[BTC-TC] CIPHERMINE.B1 - a virtual corporate bond with a 22% fixed-fiat APR

[woodrake]

Apologies for the lack of dividend last Sunday. Unfortunately I ran out of time before my honeymoon.

I will be sending last week's dividend soon (currently sight seeing in Bali, so when we get back to the hotel this evening) and will send the regular one on Sunday.

This will be the first proper payment with the BTC dividend script. I'm making it exactly 3.0 BTC so you should all be able to work out what you should get:

 <number-of-bond-shares> x 3.0 / 100,000

Please let me know in this thread if you don't get what you expect.

After that I'm going to have to delay the next two dividends (ie. 3rd & 10th of November) and will pay them with the dividend on the 17th. I decided it would be better to do this rather than try to teach one of the guys while I'm away.

Kate.

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[yufu571]

Between all the CIPHERMINE threads on litecoinforum and here I still haven't found a definitive statement on what will happen to non-"major shareholders"' of CIPHERMINE.B1. This is important to many people cashing out on DMS pairs, as a percentage of the proceeds is paid in CIPHERMINE.B1.

Will CIPHERMINE.B1 be traded on the exchange you're creating?
Will the dividends be sent the same way you tested with the CIPHERMINE sendmany experiments?

I note that Kate has indicated that since she is only committed to looking after the interests of "major shareholders" in her operations, she recommends that "those of you with a small number of shares...take what you can over the next week...ie. [sic] sell them...":

https://forum.litecoin.net/index.php/topic,4582.msg46464.html#msg46464

kate should seriously answer junkonator's question.

[alincoln]

Apologies for the lack of dividend last Sunday. Unfortunately I ran out of time before my honeymoon.

I will be sending last week's dividend soon (currently sight seeing in Bali, so when we get back to the hotel this evening) and will send the regular one on Sunday.

This will be the first proper payment with the BTC dividend script. I'm making it exactly 3.0 BTC so you should all be able to work out what you should get:

 <number-of-bond-shares> x 3.0 / 100,000

Please let me know in this thread if you don't get what you expect.

After that I'm going to have to delay the next two dividends (ie. 3rd & 10th of November) and will pay them with the dividend on the 17th. I decided it would be better to do this rather than try to teach one of the guys while I'm away.

Kate.

Problem with delaying dividends in this case is that they depend on EUR rates against BTC, and these have been varying wildly. If you pay with today's EUR/BTC rates, bondholders will end up with less BTC than they would last Sunday. If the bondholder's intention was to keep their BTC, they will have lost money.

On the other hand, if the bondholder meant to convert back to EUR and EUR appreciated against BTC, they will also have lost money upon conversion.

I can imagine unforeseen circumstances forcing a delay but you must realize it causes unnecessary problems to investors and restricts their ability of deciding how to keep their earnings. In my opinion, if you must absolutely delay payment you should take the most favorable rate in account - from the day it was supposed to be paid and from when it was actually paid.

[woodrake]

Between all the CIPHERMINE threads on litecoinforum and here I still haven't found a definitive statement on what will happen to non-"major shareholders"' of CIPHERMINE.B1. This is important to many people cashing out on DMS pairs, as a percentage of the proceeds is paid in CIPHERMINE.B1.

Will CIPHERMINE.B1 be traded on the exchange you're creating?
Will the dividends be sent the same way you tested with the CIPHERMINE sendmany experiments?

I note that Kate has indicated that since she is only committed to looking after the interests of "major shareholders" in her operations, she recommends that "those of you with a small number of shares...take what you can over the next week...ie. [sic] sell them...":

https://forum.litecoin.net/index.php/topic,4582.msg46464.html#msg46464

kate should seriously answer junkonator's question.

Apologies, I retracted that statement about non-minor shareholders.

Everyone will be looked after, no matter how small or large. We are in the late stages of creating a new exchange in partnership with a few other major issuers. We will migrate this security across when it is complete.

There will be some "down time" while we send dividends manually, but be assured they will continue.

Apologies for the delays in the promised 3 BTC by the way. I'm on an extremely slow Internet connection here and since I'd not had my Bitcoin client open for quite a while and it is taking an eternity to sync the block chain. Left it running all last night and still not done! Will send the 3 BTC divi from last week ASAP, and this weeks should be on time.

Kate.

[woodrake]

Problem with delaying dividends in this case is that they depend on EUR rates against BTC, and these have been varying wildly. If you pay with today's EUR/BTC rates, bondholders will end up with less BTC than they would last Sunday. If the bondholder's intention was to keep their BTC, they will have lost money.

On the other hand, if the bondholder meant to convert back to EUR and EUR appreciated against BTC, they will also have lost money upon conversion.

I can imagine unforeseen circumstances forcing a delay but you must realize it causes unnecessary problems to investors and restricts their ability of deciding how to keep their earnings. In my opinion, if you must absolutely delay payment you should take the most favorable rate in account - from the day it was supposed to be paid and from when it was actually paid.

On the contrary; I am using Bitcoincharts' 30-day moving price average as per the contract. Last Sunday it was $135/BTC.

Last week's I have rounded down to 3 BTC to make calculations easy for checking that everything was working. The difference (0.446 BTC) will be made up with this week's (ie. tomorrow's) dividend. Apologies, I should have explained that better.

When the market is rising the bondholders benefit, and quite significantly with the recent rapid rise. When it is falling, CipherMine benefits.

As previously mentioned though, we are going to have to defer the dividends due on the 3rd and 10th of November. They will be paid out around the 15th of November. A weakness in our current system is that only I can really issue the dividends. One of the features we are implementing with the new exchange is the facility for there to be authorised "administrators" of a security who can do things like this when the principal is on leave. Those deferred dividends will still be calculated at the 30 day moving average price at the date they should have been issued.

Kate.

[woodrake]

Dear All,

I've actually made two payments; one for 0.1 BTC and the second for 3.0 BTC. I've never used our dividend payment script for BTC so wanted to check it worked with a smaller amount first.

Please let me know if you've not got what you think you should have got:

• <number-of-bond-shares> x 0.1 / 100,000
• <number-of-bond-shares> x 3.0 / 100,000

Kate.

PS. Note that the divis go to the public withdrawal address you've specified on BTC Trading Co, not the private withdrawal address which is on a different tab.

[stripykitteh]

Dear All,

I've actually made two payments; one for 0.1 BTC and the second for 3.0 BTC. I've never used our dividend payment script for BTC so wanted to check it worked with a smaller amount first.

Please let me know if you've not got what you think you should have got:

• <number-of-bond-shares> x 0.1 / 100,000
• <number-of-bond-shares> x 3.0 / 100,000

Kate.

PS. Note that the divis go to the public withdrawal address you've specified on BTC Trading Co, not the private withdrawal address which is on a different tab.

I confirm I received 2 payments to my public address as described.

[DrGregMulhauser]

Since many people are still confused about the extent to which the bond is, from a BTC-denominated yield perspective, a gamble on a fall in the value of BTC versus fiat, it seemed worth clarifying the following:

When the market is rising the bondholders benefit, and quite significantly with the recent rapid rise. When it is falling, CipherMine benefits.

From the overall yield perspective, this is entirely false.

The only sense in which it is partly true is when comparing currency conversion based on the 30-day average versus currency conversion based on spot. In this partial sense, it makes no difference whether BTC is rising or falling against fiat -- it matters only whether spot is above or below the 30-day average, and this may occur regardless of whether the rate is rising or falling at any given reference point. When spot is above the 30-day average, converting fiat-denominated interest to BTC somewhat benefits the bondholder versus having just used conversion at spot, and when spot is below the 30-day average, converting fiat-denominated interest to BTC somewhat benefits the interest payer versus having just used conversion at spot.

But the discrepancies between spot and the 30-day average are overlaid atop the far more significant underlying structure: from a yield perspective, when BTC rises against fiat, bondholders suffer in BTC-denominated terms, and when BTC falls against fiat, bondholders gain in BTC-denominated terms. From a yield perspective, for bondholders the instrument is and always has been a gamble on a fall in BTC versus fiat.

[woodrake]

Dear All,

Thank you for your patience during my absence / honeymoon. I have just made two retrospective dividend payments:

• 3/11/2013:  2.929 BTC
• 10/11/2013: 2.616 BTC

However, I've just noticed an error in my spreadsheet though so I've actually just overpaid you all, and did so for the one before that. The dividend payments using the 30 day weighted moving average price on those dates should have been:

• 27/10/2013: 30d $160/BTC -> 2.933 (not 3.30) BTC
• 3/11/2013: 30d $180/BTC -> 2.572 (not 2.929) BTC
• 10/11/2013: 30d $240/BTC -> 1.903 (not 2.616) BTC

Apologies for this error. I will amend next week's payment to correct it (ie. I will deduct 1.437 BTC from next week's). I am flying back out to Berlin this afternoon (I've literally only just got back from Indonesia) but at the weekend will be making an announcement regarding the new exchange home for CIPHERMINE and CIPHERMINE.B1. The securities will soon be liquid and tradeable again.

I've not had time to review the responses to this thread in my absence. To the last post though: the bond is denominated in BTC, but the interest is denominated in fiat (EUR €340/week). You can use this to check the above calculations quite trivially if you wish. You are correct insofar as BTC appreciates the BTC yield does indeed fall.

My point was that when the trajectory of the market is upwards, the weighted 30 day average lags behind the current actual spot price, which means that in a rising market you actually get more in fiat terms. Last week's payment of 1.903 BTC was calculated with a 30-day price of $240, but at that time the price was actually closer to $330/BTC, so in fiat-terms the interest was more like €470 than €340. In a falling market the 30d average would also lag behind, and in that scenario you would get less in fiat terms.

To be honest it is a lot simpler if you just think of the interest as fiat, which is exactly what it says on the tin (see title of OP; "fixed-fiat APR").

Kate.

[woodrake]

All,

This week's dividend, calculated using a 30-day average of $310, would have been BTC1.480.

However, after the reduction from the aforementioned dividend overspends (BTC1.437) that leaves just BTC0.043.

Since it is such a small amount, rather than wasting transfer fees I'm going to roll that into next week's dividend. This is also because I'm not 100% certain whether our dividend payment script will cope with sending BTC0.00000043 (the amount that one bond share would get)!

Kate.

[Rannasha]

A transaction with such a small output would be below the dust-threshold and most miners wouldn't mine it. So pushing the dividend to next week is a good idea.

[woodrake]

Good evening,

This week's dividend payment is BTC0.964 (including last week's remaining balance of BTC0.043), calculated using BitStamp's 30 day EMA of $500/BTC.

Kate.

[inspiredinvestor]

Good evening,

This week's dividend payment is BTC0.964 (including last week's remaining balance of BTC0.043), calculated using BitStamp's 30 day EMA of $500/BTC.

Kate.

Really looking forward to new exchange Kate... will it happen by end of year?

[shadallion]

Seems like CipherMine is producing less and less

[stripykitteh]

Seems like CipherMine is producing less and less

The nature of the security is that it pays interest in btc calculated in Euros. So when the price of btc goes up vs the Euro the premium payable decreases, and vice-versa.

[eltopo]

Are there dividend payments of several weeks outstanding or did I miss something?

[CHAO]

Please find a  new exchange quickly.
By the way, I haven't received the dividend payments too.

[stripykitteh]

Not that it's an excuse, but I believe Kate has been unwell for the last few weeks (recovering from surgery).

Ideally she would have a DR plan in place for such eventualities (she has a background in hosting so I'm sure she knows all about backups and DR).

[CHAO]

Please find a  new exchange quickly.
By the way, I haven't received the dividend payments  too.
Anyone who can tell me if he have received the dividend payments?

[shadallion]

They haven't been paid out in 3+ weeks for this bond or for the LTC-denominated CipherMine shares themselves.

We're all just waiting around.

So the same as every other mining company.