[IPVO] [Multiple Exchanges] Neo & Bee - LMB Holdings

[cocoxixi]

So...

- you have 100 million euros in deposits that were converted to bitcoin at an average price of 100€ (hence, 1 million bitcoins)
- bitcoin price falls to 50€

You now need an extra 1 million bitcoins (that will cost you 50 million euros) in order to re-balance the customers accounts... So... Are you pulling that million from your anus?

I'm gonna keep posting this question until I get a reply from the geniuses in charge... But I don't think I'll ever get one. This parade has officially been rained on! hahaha

[Stelios]

Just been away for a day and a lot of interesting things has happen  I see .

Coco, there is a very simple mathematical formula with witch you can calculate what will happen if the price drops as much as you want (ofcoure if the drop is big and long enough NEO&BEE will fail, nothing is without risk). What you are missing though is that most of the guys here are already in bitcoin (so they believe it will rise) and are looking for ways to invest it correctly. If they thought that it will massively drop then the question is no more were to invest it, the question shifts in being in or out  of bitcoin itself . From my side the biggest risk is the regulatory one (even though the banking lobby in Cyprus has lost a lot of its power after the bail-in and the Cypriot government has a Nobelist in economics "Pissaridis" as its economic adviser so he should be able to see the positives in bitcoin for Cyprus itself). Second biggest risk factor, in my view, is if the (conservative) Cypriot population will actually go for it. For both the above, NEOBEE has lunged/planned a lobbying and PR campaign respectively and I wish them the best of luck .    

Variable percentage pledged accounts also sounds like a very interesting idea. Here though, the wealth to be stored should be splited at the beginning say 50% pledged and 50% BTC and from their on each part will take its own way (of course the owner can at any point move money from one account to an other as he pleases, manually or automatically). This can easily be done with 2 separate accounts and does not need to be a separate product/service (the automatic transfer functionality from account to account could be though ).

SK
p.s. looking forward for the Amsterdam youtube clips btw            

[cocoxixi]

Just been away for a day and a lot of interesting things has happen  I see .

Coco, there is a very simple mathematical formula with witch you can calculate what will happen if the price drops as much as you want (ofcoure if the drop is big and long enough NEO&BEE will fail, nothing is without risk). What you are missing though is that most of the guys here are already in bitcoin (so they believe it will rise) and are looking for ways to invest it correctly. If they thought that it will massively drop then the question is no more were to invest it, the question shifts in being in or out  of bitcoin itself . From my side the biggest risk is the regulatory one (even though the banking lobby in Cyprus has lost a lot of its power after the bail-in and the Cypriot government has a Nobelist in economics "Pissaridis" as its economic adviser so he should be able to see the positives in bitcoin for Cyprus itself). Second biggest risk factor, in my view, is if the (conservative) Cypriot population will actually go for it. For both the above, NEOBEE has lunged/planned a lobbying and PR campaign respectively and I wish them the best of luck .    

Variable percentage pledged accounts also sounds like a very interesting idea. Here though, the wealth to be stored should be splited at the beginning say 50% pledged and 50% BTC and from their on each part will take its own way (of course the owner can at any point move money from one account to an other as he pleases, manually or automatically). This can easily be done with 2 separate accounts and does not need to be a separate product/service (the automatic transfer functionality from account to account could be though ).

SK
p.s. looking forward for the Amsterdam youtube clips btw            

Oh I have no problem with people wanting to gamble their own money on bitcoin. Sell the car, mortgage your house, go all in. Good luck with that. The problem is gambling with the customers money. And notice my 100€ million question is rhetorical, of course, cause there's no way anyone with half a brain will deposit money in a "bank" with no deposit insurance whose safety depends on the owners' belief that bitcoin can only go up.

I must say I'm flattered by those saying I'm ex-trader, cause he's clearly the only one here with half a brain. Or maybe you are all very smart, and we're the dumb ones. Yes yes, that must be it.

In conclusion, I was on the fence regarding whether criptocyprus was a scammer or just clueless. I'm still not sure, maybe a little from column A, and a little from column B. Either way, I'm enjoying the show. LOL

[cocoxixi]

I bought into NeoBee (not much as I think it's risky, but a project I'd like to exist anyway), but this surge of mindless cheerleaders is making me sad.

There is nothing wrong with criticism - or even skepticism.

Don't you see, critics just don't understand the prospectus, man! They are all dumb and have zero experience in finance, just ignore them.

PS. You have 100 million euros in deposits that were converted to bitcoin at an average price of 100€ (hence, 1 million bitcoins); bitcoin price falls to 50€... You now need an extra 1 million bitcoins (that will cost you 50 million euros) in order to re-balance the customers accounts... So... Are you pulling that million from your anus? The silence... It is deafening! LOL

[cryptocyprus]

I am still leaving the job offer open to anyone that can buy €100m worth of BTC without applying any upwards movement in the price.

I believe that, I have demonstrated enough that I will provide answers to any questions or concerns when they are posed in a manner that makes any logical sense and will continue to do so.

[gurcani]

does anyone know what is the percentage of bitcoins that are exchanged? %10? %20?

I exchange (or risk in different ways) about %10 of my bitcoins. I wouldn't go above this unless bitcoin price went above 1000 Euros. I guess most of the bitcoins are held by people like me (i.e. natural selection, if you are not like this, you sell your bitcoins, your bitcoins end up with someone who is like this)...

So 100 Million euros is huge. You will be trying to buy a good percentage of all the bitcoins that are being exchanged. That will drive the price sky high.

But I guess one important point is that you should probably not buy bitcoins immediately whatever the price may be, and instead have some flexibility. Otherwise you will drive the market price too high before you buy, instead of after.

[237]

does anyone know what is the percentage of bitcoins that are exchanged? %10? %20?

I exchange (or risk in different ways) about %10 of my bitcoins. I wouldn't go above this unless bitcoin price went above 1000 Euros. I guess most of the bitcoins are held by people like me (i.e. natural selection, if you are not like this, you sell your bitcoins, your bitcoins end up with someone who is like this)...

So 100 Million euros is huge. You will be trying to buy a good percentage of all the bitcoins that are being exchanged. That will drive the price sky high.

But I guess one important point is that you should probably not buy bitcoins immediately whatever the price may be, and instead have some flexibility. Otherwise you will drive the market price too high before you buy, instead of after.

That is why they try to raise more BTC with the IPO than they need for the starting expenses. The extra Bitcoins serve as buffer, so they have more flexibility for buying Bitcoins at the market.
That way they have much more control over the market and for which price they buy.

At leat that's how i understand it.

[cocoxixi]

I forgot to mention that I'll be reporting you myself to the proper authorities if you ever try to fool a single Cypriot into giving euros for your little scam, ok? But don't worry, you still get to keep the "investors" money

So many pigs getting slaughtered hahaha Greedy ignorant little pigs

[N_S]

That is why they try to raise more BTC with the IPO than they need for the starting expenses. The extra Bitcoins serve as buffer, so they have more flexibility for buying Bitcoins at the market.
That way they have much more control over the market and for which price they buy.

At leat that's how i understand it.

I'm of the same understanding.

[cryptocyprus]

Yes we will have our own reserves to trade with.

[cocoxixi]

Yes we will have our own reserves to trade with.

Idiot or scammer? We will find out soon enough! LOOOOOOL

[Herp]

cocoxixi = ex-trader

That much is obvious.

And since his narrowminded FUD-spreading trys didn't work (he clearly doesn't understand the prospectus), he started a troll account.

So yes. Ignore list and move on.

I have nothing to gain from my questions, since I am not invested, nor have any intention of doing so and cannot profit through shorting. However as someone who is an expert in the relevant field (banking balance sheets, funding, liquidity and risk) and who has flown around the world talking on the subject and has published articles on it, when I read something I found naive and disturbing I felt compelled to comment.

There is a big problem with this forum, in that far too many Bitcoin enthusiasts are simply blind to argument and counter-discussions and call any opinion other than 'Bitcoin is brilliant, can do anything, 'to-the-moon' etc' as FUD. I posted on the Asicminer forum some time ago that I'd bought at 1.4, sold at around 4 and thought that it was massively over-valued at 5 - I got shouted down as FUD etc and now it's 1.4.......

You say you're an expert when it comes to finance, risk management and so on and yet you've bought into an ultra high risk, Asicminer run by some Chinese? dude calling himself Friedcat (no real identity provided) that doesn't name his associates; an operation that provided/provides zero transparency on many levels.

Now you're ultra-critical with these guys that provided a very high level of transparency and have a sustainable business model. Something doesn't add up.

[jedunnigan]

If we take a step back and just look at the arguments on the table, ex-trader's concerns aren't entirely unfounded nor were the answers cryptocyprus provided entirely clarifying.

Deprived says:

How are you planning to hedge against a heavy fall in the BTC/EUR rate?  I'm not aware of any cheap high-volume means to do so (other than converting into fiat which would be rather pointless).

Your plan pretty much relies on BTC rising vs EUR.  Whilst I'd tend to agree that long-term that seems likely it's also likely that any such rise won't be a steady one but will have the occasional large bubble + collapse.

If BTC happens to be at the top of a bubble when you launch it could be rather a problem for you.  Whilst you may hope your own purchases could extend the bubble you can't really base a whole business plan on hoping BTC doesn't have a collapse shortly after you start taking deposits (if it happens later then it isn't such a big problem - after a while only a total collapse of BTC would be a major issue for you).

It's certainly an interesting business model - borrow money denominated in EUR then bet it all on BTC rising.  And rather than paying interest for the loans to speculate with, charge them fees for the privilege.

cryptocyprus responds:

We shall be operating our own local index based on several determining factors to prevent bubbles having a detrimental effect on our operations, these bubbles will also provide us with the opportunity to strengthen our own position.
....
We also have products planned that will provide part of an gains back to the customer.
....

Our local index will determine the price the Bitcoins flowing between our customers when depositing and withdrawing, this will be determined on long averages, our purchase price, how efficiently we can liquidate our own positions to ensure sufficient cash flow to cover larger withdrawals, customer behavioral trends.

If the price drops considerably quickly it will take time to filter through the averages until it reaches the front line, this additional time will enable us to take advantage of trading conditions to strengthen our position.

Deprived responds:

I see a lot of words there but no real meaning.

When someone withdraws their euros there's no "flowing between customers" - you have to sell Bitcoins to recover their euros.

You can pretend on paper that you still have enough BTC to cover euro-denominated deposits (by using an internal exchange-rate that isn't in track with the market) but you can't actually sell your BTC onto the open market at that internal index price.

The scenario I'm looking at is the typical bubble one - think of what happened earlier this year.  BTC rose up to $250+ vs USD then collapsed down to $100 very rapidly and stayed there for months (dipping even lower on occasions).  If you had 5 million euros on deposit with you and 1 million euros float and BTC halved vs the euro then at best you'd only have 3.5 million euros worth of realisable fiat.  i.e. you'd be insolvent.

Pretending BTC was still worth $250 doesn't solve that.  And as soon as customers notice and start withdrawing the deficit grows as every withdrawal has to be covered by selling BTC at the real price not some pretend index.

And what does "this additional time will enable us to take advantage of trading conditions to strengthen our position" mean?  You claim you'd be unable to even move the BTC around without customers signing transactions - so how can you trade with them?

cyrptocyprus responds:

We shall operate our own reserves for trading both EUR & BTC and not deposits, our strategy will be constantly monitored and adjusted. Not every BTC and Euro will be derived from the public markets and we also have several options on futures. Our strategies will be kept private because we do not want to buy off the back of our own hype, this will be partly unavoidable but we will be doing everything we can to mitigate that risk.

If someone withdraws €5m and other withdrawals that day alone make the total €7m, we will also take deposits that day at the same price point, even if the deposits that day total €5m we will already be in a strong position because we would have the trading benefits of adding that €7m to the market prior to the decrease, increasing the strength of our own reserves.

Another answer somewhere else:

1. We will implement a hedging strategy utilizing our own reserves, this strategy will be constantly changing, we will also be setting the price locally to ensure that sudden falls in price are not realized on the front line immediately. This gives us an opportunity to increase trading activities to strengthen our positions. A good trader(s) will make gains under volatile conditions, irrespective of the direction of the movement. Sorry I cannot provide the exact strategies for different scenarios but doing so would be like playing poker with see through cards.

Another answer

More than 100% of total liabilities in our own reserves wouldn't happen because during any falls we would continue our trading to ensure that we had sufficient Bitcoin to cover the adjustments required. The depth of the market is also a very important factor, its all well and good having a BTC/EUR rate of €1000 if it would only take 10BTC to drop it down to €500.

And his answers to ex-trader:

A "run" on withdrawals would serve only to reduce our liabilities unlike a traditional bank.
We will have both options and futures trading available to us prior to launch (with substantial volume)
We will also be basing our business model on the additional services we shall be offering, ie insurance, international remittance (there are more but I will provide more detail when we have more solid progress).

Yes substantial losses in the value over a long period of time would not be of benefit to anyone neither ourselves or anyone that holds Bitcoin as a store of value, however if we fail our customers can still obtain their own Bitcoin. For these recurring losses to happen it would also pretty much mean an end for Bitcoin too (if they were to happen at this point in time), something I don't foresee happening anytime soon. For everyone who likes doomsday scenarios, if you think your going to wake up tomorrow with Bitcoin valued at 0, it just isn't going to happen because of the fact that if two people agree on a value then it will always be worth something.

There is definitely some gray area, as we are not privvy to all the methods used (competitive edge, as claimed). Whether you believe in them or not, that is up to you.

[cryptocyprus]

Many of the early questions posed were born out of misconceptions as to the way we are going to be operating. We have brought certain aspects of our plans forward to ensure that we can provide earlier clarification as to the platforms that we will have available to us for trading our own reserves.

[cryptocyprus]

Second biggest risk factor, in my view, is if the (conservative) Cypriot population will actually go for it. For both the above, NEOBEE has lunged/planned a lobbying and PR campaign respectively and I wish them the best of luck .    
          

I missed this part yesterday, yes the Cypriot people are conservative, as myself and you both know (having had/still live in Cyprus) that they have always operated under the terms of "old is good". Now that is changing, especially when you talk about the following percentages 6.9%, 47.5% & 100% then pose the question to them "is old still good?" the answers are somewhat different these days.

[joele]

Many of the early questions posed were born out of misconceptions as to the way we are going to be operating. We have brought certain aspects of our plans forward to ensure that we can provide earlier clarification as to the platforms that we will have available to us for trading our own reserves.

May I know when is the shares going to transfer on bitfunder? I already sent transfer info 5 days ago.

[cryptocyprus]

Many of the early questions posed were born out of misconceptions as to the way we are going to be operating. We have brought certain aspects of our plans forward to ensure that we can provide earlier clarification as to the platforms that we will have available to us for trading our own reserves.

May I know when is the shares going to transfer on bitfunder? I already sent transfer info 5 days ago.

I do know that TAT is working on these transfers, he will be better placed to provide an update. I will speak with him later today, to push for an update in here.

[mutex]

After reading the prospectus and this whole thread, here is how I understand this whole enterprise.

Euro-pegged accounts obviously imply an exchange rate at which bitcoins will be pegged to euros. This rate will be set by Neo.

Let's say Neo exchange is the only way to get bitcoins into euro-pegged accounts. Then controlling their internal BTCEUR rate and keeping it above the market Neo can remain solvent. They'll be essentially keeping their bitcoins in a closed loop, which their clients can exit either at a loss, by getting bitcoins worth less then deposited euros if sold at market price; or at par in euro terms, by redeeming bitcoins through Neo.

They could do the same with any commodity or some kind of their own tokens, physical or digital. Say, euro-pegged gold or silver accounts.

But bitcoins are better in a number of way.

First, clients can be sure that Neo actually holds their bitcoins, as all accounts will be visible on the blockchain, thus providing trustless 100% reserve which is not possible in conventional banking.

Second, bitcoins are hard to confiscate. Although Neo didn't say much about that third legal entity which will be keeping signatures (1 out of 3) for signing client transations, if that entity is out of Cyprus (or better yet, out of EU) jurisdiction, it can't be coerced to give up those signatures. Thus Cyprus gov would have to somehow coerce both Neo and each of their customers to give up their individual bitcoins. Which, I imagine, is harder than blocking bank accounts through central bank. It would be much easier to coerce Neo to give up their EUR reserves.

Third, bitcoins are easy (and cheap) to transfer and store, not unlike gold or cash. Considering theft/robbery is becoming a problem in Cyprus, that's a marketing advantage right there.


Now, obviously, keeping Neo's BTCEUR rate too high above market is not good for business. This is where their secret trading-hedging strategy comes into play. (I downloaded Neo's trading spreadsheet but could not figure it out, I have zero financial expertise.) They will have a reserve of bitcoins and euros to smooth out day-to-day BTCEUR fluctuations. If the worst comes to worst, and trading reserve is depleted, Neo can fix their internal exchange rate and stop further losses.

So, yeah, as I see it, it is sort of a bet on rising price of bitcoin. But the fact that Neo can still remain solvent in the worst case scenario will attract customers, which will drive the price of bitcoin up. So, in the end, it is more than just a bet.

[ex-trader]

You say you're an expert when it comes to finance, risk management and so on and yet you've bought into an ultra high risk, Asicminer run by some Chinese? dude calling himself Friedcat (no real identity provided) that doesn't name his associates; an operation that provided/provides zero transparency on many levels.

Now you're ultra-critical with these guys that provided a very high level of transparency and have a sustainable business model. Something doesn't add up.

Different scenario entirely. AM were mining and paying dividends (a quasi-real business) and I thought they were about to jump in price, so I bought as a short-term speculation. They jumped in price very quickly in about 2 months, so I sold out. Haven't touched their shares for months and watched them subsequently fall.

I have no criticism of the transparency of Neo/Bee, but what they precisely don't have is a sustainable business model as it relies on Bitcoin growing continuously.

[klee]

You say you're an expert when it comes to finance, risk management and so on and yet you've bought into an ultra high risk, Asicminer run by some Chinese? dude calling himself Friedcat (no real identity provided) that doesn't name his associates; an operation that provided/provides zero transparency on many levels.

Now you're ultra-critical with these guys that provided a very high level of transparency and have a sustainable business model. Something doesn't add up.

Different scenario entirely. AM were mining and paying dividends (a quasi-real business) and I thought they were about to jump in price, so I bought as a short-term speculation. They jumped in price very quickly in about 2 months, so I sold out. Haven't touched their shares for months and watched them subsequently fall.

I have no criticism of the transparency of Neo/Bee, but what they precisely don't have is a sustainable business model as it relies on Bitcoin growing continuously.

I have noticed (for the last 3 years here) that many 'traditional' traders say the same things over and over again. They are correct in short window timeframes but they miss the point entirely long term.

Bitcoin is not a traditional asset - when it was 0.0001$ last time? Sorry, I forget!