Again, btcx, I sincerely appreciate the intelligent comments.
Thanks for taking the time to reply to all of them! I've written some responses back but we could probably go back and forth eternally so don't feel the need to address every concern I have.
I'm not the guy you're after.
So it is thus accurate to say that I prefer 32k BTC instead of 10% of SatoshiDICE, but I would not prefer 15k BTC instead of 10% of SatoshiDICE. My investment preference only shifts to the BTC at the 32k for 10% exchange rate. Further, I wouldn’t sell another 10% for an additional 32k btc, for at that margin my preference shifts back to SD.
Sure, if I were in your position I'd do the same thing. I would rather have a diverse portfolio than all my eggs in one basket. Selling some of SatoshiDICE allows you to take some other risks elsewhere. I just think it's important to emphasize to the investors that this money isn't all going toward efforts to increase the business' value. Apart from the portion going toward the marketing, it's an independent shareholder selling his shares. After this round, if the company ever wishes to sell shares again, it'll have to compete with existing shareholders. It'll be interesting to see what happens to the price then.
With that said, there is no denying legality risk. If there were no legality risk, the offering price would be higher.
wow! Well, nobody can stop you from charging whatever you think the shares are worth.
It is not a registered legal entity. It’s a website. I’m not sure what “properly allow investment” means. The terms are stated, they are clear, and I have signed them with provable identification. Bitcoin is a free market, and this is a voluntary contract. I understand most of the world does not operate in this way, but that’s part of the problem, and I’m spending my life fighting it. Not by protesting with signs and letters to congressmen, but by building alternatives and living by my principles.
Sure it's a website but a business is operating at that website. In the United States (and elsewhere) there are laws about who you can accept investments from, and for investors to be protected, the company needs to have a certain structure, bylaws/operating agreement, etc. I'm beginning to understand that this whole operation and stock sale are not intended to take in to consideration any body of law, and you all are comfortable with the risks involved with that. It's basically a gentleman's agreement offered on a handshake. I think you would be better protected legally if you did not make this offer in terms of shares/company ownership, and rather just allowed people to purchase a contract for a percentage of profits. If a shareholder ever decides to sue you, it's going to be a mess.
This is true. According to the prospectus, 10% is going to a very large European print campaign, and the new website has already been paid for. Beyond that, the funds are my own and I’ll do with them what I wish. Some will inevitably be spent furthering my remaining 90% stake in SD (my incentives in that regard are not changed at all by such a small equity offering)
Sure, you still have a lot of incentive to grow the business. Any money from this round of funding that does not go in to the company's coffers will be money that has to be spent out of profits later. I don't think I've ever seen a pitch to raise funds where that money wasn't going directly in to expanding the business, but again, I now realize that there is very little money actually being raised, and the majority of the sale is a private shareholder liquidating.
, some will inevitably be spent on other BTC projects. Most of it will be saved for possible future opportunities in this world we’re trying to build.
Full time, no, but yes I’m actively involved in growing it. Everyone reading this knows about SD because I’ve grown it and I will continue to do so (it would be quite silly to work on a site of which I own 100% only to stop working upon owning 90%). And indeed, the site doesn’t require full time management. Part of its charm is the low overhead in time resources. My full time job is with BitInstant. SD is one of a handful of projects I work on.
This brings up another possibility. I'd much rather invest in Erik Voorhees, Inc. than SatoshiDICE. Since you won't be devoted to SatoshiDICE full-time, why not consolidate your efforts under one umbrella and allow people to purchase a stake of everything you produce? What if you come up with something else like SatoshiDICE but better and decide to devote your time to that since it both produces more profit, and you own a larger stake? I suppose this is where you and your investors would find out how far a handshake goes in court.
This is false, the company has over 7k BTC in reserves currently. If there were legal challenges to SatoshiDICE, it would be deducted from net profits. Let’s remember here that the site currently earns 33k BTC per year in net profits, and can certainly afford legal assistance if needed, but if harmful legal attention was brought to SatoshiDICE we’d probably have bigger problems within the BTC world as a whole. Legal risk is part of the business – though investors in this IPO are not liable for anything, other than potential lost profits.
I'm glad that you now recognize it as a business and not simply a website. It's nice to think that the site will be doing well enough to cover legal fees should they arise, but often legal problems come up when you're running out of money--just ask Intersango
Anyway, 7k BTC sounds like reasonable reserves. Investors potentially do create exposure for themselves beyond lost profits:
https://vcexperts.com/buzz_articles/1180The site has been DDoS’d a couple times and this has not been a problem. By the nature of the structure, let’s remember that bets to the site are placed via the Bitcoin network, not the website, so in case of some massive attack on the site, we just post the bet addresses somewhere else temporarily and most players can continue playing without a hiccup. The only real attack against SD’s playability would be if the BTC network was under attacked and in that case, again, we have bigger problems.
True. Given the site's structure and relative simplicity, it's probably not going to be an expensive issue to deal with. Unfortunately, this also means lower barrier to entry.
No idea… depends which country we’re talking about. SatoshiDICE needn’t exist in any specific country. It is not tied to a bank account.
I'd most be worried about the countries that you live in, travel through and have servers in:
http://www.cato-at-liberty.org/uk-gambling-ceo-arrested-at-us-airport/If Bitcoin goes bust and is not replaced by another cryptocurrency, SD is probably worthless… but so are the BTC you chose not to invest, no?
If Bitcoin goes bust and another cryptocurrency arrives, SD would almost certainly adopt it and continue on (and this is fundamentally why Bitcoin, or the Bitcoin concept at least, will almost inevitably win against its competition).
The difference with BTC is that they're much more liquid. If I see the end coming, I can cash out. It'd probably be a lot more difficult to ditch my SD shares. What if that other crypto-currency has SD built in? My main problem is that the company has no real assets and doesn't intend to accumulate any that might be of value to investors if the site shuts down. The company doesn't plan to diversify (beyond possibly a similar crypto-currency). For the same reasons you want to sell 10% of your shares, I'd like to see company diversify its offerings.
The brand name and massive ubiquity of the site are not easily replicable. The free advertising and word of mouth discussion the site gets from its current position is not replicable. Holding 6 of the top 7 addresses in the Bitcoin blockchain is not easily replicable. The business relationships and reputation I have with people are not easily replicable. The integration into blockchain.info’s wallet and mobile app are not easily replicable. Beyond that, the concept can be (and is) copied.
We might have said the same things about MySpace before Facebook came along, or Gox before Bitcoinica. It's still very early days for Bitcoin (and SD) and there are still very few professional offerings to compete with but that will change.
Can they do a lot more than SD if SD also raises 300k…? Ponder on that a while and you’ll discover one of the main reasons I’m doing this
Well, I'd say that using the funds raised to rocket SD far beyond the competition's reach would be great, but we're really talking about $30k going toward that, not $300k, right?
I fully agree with the first part of that statement, I say the same thing to lots of people. Betting on a Bitcoin company is almost certainly riskier than betting on Bitcoin itself. If the return you expect doesn’t justify it, then it’s best for you to stay in BTC. We can both agree that it is SatoshiDICE’s future which will dictate whether the investors at the IPO get a good return. At zero growth, perhaps it’s a wash given the opportunity cost of the coins. However, with even small growth in the site the dividends + share appreciation should make any investor who’s not seeking 7% returns per week happy.
Everybody is going to have a different opportunity cost for the coins but that is what a 'good' return will be measured by. I'm pissed that I didn't sell everything I own to buy Bitcoin when it hit $2. Do investors think better offerings will come up that will make them wish they didn't have their money tied up in this 5-year break-even plan? Things are happening, as Bruce Wagner likes to say, in 'Bitcoin time'.
In the prospectus and contract it states that SD doesn’t pay salaries and salaries wouldn’t be deducted from net profits. Good question, though.
So who does pay employees/contractors? Are you not in some capacity an agent for the business? Who does the company hold responsible if somebody screws up? Is it all volunteer work with immunity then? There is no set amount of hours that the shareholders can expect the company will employ someone to work on the business? Is there a board of directors who instructs these volunteers? Or, does Erik just pay the compensation out of pocket for work performed on the company's behalf?
Only if SatoshiDICE doesn’t grow and perform to a standard that the future investor would find attractive. There’s always a price for everything, and the price to buy 10% of SD today won’t be the same price in a year, and I can almost guarantee that. The gamble will be whether it’s higher or lower. Further, if not all the shares are purchased at this price, I wouldn’t call that “botched” – it just means the market disagrees with me on the valuation, and that’s fine. If the market disagrees with my valuation, life goes on, and I keep the shares and the profits in that case and will continue building it as I have been.
By botched I mean illegal. It would probably be too much of a problem for any organization concerned with legal compliance to purchase SD after a funding round like this.
This is a risk for all businesses everywhere, no? Holding your Bitcoins as you are now exposes them to acts of god… though I hear CoinBase’s new ewallet has a feature to protect against deity risk.
I should have said Acts of Gavin
Is it likely that SD would be obsoleted/broken by changes to Bitcoin?
I respect your opinion, and greatly appreciate your questions. You say you’d gladly take my end of the deal all day long, but of course, the only way you can be in my position is to own a piece of SD so that when the Macau casino buys it you’ll be on the selling side…
I wish I could own a piece but for my own opportunity cost, the price of the shares and the risks at hand, I'm going to pass. I hope you'll still invite me to the party in Macau
This is a good point, and primarily I chose to release this a bit early because of the Pirate issues. I thought it’d be wise to offer an investment to Bitcoinworld that had transparency and profits which were A) verifiable and B) sustainable. If Bitcoiners are only looking for investments paying a few percent per week, I unfortunately have no idea how to offer such a thing.
Probably a wise choice to present an alternative investment opportunity before the idle coin is thrown away on the next ponzi. Boring ol' verifiable and sustainable have not been popular so far, unfortunately.
I'll end by saying that just because I'm not investing, that doesn't mean the deal isn't a good opportunity for some people. You'll have to assess the risks and opportunity cost for yourself. There are definitely worse guys you could give your money to than Erik--he's trustworthy and he'll probably use it to continue doing great things for Bitcoin. Good luck all around.
