a bad business model.

It makes sense for larger holders of bitcoins to be able to be part of a large co-investment vehicle and allow shares in that vehicle to be sold over time to new buyers into Bitcoin who want to buy in an easier way. Saves disturbing the small traded market. I also imagine there are a few people who have recently become worth quite a lot in Fiat from Bitcoins and don't really know what to do with them regarding selling, tax and subsequent asset diversification and have no idea about who to discuss it with given the sharks, scams and general bad behaviour that is so often around Bitcoin and this forum.

PS I did work in MS on the trading floor, so am quite amused by the name calling. Happy to prove my identity privately to anyone who is willing to do likewise.

You're asking why not get new people to invest in Bitcoin by buying on MtGox and then work with them?

Sure, that's an option and something I could do.....I have plenty of access to capital from people who hold no Bitcoin.  

I'd much rather work with people who already understand Bitcoin and believe in it.  There are a handful of large investors interested in the space, some believe in it, some want to dabble in it as what they thrink might be a way to make some quick money on what they see as mania.  

In those types of meetings the conversation is 95% focused on what Bitcoin is, why they should be interested, questions about negative articles etc.  Happy to have those conversations with investors who are interested in BTC but I'd much rather talk with people who already get all of that, already believe in BTC and who want to keep BTC exposure.

I also like the idea of doing a full BTC based idea: paying the law firm and other service providers with BTC, paying employees with BTC etc and starting entirely with BTC.

Also, I'm talking to large BTC holders to get a feel for what the viability is and the interest levels.

The reason I'm not simply publishing the plan on here is:
- regulation-- if this does become an offering at some point I want to avoid anything in a public forum which could be construed by regulators as an offering of securities
- it's harder to wade through Internet forums to separate trolls and serious people and on boards it's easy to be confused -- also don't want to broadcast what I think is a good idea to competitors.
 

Full text (https://bitcointalk.org/index.php?topic=124441.0).

Anyway, if you want to talk to bitcoin finance, take the hint kindly offered to you by a few others a few pages ago and drop by assets (https://webchat.freenode.net/?channels=bitcoin-assets).

I fixed that for you.

Clever but not close to true.

I'm  not looking to get people to sell or provide liquidity.

If you do not need the bitcoins (since you do not want the people to sell them nor do you need locates or liquidity of any kind), you should probably speak with ross ulbricht.   He has a lot of coins.  He is pretty easy to locate too.

That makes absolutely no sense.  You have already said you want 10-20k bitcoins.  Are you seeking donations?

And people wonder why people are cautious of troll boards...

No, as I explained before I have an idea for a vehicle which would be public and provide easy access -- I believe this type of vehicle is superior to ETFs, private offerings and the other plans that people have announced.   In order for it to work, we'd need critical mass of 10-20k coins.

I'm not asking for a loan or donation--  I have an impeccable record for over 20 years and have worked with some of the largest most reputable firms in the industry.  I've never remotely been close to involved in any boiler room operation and have not had any regulatory issue, ever.

If you think you have the wisdom you need to judge me based on almost no information which was gleaned from a bulletin board then have at it....don't contact me and don't provide the input I'm asking for in this thread....it's clearly not a fit for you and clearly you are not a fit either.

He is full of crap.   He has stated that he DOES NOT need the bitcoin in any way.   Does not want to buy them and does not want to use them as collateral.   But needs 20,000 of these things that he really doesn't need.  If you truly do not need them, then there is a place you can search wallets.   Pick one with 20,000 in it and use that for your show.   Since you will NEVER need to access the wallet, it does not matter whose it is.

I already told him to use Ross' as he will not be accessing his for at least a couple years.   Ross is easy to find and probably would enjoy a visit.   

Clever....not sure why you are so focused on wasting time.

I'm not going to argue about proving who I am to anonymous people on a chat board when I've already provided my real name and it's easily verifiable on Linkedin etc.

You are picking apart something you have absolutely no earthy clue about. 

I'm not being cagey but I'm not going to post details on a public forum....if we are involved in an offering at some point this could be construed as a "public communication" by regulators.   Without details you are just making wild accusations and assumptions.

I am yanking your chain because your post is the equivalent of someone going on craigslist (or pick your site) and asking for all the people that have more than $250,000 in cash or gold in their possession to contact you.  And then you say, I do not need your cash or gold and do not need to use it as security but I need people who keep that much gold or cash.....
You were more entertaining when you got defensive about your resume.

What input/advice you want? I would like to do this in public. I will not be disclosing how many bitcoins I have control but it is enough to fulfill your requirement.

Well you've got to admit that's being a bit of a troll.

I came on here because I really to want advice and to speak with large BTC holders --- this is supposedly a respected forum and I want to get input from as many people and as much variety as possible.

It would have been much easier to do what my colleagues do and stay in a tiny bubble of acquaintances -- despite the trolls and clowns there is value in connections and input made from public forums.

Thank you -- like I said, I'm governed by regulations of the investment industry which are very strict about public communications....particularly something that could become an offering.

I'm happy to provide more verification, also provided my real name etc. and even speak to someone who is anonymous and without verification.

I understand people are cautious and if this is not enough, understand.

Thanks it's for a public offering backed by BTC which would allow much more broad and easy public access to exposure in BTC for retail and institutional investors on a regular open exchange and would be available in standard brokerage accounts, IRA accounts etc.

I believe the listing method is superior to ETFs and the private offerings created by other companies.

It's not at all close to the same in the eyes of regulators.   There are very specific definitions of "material communications with the public" and there is absolutely a legal difference between something posted on a public forum, we page, Twitter, public seminar, mailer, tv ad, or Facebook versus something which is not posted to the general public but is communicated privately to a limited audience by way of email, private message, phone, in person etc.

If you are interested ask your lawyer about communications related to securities laws, public offerings and investment professionals and I'm sure he will say the same thing.

The BTC holders would own a portion representing their holdings....I wouldn't own their holdings, buy them etc. in fact they would not even be sold but placed in the vehicle and the BTC holders would own a representative  amount of that vehicle.

Just what non-accredited investors need.   Investing in something that has 5x the vol of gold....
Maybe get them some of the 'higher interest paying' tranches of some CDOs too.
I should have realized we were dealing with a saint here since he is from boston.

Pretty close, someone could own the whole thing if they set it up and put all the BTC in.  I'm sorry but I'm not going to explain more on a bulletin board.   I know you may take that as secretive or whatever but I can't do it.

No idea what you are talking about.

I'm up on securities laws....I was a FINRA Series 24 General Securities Principal / registered supervisor for 15 years.

Bitcointalk is not close to the type of closed, verified, accredited investor group the SEC permits this type of communication.  No one would construe this as a board limited solely to accredited investors. 

That is referring to something like a website which a hedge fund makes available to people who are accredited by use of a password which they provide when the person has verified that they are accredited or when the fund has proof such as if they are a large institution.   Even then, those communications are not public communications in the sense of mass market like FB, chat boards etc.

This is why there is NEVER a legitimate offering from a legitimate firm discussed in detail on here or any other similar forum EVER....unless they are violating the regulations......this is why Fortress won't come on here with details, BIT would not discuss details and why Cameron Winkelvoss could not discuss anything about his potential offering on his Reddit AMA.

Some firms don't even allow employees to have LinkedIn profiles and many of the largest hedge funds have no website or a simple one-pager.

this has turned into a garbage thread

if you really have these investors who are too old folky to create a coinbase account on their own and you are looking to provide a service to them then why don't you get the good faith of them and be their broker and manage their wallets?

Are you really trying to make some type of 'paper bitcoin' exchange which is why you want to start with such a large amount?

If it is so secretive just buy the bitcoins and do whatever you want with them. 

You can disagree on details but it's either dishonest to say that it's not close to true or maybe you just misunderstand bitcoin.  XBT belongs to the person who knows the private key.  The rest is fancy gibberish.  It doesn't matter what offering with what good reputation and what big firm is going to PROMISE to do.  Once you aren't the one in possession of that private key you own NOTHING.  You can dress it up as fancy as you want but the reality will still be the same.  When someone will give/sell/place/donate/partner/ipo XBT to you/firm/vehicle/trust/etf they will no longer "own" that XBT.  They will likely own some sort of a disfigured claim to it but they will "own" 0 XBT.  The whole reason for bitcoin is to eliminate this exact counter-party risk.  It's like trying to shove an internal combustion engine inside a horse.  What's the point?

For some there is no point.  For some there is value in having BTC in a widely recognized format.  Right now the teenage girls clothing store The Limited has more value than all bitcoins on planet earth.   

I think and hope it will become a major piece of the global economy but it is very very far from this now in terms of size.  Personally I think for BTC to realize it's potential, larger market cap, wider adoption and price stability is key.

There are tons of dentists, small business owners, all the way up to billionaires and sovereign wealth funds who find the current process hard to understand and who simply won't buy bitcoin.  Eventually many of these people will understand and services like Coinbase will be easier to use -- this number may double, triple or quadruple the amount of assets involved in BTC near term, but it is doubtful that 200-300 times the people and investors will reach this understanding within a year or two. -- Even the US stock market after nearly a century has more participation indirectly through funds, intermediaries etc. than direct purchases.

As for ownership - when someone has shares of a stock in an IRA account they technically no longer own the stock, it is held in a trust and in the name of the trust, not the person.   This is common and is done by millions of people and organizations including every single Fortune 500 company, all of whom have large pension plans with billions of dollars in exactly this format.   Individuals are in the same situation.   (I'm not talking about a trust like this --- in this type of vehicle the shares would remain in the holders name, I'm only using that as an example.)

This vehicle would be publicly traded, likely trade at a premium to the underlying asset, provide leverage, be eligible to placed in tax deferred retirement accounts, could be borrowed against and would be able to appear on standard brokerage and investment statements in any type of brokerage account and would also be insured.

Some people see no advantage whatsoever to this and that's fine, I understand it and this wouldn't be for them.   It's not a fit for small investors, people who want to avoid taxes, people who want no part of the mainstream financial system or people who see no advantage in insurance or borrowing.   Others do see an advantage in insurance, more mainstream asset classes, leverage etc such as people who would like to borrow against BTC etc.

No, a publicly traded vehicle backed by bitcoin....similar to the ETF the Winkelvoss are attempting.

Coinbase is not a viable option and if you are talking about investors who would purchase something like this it would be after it is listed.

you are creating a CEF for bitcoin?

http://cef.morningstar.com/quote?t=CEF

http://www.centralfund.com/

Your apparent re-invention of the Winkelvoss wheel, together with what seems to be your misunderstanding of the basics of the Bitcoin protocol as revealed by your response to User705, are really straining your credibility as someone well prepared for the intersection of traditional finance and Bitcoin. As I've just suggested in a PM, it may be a good idea to take a break from this discussion before you dig the hole any deeper and spend a few minutes reading up on Bitcoin; the Winkelvii have made it clear that they understand entirely the mechanics of holding BTC in trust, while your comments suggest that you do not.

There is more than one way to skin a cat.

There are hundreds if not thousands of ways to create public offerings.

The Winkelvoss are smart guys but as far as I know they have never successfully raised funds for an offering, never been registered or even worked in the investment business and are fairly new to the space.


There are many major disadvantages of an ETF which someone who understands both spaces well can see:

Regulatory-   Despite whatever advice Winkelvoss received from the lawyers they paid to set up the vehicle, ETFs have several regulatory hurdles that other vehicles do not....they are learning this now as they are stuck in regulatory limbo.

Trading redemptions:  ETFs are required to allow DAILY redemptions.....this means that if there is a panic sell/ crash in the market and BTC is down 25% at 1pm ....then, because of that,  $50,000,000 worth of ETF shares are sold by holders of the ETF....then at market close the Winkelvoss would need to sell ANOTHER $50 mm in BTC on the market to meet those redemptions....therefor causing the price to spin further lower....they would not have the luxury of time because the redemptions must be met..this of course causes more of a panic sell, more volatility and is also a logistical nightmare.

Security/ logistics:  because of daily purchases and redemptions the security and logistics issues are significant.   Someone can literally buy $100 mm of the ETF on the market then sell it again the next day.  An EFT would need ready easy access to all those BTC for redemptions totally all holdings backed by public investors because theoretically all those investors could sell.   Securing the private keys AND having easy daily access to them is challenging.   They cannot simply be locked in a safe offsite....every single day there are net redemptions, someone (actually several people) would need to access those keys.  This brings up many other questions of logistics etc.

Volatilty:  because of daily purchases and redemptions, volatility would increase and panic sells would be worsened.

I thought of an ETF a long time ago, long before the Winkelvoss announcement and determined that these flaws and the accounting of private keys for tens of millions of dollars daily would be a logistical hassle -- it's possible the regulators agreed and this is why the ETF is now stuck in limbo.

It's a great idea but I believe there is a better way.

For the vehicle I'm researching it would employ some of the features similar to a REIT, Real Estate investment Trust and could trade daily on the open market but not be subject to daily redemptions (because holders would sell shares to other investors, not the fund as is the case with an ETF).



EDIT / added :  I'm confident there are better options than EFT --  however, the Winkelvoss bros might very well have solved these issues in some way I'm not aware of and their vehicle may not have the need for them to do daily redemptions ---  I won't negatively judge the details without knowing more than what has been listed in their documents because I don't think it's prudent to judge things unless one has facts

I won't bother to pick out all the other quotes illustrating the full range of utter baloney here, but clearly I stand corrected: to rescue your credibility, you'll need to spend a few minutes not just reading up about how the Bitcoin protocol works, but you'll also need to revisit the basics of ETFs and in particular the distinction between Authorized Participants, normal investors, and the fund itself. It would also be worth considering actually reading the Winkelvii's S-1 filing before prognosticating about how you imagine redemptions might work.

There's a lengthy discussion about this from half a year ago available in the Economics section:

https://bitcointalk.org/index.php?topic=252330.msg2688380

As I have no involvement in your particular scheme, it doesn't matter a jot to me whether you actually want to rescue your credibility, but I've offered the suggestion -- twice now -- that you're not helping yourself in the least in the eyes of the people you claim to want to reach, and to whom you claim to be able to offer something of value. So just take it as a friendly observation of you shooting yourself in the foot, and if you believe I'm simply wrong about that and want to disregard it or dismiss it entirely, that's your call, and I'll leave it to you to keep shooting.

By now, most or all of the large Bitcoin holders who grok finance will have left this thread, but best of luck with it all anyway. Anything that genuinely improves access and transparency for the wider community is bound to be a good thing.

Some of us stick around for the lolz.

It's always fun batting around the new wave of opportunists when they crawl out of their holes.

The economics section post is about a completely different topic than what I am talking about (effect on exchanges)

I've read the S-1 including page 50 which covers redemptions.  I'm talking about the reality of how it will work and getting approvals for their method.

So far they haven't gotten the approvals and I can't almost guarantee they will not gain approval for the S-1 as written and this will be a key reason why.  I predicted this months ago and was correct.

"Central Fund's purpose is to hold gold and silver bullion on a secure basis for the convenience of investors in the shares of Central Fund."

As I said earlier, you are making a CEF for bitcoin?

I guess this is the part where you say you can't say what you are doing

No one can legally discuss specifics like this in any way I know of publicly.

Sorry --- I'm trying to be MORE open, transparent and involved in the community than others in the investment business (despite the many drawbacks and some low quality interaction etc)--- very few people disclose their real identity, fewer still (if any) from the investment business.

I'll be open and responsive as possible but I just can't cross a line of what my lawyers tell me is not prudent.  The rules about public communications are very specific and places like chat boards/ bulletin boards are expressly included.

Some take this as a sign to be cautious of .....but the opposite is actually a major red flag.   Just as someone who uses the word "guaranteed", implies something is "approved" by the SEC etc....anyone who goes on a public forum and provides details about a potential offering is almost certainly in violation of securities laws and should be avoided.

No one has to sell because of ETF redemptions. They just need to deliver BTC to the redeemers.

You really have no fucking idea what you are talking about.

You are completely and totally incorrect.

"Just" delivering What could be tens of thousands of BTC based on a huge number of transactions, collecting and reconciling which public keys to send the BTC to and matching those keys with account holders is a massive undertaking ....but it's irrelevant because you are totally incorrect anyway.

That's true, it's the reason the finance industry doesn't send money to a client's bank account.  I mean dealing with transactions, collecting and reconciling which bank account to send the money to and matching those accounts with their client's records, it's just too impossible.

Redemptions can only be done in blocks of 10000 BTC.  To one entity.

If you're going to claim you read the filing, you should actually follow through.

Do you think you can buy 1 share of SLV and demand they deliver an ounce to you?

It's blocks of 50,000 shares of the ETF to basket holders which is a certain category of investors such as broker dealers who become members of that category.

Anyone who thinks this is simple to solve can probably make some easy money by calling the Winkelvoss bros and the regulators and straightening them out-- good bet they'd be glad for the advice .....fact it's, it's not that simple.... it's a major hurdle and I will bet that if the ETF ever is launched it will not be with the same S-1 we see.

Not sure why people are so convinced that there is no possibility anyone has come up with a better model than the ETF ...when clearly it is not working so far.

Right 50000 shares, each share representing 0.2 BTC = 10000 BTC.  It isn't the trusts problem what happens to the coins after redemption.

Ready to withdraw your claims below?

The REIT concept is interesting...

"Have at least 75% of its total assets invested in real estate"

This leaves room for a bitcoin holding that could provide appreciation, the real estate holdings could be focused on short term income yield.

I thought you were "wall street", some sort of expert on stocks?  You think the The Limited is a teenage girls clothing store?
Really?  Victoria Secret, La Sensa, Henri Bendel, Bath and Body etc.   
Fine to try and compare the "market cap" of btc to something (although it is foolish unless you consider btc is an equity) but try and get some facts straight.

This is the funniest post so far....
The world will be a great place when we have some sort of thingy that can manage to figure out which names go with which numbers and stuff...

Just to throw this out there, here's something immediately slimy about this guy that puts off anybody with a good sense of intuition --

On this forum he says something early on that suggests he came here disparaging having tried reddit first, and on reddit he says that he tried here first.

That's very much in the wheelhouse of scammy manipulative con artist pandering techniques.

Also soliciting roughly $25 million in Bitcoin capital without having a clue where to start? Really?

No -- not soliciting....if I was I am well aware of sources of capital....

I was asking advice on this forum on the viability of something....which is not even an offering at all....I could not and would not even be close to accepting anyone's Bitcoin and never requested to.

He is asking for some criticism on an idea that he cannot tell you about.
The only part he can let you in on is that it will make him a lot of money but he needs to use your assets first.

No.  Again, not true.

He can't say but I can since I ain't part of it

This is EXACTLY what that Canadian Fund for Gold & Silver is CEF.  And CEF is also the discription.  A Closed Ended Fund.

There are no redemptions in a Closed Fund.  Only Shares.  So he would get a group of old bitcoiners to pool their bitcoins and issue shares at a premium above the NAV.   Those shares would then be traded above the underlying asset.  Being that bitcoins can rise or fall the shares can rise or fall but the premium above the NAV can also rise and fall in relation to the actual value.

Kinda like CEF right now, there isn't much appeal for gold/silver holdings so their shares are selling very low because two things. Gold and Silver are down a lot from a year ago and also people do not think it is going to rise very soon so the premium above that NAV is low as well.  

So, the holders of this Bitcoin CEF would probably issue some of their shares to cash out but also hold a portion in the fund as that would rise as the value of bitcoin rises.

Sometimes additional shares can be issued and there are some small dividends paid and expenses etc..

But this is why he wants to partner since he has people that would like to buy the shares with their IRA which can't go buy bitcoins from Mt Gox.




Now, anyone here that feels like doing this can go do it especially if they have the trust of some old money bitcoiners

That you CLAIM to be seeking advice on an idea that "you cannot tell us about".   TRUE.  Your own quote.
That you will make money from the use of our bitcoin?  IF THAT IS NOT TRUE, THEN PUT IT IN WRITING AND YOU HAVE THE COIN YOU SEEK.

Sure!

Merrill Lynch is going to become a basket holder in the ETF and develop a procedure to take BTC as redemptions...something they have never held and have no accounting or compliance or security procedure for.    And who sets up the public keys at Merrill?  Who holds the private keys?  Who is authorized to use them and how?   And surely the compliance department, which strictly reviews everything is going to simply approve this with no problems at all right?

You should take all your vast knowledge of Wall St and your stellar expertise and become a consultant....you can straighten out these regulators, fix the issues preventing the Winkelvoss ETF from being offered and you can help all these basket holders with the procedures to accept these non-existent bitcoin based redemptions that will occur.   They would be very impressed by your brilliance.  You obviously have such a deep understanding of things!

Seriously man.  If we met in person I doubt you'd have this kind of interaction.  I'm not Lloyd Blankfein but just consider the remote possibility that I know something about the industry I've worked in for a while.   You and I are both part of a small community that has a lot more in common with each other than 99% of the rest of the people not interested in BTC.

You are probably right.

The trouble is a CEF only benefits the administrator.  The bitcoins in it would be diluted by all the issuing fees, and ongoing administration so contributing BTC leaves you owning less coins when all is done.

And because you cannot deliver BTC for shares it doesn't allow for additional capital to enter the Bitcoin ecosystem like an ETF would.

So it's vaguely interesting if you desperately want an exit from BTC and feel your coins won't catch a bid.  Otherwise it's only good for the guy who gets to shave fees.

I agree. And the only reason it makes sense for a gold/silver fund is dealing with storage, high premiums to buy physical, etc but with bitcoins it is kinda only good for people to push their locked up IRA money into it

so it will probably exist at some point but not the most attractive vehicle

I'm not seeking anyone's Bitcoin -- I'm looking at the viability and interest in something which I said I was happy to share privately.  

IF this led to something and after many other steps seemed sensible then I might have an offering and if I did I would probably present it to people who hold Bitcoin in addition to standard Wall St. types with fiat capital because I think that it would be good to have something done by Bitcoin holders ---

and when and if I ever reached that stage I'd be open about it and simply say "I'm seeking BTC in exchange for X" and this would obviously be something I hope everyone would earn money on, including me.   But I am not at that stage --- and if I was I wouldn't post on the forum at all (for sure!) and I wouldn't be doing early stage research or asking for advice.

I'm probably crazy to have bothered but I do believe in getting a variety of opinions and net net probably worth it.

Ways to invest in Bitcoin

1- Direct ownership
2- Mining hardware
3- Qualified investors fund- Second Market
4- Qualified investors - angel investing in service and equipment providers
5- ETF- Winklevii (future)
6- Closed end funds as discussed here (future)
7- REIT with 25 % in BTC (future)
8- Trusts, do any exist yet?

I wish that were true.  Something like 40,000 people a year resign from FINRA registration because the compliance costs are not worth the revenue.

I once had a compliance officer ask me who Alan Greenspan was (when he was Fed chair) and I've seen huge pieces of business turned away for very odd reasons.

There are many other possibilities  (all future): 

Unit Investment Trust - or like vehicle
IPO
Commodity fund (? Who knows - depends on how BTC is categorized)
Charitable income trust (wealthy person donates BTC to his own charity, can get current deduction for full amount and can provide income from the trust to beneficiaries)
Mutual Fund focused on BTC
Many many variations of types of funds which are publicly traded
DPO, direct public offering
Different types of ETFs
Hedge funds invested in BTC
Separately managed accounts focused on BTC
VC fund focused on BTC related companies

Several different non US vehicles.

It's also not as hard as some May think to invent a new investment type --- or, better yet, to re-invent or revise some older vehicle type for BTC.

Did not slow us down from doing snowball.com nor a primary and follow on for Ivillage and a ton of other crap that mathematically could never make money.   I call bullshit, hip deep.
And before you write off the winklevoss twins' ETF attempt you should probably take a look at who is doing the filing for them.  If you do not recognize her, then get on google.   They are not fools.
And it was corzine, then paulson (after he pushed corzine out when the partnership was destroyed).   Blankfein is a spank.

look, people in this forum didn't trust B. bernanke, and they are going to trust you with their bitcoins?

Now it looks like you need is an trustworthy IT admin that can give you advice in managing the bitcoins.

I'm ex-IBM and for a small fee i can be a "consultant".

If you want someone to actually manage your private keys, i advice you to hire them full time and never let it out of your sight, that were my mistake when i put in advance 1 month rent to a flat-mate, it vanished!

Know you know why the winklevoos maybe into something, they each hold half of a private key !

Let's say you're totally legitimate (your personal details are available for anyone to contact you and find out more about you).

What exactly is it that you need to know?

What technical hurdle are you coming up against?

What information do you need to make a decision whether to take this forward?

Surely as a forum, we can all provide you with that information and then you can assess whether this will work or not.

Surely this would be a better route than you to keep proving yourself to us and us continuing to grill you?

Thanks -- the thread is getting long and I actually got a lot of what I needed in PMs.

Main things I'm wondering is how much, if at all, large BTC holders see as a value of public vehicles backed by BTC.   As suspected, for some it's no advantage at all,for others it's perceived as a major advantage.

The technical hurdles mainly relate to security of large numbers of Bitcoin -- in two phases, one in setup and another for an operational fund.   How would people secure their Bitcoin in escrow so something along those lines.  If we bought something like the amount BIT has which is $70 mm or so, (this would be money from public investors) what are the best practices for that.   I'm a bit aware of the 2/3 Armory solution where two of three people need (piece of ) a key....also there are 100 (1000?) years plus of good physical security best practices which have been used for metals and gems etc. so that part is not new....it's the main weakness point of transitions to the physical security in cold storage.

To move forward there are still some regulatory things I'm looking at and also weighing the benefits and drawbacks....I mentioned that I think I have a method of listing which is superior to an ETF and it is in many ways....but it does have some drawbacks....for example it is more static than an ETF without need to worry about redemptions....but less scalable than an ETF....the Winkelvoss fund could literally be worth $100 billion if BTC grows enough.....this model that would be much harder....but it would be quicker to market for the first new $100-200 mm or so which would be a good inflow into BTC.

For discussion purposes just think of it as if I've come up with a variation of a REIT....for BTC...publicly traded daily, but not with redemption issues -- more static in its holdings (the BTC would stay put) but of course the price would sway with the market.    That's not a fully accurate description of what I'm looking at, I'm still early stage, this shouldn't be construed as an offering in any way ....but that's about the closest I think I can explain on a public forum.

Thanks again

Someone said that with BTC security one can never be paranoid enough. 

 In speaking with VCs and others I think some in the investment business may be underestimating security issues. 

At least in my career we have never had to deal with this type of security.  Someone can raid a huge NY PE firm, hedge fund or even investment bank and there is nothing to steal which could easily be converted to cash.   

However, when we talk about $100 mm chunks of  Bitcoin floating around on a piece of paper that if someone even snaps a photo of it's gone....that's a new world.   People who run gold ETFs most have never seen a bar of gold.....this is different.

People should be aware of things which no one is ever concerned with, no matter how far fetched because no instrument like this has existed before.

So security is a main thing....but not so much specific to anything I'm researching because it's a universal concern for any vehicle.

It's great that people are happy to PM you (I'd bear in mind the number of con artists going around - don't take this as an endorsement that you, or I for that matter, aren't in that same group) but I'd recommend you keep the technical details public where details don't impinge on regulations. This will a) help others and b) save a lot of people a lot of time when answering.


When you say how large BTC holders value public investment vehicles, you mean those interested in becoming involved? I would think all of them would be interested in any legitimate means to increase their wealth. What you'll see here is a very protective and vocal part of the community defend itself from perceived threats.


As far as securing Bitcoins is concerned, it's very similar to standard IT security for banking. I guess the operationally, only you know the requirements as you're the only one who knows how the underlying investment vehicle works.


As an investment vehicle, I guess the liquidity will determine the types of investors (I still find it incredible that a currency can be used for investment) but as long as there are longer term investors around, there will be interest.

Security will be a major issue but no more of an issue than for electronic banking.

I don't understand your comment about theft of bitcoin by taking a picture as that would only be the case if you printed out the private key to a wallet. There would be no reason to print that out unless your investment vehicle demands it.

Not knowing how REIT securities work I can't really comment but I do wonder why you'd need to reallocate the underlying Bitcoins to a new shareholder. Doesn't the share abstract away that need? (This paragraph is more to address your comment earlier about handling thousands/millions of private keys etc.)

I think dude is trying to get info on writing a script for next Die Hard

..We stole $100mm bitcoins but wait..  everyone can see we stole $100mm of THEIR bitcoins...  Hmmm.. the chopper isnt gonna help this heist..  we have to rethink it...  tumblers tumblers tumblers

I agree with ghdp.

I was at a $20 bn boutique fund the other day talking BTC with the owners -- I looked around the office and noted that there really isn't anything anyone could steal.   If a criminal walked in you could give him free reign -- what could he take?  Client lists? 

If he was REALLY clever he could figure out where to wore money....then what?  He'd need to have a wire to a bank where he could wore it to another etc.    Opening anonymous Swiss bank accounts to receive a $10 mm wire the next week is purely a product of the movies (or maybe might have worked in the 1960s) -- there is almost no way people could move real money like that.

Bitcoin on the other hand -- all someone needs is to take a photo of a private key.

The Die Hard comment from DPoS is a real point!  The reason we saw heists like the Lufthansa heist in the movie Good Fellas (which was a real heist) stop is not because criminals got more honest but because there isn't anything to steal.   Now, with bitcoin there is again and when we talk $10, 20, 100 million worth... All bets are off....people have sent entire teams of heavily armed people to kill for a lot less.   Not to be over-paranoid but I think Wall St. firms who think they can simply use the office safe and building security for 45,000 coins are making a mistake.

I'm looking at time delayed transactions, might be useful for the warm wallets used in these funds.

   
--Delayed transactions (using nTimeLock)--

https://bitcointalk.org/index.php?topic=131443.0

Something to experiment once I'm ready to play with raw transactions.



This leads me to wonder about certification tests, I suppose each unstolen wallet is evidence of some ability.

Are you kidding?

People steal funds electronically all the time.

Sure, Bitcoins are harder to trace but do you think the banks have thought, "You know what? Let's just make our systems slightly secure. We don't want to make it too difficult for people to steal money."

No, what they've done is strike a balance between security and convenience.

Sure, you could make it a requirement that you need go into the bank with a DNA sample to make a withdrawal. That would be damned secure but ultimate completely impractical.

Bitcoin could be made 100% secure, it would also be 100% inconvenient.

So yes, securing Bitcoin will be no different to banking.

Recent losses on credit cards amounted to $190B - if it were that easy to trace, surely they wouldn't be losing so much would they?

Why are you printing out private keys? This is the equivalent of printing out your banking password. In fact it's worse - it's the equivalent of leaving your money on the table instead of in the bank.

I can see no reason why you'd print your private key out. Are you needing to transfer the base asset of your investment vehicle?

I get that you might not have a full understanding of how Bitcoin works but this is a fundamental misunderstanding you have here.

I own Bitcoins. You could walk into my office and there'd be nothing you could steal that would endanger my funds any more than the $20 bn boutique fund.

I forgot to mention, in today's Bitcoin world, you have pretty much the same problem.

Any large exchange requires you to be identified before they allow you to cash out to fiat.

I think I see the issue you're trying to raise.

You're saying Wall Street will want to treat this just like an ordinary security which of course it can't be because this asset is a currency.

You'll need banking expertise to secure the asset but the instrument itself can be left out on someone's desk.

Are you thinking that there are going to be bonds or something with private keys printed on them? This could be the cause of the potential scalability issue you mentioned?

If that's the case, you really don't need to do that. The private key doesn't need to be printed and you could still have claim to a tranche of Bitcoins.

For cold storage, the standard in the Bitcoin fund industry is to use BIP 0038 for a password protected address.

"TW: They’re in safety deposit boxes in different cities. "

http://www.businessweek.com/articles/2013-08-08/cameron-and-tyler-winklevoss-on-bitcoin-and-their-public-persona

To create the type of investment vehicle you seem to have in mind you really need btc to be traded either on a commodity exchange or (more likely in my mind) a currency exchange.   Physical gold is not backing the various gold mimicking investment vehicles, financial gold is.   There is not enough physical gold in the world to settle all the financial contracts for gold.   Bass brother squeezes do not happen anymore because there are some many financial ways to settle your obligations.
People would not pledge their coin to allow others to receive btc returns because if you read enough of these forums, you will find that people expect their fiat back or their bitcoin back based on which one is worth more.   Go read the butterfly labs thread (it may take painful days...) but you will see that buying optionality from people that do not understand what they have given up can be very dangerous (especially when it comes time to settle the trade with the physical).
I think your best bet would be to match investments with actual buys.   Should you do those buys on an "exchange"?   Likely not, but you could do block trades with miners to supplement.    You need to remember though, a lot of miners did not invest $200MM (best guess of equipment on order, not equipment in place) to mine an asset with 150 Vol because they think the value is going down.   
Just like gold miners are not paying $800 an oz for gold claims because they think the price is going back to $250.    Liquidity will always be an interesting psych thesis in btc.

That is counterparty risk, to big to fail quietly. The German bank is having fun unwinding their corner of this mess.

This community has tools and preferences to eliminate counterparty risk, may we never handle the backend as poorly as the physical gold community has.

Curious who thinks it's a major advantage?  Current Bitcoin publicity is huge.  Short of the president buying bitcoins it's hard to think of it getting any bigger.  So publicity angle is underwhelming at best.  Ease of trading if thought through seems more of a negative because it isn't actual xbt ease of trading.  If a dentist in san diego as you put it sells apple and buys xbt fund the fact is they aren't buying xbt but instead are buying just paper.  Reminds me of MP calling it a valueless receipt.  Instead of reducing volatility it only increases it.  Instead of xbt being used as a currency it becomes a penny stock pump and dump.  Hard to see bitcoin idealists seeing this as a major thing.  I could be wrong though.

A fund should have a public bitcoin side to earn full community support. This might be difficult, but could be done in phases.

1- Bitpay for incoming funds.
2- Redemption in dollars directly to an  BTC exchange account, with some discount on fees.
3- A full Bitcoin interface in and out, difficult to get approved, but worth trying long term.
4- Full implementation in the blockchain as a BTC security, may need new laws or really clever lawyers.

For the sake of argument, let's say it's only $10B. It's still a massive amount of money to not be able to trace.

Source: http://www.forbes.com/sites/haydnshaughnessy/2011/03/24/solving-the-190-billion-annual-fraud-scam-more-on-jumio/

there is a bunch of IRA money or crazier 401k money that someday could be blindly tossed into bitcoins..  I think OP is trying to set up something that can get through regulations for the common greater fool to come push bitcoin higher quicker.

the other ones now are only for 'sophisticated investors'...    Fidelity slipped and let the second market one go live for anyone's IRA but then took it off in a day

The big win would be Roth IRA money, think about the tax savings on BTC  withdrawn in 2050.

there is a bunch of IRA money or crazier 401k money that someday could be blindly tossed into bitcoins..  I think OP is trying to set up something that can get through regulations for the common greater fool to come push bitcoin higher quicker.

the other ones now are only for 'sophisticated investors'...    Fidelity slipped and let the second market one go live for anyone's IRA but then took it off in a day


[/quote]


Yes exactly -- the publicity has been great but the overall actual investment in Bitcoin is still REALLY tiny compared to other financial instruments like the currency of a very tiny third world country or a moderately sized public company.

I'd like to see a vehicle where that dentist form San Diego so to speak could rally easily but a BTC based investment in a way he understands and is comfortable with.

Basic investor behavior is that people stay with what they know, what they are comfortable with.

To the point about it just being paper, not real Bitcoin -- depends on the structure.... I'm going with the REIT - Real Estate Investment Trust example because it's the closest I can do.   If I launch a $400 mm REIT for development of real estate opportunities in Boston --- and Joe Dentist buys $100,000 worth from his Charles Schwab account ....that helps Boston real estate and that 100k does go toward Boston real estate.....for this, same thing.    

A Bitcoin fund invested into by retail and institutional investors WOULD go DIRECTLY to Bitcoin --- so if we raised $100 mm then you'd see the fund staff around working to buy a heck of a lot of coins.   Now AFTER a fund like this is raised then Joe Dentist may sell his shares on Schwab to some other investor and, yes, at that stage it's just paper....but, like the Boston real estate, the Bitcoin is still owned and held....adding stability and improving price.....also bringing even more notice, ease etc to the space.

If Bitcoin grows the way it hopefully will, then it seems likely there will be several vehicles like this which could collectively add a good amount of money to BTC as well as some stability.

Definitely....these kinds of mainstream vehicles have the capability of significantly increasing the overall size of Bitcoin market cap.



    (I know "market cap" isn't the best measurement)

Isn't one able to do Roth IRA right now with casascius coins or is it limited to bullion pm coins?

Casascius coins are likely considered a collectable and while IRS regs and the tax code theoretically allow collectables in an IRA, the practical matter of actually doing so is much more difficult.

For an IRA to be considered real and recognized by the IRS it must be confirmed to be compliant.   Major custodians like Fidelity, UBS etc. have no problem at all getting the plans considered to be complaint....but there are almost no major custodians who can take non standard assets like this.

So....you'd be looking at either a high end very specialized solution done through a law firm or family office....usually something focused on investors with over $50 mm......or you'd be looking at getting your own custom IRA to be considered compliant.   

Both are hard paths.

Ideal solution for Bitcoin is something which is on an exchange and requires no special approval....one on the exchange ANY IRA which has access to stocks could buy it very easily.

Found a case where bank security failed destroying a California escrow company.

http://krebsonsecurity.com/2014/01/firm-bankrupted-by-cyberheist-sues-bank/

"$1.1 million to accounts in the Heilongjiang Province of China"

Another method for the list, available today in the UK: CFD(contract for difference) at EToro.

http://www.etoro.com/blog/product-updates/13012014/bitcoin-arrived/

"Bitcoin has arrived!"

It's not nearly as hard to own bitcoins in an IRA as this post suggests.  For about $1,500 and a small amount of effort, you can have a company like Broad Financial set up an IRA LLC for you, which allows you to invest IRA funds directly in bitcoins or a wide variety of other investments.

You cannot invest in Casascius coins, because the IRS rules specifically prohibit investing in collectibles, and they specifically say that coins, other than a certain few specific silver, gold, and platinum ones, are considered collectibles.  Since Casascius coins are physical coins, they are disallowed.

However, normal bitcoins are not actually coins ("a flat, typically round piece of metal with an official stamp, used as money"), so they are allowed.

Yes, it will be easier once there is an ETF, but how long will we have to wait for that to happen?  And how much will the price rise in anticipation of the launch of the ETF once it is approved?

If the bitcoin keeps going up, you can save a considerable amount in capital gains taxes by investing in bitcoins inside a Roth IRA LLC today.

Details at https://bitcointalk.org/index.php?topic=396783.0 (https://bitcointalk.org/index.php?topic=396783.0).

Interesting notes on Second Market  in Forbes' Silk Road auction story.

"10-person team which spends most of its time doing Bitcoin sourcing, “banging down doors and networking.”

That's more guys than I would have guessed, they are trying to avoid exchanges; might even be paying more to do that.

http://www.forbes.com/sites/kashmirhill/2014/01/16/the-feds-are-ready-to-sell-the-silk-road-bitcoin-kind-of/

coinbase crimping the inflow from instant 10btc/week to 1btc/week is major

basically if you don't already have coins, using bitcoins on overstock is like reverse layaway plan for anything over $80 right now.. and that is all you can spend for a whole week!

the floor is out of the public's hands and that is what wall street wants no doubt...  insiders hold the cards even more than they ever did

so just buy your ticket and watch the show and not think you are part of the action

I'd be super cautious of the Broad Financial option....there are many similar companies which have come and gone....it's not easy to research them to get a comfort level with thier quality...The site doesn't even have much info about the company.

I've seen hundreds of people try this but never actually seen it work for anyone.

The challenge lies in the actual implementation.   Sure anyone can follow IRS regs and set up a compliance LLC to be invested in an IRA....but the actual implementation is the killer.    Who is the custodian?  Who does the accounting?  How do you segregate bitcoins out?

I might be wrong but I've never, ever seen it work for anyone other than the ultra rich through specialized family offices.

There is a HUGE market for these kinds of fully self directed IRAs for people to buy real estate etc. -- the reason NO major firm (like Fidelity, Schwab or Merrill) has ever done one is because NONE have been able to figure out how to do it.   It would be a huge profit area for any firm who did so.   I don't trust the small companies who say they have figured it out.

The big companies like Fidelity, Schwab or Merrill make huge money on trade commissions and mutual fund fees.  There is not much profit in being an IRA custodian of an account with only one holding, an IRA LLC, so there is no incentive for them to get into the business.  They want you holding stocks and mutual funds.

We know that tens of thousands of people are doing self-directed IRAs for real estate, and the IRS has removed this from the list of activities likely to trigger an audit.

One commonly used custodian is IRA Services Trust Company.

I don't yet know how much work this will be, and I can't yet say whether it will trigger an audit.  I just think that shielding bitcoins from capital gains taxes sounds like a good idea.  I'll know more in a year or two, but how much will bitcoins appreciate during that time?  What will it cost people to wait?

I'm an early adopter, and that brings some risks!