Responding to this here - so as not to derail the BTC-TC thread.

True there isn't much money owed to BMF investors - but they aren't the only investors owed money (Nyan.A are owed rather more - unless the promise to pay them is being forgotten about again).  And that he lost so much that there wasn't a lot to give back isn't exactly something to brag about.

On to the usual misleading comments next.  If you read the quote from usagi you'd get the impression that BCB and and augusto croppo investigated him and found him innocent.  Nowhere have I seen any records on an investigation by Augusto (he did keep spamming "where's the evidence" in a usag-related thread for a while then pronounced usagi innocent).  BCB however DID do an investigation - in a thread specifically made for it.  The thread's locked now - but here's the LAST post in it from him that actually comments on usagi's behaviour (there's one more announcing investigation would be paused for a while).

Can't do proper quoting due to it being a locked thread but will provide link.


Not exactly what you'd expect to find as his last comments from reading what usagi wrote is it?

https://bitcointalk.org/index.php?topic=133823.msg1432590#msg1432590

But of course I'm only trolling when I claim usagi tries to mislead.  Right? Maybe that was just an uncharacteristic comment by BCB or is out of context or is poorly written and doesn't represent what he actually believes?  Well no:

   

https://bitcointalk.org/index.php?topic=133823.msg1430313#msg1430313

And that's the view of someone usagi was trying to make you believe had cleared him.  If that's the view of those he thinks support him then is there any real need to even consider what his opponents think?

You could be right about that - especially as not only is the price of them lower (but can reflect the same change - hence making them mor efficient) but people can also write CALLs based on holding assets that they believe are long-term viable even if the option isn't exercised.  With writing CALLs on purchase the writer has to commit to holding purchase - meaning they give up the opportunity cost of being able to sell one part (mining or selling) if at any time in the interim prices move to as to make that attractive.

It's highly likely no big option market will develop at all - and options would only be used occasionally where two people wanted what boils down to an escrowed bet.

On which note I'm off to bed.  Sales for the first half day have surpassed what I expected on Purchase (I didn't expect much over 100 BTC worth) and are around what I expected on Mining (there won't be significant sales there until a dividend has been paid - all the investors who don't read the forums or contracts want to see a dividend) and Selling (people have already given away money by buying MINING when they could have bought purchase and sold the selling into bids and ended up with MINING for up to 10% less - volume just won't be high there for a bunch of reasons, inability to do very simple math being one of them).

Will deal with any transfers in when I get back online.

Yeah - I was around then as well and remember him having to crawl off and hide after pretending to be a female that was being stalked AND also pretending to be someone who had suffered identity theft from the stalker.  Turned out all were him of course - and there was no female OR stalker OR identity theft.  Just one delusional attention-seeker.

Until then he'd been a huge attention whore - claiming or implying responsibility for anything that happened but always AFTER the event.  The one time he claimed in advance it, of course, never happened.

I'm around for about another hour - then off to bed.  I'll process all conversions I receive prior to that - once I've gone there'll be no more MINING or SELLING given out until I get back online tomorrow.

There's another use for this fund which hasn't been touched on yet.  Investing in MINING and SELLING allows you to gamble on the medium to long-term trend of difficulty, but trading options on PURCHASE allows you to speculate on short-term difficulty changes with very high precision.

Once you've mastered the math of how PURCHASE price will change (which will become a LOT clearer after the first dividend tomorrow - when I'll post all of the calculations and numbers with explanations) you can (with hardly any time at all making a spreadsheet) predict precisely what the PURCHASE price would be if the next difficulty change was any value you like (the only bit you can't precisely predict is any increase in NAV/U from sales or income from investment).  That then allows writing options based on any cut-off point on difficulty you want.

Whilst you CAN in theory write such options on MINING or SELLING instead, PURCHASE is the best to write them on as its price is determined entirely (other than the minor factors mentioned earlier) by formulae dependent at root solely on difficulty.  Whether there's enough spread in the range of views people hold (strongly enough to bet on) is of course the main limiting value on the utility of this - but the opportunity is definitely there.

There are two main things which concern me about this :

Is this a goal or a minimum expectation?  A goal is something you hope to achieve a minimum expectation is something you assume you WILL achieve.

What happens if you have a losing week?  Do you still pay at least 1% in dividends?  If so, where does it come from.  If not do you REALLY expect that you'll never have a losing week?

If you intend to guarantee a minimum return then this isn't a fund - it's nearer a bond but without any demonstration of assets supporting the claimed guarantee of a minimum return.

If it's nowhere near guaranteed then your goals boil down to "make profit" - which isn't exactly enlightening as a goal (nearly every business at least claims that).


All of these carry high fiat-exposure.  If you buy hardware it's almost always going to have a price/value in fiat.  If BTC then rises sharply vs fiat you MAY make a profit in fiat - but in BTC (what your fund is valued in) you'd make a loss.

Paying for something in BTC doesn't magically make its value/price static in BTC.

If you trade BTC/USD then at times you will hold USD.  If BTC then rises you will lose (in BTC).

Mining is pretty much fiat-denominated most of the time (right now it isn't - but within a few months it'll be back to being fiat-denominated).

How can you aim for (let alone nearly promise) BTC-denominated profit when a significant part of your planned activities will bear heavy exposure to the BTC/fiat exchange-rate?

You'll find there's actually very few things you can do which have low fiat exposure.  That doesn't mean you can't do them - but it does mean you need to be realistic about claims of profits every week.  And it also means you need a strategy to actively assess, manage and reduce the risks that exposure brings.

Yeah - it was never my intent that I'd miss out on a chunk of the management fee.  That happened because shortly after the start GLBSE closing happened - totally destroying all confidence in the market.  By the time confidence recovered, LTC-ATF had made good profits.  The closure of GLBSE also totally reduced the amount of trading available - meaning there was less scope for expansion by selling more units (raising capital I can't use effectively from investors would be stupid - though a lot of crypto-securities do it).

The other reason why volume of units sold never increased much was the decision by me to raise BTC-denominated capital by selling bonds rather than by selling more LTC-denominated units.  That retained far more of profit for LTC-ATF investors AND allowed them to keep the majority of gains made by LTC's surge vs BTC and USD.  In delivering those benefits to investors I did, however, penalise myself in terms of management fee - but that was a trade-off I accepted (as I hold over half of units of LTC-ATF anyway - so the benefit I gained on those far outwieghed a small loss in my effective management fee).

And yes - on reflection I agree that if a split is done a 100:1 one would make more sense, i navoiding the need for another one down the line.

Have updated spreadsheet for the dividend etc.  Right now status is:

Exchange-rate : .0234
Adjusted NAV/U : 49.902
Bid at : 48.9

Or both are overvalued - but TAT more so.
Or both are undervalued - but DMS.MINING more so.

All other things being equal (which isn't necessarily the case - there's valid scenarios in which each is worth more than the other) DMS.MINING will trade lower anyway - as it has multiple sources of supply (anyone who buys DMS.PURCHASE can sell them) so doesn't have the enforced shortage of supply that all other similar(ish) securities have.

The remaining capital in the fund will tend towards 0 - whether difficulty rises, falls or stays the same (I'm ignoring for now buy-backs - those take capital to 0 immediately with the majority of it going to MINING).

What will change massively is the extent to which each of MINING and SELLING receive that capital back.

Let me give two extreme examples - reality lies somewhere in between.

If difficulty were to stay the same (or fall) then there's ZERO chance of SELLING ever receiving a single payment - as capital would never be over 410 weeks of dividends.  After some period of time, capital would drop below 100 weeks' of MINING dividend prompting a forced closure with everything being given to MINING.

At the other extreme if difficulty rose to 100 times present at next change then after the change the vast majority of all remaining capital would immediately be sent to SELLING (leaving 400 weeks of a miniscule MINING dividend as capital) and MINING would never get back anything much more than what they received before next difficulty change.

We can be pretty certain neither of the above will happen - though in theory results not too far from either are not unfeasible.  The skill is to estimate where in the interval between those extremes real future difficulty changes will lie - and buy/sell appropriately.

And remember that whatever you work out for MINING DOES apply almost unchanged to ALL PMBs - even ones that have hardware.  Their payouts are calculated in almost exactly the same as ours.  The only place where there is a significant difference is if you believe the reality will closely mirror the first scenario (difficulty staying the same or falling in the short to medium term) - if you believe that is likely then you should value PMBs significantly higher than MINING (as our cap on payout becomes relevant).

WEEKLY REPORT

Report represents status as of the evening of 9th June.




After the great start to the week we didn't go anywhere - some more profit was made trading but LTC rising vs BTC cancelled that out.  This is the first week in quite a while that LTC has ended higher vs BTC than it started.  Interestingly the rise was caused by arbitrage of a fall in BTC vs USD - but the gains (by LTC) were kept when BTC rose back up.

We ended the week with 4.53% - with an estimated  5.69% growth from trading and the difference being due to LTC rising vs BTC.

DIVIDEND PAYMENT

With LTC holding nicely vs BTC - and two weeks in a row of solid profit I'm issuing a dividend of 5 LTC per share immediately after posting this report (part of the reason for the report being slightly later than usual was that I wanted to make sure LTC didn't go into dive when BTC recovered 0 if it had then there'd be no dividend).  I'm erring on the side of caution here - we could easily afford a 10 LTC dividend without impacting our activities - but, as before, I do NOT want to pay dividends then have to sell more shares if LTC drops rapidly.

DEPRIVED MINING SPECULATION

Some of you may have noticed that I've launched three new securities - and wonder why they aren't being run by LTC-ATF.  There's two reasons for this:

1.  There was no guarantee of profit from running them - if noone wanted to buy PURCHASE then potentially a loss of up to 15 BTC could be realised.
2.  LTC-ATF has nothing to bring to the table in managing them.  With the pass-throughs, issuing them by LTC-ATF gave the benefit of capital in place.  The new securities required no capital at all (other than the 15 BTC for listing fees).

Interaction between LTC-ATF and these new securities will be minimal.  As shares in the new securities DO represent equity (they own rights to assets) my interpretation of the SPIRIT of LTC-Global rules is that LTC-ATF cannot trade or hold them (by the letter of the rules we could).  In the other direction it's fine for the new assets to hold LTC-ATF.B1 (by the letter it's definitely clear - in spirit it's also fine as LTC-ATF.B1 is debt not equity and the rules were designed to prevent equity holdings).

POSSIBLE SPLIT OF LTC-ATF SHARES

This is an issue which has been raised a few times with me (by PM).  It's been raised again in the last week - so I'll discuss it here.

At present there's a significant barrier to ownership of LTC-ATF units - the price.  Not only is it a lot higher (in LTC) than when the fund started (even after dividends) it's now massively higher if viewed in either BTC or USD.  A split (of say 10:1) would reduce this barrier to entry and (in theoiry at least) increase liquidity and narrow the spread - in particular encouraging Bids above the fund's own buy-back offers.

I've held back from suggesting this in the past- as I MUST be clear that there is a not insignifcant financial benefit to me personally should a split occur.  If anyone isn't clear what a split is - in a 10:1 split every unit you hold of LTC-ATF would become 10 units and the NAV/U would drop to 1/10th current value - leaving you with exactly same value of holdings, but able to buy or sell in smaller quantities than is previously the case.  The benefit to me personally is that my management fee is paid in units - a split would mean I lost less on this being rounded down to the nearest whole unit (for example this week I'd receive 12 of the new units instead of the 1 old unit I'll currently receive - meaning 20% more management fee).

You may or may not believe me when I say that is NOT the reason for me suggesting it - but you MUST be aware that there IS a benefit for me (and a loss for everyone else) in that respect.  If you sell your units then that MAY be compensated for by increased liquidity at the bid side - from people who previously couldn't afford to bid doing so (and possibly causing over-bidding by others).

I'd be interested in feed-back on this - it would definitely help smaller investors not in.  It would help existing ivnestors who wanted to sell less than 1 unit.  It would increase liquidity in general.  But does that out-weigh the fact that effective management would increase?  If there's no clear opposition then I'll put it up for a vote - if that happens then I'll vote NO myself if more than 10% of units vote NO.  As always I won't push through ANY motion if there's any significant opposition.

No change to the contract would be needed - only other thing which would happen is I'd use my existing right to authorise new units so as to get them above the new total outstanding.

ODDS AND ENDS

Market will be briefly closed and orders cleared prior to paying the dividend - so as the existing bids don't end up being a higher markup to the post-dividend NAV/U than purchasers intended.

Management fee of 1 unit (rounded down from 1.24) will be transferred after posting this but before paying the dividend.

HWM will be set to the adjusted NAV/U in the above report minus 5 LTC.  NAV/U post-dividend will also be that.

At present the value of total assets controlled by the fund isn't listed anywhere.

But right now it's just the BTC raised from selling DMS.PURCHASE (less management fee due).

If you look in the financials section of any of the securities you'll see this link :

https://btct.co/portfolio/gbg8CQ==

If you go to it, it shows you the current assets held on BTC-TC by the fund - INCLUDING wallet balance.  That wallet balance IS the total assets controlled by the fund - until I invest some of it.  If you do the math you'll find that to be equal to PURCHASE SOLD * Sales price * .998.

The multiplication by .998 is because we pay a fee of 0.2% on all sales.

3% of that is due to me as management fee - I'll take that before paying first dividend (the 3% is only due on sales - not on balance - it's only for the first day that balance will equal sales).

So after paying management fee and first dividend the NAV/U will fall by 3-4% and the new sales price will be set at 5% above that : i.e. very slightly above current price (within a few days it'll drop below that).

I'll probably also do first investment before paying first dividend - exchanging bonds issued by my trading fund (LTC-ATF) for MINING/SELLING.  Those are bonds with a face-value of .01 BTC with a senior claim on all assets held by LTC-ATF (well over double the value of all bonds - with over 90% of that actually being cash) that pay 0.6% per week.  That'll give us a little bit of invome right away - investments into other issuers will need approval by investors first (I'll discuss that more - and raise first votes - tomorrow).  The bonds being traded in will be ones already held by me personally - not new debt (LTC-ATF is not issuing new debt at present and is about to return some more capital to investors).

If that's done before next dividend payment then it will be detailed here - and the 4th post in this thread will be updated to contain sufficient information such that investors can work out EXACTLY what we hold (and hence exactly what NAV/U is) other than any management fees owed but not yet paid.

Some of you may notice that the securities now have an indicator on them that some their details have been changed.

The change was simply that the following text was added at the top of the Executive Summary for all three:

IMPORTANT : The account to send DMS.PURCHASE to (to receive DMS.MINING and DMS.SELLING) is DeprivedMining

I CANNOT change the contract myself now (and do not want to).  On BTC-TC contracts can only be changed manually by burnside (and he'll only do it after making sure the change isn't unfair and was approved by shareholders).  In my view that's the correct policy - an issuer should NEVER be allowed to edit the actual contract themselves once they've started selling shares.

So don't panic or feel the need to re-read the whole thing looking for changes whenever you see that icon - there'll be a few changes in the short-term as I add more detail into the explanatory sections and/or address requests for clarification from investors or other interested parties.

ASIC-MINER are trying to make as much profit as they can for their share-holders from the fact they're the only ASIC manufacturer who can ship completed product promptly.

Avalon are trying to catch up with a back-log and pre-selling chips to cash in on having working chips but not much of a production line.

BFL are trying to get as many pre-orders as they can.

Yeah - there IS definitely a theoretical risk that if enough people buy this (and yours) instead of real mining then difficulty will slow down rising and the shares would turn out to have been sold too cheaply.

But of course the selling price isn't down to me now - anyone can sell at whatever price they want.  I will not attempt to control the price either by price-fixing OR by restricting volume.  And risks like that are just one people selling MINING need to take into account to ensure they aren't selling too cheap (and so giving someone else profit at their own expense).

Just a quick note.

Transactions on BTC-TC are cached - meaning it can take up to about 5 minutes for transfers to show up at my end.

RIght now I KNOW someone bought 1000 PURCHASE and then transferred them to me (as they've gone from outstanding) - but until the transaction shows up for me I can't send the MINING and SELLING (as I don't know which account to send them to).

Further to my above post it appears it IS updating the amount to be paid correctly - just with a fairly significant delay.  Guess it only gets updated when the dividend-payment cron job runs.

I'm also puzzled on how it works.

The dividends were scheduled (by me) based on a fixed payment per share (NOT a total amount).  It seems that, at a minimum, the amount reported in the system as going to be paid is not correctly updated when shares are sold.

From past experience I believe that it WILL pay the correct amount when the dividend is actually processed.

Unfortunately the reason I scheduled the dividends was NOT to schedule the dividends (sounds crazy I know) but mainly to try to allow people to see what the next dividend would be - and it fails at that.  So, as I actually need to be around when dividends are paid (to catch on exchanges and to adjust PURCHASE price after) I'll be cancelling the scheduled dividends and doing them manually.

The procedure for paying dividends will be as follows:

1.  Calculate what the dividend will be per MINING share (this can be done at any time after midnight - earlier if I'm confident difficulty won't change).
2.  Shortly before I pay dividends, halt trading on PURCHASE and remove any orders placed by issuer.
3.  Make sure I'm up to date on all transfers.
4.  Pay dividends to MINING and to PURCHASE.
5.  Calculate current NAV, NAV/U and whether a dividend is due to SELLING (usually will only be the case on the day after a difficulty change - and definitely won't be the case until the next difficulty change initially).
6.  Calculate new selling and buyback prices for PURCHASE.
7.  When dividend has left my account reenable trading on PURCHASE and place new Asks and Bids (Bids will only be placed if doing so would not reduce liquid capital too low - until we have significant investments I'll always be able to place Bids and probably will be able to nearly all the time.

It sounds pretty complicated but will only take a few minutes of my time (plus a wait of a few minutes between steps 6 and 7) - other than the very first time (tomorrow) when there'll be a longer delay due to me recalculating everything by hand to ensure the spreadsheet is correctly set up.

There's also a step 8 - which will occur tomorrow and probably most days - of posting some extracts from the spreadsheet here so everyone can see how the dividend, new NAV/U and new selling price were calculated.  When I do that tomorrow I'll also explain every line in the data dump.

I've caught up on transfers again.

The inconsistency in the capitalisation of issuer names has now been corrected  - thanks burnside for fixing that promptly.  I don't believe there was any actual risk (you can't create accounts with same name but different capitalisation) but it removes some confusion.

It's interesting to watch the spreads on SELLING and MINING tighten as, even with relatively few traders, competition forces it.  We're already past the point where you can BUY MINING 'hash-power' for LESS than you can SELL TAT 'hash-power' - suggesting that the market's definition of PMB value (in DMS) will be even lower than TAT had already reduced it to.

Minor bug.

In all securities when it shows the issuer's name it does it in ALL CAPS - regardless of the capitalisation of the actual name.  When you do a transfer it claims names are case-sensitive.  If so then this is a ptoentially dangerous issue - as it's giving an incorrect name to send transfers to.

DeprivedMining is the correct spelling - I'll nudge burnside about the all-caps version as it's wrong and potentially dangerous.

Internal transfer from Portfolio menu is the way to do it, yes.

On a seperate issue do NOT expect much volume of trading until after the first dividends are paid tomorrow.  A lot of investors compare securities on dividends - and until they see one won't trade.

Changes WERE made to the contracts in response to comments from Moderators AND to comments from non-moderators.  Some of these can be found in the thread for the securities - others in my inbox.  If you look at the thread for DMS you'll see a bunch of changes listed as made to the contracts - with moderator approval not being received until after there'd been a significant period with no further change being made.

And of course burnside has seen the contracts - he had to read them before unlocking the assets at Admin level.  Changes were made to the contracts in response to his comments before moderators were even asked to read the contracts and vote - and with some of those changes being typos he pointed out I'm pretty certain he read the entire contract carefully.