Bitcoin Forum

Here is the current version of the company pitch.  Subject to revisions.  Click here (http://www.bitcointrading.com/forum/index.php?topic=958.0) for the official thread.

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BitcoinTrading.com Canada 6/49 Lottery Mining Company

Date: August 6th, 2012

Hello!  I am proud to present to you: The BitcoinTrading.com Canada 6/49 Lottery Mining Company. 

I always dream about winning the lottery, and I have come up with a way that we can do it together by pooling our resources together.  This new company will run a lottery pool and a portion of the shares sold will go towards shares in mining companies for long-term ticket purchasing sustainability.  When there are winnings, they get paid out to shareholders of The BitcoinTrading.com Canada 6/49 Lottery Mining Company.  When you buy a share, you are getting a share in the company, not an individual lottery ticket or a portion of one. 

Funds received from shares sold will used to both purchase shares in trusted Bitcoin mining companies on GLBSE.com and pay for the lottery operations.  The Bitcoin received from shares sold will be split in this manner:
  20% invested in shares of GLBSE.com mining companies
  80% invested in the lottery pool

The Bitcoin received from the dividends that mining companies pay to The BitcoinTrading.com Canada 6/49 Lottery Mining Company will be paid into the lottery pool.  This way the lottery pool has a sustainable source of income.

Here is some information about the lottery pool which the company will be running:
The advantage of a lottery in Canada as opposed to the United States is that we don’t pay taxes on prizes.  In the US, almost half is paid back to the government.  More information about the lottery here: http://www.wclc.com/games/lotto_649.html

It costs $2 per draw per 6 numbers.  The maximum number of draws for one ticket is 25 draws, so we can pay for 25 draws in advance on one ticket.  That’s about 3 months, and would cost $50. 

The lottery pool will aim to buy one 25-draw ticket per week, since the tickets are good for 3 months, we will have an increasing amount of tickets in each draw.  If the lottery pool has enough funds, we will purchase multiple 25-draw tickets each week.  The lottery pool will purchase a 25-draw ticket each week if the price ($50 CDN) represents 10% of the total funds held by the company and its lottery pool, not including assets in Bitcoin mining companies as “share value” but the proceeds from them will go to the lottery pool.  This rule is being set to limit the number of tickets purchased if our funds are low. Each ticket will be drawn for 3 months, so we will still have tickets in the lottery (we need to buy a minimum of one 25-draw ticket every 3 months).  We will purchase tickets less frequently if necessary.

All of the information about the assets that the company has will be posted on www.bitcointrading.com each week, plus an update on the amount of profit received from Bitcoin mining companies and if there are any winnings, scans of the tickets as well if necessary.  All information will be public, including the current account balances of the company, reserving the right to make this information only available to shareholders at a later date.  A dedicated website for this will be created in the future. 

The lottery pool winnings will be distributed as follows:
70% of winnings paid directly to shareholders through GLBSE.com as Bitcoin
25% of winnings put back towards the lottery pool as Bitcoin
5% of winning kept by operator as Bitcoin

The company will keep a maximum amount of company funds in Bitcoin, due to its currently very bright outlook, a Bitcoin could double or triple in value very soon.  To pay for tickets, we will sell some Bitcoins on the exchanges.  The price of a Lotto 6/49 ticket goes down each time the price of Bitcoin goes up.  If the lottery pool has a large amount of money in Bitcoins, and the price keeps rising over months and years, then the tickets get cheaper.   

When there are winnings of the lottery pool, they are paid to the company in Canadian dollars, to be converted to Bitcoin and then distributed.  If the amount is small (under $100), the prize will be paid out from the company funds instantly and then the winnings will be converted on the exchange to Bitcoin.  If the prize is over $100, the winnings will first be converted to Bitcoin on the exchange, and then paid out.  The current plan is to choose numbers for the lottery based on the latest hash of the most recent Bitcoin block solved.
10,000 shares issued initially, more issued if those are all sold.  The price of each share is 1 BTC.
The share is a portion of the assets the company has, which will be
1) Any funds the company possesses, in Bitcoin from shares sold
2) Any funds the company possesses, in Canadian dollars (if any)
3) Any proceeds from the company lottery pool
4) A portion of shares held of other Bitcoin mining companies

A shareholder in this company does not have voting rights.  This company does not include any other assets owned by BitcoinTrading.com.

In the event that the GLBSE.com website goes offline permanently, all assets will be liquidated and paid out to shareholders.  Shareholders would be able to contact BitcoinTrading.com in that event.

IPO date announced soon.

maplesyrupghost (on bitcointrading.com)
mc_lovin (on bitcointalk.org)

Read this, is valid even for this thread: https://bitcointalk.org/index.php?topic=98743.msg1082932#msg1082932 (https://bitcointalk.org/index.php?topic=98743.msg1082932#msg1082932) .

Why are you linking to a post which I already quoted that very post and commented below it? 

Mining bitcoins is similar to a lottery, clearly it's a game of "luck" and the more hashpower is put towards a pool, the better chance they have at winning.  This is an OBVIOUS thing to mention, thanks pyramining! 

By the way to those who are reading this, OZLOTTO posted the thread that pyramining has linked to only a matter of hours after the original posting on BitcoinTrading.com, notice how the general idea is the same except BitcoinTrading.com has a 2-page contract and OZLOTTO has only a few fragmented sentences.  I wasn't going to officially post it on bitcointalk until we were publicly available but apparently you can copy someones business model and post it with a moments consideration. 

Because I didn't want to repeat all the discussion, I wasn't referring only to that specific post, but all the subsequent ones.


Yes but increasing hashing power while increasing also costs, makes it a loss anyway. If you do some math, gambling is NEVER worth it.

It's true that someone in the world has so much luck that he changes his live with a winning ticket, but the chances are so low, compared to the cost (no matter how many tickets you'd buy) that it's not worth any effort. Much better going to work, it provides a guaranteed revenue, with almost 100% chances (almost because with this crisis around and failing businesses, you aren't certain anymore to get your wage, at least in my country!). :-)

I don't want to be annoying, I'd want to advice you to use your intelligence for something more effective/interesting/useful. There are 1/1000000 chances that I am wrong. :-) :-) :-) :-)

I hope you take this as an advice, and not as an hassle.

This asset is -EV for everybody except the issuer who can do huge insider trading.  I'd advise everyone to stay away.

Insider trading.. but all of the information is public.. and what do you mean by -EV?

But surely there must be a point in which the amount of assets owned by a company produces enough interest or profits to "afford" to buy a lottery ticket for every draw? 

Ah, see I think you are slightly mistaken on one fact, we will not buy a proportionate amount of tickets to the number of shares sold.  We aim to purchase at a steady pace of one 25-draw ticket per week.  This way the maximum amount spent is 4.5 BTC per week (currently), but that number will decrease as bitcoins go up in value.  

If we have an IPO of 7500 BTC, we would essentially be "set for life" for purchasing lottery tickets.  Even if we never sold another share after that.  Since 1500 BTC would go into shares in mining companies, we would be able to sustain future tickets with the proceeds of mining.  

Right now, it's like 20 BTC per month to run a new set of 25-draw tickets every week.  When we are just starting, we can only spend 5 BTC per month, and always keep a minimum balance.

So there would be 6000 BTC left in the lottery pool from day one after purchasing all the shares in other lottery companies.  Surely we will get other shares sold down the road, but let's assume there arn't any other shares, just this initial investment (shares sold out).  

By the time we have spent 240 BTC, an entire year would have passed.  In that time, we would have mined many BTC since we are constantly receiving dividends.  Right now people are estimating that Bitcoin price could be as high as $30 again this summer, perhaps much higher.  Putting the remaining 5760 BTC (after purchasing lottery tickets all year) in a very "long" Bitcoin investing strategy, by the next year, we might only need to spend 60 BTC per year on tickets.  The price of a lottery ticket keeps reducing over the course of time, and we are spending the money at a slow enough pace, that it could reach a point where the tickets are basically purchased infinitely. 

It all depends on the initial investment.  We just basically have to reach a minimum balance.

This is how I envision the 7500 BTC investment going:

https://i.imgur.com/1zStk.png

Assuming Bitcoin increases by 1% per day in value, and the exchange rate is $10 today.  Not another ticket is sold.  1500 BTC invested into mining companies.  Profits from mining companies is added to the "balance" column, the spreadsheet is wider than the picture.

"CDN" is the value of the coins in Canadian Dollars. 

"Weeks" is the number of times we can run a 3-month ticket ($50).

A 7500 BTC would give us more profit per-day than we need to operate per-week. 

Take a peek at this spreadsheet.

http://www.bitcointrading.com/files/BitcoinTrading649LottoMiningCompanyv1.xlsx (excel 07+)
http://www.bitcointrading.com/files/BitcoinTrading649LottoMiningCompanyv1.xls (excel 97-03)

I put this together in like an hour, there may be errors, but its just for estimation.

The darker columns are formulas.  Lighter columns are user-input.

I didn't put much thought into which mining companies, how the difficulty would change, etc in the calculation.  I made it decrease the amount of BTC over time, but since the Bitcoin exchange rate closely follows the difficulty, the higher the difficulty means higher value of Bitcoins, company assets go up in value.

Each "page" of the spreadsheet is a scenario.  Dial in your own settings to see how you think it will play out.

Note that in my calculations "winnings" and "prizes" are not mentioned, I assume we lose 100% of the time and still maintain a profit, but we are playing 6/49 "for free" from profits of investments, for the chance that we win it big. 

If 200 people out there invest 1 BTC, I think we can make this happen. 

Who out there thinks that 1 Bitcoin is going to be worth <$11 next year?  What about 2 years from now?  We have a much better chance at the exchange rate going up than we do winning the lottery.  So investing 'long' in Bitcoin is a safe bet, and investing in Bitcoin will net us free lottery tickets forever.

Sorry, but THIS is (another) fatal flaw:

Difficulty follows BTC price, never the other way round!

Think of it like gold mining:
You have a mine where it costs 100 USD to mine 1g of gold and another mine where it costs 500 USD.

If you start mining at the 500 USD mine, the gold price will NOT magically jump upwards - actually, you're dumping MORE gold on the market, so it might go down!
If the gold price though increases to 1000 USD per g, then it makes sense to mine at the 500 USD mine too.

About the topic in question:
I already read weeks ago about the idea to purchase shares in lottery gambling system offers ("companies" that buy e.g. 1000 tickets and distribute all earnings to the people who gave them the money for these 1000 tickets) - still lotteries have usually huge markups between funds raised and prizes paid. It would make more sense imho to play on Bitlotto (as the currency conversion risk - another fatal flaw - is eliminated) or even Satoshi's Dice...

About lottery systems paying more than single tips: http://en.wikipedia.org/wiki/Lotto_649 seems to be a lottery where you can choose your numbers. This means (since people buying lottery tickets are not smart in the first place) that the distribution of numbers played is NOT uniform (betting on birthdays...), the distribution of numbers drawn however hopefully is. this way a smart lottery player will pick less preferred numbers, so in the event that actually a win occurs, the earnings are higher, since he has to share with fewer people.

Still: 6/49 (as all other lotteries) will have a much larger operator cut than Satoshi's Dice, Bitlotto et al - so the expected earnings over a longer time are even worse.

So difficulty follows price?  So the higher the price gets, the higher the difficulty, lowering the profits but increasing the profits at the same time with the higher price.  The higher the price gets, the more the existing funds "increase value" because they are stored in bitcoin.

We just need to be holding bitcoin at the time when the price goes up.

If price and difficulty do not change, then we will definitely be able to sustain this model with these profits.  Do you think the difficulty is going to go down any time soon?

Hey mc_lovin,

Being a Canadian, and a volunteer lottery salesman I was thing of this idea (kinda) myself, but in the respect of scratch tickets. I think your idea has much potential. You never know if you win or not. My boss just won $2500 in the lottery, so it isnt too bad of a deal if you are decently lucky.

Free plays are a great bonus too, as they only require 3 numbers, or 2 + bonus (correct me if I am incorrect). Prize amounts increase exponentially as so does the difficulty of winning such a prize.

I have been holding onto some BTC, and I think I will be investing into this venture.

Great to hear positive feedback!  There's always that chance that we win.

I like to think of it as if you had $2000 in the bank, and every month your bank pays you interest.  That interest you could be spending on lottery tickets, and your balance would never go down.  Your money would depreciate eventually, however, due to inflation of the USD or CDN.   If the money was stored in Bitcoin, it would appreciate in value, potentially exponentially.

The free plays, the $10 wins, and the decent chance that we get 4 or 5 of the 6 numbers and we share a medium sized prize, they all make it worth the while.

What do you think about a fixed limit of shares available?  I think that would make it more interesting, because it will reach a point where we have enough capitol to buy tickets indefinitely, and we need no more investors.  Figuring out exactly what that number is tricky, so leaving some headroom, I think 1000 shares @ 1 BTC is overkill, 750 shares @ 1 BTC (or 3000 shares @ 0.25 BTC) would be a good number.  At current difficulty, that would be 1.5 BTC per day in the fund that the 20% of shares creates.  If the bitcoin price goes up by 2% a week, and the difficulty gets 2% higher per week, we would still have a net profit of 6 BTC/week after purchasing a 25-draw ticket. 

It's hard to speculate on numbers we don't know.  But if the Bitcoin exchange rate goes up suddenly and our company is holding bitcoin, we will have enough funds to sustain ticket purchases with no further investment.  Our ticker would be very interesting to watch as well, because once all the shares are sold, people would have to bid for them on the exchange. 

I was thinking about some of the technical things we can develop for this, like a system that grabs the new drawn numbers from the 6/49 using a sort of API and displays them on an interface, comparing them to the numbers we are holding, and how many of the numbers are matching.  A user can set an alert where if we hit 4 or more numbers, an email alert is sent to them, just so they know to be excited about it, or even an email alert that we didn't win at all that week. 

We will require you to post pictures! :-)

At least in my country (central europe, EU area) it is quite common to get snail-mail spam from lottery communities that offer something similar to the OP: You pay them e.g. 100€ a month, they keep 5€ from that and buy lottery tickets for the remaining 95€. Since a lot of people pay them, they can play a lot of different numbers, so they get the chance down that people are betting on the same numbers. Everything they win from their lottery tickets, they pay out to their customers again (let's say 100 customers with 100€ each, they win 1k€, so they pay each customer 10€).

Still in the long run the expected money to earn from that is (as always in gambling): "Total_money_played - house_edge" and in the case of lotteries, the house edge is easily in the 50% range.
Playing on Satoshi's dice would still be a far better thing to do, as the house edge is much smaller, there is no currency conversion risk and it's better auditable.

I think fixed limit of shares would be optimal because the original group of investors can profit from it the most, and you wouldnt have to go through motions and all that crap. Keep it simple, and keep profits up. If more investment is needed, I'm sure another asset can be listed.

Also, how will you verify the number that you have purchased? I was thinking that you could scan the ticket and post before the draw date, and then after the draw date have it validated at a lottery booth and display the receipt of whether the ticket has won, lost, or gained free tickets.

Making my text blue so it's easier to read..

I'll definitely post the numbers as soon as they are selected, and posting the ticket scan will be a very easy thing to keep maintained: scan a piece of paper once a week and post it.  Everyone will be informed before the draws take place, and then you know those numbers weeks in advance. 

Knowing which numbers have winnings, and having eventually dozens of numbers running at any given time would become difficult to keep in order, but I think this entire process can be automated.  The manual way, since I've purchased many 25-draw tickets in the past it's routine to me, is that you scan the ticket at the "customer ticket checker" thing, and it will say if there are any winnings and it will notify you that there are additional draws still to come.  If there is a winning, let's say $10, you give it to the lottery teller and she scans it, machine says "$10 yay!" and then prints a new ticket for the remaining draws.   

A script that checks our numbers against the winning numbers would be very simple.  I imagine it looking like a calendar which has our numbers on every Wednesday and Sunday, and when there are winning numbers announced, it automatically posts them to the calendar and says how many matching numbers we had.  This way we could have 10 sets of tickets in a draw, and the script will if we have won, without having to manually go over numbers twice a week.  The script will be so easy to do that I essentially have it already.  I have a text rpg (http://mafia.murdercapitals.com/) game that has an internal lottery where people can play the lottery with pretend money, and it announces the winning numbers (picked at random) every week and if there are any winners, plus tells each individual user how many numbers they got correct on the tickets they purchased.  The site is built on basic PHP and it checks numbers using cron.  We could easily modify this script to do what we need, or create a new one.

Playing Satoshi's Dice is a great suggestion, it would almost do what we needed to do.  We would have to take the profits from the week and basically gamble it.  There's no set amount to gamble, and we will know instantly if we won or not.  Sort of takes the excitement out of the whole thing, but there is potential there.  I don't know if we'll go that angle, perhaps if we reach a certain point of infinite sustainability we could play it a bit, but I would sooner just increase the number of tickets purchased each week in 6/49.


Sure, we purchase n tickets.  But our weekly profit will always exceed our weekly expenses.

Right now if we sell 750 shares @ 1 BTC, invest 20% into Gigamining and put the rest in the lottery pool.  That 20% is going to make us 11 BTC per week, where our expense goal is 5 BTC per week.  That number shrinks every week as the price of a bitcoin increases, as I have made clear so far.

If it gets to the point where we are only earning 5 BTC per week now, if we spend 5 BTC we will be breaking even.  To combat this, we space apart the purchases so that we spend 2.5 BTC per week, this way we always have a net profit at the end of the week.

n = ∞


What we have in the lottery will not go to zero.  The weekly costs are adjusted to maintain a profit, and tickets are purchased with a minimum balance.

Investing in our company will be a way for a person to buy a share once and have a chance at winning a big payout for as long as they are a shareholder.  It's not like they should expect a dividend every week, but to look forward to a chance at a fortune twice a week, and that chance increases each week as more and more tickets are purchased.  The change in your back pocket will probably not give you enough interest to afford to buy a lottery ticket at the end of the week, but surely if you had $10k in the bank you could afford it, plus the odds that bitcoin increases in value over the next two years is astronomically high, so our expenses go down every week.


I look forward to the hat eating and proving the nay-sayers wrong, this will be a raging success.  Will you eat your hat when 1 BTC is $100 in 2 years and we are sitting on 1000+ and we never have a week of loss despite routinely spending money? 

I work at a hospital gift shop, and I hang around the lottery a lot.

I can also get all the validation slips necessary. The only thing I need is a decent scanner...

If you want me to, I can help you out with the ticket purchasing and all the financial stuff to do with it.