Bitcoin Forum

A friend and I have been thinking about starting an Investment company, where deposit are made in bitcoins.  This investment fund would be using a system that has been used the past year successfully.  We are planning to start this on a trial basis, but we wanted to know if people were even interested.  So would anyone be interested in this?  Would people actually deposit anything due to the fact that we would be just starting out?

Maybe. Depends how legit it seems or if it looks like a scam.

Spruce,

How would we best show that we are serious?  We are currently working on the site, and are willing to work with the initial customers to ensure that they understand how the fund works and that we are serious about the fund, and about keeping their money safe.

RonRamon,

Your response is kind of what I was expecting, the only issue is that the cost of running that would be very large compared to the number of bitcoin users/possible investors.  The idea we had was creating a "micro" investment fund, where people would be investing a small amount of money to see what kind of interest this really generates before starting up a larger organization.  Also the plan right now is to just use one fund, to simplify things.

The idea of having support, live updating of performance is given.  Right now I would say we are targeting small fish to test out the bitcoin market, before bring in larger sums of money.

All you really need to do is:

a) look professional
b) act professional

That's it.

If you look like a nice website and answer any and all of my questions within 24 hours as most good websites should, chances are you will get some of my money.

How much initial capital are you wishing to work with, in short what would the buy in be and what ROI are you targeting over what period?

I am Tanyc's said partner... thanks so far for your comments.


Initially, in trial mode, we are thinking of limiting external ownership to equivalent of $5,000 with individual ownership limited to 10% max. The particular fund is already executing with substantially more funds than that and the trial would shadow that. Target APR is 40%. You can find out more here http://www.xidcapital.com/alpha-fund.


Yes, we both have trading experience and mine goes back 5 years. In the last 2 I've concentrated on systems like the one described above.


In trial mode and for this first fund, we envision requiring at least 1 full trading day notice of entry or exit. Entry/Exit would always be End Of Day and because of this, you would not know what price you were going to get in advance. Having said that, this particular fund is designed to 'bag' gains itself so you are supposed to leave it alone, not micro-manage it, and let the system do the work for you. Hopefully, that will eventually become apparent in its trading history compared to the benchmark (it is not currently!)

Initially, the fund size and individual participation would be very limited. The point of the trial is really to discover processes and whether there is a market for this type of service. Eventually, it could become larger, audited, regulated and perhaps a business.

Minimum participation would only be 1btc but we would also limit the total number of participants to keep things manageable.

Please keep your comments/questions/ideas coming as we decide if/when/how to proceed...

Is the plan to invest in specifically bitcoin businesses, or something else? 

Is the idea to eventually have thousands or millions of small investors, or is the goal a few larger individual investors?

How many hoops are you and your investors going to jump through?  I imagine one requiring a lot of paperwork would be less popular amongst bitcoin users.

I would be interested in putting some BTC in, how would I keep track of my investment?

You will be buying in with Bitcoins and our fund will be invested into stocks on the US stock exchanges.

Our plan is to go towards having thousands of smaller investors, being part of a niche market normally does not lead to a few larger individuals, but we would not be against larger investments in the future

Hoops?  We want to make this very simple and straightforward.  The initial investors will not have alot of paperwork to file.  With that in mind, as the fund grows we could have to make might have to make things more complicated, but this will be progressive.  Initially we will be running this as an email, more personal, service then growing to a more automated log in system.


You would be able to track the actual fund online.  Initially current investment updates would be on a per email basis, with a reasonable response time, we could even do automatic weekly updates if that is wanted.  As we build the fund we will make this also more automated, and you would be able access this data online as well.

We have posted a bunch more stuff on the site, including FAQ, how to invest and some updates to the fund description.... take a look http://www.xidcapital.com/faq

while this isn't a fund, it's certainly got some 'banker' people behind it:

http://techcrunch.com/2011/06/18/bitcoin-crazy/

Purchases by entities is perfectly acceptable.

And there is always an alternative for investors, just keep the bitcoins.

+1 Vladimir.

As most of the time, your comments bring it to the point.

And particularly a NASDAQ long only strategy has not a lot of room to rise in the current crisis, particularly not vs. bitcoins if bitcoins stays strong.

I totally agree, if you want to start an investment fund, buy bitcoins.

As new clients that have automated encryption hit the web, along with clients for mobile devices hit the market the use base is sure to jump.  Right now, the market is testy, cautious, and begging for more security and less complicated software.  If you can provide these type of services to people, your bitcoin investment will skyrocket.

-KBundy

That's not a valid analysis of the fund http://www.xidcapital.com/alpha-fund. It does not need 'room to rise' in the same way that a buy-and-hold strategy of the QQQs might. It can profit in a downward or choppy market because it constantly buys and sells stocks and can spend a lot of time in cash. Have a look at the model charts and you can see that although it still experiences drawdown, there have been no losing years. Contrast that with buy-and-hold of the Nasdaq 100 which is actually still in drawdown from 2000.

The issue of whether it will perform better than buy-and-hold bitcoin - I have no idea. The risk profiles are entirely different, though.

An alternative version of these type of funds could be to deal with capex on mining hardware and/or r&d on new technologies for mining/semiconductors.  In this way, rather than the fund being a trading vehicle for bitcoin only, it would be able to identify companies which have some influence in the way bitcoins are generated.  For example, AMD would be an obvious candidate, but other companies working in similar promising areas would be available.  This could help to legitimatize the fund since it would have traditional instruments which would 'benefit in the rise of bitcoin'.

Way to move the market! AMD jumped almost 20% today.... http://www.google.com/finance?q=amd

What a very interesting statistic, and such a rapid increase as well, very interesting indeed.  I wonder if bitcoin really has something to do with the rise in AMD sales in the last quarter?  If that is true, that is incredibly excellent news, such an increase in prospect in such a short period of time?  Talk about momentum, this would be excellent to be attributed to our cause.

-KBundy

AMD's stock went up after publishing its quarterly report, showing a profit on reduced costs - not on increased revenue. So I doubt bitcoin had anything to do with that. Having said that, mining for bitcoin is an interesting new use for retail computing power, especially considering computing seems to be migrating from the PC to the cloud these days.

Do you have prior experience?
That is a big point for me...

"Investment" this word never exist in the bitcoin world, since bitcoin itself is the biggest investment

In an inflationed economy, currency continuously drop in value, pushing those who have the currency to invest, otherwise their fortune will be destroyed day by day

In an deflationed economy, unless each one has hoarded enough currency, they will not start to investment/spend

I think currently we are just at the beginning of the hoarding phase ;D ;D

So you would invest 2600 bitcoins to receive less than 1/3 of that as the maximum profit per investor per year, assuming that bitcoins never change and they don't get left out with 1/3 of their money after one year?  Sounds great.

A taxi license is a "license to print money" because they are a government granted monopoly. I was driving them for awhile and the earnings for the owners are phenomonal.

fwiw its a great idea as an investment

Now if only we had a p2p bitcoin taxi service  ;)

I have had 5 years trading experience. The last 2 years specializing in systems like http://www.xidcapital.com/alpha-fund.

I'm mostly interested in bitcoin for its utility. Speculating on bitcoin's future value wrt USD is not the only thing people are interested in. Besides, if bitcoin had no utility, it would have zero value and therefore no reason to speculate on it. The more utility it has the more chance you speculators have of making money from your hoard!

You could float taxi shares on the https://glbse.com/ (not sure if it is up and running). For each share sold, you would need to pay a dividend per month to return the earnings to the owner of the share. The question is whether you need to capitalize a whole taxi before you can start to pay earnings on it. In other words, do you have a taxi that is operating right now that you could sell a portion of? If not, you need to attract investors to put in 2600 btc up front and that will be tricky.

How can I recover the original 2600 coins after one year? Surely that depends on another investor willing to pay that price and that depends on the exchange rate right?
Thanks!

1,000 units of the fund have been listed on GLBSE under the ticker XID.ALPHA

Ok, STUPID question - how are you going to deal with the possibl appreciation ot BTC when dealing on NASDAQ?

I mean, lets assume you hit your theoretical profits (which may not happen - quite likely you end up witha loss, but lets just ignore it).

At the same time, BTC go to 100 USD.

So, you turn the USD valuation up * 1.5, but thanks to BTC raising *10 the fund, in BTC, is still down significantly.

This is a serious issue I think - typical for the current valuation changes of BTC. Lot of people think BTC will end up at 1000+ USD quite soon or more or less fail, and with such appreciations all investments must only be looked at from their BTC side. The strong posible raise in BTC makes it very bad to not keep the funds in BTC.

The fund is priced in USD so the price quoted in BTC varies with the exchange rate in exactly the same way that anything priced in USD would. So if BTC appreciates more than the fund does, the price quoted in BTC will go down.

The aim of the fund is to generate return in USD, not BTC. BTC is simply used as a means to transact. If people want to invest in BTC themselves, all they need to do is buy it on MtGox and keep it. There's nothing wrong with that, although I personally think it is a very risky investment and note BTC has lost 35% of its value since the fund started trading 40 odd days ago (it was $17 then, it is now $11).

I think there are two reasons to be interested in bitcoin. One is to speculate on it by buying or selling it on MtGox. The other is to use it for commerce, which is what I'm doing. If there is no one using it for commerce, then it would have no value, there would be no point speculating on it and it would not appreciate to $1000 to make you a millionaire. I don't understand why anyone who has an interest in BTC appreciating would go out of their way to 'bash' anyone who wants to use it - seems a bit self-defeating to me.

The actual trading performance is for me more important as historical models. Since start of trading, performance of this alpha fund is down in the absolute and even underperforming the benchmark.

Agreed that actual trading performance is paramount, and I will continue to track it and make it public. The performance to date is disappointing. It is still early days - I am hoping it will pull ahead, and stay ahead, before too long. The period of tracked actual performance is still short, and there are plenty of time periods like it in the model so I'm personally not too discouraged.

This is perfectly fine. Let's continue to watch it.