Bitcoin Equity Market

[spndr7]

A equity market may be established on lines of standard real equity market using bitcoins which will promote the currency and encourage new business involving bitcoins .A central controlling body is needed to regulate the market just like a real one .

My idea about it is as follows :
eXchangable Trust Tokens-XTT
After establishing of a central authority,reputed websites or enterprises dealing with bitcoin may float Initial Public Offerings (IPO) mentioning the risks and prospects.This method may be -

For example-
Company XYZ floats 100 XTT each XTT of face value 4 BTC, aggregating 400 BTC with 70 % risk,which means that company had made 30 % of money(120 BTC) being raised in as a security deposit on the central administrator of the market . This deposit may be distributed among the XTT holders incase of bankruptcy of the company as according to the initial risk disclosure(in accordance to the risk involved) . 

If the investor accepts the risk and reputation of the company,then he may place orders for allotment of the IPO .The allotment of the IPO will be made on chance and probability based on amount of investment .
After the allotment the market may run as other market with bidders and askers changing the rate of XTTs in real time of the company XYZ .The should be under the central authority of the market .The company may give dividend on profit .

[Babylon]

I don't think there is enough value extant in bitcoins to support an IPO on any business of more than very marginal size at the moment. I may be wrong though.  Also I know that the required initial investment on many online businesses is extremely small and could potentially be created via a bitcoin IPO.

[spndr7]

It could act as an incentive for small development works .

[caveden]

At a first glance the idea sounds interesting, but you're suggesting to create an unofficial stock market. Being unofficial, no enforcement of any kind would be available. You can't enforce companies to publish real data, or even to pay owed dividends. You can't enforce decision power to be given to someone that buys enough stocks either...

Just a remark, not saying it couldn't work.

[FreeMoney]

At a first glance the idea sounds interesting, but you're suggesting to create an unofficial stock market. Being unofficial, no enforcement of any kind would be available. You can't enforce companies to publish real data, or even to pay owed dividends. You can't enforce decision power to be given to someone that buys enough stocks either...

Just a remark, not saying it couldn't work.

Maybe companies/people that already have a reputation to protect could use it. The entity running the equity market could do something basic like make sure that the people selling the shares are the company they claim to be.

[Babylon]

At a first glance the idea sounds interesting, but you're suggesting to create an unofficial stock market. Being unofficial, no enforcement of any kind would be available. You can't enforce companies to publish real data, or even to pay owed dividends. You can't enforce decision power to be given to someone that buys enough stocks either...

Just a remark, not saying it couldn't work.

This isn't quite true.  What's true is that government enforcement won't exist.  That doesn't mean that alternate enforcement mechanisms couldn't be put into place.

[spndr7]

You are true some, kind of enforcement mechanism is needed to make the companies accountable .

[grondilu]

You are true some, kind of enforcement mechanism is needed to make the companies accountable .

I don't think so.  No enforcement is necessary as long as you consider that an investor is responsible from his investiment choices.

If an investor wants to buy shares of a company, that means he has some trust into this company.  Therefore it's up to him to believe or not in the company's published accounts.

Sure, an enforced company would have a better price, since it would be possible for non-much motivated investors to invests in it.

But it should be possible for a company to rely entirely on its reputation, and on its reputation only, to have investors trust her.

[spndr7]

May be satoshi should should establish the market if possible because of obvious reasons .

[Timo Y]

An anonymous investment market with no enforcement whatsoever is nothing but a game with possible win-win outcomes. Investors and borrowers would eventually arive at an optimal game strategy. This is likely to end up being tit-for-tat with some tolerance for honest mistakes built in.

Defection would never be completely eliminated but it's likely to be a small percentage. The aim of the investor is not to minimise defection but to maximise returns. She accepts that this optimum point may entail a degree of defection.  She knows it's part of the game.

The most likely defectors would be the newcomers. A newcomer would thus need to offer higher rates of return to attract investors.

No contracts, no rules (except those hardcoded into the Bitcoin network), no right and wrong, just winning and losing.

[grondilu]

An anonymous investment market with no enforcement whatsoever is nothing but a game with possible win-win outcomes. Investors and borrowers would eventually arive at an optimal game strategy. This is likely to end up being tit-for-tat with some tolerance for honest mistakes built in.

Defection would never be completely eliminated but it's likely to be a small percentage. The aim of the investor is not to minimise defection but to maximise returns. She accepts that this optimum point may entail a degree of defection.  She knows it's part of the game.

The most likely defectors would be the newcomers. A newcomer would thus need to offer higher rates of return to attract investors.

No contracts, no rules (except those hardcoded into the Bitcoin network), no right and wrong, just winning and losing.

+1

Except maybe for contracts.  A contract is a way to engage your reputation and protect against liars.  In an anarcho-capitalistic point of view, it's perfectly valid as long as it's nothing but a way to write down what you intend to do.

[S3052]

+2 

Foreeverdamaged is right.

Its the same like for current wall street markets. we have seen oftne enough surprises despite the regulation.

[Babylon]

You are true some, kind of enforcement mechanism is needed to make the companies accountable .

I don't think so.  No enforcement is necessary as long as you consider that an investor is responsible from his investiment choices.

If an investor wants to buy shares of a company, that means he has some trust into this company.  Therefore it's up to him to believe or not in the company's published accounts.

Sure, an enforced company would have a better price, since it would be possible for non-much motivated investors to invests in it.

But it should be possible for a company to rely entirely on its reputation, and on its reputation only, to have investors trust her.

Not for an IPO, a company doesn't have an established reputation at that point.  Some sort of third party organization that certifies that the prospectus of a company is accurate could come in handy.  of course they'd need to build up trust as well, but that could definitely facilitate IPO's.

[grondilu]

Not for an IPO, a company doesn't have an established reputation at that point.  Some sort of third party organization that certifies that the prospectus of a company is accurate could come in handy.  of course they'd need to build up trust as well, but that could definitely facilitate IPO's.

Still, enforcement is not required.

Some company could be specialized in "certification" of other companies.  They would engage their reputation in claiming that the companies that they certify are trust-full.  There would be no enforcement as a general rule, but only as a particular agreement between the certification company and the copany it certifies.

It might look like the current system, but there is an important difference :  no one can forbid a company to try to introduce herself in the market using nothing but her own self-confidence.

Also, the certification market would not be a monopoly controlled by force.  It would comply to market rules.

[Babylon]

Not for an IPO, a company doesn't have an established reputation at that point.  Some sort of third party organization that certifies that the prospectus of a company is accurate could come in handy.  of course they'd need to build up trust as well, but that could definitely facilitate IPO's.

Still, enforcement is not required.

Some company could be specialized in "certification" of other companies.  They would engage their reputation in claiming that the companies that they certify are trust-full.  There would be no enforcement as a general rule, but only as a particular agreement between the certification company and the copany it certifies.

It might look like the current system, but there is an important difference :  no one can forbid a company to try to introduce herself in the market using nothing but her own self-confidence.

Also, the certification market would not be a monopoly controlled by force.  It would comply to market rules.

Right.  Enforcement is difficult and unweildy.  The market does not need to serve as an enforcing agent. 

[idev]

Im very keen in establishing this market, my plan is to offer any bitcoin based businesses to purchase shares and publicly establish
their shares on the market. Investors would then register at the market site and would be able to buy and sell shares
in the companies available on the market. I would have flat share rate for companies purchasing and establishing their entity
on the market, something like for 0.01 per share plus a small entry fee, minimum share capital to enter the market is 100.000 shares.
I also have found script which could serve the needs and operation of this market, although a few mods will be needed before it could even
be launched in beta, and of course the demand from potential bitcoin businesses and investors.

[kiba]

Im very keen in establishing this market, my plan is to offer any bitcoin based businesses to purchase shares and publicly establish
their shares on the market. Investors would then register at the market site and would be able to buy and sell shares
in the companies available on the market. I would have flat share rate for companies purchasing and establishing their entity
on the market, something like for 0.01 per share plus a small entry fee, minimum share capital to enter the market is 100.000 shares.
I also have found script which could serve the needs and operation of this market, although a few mods will be needed before it could even
be launched in beta, and of course the demand from potential bitcoin businesses and investors.

I think people are keen on being an anonymous shareholder and public the use of key cryptography.

[idev]

Im very keen in establishing this market, my plan is to offer any bitcoin based businesses to purchase shares and publicly establish
their shares on the market. Investors would then register at the market site and would be able to buy and sell shares
in the companies available on the market. I would have flat share rate for companies purchasing and establishing their entity
on the market, something like for 0.01 per share plus a small entry fee, minimum share capital to enter the market is 100.000 shares.
I also have found script which could serve the needs and operation of this market, although a few mods will be needed before it could even
be launched in beta, and of course the demand from potential bitcoin businesses and investors.

I think people are keen on being an anonymous shareholder and public the use of key cryptography.

Thats no problem, all share holders would be anonymous anyway, its only share prices and company names that would be public.

[grondilu]

Im very keen in establishing this market, my plan is to offer any bitcoin based businesses to purchase shares and publicly establish
their shares on the market. Investors would then register at the market site and would be able to buy and sell shares
in the companies available on the market. I would have flat share rate for companies purchasing and establishing their entity
on the market, something like for 0.01 per share plus a small entry fee, minimum share capital to enter the market is 100.000 shares.
I also have found script which could serve the needs and operation of this market, although a few mods will be needed before it could even
be launched in beta, and of course the demand from potential bitcoin businesses and investors.

I think people are keen on being an anonymous shareholder and public the use of key cryptography.

Thats no problem, all share holders would be anonymous anyway, its only share prices and company names that would be public.

I'm afraid such an activity would be illegal.  Therefore, apart from purely IT-oriented businesses, with off-shore servers, it would not be possible.

[spndr7]

Thanks for implementing this idea !!