[CLOSED] S.DICE - SatoshiDICE 100% Dividend-Paying Asset on MPEx

[MPOE-PR]

Seems pretty clear cut to me. No further issuance (over the 100mn already issued) on any other venue, no further issuance (over the 100mn already issued) on this venue unless it's both approved and non-dilutive as defined.

Otherwise PTs are and always have been perfectly legitimate, and deliberately so.

I wasn't asking about a pass-though but about a cross-listing (of some of the existing 100 million) on a second exchange.  In a cross-listing the shares on the other exchange wouldn't be represented at all on MPEx - which is different to a (properly run) pass-through where each share in the pass-through is backed by a share purchased through and tracked by MPEx.

The difference would seem to be purely semantic. In the case it's "cross-listed", a block of the 100mn MPEx shares have to be annulled, and a block of the same size would be traded on another exchange. In the case it's a PT, a block of the 100mn MPEx shares is held by the PT op, and a block of the same size is traded on another exchange. Where is the difference?

[Deprived]

Seems pretty clear cut to me. No further issuance (over the 100mn already issued) on any other venue, no further issuance (over the 100mn already issued) on this venue unless it's both approved and non-dilutive as defined.

Otherwise PTs are and always have been perfectly legitimate, and deliberately so.

I wasn't asking about a pass-though but about a cross-listing (of some of the existing 100 million) on a second exchange.  In a cross-listing the shares on the other exchange wouldn't be represented at all on MPEx - which is different to a (properly run) pass-through where each share in the pass-through is backed by a share purchased through and tracked by MPEx.

The difference would seem to be purely semantic. In the case it's "cross-listed", a block of the 100mn MPEx shares have to be annulled, and a block of the same size would be traded on another exchange. In the case it's a PT, a block of the 100mn MPEx shares is held by the PT op, and a block of the same size is traded on another exchange. Where is the difference?

Well there's obviously practical differences when it comes to things like paying dividends.

I mainly wanted to be sure that you were applying the same interpretation of the contract consistently.

I think the disagreement on interpretation stems from the use of the phrase " issue more shares on any other venue".  You believe (and in general I agree) that issuing is something that happens before shares are placed anywhere.  Which makes that phrase meaningless as you don't issue on ANY venue (whether more shares or existing ones).  If that phrase had read "issue more shares and then sell them on any other venue" then the meaning would have been clear.  Instead, by suggesting that the act of selling on a venue was "issuing" it leads toward my view of the interpretation.  And the act of selling COULD be issuing if the MPEx listing is considered to be a pass-through (NOT a cross-listing) to 10 million of the 100 million privately issued shares -as then more shares would need to be issued on MPEx before further sales (as it would be an expansion of the pass-through).

[k]

100 million shares were issued initially - no more will be issued above this limit. Of that 100 million, 10 million were available to buy on MPEX, now another 5 million will be on MPEX leaving 85 million still off MPEX (owned by Erik or whoever). No shareholders have been diluted or screwed or anything of the sort.

If the shares were worth ~0.007 before then nothing has changed. Buyers should be chomping at the bit to buy up these shares at 0.0044 and push the price back up to 0.007.
I'd buy at that price. I thought around 0.005 was good value based on what I predict the sustainable profits to be and the risks.

Maybe Erik values the share around the same level as me. If he thought they were worth more then why not keep them and earn the dividends. He's happy to take the bitcoin now rather than stay in for the long haul and keep the dividends.
Complete speculation here but perhaps another reason Erik is willing to sell these shares and take the bitcoin (and do what he wants with them), is that he thinks it is somehow legally less risky to do this than to convert his SDICE earnings into USD (fiat). If SDICE earnings are only kept in bitcoins there is maybe some legal grey area with US gambling laws but if he converted his dividends into USD there could be some issue.

[MPOE-PR]

100 million shares were issued initially - no more will be issued above this limit. Of that 100 million, 10 million were available to buy on MPEX, now another 5 million will be on MPEX leaving 85 million still off MPEX (owned by Erik or whoever). No shareholders have been diluted or screwed or anything of the sort.

Well, actually, they're held by Erik in his MPEx account.

If the shares were worth ~0.007 before then nothing has changed.

This is a very important point. If X thinks they're worth 70 and buys, nothing has changed. If X thinks they're not worth 70 he shouldn't buy. If he buys anyway, for whatever reason, he has no right to complain. The entire "greater fool" approach to investing isn't too well regarded on MPEx, and I guess not too likely to succeed on the long term anywhere.

Buyers should be chomping at the bit to buy up these shares at 0.0044 and push the price back up to 0.007.

Actually the gap was closed already. Those in the best position to pick up a bargain are first those with bids in, as the sale happens, and second those with cash available on the exchange. There's (and there should be) a benefit from keeping BTC available so one doesn't have to wait for deposits to clear.

Maybe Erik values the share around the same level as me. If he thought they were worth more then why not keep them and earn the dividends. He's happy to take the bitcoin now rather than stay in for the long haul and keep the dividends.
Complete speculation here but perhaps another reason Erik is willing to sell these shares and take the bitcoin (and do what he wants with them), is that he thinks it is somehow legally less risky to do this than to convert his SDICE earnings into USD (fiat). If SDICE earnings are only kept in bitcoins there is maybe some legal grey area with US gambling laws but if he converted his dividends into USD there could be some issue.

I think he just wanted to give more people a chance to be shareholders.

[lightbox]

Hey all,

S.DICE will be releasing another 5% stake starting now in five tranches of 1,000,000 shares each. Each tranche will be priced higher than the last. All tranches will be higher than the IPO price but lower than the current market price of around .0071 btc per share. Same rules apply to these shares (100% of net earnings from SD).

First tranche is 0.0044 btc per. Listing is live.

First come first serve

Can we get a SCHEDULE for the next 4 tranches? or will they be done spontaneously as well "sometime in the future" ?

[evoorhees]

Wow... lot's of antagonism to the cheap offering of shares last night. I must say I'm quite shocked at the response.

To everyone who's pissed because I "halved the value of your shares overnight" - you have a seriously deluded understanding of value. The value of the shares didn't change. All that changed was the price - I offered shares cheaply, so anyone who knows the value of the shares instantly profits, period. If you don't really know the value of these shares, or if you aren't confident in the market price around .007, then you shouldn't be invested in the first place, period. If you are so insecure about some people offering shares cheaper than you, then you should not be invested at the price you are, period.

The value of SD shares is based on the dividend earnings of the site. That is the only reason they have fundamental value, because they earn income (this is the only ultimate reason any stock has value). Me releasing some shares far below market price doesn't change the dividend earnings of the site, and thus does not affect the value of your shares.

Let's do a thought experiment...

If it's wrong of me to release shares at a discount, then it must be really wrong of me to give shares away for a very huge discount, or perhaps even for free.

So tomorrow if I say, I'll give out 1% of SD for free. Would the critics here condemn me for making their shares suddenly "worthless" as being given away at a price of zero?  Anyone who knows the value of the shares, should be thrilled, because now they have the opportunity to acquire them for free! Or, in the real-world case of yesterday, to acquire them for a large discount.

I don't mean to sound harsh, but honestly if you do not understand the point that I'm making here - that a person giving away shares below market price is offering a gift to anyone who understands the correct value behind them - then you should not be an investor in S.DICE.

There were a few people who discussed with me on IRC their concerns about the move, in a mature way, and I appreciate their feedback.

[evoorhees]

Also, it seems some people don't understand whether this is "dilution" which is a fair question and I'll address it plainly:

There was no dilution. 100m shares existed from the IPO date originally. 10m of these were on MPEX before yesterday, now 11m are. Each 1m of shares represents 1% of SD earnings. So the new shares do not harm anyone's earnings, whatsoever. The only difference is that now MPEX owners get 11% of earnings instead of 10%.

A share that earned 1 btc of dividends before now earns 1 btc of dividends.

[wtfvanity]

Wow... lot's of antagonism to the cheap offering of shares last night. I must say I'm quite shocked at the response.

To everyone who's pissed because I "halved the value of your shares overnight" - you have a seriously deluded understanding of value. The value of the shares didn't change. All that changed was the price - I offered shares cheaply, so anyone who knows the value of the shares instantly profits, period. If you don't really know the value of these shares, or if you aren't confident in the market price around .007, then you shouldn't be invested in the first place, period. If you are so insecure about some people offering shares cheaper than you, then you should not be invested at the price you are, period.

The value of SD shares is based on the dividend earnings of the site. That is the only reason they have fundamental value, because they earn income (this is the only ultimate reason any stock has value). Me releasing some shares far below market price doesn't change the dividend earnings of the site, and thus does not affect the value of your shares.

Let's do a thought experiment...

If it's wrong of me to release shares at a discount, then it must be really wrong of me to give shares away for a very huge discount, or perhaps even for free.

So tomorrow if I say, I'll give out 1% of SD for free. Would the critics here condemn me for making their shares suddenly "worthless" as being given away at a price of zero?  Anyone who knows the value of the shares, should be thrilled, because now they have the opportunity to acquire them for free! Or, in the real-world case of yesterday, to acquire them for a large discount.

I don't mean to sound harsh, but honestly if you do not understand the point that I'm making here - that a person giving away shares below market price is offering a gift to anyone who understands the correct value behind them - then you should not be an investor in S.DICE.

There were a few people who discussed with me on IRC their concerns about the move, in a mature way, and I appreciate their feedback.

Also, it seems some people don't understand whether this is "dilution" which is a fair question and I'll address it plainly:

There was no dilution. 100m shares existed from the IPO date originally. 10m of these were on MPEX before yesterday, now 11m are. Each 1m of shares represents 1% of SD earnings. So the new shares do not harm anyone's earnings, whatsoever. The only difference is that now MPEX owners get 11% of earnings instead of 10%.

A share that earned 1 btc of dividends before now earns 1 btc of dividends.

I'll take as many free dividend earning shares as you would like to give away. lol

Can we get a SCHEDULE for the next 4 tranches? or will they be done spontaneously as well "sometime in the future" ?

That's the only thing I would actually like to know. Doesn't need to be a schedule, just give us an idea? Found out about the first group too late.

[ThickAsThieves]

Thank you for the update, I agree that it's an awesome opportunity, and the first thing I thought when I saw it was, "Shit, what can I liquidate to buy in?".

So that's what I did, and I made it just under the wire. The share price won't take long to stabilize. And if you are a true investor, you will want Erik to do this again and again, as long as the company is profiting the way it is.

When's the next drop?  

[Bugpowder]

I don't think the ravings of some clueless people on reddit are worth even responding to.

Looking forward to the next release.

[sunnankar]

Also, it seems some people don't understand whether this is "dilution" which is a fair question and I'll address it plainly:

... So the new shares do not harm anyone's earnings, whatsoever.

I really wish I could make a proper response but only have an iPad and slow connection and the flight boards in 12 minutes. It may take a while to make a proper, or any, response due to transoceanic flights.

First, your point about price and value is completely correct. For value I refer back to a financial analysis I posted in early Jan.

Second, in that analysis I raise an undetermined issue (probably not fully thought through? it is kind of tricky) about the retained earnings. This additional tranche does affect how that issue is applied and, based on past performance but unaddressed in the contract, would be 'dilutive' to shareholders. The dilution would be immaterial though at 1m shares but at 5m it starts to change the DFCF.

Third, none of the issues raised should cast any aspersions on SD. If anything it is being too generous and letting too many people ride on a real entrepreneur's coat tails without extracting maximum value.

[evoorhees]

I agree with one criticism - that I should schedule the release of the tranches. I apologize for not pre-announcing the first tranche. I will pre-announce all the others, and post here when I've decided.

We'll start with this...
The 2nd tranche will go up around 10pm EST (Tuesday night in the US). The price will be .0055 on this tranche.

[evoorhees]

I don't think the ravings of some clueless people on reddit are worth even responding to.

Looking forward to the next release.

I think some of them really overreacted, but I always want to respond to people, especially critics. I posted my skype in the reddit so hopefully the ones who are really upset will talk with me and I can explain.

[Deprived]

The value of SD shares is based on the dividend earnings of the site. That is the only reason they have fundamental value, because they earn income (this is the only ultimate reason any stock has value). Me releasing some shares far below market price doesn't change the dividend earnings of the site, and thus does not affect the value of your shares.

That's not strictly true - in an ideal world it would be.  The main reason it isn't true is simply because there's a lack of alternative investments of a similar quality.  Because of that, investors who want a (relatively) safe place to park BTC and earn BTC-denominated profit can't value or buy based on P/E ratio - as there's not a sufficient range of options for them to be picky or comparison-shop.

Whilst I agree the shares only HAVE value because they earn income, the price at which they trade (which IS the value whenever someone wants to sell - and every trade has a seller in it) gets set based not just on what the income is but also on what supply and demand there is.  Increasing supply DOES lower their value for anyone selling.

And if anyone needed to sell just when you released the block then rather obviously your action had a significant effect on the value of their shares.  I think maybe you miss that in some circumstances the realisable value of something IS it's value - there's no magic value which applies to everyone at all times in any practical sense.

It also has a more significant impact on those (like myself) who trade rather than invest (for me S.DICE is a commodity not an investment) - but traders aren't (and shouldn't be) your concern.

The price you sell at should have NO long-term impact on the trading price of the shares - but the fact that you sold at all does (as it increases supply).  The extent to which price and value are linked is debatable - but claiming they're entirely unrelated is plain wrong.

[Deprived]

I agree with one criticism - that I should schedule the release of the tranches. I apologize for not pre-announcing the first tranche. I will pre-announce all the others, and post here when I've decided.

We'll start with this...
The 2nd tranche will go up around 10pm EST (Tuesday night in the US). The price will be .0055 on this tranche.

Thanks - I imagine a lot of the really pissed off people are ones whose buy orders got filled when you dumped the block, leaving them sitting there watching shares at 0.0044 slowly disappear.

[Fizzgig]

I'm pissed that the nominal price went down sharply, causing the markets to become very difficult to trade, resulting in sub-optimal trades. Of course my anger is irrelevant, but to avoid this anger in the future, perhaps you could always sell your own shares above the market price? They will all be sold eventually because the value of the business will keep going up, and you will avoid pissing off a small group of people.

Sincere thanks for everything you do and the ideas you espouse, Erik!

[ThickAsThieves]

I'm pissed that the nominal price went down sharply, causing the markets to become very difficult to trade, resulting in sub-optimal trades. Of course my anger is irrelevant, but to avoid this anger in the future, perhaps you could always sell your own shares above the market price? They will all be sold eventually because the value of the business will keep going up, and you will avoid pissing off a small group of people.

Sincere thanks for everything you do and the ideas you espouse, Erik!

He would always need to sell at under market if he wants to unload a million shares in a reasonable amount of time.

[kgo]

Whilst I agree the shares only HAVE value because they earn income, the price at which they trade (which IS the value whenever someone wants to sell - and every trade has a seller in it) gets set based not just on what the income is but also on what supply and demand there is.  Increasing supply DOES lower their value for anyone selling.

Supply in this case is the number of asks.  Adding a million shares to the market doesn't automatically add more asks.

[kgo]

They will all be sold eventually because the value of the business will keep going up, and you will avoid pissing off a small group of people.

Past performance is no indication of future success.

[evoorhees]

The price you sell at should have NO long-term impact on the trading price of the shares - but the fact that you sold at all does (as it increases supply).  The extent to which price and value are linked is debatable - but claiming they're entirely unrelated is plain wrong.

Fair point. Although while the supply available on MPEX has increased now, so too has the value, in direct proportion, because now more dividends go out on MPEX. Or in other words, supply increased but demand should've increased perfectly in step (if the market is acting in step). Obviously markets don't price things perfectly

And yes I agree that price and value are certainly related. But what I was arguing was that dropping the price of something in half doesn't drop the value in half (which I think you agree with).