[UPDT]Selling a bitcoin bond at GLBSE at 95% value, maturation date December 1st

[ripper234]

Update - all the dividends have been paid (ahead of schedule), so the bond is now worthless. Do not buy it.


tl;dr - if you have some bitcoins to loan me for little over four months, you'll make 5% on your investment, guaranteed.


So, I want to see if GLBSE really works. Also, I've never created a bond before in my life, so this is exciting.

I created a bond at GLBSE.
It basically says I will pay 1 BTC for every share at date December 1st 2011.
I am currently selling 50 such bonds at 0.95 BTC each.

(Please ignore the "issue price 0.8 BTC" text in the bond, I regretted it after creating the bond but I can't edit it away and it's not a meaningful part of the contract ... the rest of the bond text will be honored by me at December 1st).

[elk-tamer]

tl;dr - if you have some bitcoins to loan me for little over four months, you'll make 5% on your investment, guaranteed.


So, I want to see if GLBSE really works. Also, I've never created a bond before in my life, so this is exciting.

I created a bond at GLBSE.
It basically says I will pay 1 BTC for every share at date December 1st 2011.
I am currently selling 50 such bonds at 0.95 BTC each.

(Please ignore the "issue price 0.8 BTC" text in the bond, I regretted it after creating the bond but I can't edit it away and it's not a meaningful part of the contract ... the rest of the bond text will be honored by me at December 1st).

How is it guaranteed?

[RandyMarsh]

5.263%

[ripper234]

How is it guaranteed?

By my reputation. There is no external guarantee.
There is a (theoretical on my part, real on your part) risk that I'll vanish with all the bitcoins. All investments carry a risk.

I promise that I will not vanish with your coins, and will return them pronto on the expiration date. You can choose how much BTC you want to risk on my promise. Note that I do have some presence on this forum, a public email address, and a blog (http://ripper234.com/), the reputation of which will be damaged if I fail to deliver on my promise. This promise does not hinge on the value of BTC vs USD - I plan to keep this BTC solid in my account.

The only way I will not deliver is a combination of two events:
1. My BTC wallet will get hacked (unlikely, I'm securing my bitcoins rather well, on a separate dedicated machine). If this were to happen at the current rate, I would just buy the 100 BTC I owe people and pay everyone back, because my reputation and credibility is worth to me more than $1500.
2. If Event #1 (My bitcoins were stolen) were to happen and BTC vs USD will rise "too much" that the cost of buying back the lost BTC would be too much (my personal subjective value of "too much"), then I will default on the loan. For example, if 1 BTC would be equal $10,000 by December 1st, and my wallet was stolen, then I will not buy back BTC for $1,000,000, but rather file for bankruptcy.

On all other circumstances I will pay the loan back. See also a similar Proof of Concept bond issued back in March by grondilu.

[ripper234]

5.263%

What?

Ah right, silly me.

[CurbsideProphet]

How is it guaranteed?

By my reputation. There is no external guarantee.
There is a (theoretical on my part, real on your part) risk that I'll vanish with all the bitcoins. All investments carry a risk.

With risk comes a premium.  5% is a very low risk premium.  

If you don't find enough funding here, you may want to try a website like Prosper.com.  Assuming you have very good credit, you can get a loan for around 7% (depending on the amount you're trying to borrow).

[ripper234]

How is it guaranteed?

By my reputation. There is no external guarantee.
There is a (theoretical on my part, real on your part) risk that I'll vanish with all the bitcoins. All investments carry a risk.

With risk comes a premium.  5% is a very low risk premium.  

If you don't find enough funding here, you may want to try a website like Prosper.com.  Assuming you have very good credit, you can get a loan for around 7% (depending on the amount you're trying to borrow).

5% per four months, it's actually 15.7% yearly.
I'm not doing this to raise money, I'm doing this as a proof of concept. I specifically want to test the bitcoin market and GLBSE. Besides, I've never issued a bond before, I want to know how it's like.

Also - note that there are currently very few options for investing bitcoins. While you might get high yields on some investment tied to USD, if BTC vs USD skyrockets you lose big time. I would want to see an investment market in pure BTC emerge over time.

[CurbsideProphet]

Gotcha.  I thought maybe you were just trying to raise funds so I wanted to give you an option I've used before.

Since you're doing this as a proof of concept, goodluck to you, I'd be interested to hear the results.   Hope you post a follow-up.

[JohnDoe]

Do you have a bitcoin-otc rating? That would probably help to assess trustworthiness .

[ripper234]

Do you have a bitcoin-otc rating? That would probably help to assess trustworthiness .

No I don't, I never traded there.
Check out this post on my blog for assurance that I indeed own ripper234.com (A domain with Pagerank 3), perhaps that will convince you that I'm serious.

[m0w3r]

Are you "investing" the bitcoins - it sounds like no?

[bitrick]

If a bitcoin bond seller sell the bitcoins right away for dollars (with the idea of buying the bitcoins back later for a lower price),
that would be a short sale, which is a bet against bitcoins (and has significant risk). Would this be the first bitcoin short?

By the way, just out of curiosity, does the contract for bitcoin bonds have all the regular stuff like name, address, phone #, soc sec #, etc of the seller? It seems odd to be referencing virtual identities like forum accounts and domain names for a contract when all that really matters is: how would I sue you and is there any collateral?

[Ben Walsh (beamer)]

Definitely not the first bitcoin short - take a look at bitoption.org - site really needs an overhaul for usability but it allows shorting of bitcoin if that's your thing.

If a bitcoin bond seller sell the bitcoins right away for dollars (with the idea of buying the bitcoins back later for a lower price),
that would be a short sale, which is a bet against bitcoins (and has significant risk). Would this be the first bitcoin short?

By the way, just out of curiosity, does the contract for bitcoin bonds have all the regular stuff like name, address, phone #, soc sec #, etc of the seller? It seems odd to be referencing virtual identities like forum accounts and domain names for a contract when all that really matters is: how would I sue you and is there any collateral?

[bitrick]

Definitely not the first bitcoin short - take a look at bitoption.org - site really needs an overhaul for usability but it allows shorting of bitcoin if that's your thing.

That's cool. I took a look and it looks like they were operational in the past and will be in the near future.

[ripper234]

If a bitcoin bond seller sell the bitcoins right away for dollars (with the idea of buying the bitcoins back later for a lower price),
that would be a short sale, which is a bet against bitcoins (and has significant risk). Would this be the first bitcoin short?

By the way, just out of curiosity, does the contract for bitcoin bonds have all the regular stuff like name, address, phone #, soc sec #, etc of the seller? It seems odd to be referencing virtual identities like forum accounts and domain names for a contract when all that really matters is: how would I sue you and is there any collateral?

I didn't put those items in the contract, no. Essentially I think it's interesting to run this bond as an online identity - to prove you can raise money even without giving your "real life" info (although in this case, I gave my personal email, and my blog has enough identifying information in case anyone really wanted to sue me).
If you think the bond is too risky in its presenet state, wait for it - perhaps it's relative value to you will increase as the expiration date nears.

The first bond was sold (at 0.8 BTC)!
There are now a few buy orders at 0.8 BTC (and my original sell orders at 0.95 BTC)

Since from my perspective, I'm already giving up a lot of value here (15% yearly!) just for a proof of concept, I don't plan to lower the bond price significantly in the near future. But - feel free to put up any buy orders you think are realistic.

[ripper234]

The first bond was sold (at 0.8 BTC)!

A few more bonds were sold at 0.95 BTC. Seems I wasn't that off the mark. There are plenty more waiting for you.

[ripper234]

So, what are you planning to do with the funds you raise before paying thm back?

Any suggestions?

[Ben Walsh (beamer)]

Some investment in the other companies listed on GLBSE perhaps ...

IBB looks like a good investment in terms of both benefits to the Bitcoin community and potential for profit.

The company has already made investments in two other companies, which have listed on GLBSE (BO and BST).
Both of these seem to have aims of earning wealth from effort, stimulating trade in Bitcoins.

Mining had its place, in stimulating interest in Bitcoin in the earlier stages, but I think it is done now, time to build demand for Bitcoin rather than build the supply any further.

Disclaimer - I am long IBB through GLBSE.

So, what are you planning to do with the funds you raise before paying thm back?

Any suggestions?

[elk-tamer]

So, what are you planning to do with the funds you raise before paying thm back?

Any suggestions?

It seems like there should be some value just in properly creating the mechanics of a bond. I would think there would be a way to integrate it with GLBSE, not by investing with companies but by having the bond payout be in shares at market value for a GLBSE security.

My suggestion would be to use the money from your bond to set up a website that handles creating bonds.

[ripper234]

It seems like there should be some value just in properly creating the mechanics of a bond. I would think there would be a way to integrate it with GLBSE, not by investing with companies but by having the bond payout be in shares at market value for a GLBSE security.

My suggestion would be to use the money from your bond to set up a website that handles creating bonds.

I don't understand. What's missing with the bond in the way I created it?

[Vod]

The only way I will not deliver is a combination of two events:
1. My BTC wallet will get hacked (unlikely, I'm securing my bitcoins rather well, on a separate dedicated machine). If this were to happen at the current rate, I would just buy the 100 BTC I owe people and pay everyone back, because my reputation and credibility is worth to me more than $1500.
2. If Event #1 (My bitcoins were stolen) were to happen and BTC vs USD will rise "too much" that the cost of buying back the lost BTC would be too much (my personal subjective value of "too much"), then I will default on the loan. For example, if 1 BTC would be equal $10,000 by December 1st, and my wallet was stolen, then I will not buy back BTC for $1,000,000, but rather file for bankruptcy.

What about 3) Pretend to have my BTC wallet hacked and keep everything? 

Didn't we just have a major exchange pretend to be hacked? 

[ripper234]

The only way I will not deliver is a combination of two events:
1. My BTC wallet will get hacked (unlikely, I'm securing my bitcoins rather well, on a separate dedicated machine). If this were to happen at the current rate, I would just buy the 100 BTC I owe people and pay everyone back, because my reputation and credibility is worth to me more than $1500.
2. If Event #1 (My bitcoins were stolen) were to happen and BTC vs USD will rise "too much" that the cost of buying back the lost BTC would be too much (my personal subjective value of "too much"), then I will default on the loan. For example, if 1 BTC would be equal $10,000 by December 1st, and my wallet was stolen, then I will not buy back BTC for $1,000,000, but rather file for bankruptcy.

What about 3) Pretend to have my BTC wallet hacked and keep everything? 

Didn't we just have a major exchange pretend to be hacked? 

From your perspective, that is a definite possibility, I was just telling you things from my perspective.
If you don't want to risk it, you don't have to buy the bond.

[smoothie]

Are you guys actually considering loaning BTC to a guy whose username has the word "ripper" in it?

LOL 

[Ben Walsh (beamer)]

Not considering ... I have.

If you look at the current depth and trade history for Bond-RonGross on GLBSE, you will see the risk which others have attached to loaning to ripper234/Ron and see others already loaned too.

PM me if you have any difficulties / questions on using GLBSE - I will be happy to guide you.

Are you guys actually considering loaning BTC to a guy whose username has the word "ripper" in it?

LOL 

[ripper234]

It seems like there should be some value just in properly creating the mechanics of a bond. I would think there would be a way to integrate it with GLBSE, not by investing with companies but by having the bond payout be in shares at market value for a GLBSE security.

My suggestion would be to use the money from your bond to set up a website that handles creating bonds.

I don't understand. What's missing with the bond in the way I created it?

The way you set up the bond, you listed it on GLBSE and investors bought it. Simple enough, but it requires knowing how to list things on GLBSE. If I understand correctly, the idea proposed here is to provide a simpler way for people to list bonds, you provide a front-end service that takes their information, then lists it as an asset on GLBSE where investors purchase it. You could ask for some cut of the money, and give some sort of guarantee if the bond-holder defaults, giving less risk to the investors at the price of a lower reward. GLBSE is pretty much anonymous, your service would collect all the personal information on people asking for a loan, even get a credit score.

I think GLBSE is set up to have assets and subassets, using subassets reduces the cost of multiple listings (I am not sure, but I think the asset costs 2.5 bitcoin and subassets are free?) so you could have main asset Bond, and subassets Bond.PersonA and Bond.PersonB.

GLBSE already has a web UI, and I imagine it will improve over time. I don't see much value of creating a 3rd party service that will provide just a wrapper of GLBSE.

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Part of the purpose of this exercise was to learn how to use GLBSE, and make it profitable enough for other people to learn it as well.

BTW, you can see the trade and bid history of my bond here.

[ripper234]

If you look at the current depth and trade history for Bond-RonGross on GLBSE, you will see the risk which others have attached to loaning to ripper234/Ron and see others already loaned too.

Are you guys actually considering loaning BTC to a guy whose username has the word "ripper" in it?

LOL 

Note that in theory I could create fake accounts and buy my bonds via that fake account, to simulate demand.
I'm not doing any of that, but it's possible.

[BillX]

Are you guys actually considering loaning BTC to a guy whose username has the word "ripper" in it?

LOL 

Id rather lend money to the homeless guys hanging out in central park.

[Nefario]

It seems like there should be some value just in properly creating the mechanics of a bond. I would think there would be a way to integrate it with GLBSE, not by investing with companies but by having the bond payout be in shares at market value for a GLBSE security.

My suggestion would be to use the money from your bond to set up a website that handles creating bonds.

I don't understand. What's missing with the bond in the way I created it?

The way you set up the bond, you listed it on GLBSE and investors bought it. Simple enough, but it requires knowing how to list things on GLBSE. If I understand correctly, the idea proposed here is to provide a simpler way for people to list bonds, you provide a front-end service that takes their information, then lists it as an asset on GLBSE where investors purchase it. You could ask for some cut of the money, and give some sort of guarantee if the bond-holder defaults, giving less risk to the investors at the price of a lower reward. GLBSE is pretty much anonymous, your service would collect all the personal information on people asking for a loan, even get a credit score.

I think GLBSE is set up to have assets and subassets, using subassets reduces the cost of multiple listings (I am not sure, but I think the asset costs 2.5 bitcoin and subassets are free?) so you could have main asset Bond, and subassets Bond.PersonA and Bond.PersonB.

GLBSE already has a web UI, and I imagine it will improve over time. I don't see much value of creating a 3rd party service that will provide just a wrapper of GLBSE.

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Part of the purpose of this exercise was to learn how to use GLBSE, and make it profitable enough for other people to learn it as well.

BTW, you can see the trade and bid history of my bond here.

Yes GLBSE has a web interface, but GLBSE itself is really just a platform, Peter is correct in saying that the best thing to do would be to build a front end just for bonds, collecting the details just as Peter said.

We've got a command line client which is in the process of being turned into a app-usable library, so you wouldn't be building a "wrapper" for GLBSE, you'd be adding value.

To top it off BitcoinGlobal(the company that owns GLBSE) can partially subsidise with BTC some of the development of such a system and offer the subdomain bonds.glbse.com if anyone is interested.

Nefario.

[ripper234]

It seems like there should be some value just in properly creating the mechanics of a bond. I would think there would be a way to integrate it with GLBSE, not by investing with companies but by having the bond payout be in shares at market value for a GLBSE security.

My suggestion would be to use the money from your bond to set up a website that handles creating bonds.

I don't understand. What's missing with the bond in the way I created it?

The way you set up the bond, you listed it on GLBSE and investors bought it. Simple enough, but it requires knowing how to list things on GLBSE. If I understand correctly, the idea proposed here is to provide a simpler way for people to list bonds, you provide a front-end service that takes their information, then lists it as an asset on GLBSE where investors purchase it. You could ask for some cut of the money, and give some sort of guarantee if the bond-holder defaults, giving less risk to the investors at the price of a lower reward. GLBSE is pretty much anonymous, your service would collect all the personal information on people asking for a loan, even get a credit score.

I think GLBSE is set up to have assets and subassets, using subassets reduces the cost of multiple listings (I am not sure, but I think the asset costs 2.5 bitcoin and subassets are free?) so you could have main asset Bond, and subassets Bond.PersonA and Bond.PersonB.

GLBSE already has a web UI, and I imagine it will improve over time. I don't see much value of creating a 3rd party service that will provide just a wrapper of GLBSE.

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Part of the purpose of this exercise was to learn how to use GLBSE, and make it profitable enough for other people to learn it as well.

BTW, you can see the trade and bid history of my bond here.

Yes GLBSE has a web interface, but GLBSE itself is really just a platform, Peter is correct in saying that the best thing to do would be to build a front end just for bonds, collecting the details just as Peter said.

We've got a command line client which is in the process of being turned into a app-usable library, so you wouldn't be building a "wrapper" for GLBSE, you'd be adding value.

To top it off BitcoinGlobal(the company that owns GLBSE) can partially subsidise with BTC some of the development of such a system and offer the subdomain bonds.glbse.com if anyone is interested.

Nefario.

This is very interesting - however personally I can't at this time engage in creating this system myself (I would however consider investing in a reliable developer if he had a good plan for this ... also would be interested in investing in other GLBSE related projects).

[elk-tamer]

I'm a developer.(I don't think the forum is short of them) Why dont you keep the lead on what a bond front end would do, and then we can design how to do it. We shouldn't need the development subsidized, but bonds.glbse.com would be better than bonds.ripper234.com

[The00Dustin]

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Have you seen https://glbse.com/fees.html?  It doesn't list any other 0.5 BTC fees.  Isn't there someone you could contact about that?  Doesn't seem like double-fees would be something any startup would want to have potentially driving away customers/users.

[Nefario]

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Have you seen https://glbse.com/fees.html?  It doesn't list any other 0.5 BTC fees.  Isn't there someone you could contact about that?  Doesn't seem like double-fees would be something any startup would want to have potentially driving away customers/users.

Sure, if you think you've been charged twice then please tell me (it has happened, there is an obscure bug in the system, and telling me gets you you're btc back and helps me find it).

[ripper234]

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Have you seen https://glbse.com/fees.html?  It doesn't list any other 0.5 BTC fees.  Isn't there someone you could contact about that?  Doesn't seem like double-fees would be something any startup would want to have potentially driving away customers/users.

Sure, if you think you've been charged twice then please tell me (it has happened, there is an obscure bug in the system, and telling me gets you you're btc back and helps me find it).

Yeah, I believe I got charged twice. All I did was create a bond (0.5 BTC) and create the ticker symbol (which I believe is free).
Do you need any information not already posted here to investigate?

[Nefario]

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Have you seen https://glbse.com/fees.html?  It doesn't list any other 0.5 BTC fees.  Isn't there someone you could contact about that?  Doesn't seem like double-fees would be something any startup would want to have potentially driving away customers/users.

Sure, if you think you've been charged twice then please tell me (it has happened, there is an obscure bug in the system, and telling me gets you you're btc back and helps me find it).

Yeah, I believe I got charged twice. All I did was create a bond (0.5 BTC) and create the ticker symbol (which I believe is free).
Do you need any information not already posted here to investigate?

pm me your user id and I'll sort it out.

[ripper234]

Creating the bond cost 0.5 BTC (I also got charged an extra 0.5 BTC on some operation, not sure exactly which ... I'd really want to see a charge history feature in GLBSE)

Have you seen https://glbse.com/fees.html?  It doesn't list any other 0.5 BTC fees.  Isn't there someone you could contact about that?  Doesn't seem like double-fees would be something any startup would want to have potentially driving away customers/users.

Sure, if you think you've been charged twice then please tell me (it has happened, there is an obscure bug in the system, and telling me gets you you're btc back and helps me find it).

Yeah, I believe I got charged twice. All I did was create a bond (0.5 BTC) and create the ticker symbol (which I believe is free).
Do you need any information not already posted here to investigate?

pm me your user id and I'll sort it out.

pm sent. BTW, all the bonds I offered at 0.95 BTC were sold out!
Now there are 16 bonds at 0.96, 0.97 and 0.98 BTC each.

Also someone's trying to resell 3 bonds at 0.965 BTC, and there is one BUY order at 0.945.

[ripper234]

Any updates?

Did you decide how to spend the money you raised?

I already raised some money, and I won't be spending it.
The goal was a Proof of Concept from the get go, I didn't have a specific goal.
Also, I don't want to spend it on something since I'll need to return it soon anyway, and I don't want to speculate on GLBSE stocks or BTC/USD rate in the hopes of making enough money to return when the bond expires.

[Ben Walsh (beamer)]

What are your thoughts on how the POC went?

Any updates?

Did you decide how to spend the money you raised?

I already raised some money, and I won't be spending it.
The goal was a Proof of Concept from the get go, I didn't have a specific goal.
Also, I don't want to spend it on something since I'll need to return it soon anyway, and I don't want to speculate on GLBSE stocks or BTC/USD rate in the hopes of making enough money to return when the bond expires.

[ripper234]

Any updates?

Did you decide how to spend the money you raised?

Dividends were just sent.

I sent a total of 83 BTC to asset holders (I own 17 of the bonds).
The dividend was paid in two parts, 1 BTC (1/83 per bond), and 82 BTC (82/83 per bond).

Please verify you received your funds.

[brendio]

Any updates?

Did you decide how to spend the money you raised?

Dividends were just sent.

I sent a total of 83 BTC to asset holders (I own 17 of the bonds).
The dividend was paid in two parts, 1 BTC (1/83 per bond), and 82 BTC (82/83 per bond).

Please verify you received your funds.

So you've repaid early? I think you should announce this so that others don't buy the now worthless bond.

[ripper234]

Funds received.

So, what is to become of the shares of the bond?

The bond is now worth exactly 0. I'll announce this.

[ripper234]

I'm truly sorry about this mistake. As a "POC", the purpose was to learn, and we did learn something valuable here (at least, I know I did).

Can anyone affected by this come forward? I hope you didn't lose too much.

Any claims of "lost BTC" because of my error should come until November 1st 2011.
After the date I will not consider any such claims as valid.

Ron