If you own 3000 or more Bitcoin, Wall Street wants your advice

[DPoS]

So it's vaguely interesting if you desperately want an exit from BTC and feel your coins won't catch a bid.  Otherwise it's only good for the guy who gets to shave fees.

I agree. And the only reason it makes sense for a gold/silver fund is dealing with storage, high premiums to buy physical, etc but with bitcoins it is kinda only good for people to push their locked up IRA money into it

so it will probably exist at some point but not the most attractive vehicle

[Bostonbitcoin]

That you CLAIM to be seeking advice on an idea that "you cannot tell us about".   TRUE.  Your own quote.
That you will make money from the use of our bitcoin?  IF THAT IS NOT TRUE, THEN PUT IT IN WRITING AND YOU HAVE THE COIN YOU SEEK.

I'm not seeking anyone's Bitcoin -- I'm looking at the viability and interest in something which I said I was happy to share privately.  

IF this led to something and after many other steps seemed sensible then I might have an offering and if I did I would probably present it to people who hold Bitcoin in addition to standard Wall St. types with fiat capital because I think that it would be good to have something done by Bitcoin holders ---

and when and if I ever reached that stage I'd be open about it and simply say "I'm seeking BTC in exchange for X" and this would obviously be something I hope everyone would earn money on, including me.   But I am not at that stage --- and if I was I wouldn't post on the forum at all (for sure!) and I wouldn't be doing early stage research or asking for advice.

I'm probably crazy to have bothered but I do believe in getting a variety of opinions and net net probably worth it.

[mrefish]

Ways to invest in Bitcoin

1- Direct ownership
2- Mining hardware
3- Qualified investors fund- Second Market
4- Qualified investors - angel investing in service and equipment providers
5- ETF- Winklevii (future)
6- Closed end funds as discussed here (future)
7- REIT with 25 % in BTC (future)
8- Trusts, do any exist yet?

[Bostonbitcoin]

Where there is a profit to be made, the compliance department will comply.  If you don't know that Boston really is a long way from Wall Street.

I wish that were true.  Something like 40,000 people a year resign from FINRA registration because the compliance costs are not worth the revenue.

I once had a compliance officer ask me who Alan Greenspan was (when he was Fed chair) and I've seen huge pieces of business turned away for very odd reasons.

[Bostonbitcoin]

Ways to invest in Bitcoin

1- Direct ownership
2- Mining hardware
3- Qualified investors fund- Second Market
4- Qualified investors - angel investing in service and equipment providers
5- ETF- Winklevii (future)
6- Closed end funds as discussed here (future)
7- REIT with 25 % in BTC (future)
8- Trusts, do any exist yet?

There are many other possibilities  (all future): 

Unit Investment Trust - or like vehicle
IPO
Commodity fund (? Who knows - depends on how BTC is categorized)
Charitable income trust (wealthy person donates BTC to his own charity, can get current deduction for full amount and can provide income from the trust to beneficiaries)
Mutual Fund focused on BTC
Many many variations of types of funds which are publicly traded
DPO, direct public offering
Different types of ETFs
Hedge funds invested in BTC
Separately managed accounts focused on BTC
VC fund focused on BTC related companies

Several different non US vehicles.

It's also not as hard as some May think to invent a new investment type --- or, better yet, to re-invent or revise some older vehicle type for BTC.

[Minor Miner]

Where there is a profit to be made, the compliance department will comply.  If you don't know that Boston really is a long way from Wall Street.

I wish that were true.  Something like 40,000 people a year resign from FINRA registration because the compliance costs are not worth the revenue.
I once had a compliance officer ask me who Alan Greenspan was (when he was Fed chair) and I've seen huge pieces of business turned away for very odd reasons.

Did not slow us down from doing snowball.com nor a primary and follow on for Ivillage and a ton of other crap that mathematically could never make money.   I call bullshit, hip deep.
And before you write off the winklevoss twins' ETF attempt you should probably take a look at who is doing the filing for them.  If you do not recognize her, then get on google.   They are not fools.
And it was corzine, then paulson (after he pushed corzine out when the partnership was destroyed).   Blankfein is a spank.

[renee25]

Sure!

Merrill Lynch is going to become a basket holder in the ETF and develop a procedure to take BTC as redemptions...something they have never held and have no accounting or compliance or security procedure for.    And who sets up the public keys at Merrill?  Who holds the private keys?  Who is authorized to use them and how?   And surely the compliance department, which strictly reviews everything is going to simply approve this with no problems at all right?

You should take all your vast knowledge of Wall St and your stellar expertise and become a consultant....you can straighten out these regulators, fix the issues preventing the Winkelvoss ETF from being offered and you can help all these basket holders with the procedures to accept these non-existent bitcoin based redemptions that will occur.   They would be very impressed by your brilliance.  You obviously have such a deep understanding of things!

Seriously man.  If we met in person I doubt you'd have this kind of interaction.  I'm not Lloyd Blankfein but just consider the remote possibility that I know something about the industry I've worked in for a while.   You and I are both part of a small community that has a lot more in common with each other than 99% of the rest of the people not interested in BTC.

look, people in this forum didn't trust B. bernanke, and they are going to trust you with their bitcoins?

Now it looks like you need is an trustworthy IT admin that can give you advice in managing the bitcoins.

I'm ex-IBM and for a small fee i can be a "consultant".

If you want someone to actually manage your private keys, i advice you to hire them full time and never let it out of your sight, that were my mistake when i put in advance 1 month rent to a flat-mate, it vanished!

Know you know why the winklevoos maybe into something, they each hold half of a private key !

[Inedible]

Can you provide some more info on what you're planning on doing?

Thanks it's for a public offering backed by BTC which would allow much more broad and easy public access to exposure in BTC for retail and institutional investors on a regular open exchange and would be available in standard brokerage accounts, IRA accounts etc.

I believe the listing method is superior to ETFs and the private offerings created by other companies.

Let's say you're totally legitimate (your personal details are available for anyone to contact you and find out more about you).

What exactly is it that you need to know?

What technical hurdle are you coming up against?

What information do you need to make a decision whether to take this forward?

Surely as a forum, we can all provide you with that information and then you can assess whether this will work or not.

Surely this would be a better route than you to keep proving yourself to us and us continuing to grill you?

[Bostonbitcoin]

Let's say you're totally legitimate (your personal details are available for anyone to contact you and find out more about you).

What exactly is it that you need to know?

What technical hurdle are you coming up against?

What information do you need to make a decision whether to take this forward?

Surely as a forum, we can all provide you with that information and then you can assess whether this will work or not.

Surely this would be a better route than you to keep proving yourself to us and us continuing to grill you?

Thanks -- the thread is getting long and I actually got a lot of what I needed in PMs.

Main things I'm wondering is how much, if at all, large BTC holders see as a value of public vehicles backed by BTC.   As suspected, for some it's no advantage at all,for others it's perceived as a major advantage.

The technical hurdles mainly relate to security of large numbers of Bitcoin -- in two phases, one in setup and another for an operational fund.   How would people secure their Bitcoin in escrow so something along those lines.  If we bought something like the amount BIT has which is $70 mm or so, (this would be money from public investors) what are the best practices for that.   I'm a bit aware of the 2/3 Armory solution where two of three people need (piece of ) a key....also there are 100 (1000?) years plus of good physical security best practices which have been used for metals and gems etc. so that part is not new....it's the main weakness point of transitions to the physical security in cold storage.

To move forward there are still some regulatory things I'm looking at and also weighing the benefits and drawbacks....I mentioned that I think I have a method of listing which is superior to an ETF and it is in many ways....but it does have some drawbacks....for example it is more static than an ETF without need to worry about redemptions....but less scalable than an ETF....the Winkelvoss fund could literally be worth $100 billion if BTC grows enough.....this model that would be much harder....but it would be quicker to market for the first new $100-200 mm or so which would be a good inflow into BTC.

For discussion purposes just think of it as if I've come up with a variation of a REIT....for BTC...publicly traded daily, but not with redemption issues -- more static in its holdings (the BTC would stay put) but of course the price would sway with the market.    That's not a fully accurate description of what I'm looking at, I'm still early stage, this shouldn't be construed as an offering in any way ....but that's about the closest I think I can explain on a public forum.

Thanks again

[Bostonbitcoin]

Someone said that with BTC security one can never be paranoid enough. 

 In speaking with VCs and others I think some in the investment business may be underestimating security issues. 

At least in my career we have never had to deal with this type of security.  Someone can raid a huge NY PE firm, hedge fund or even investment bank and there is nothing to steal which could easily be converted to cash.   

However, when we talk about $100 mm chunks of  Bitcoin floating around on a piece of paper that if someone even snaps a photo of it's gone....that's a new world.   People who run gold ETFs most have never seen a bar of gold.....this is different.

People should be aware of things which no one is ever concerned with, no matter how far fetched because no instrument like this has existed before.

So security is a main thing....but not so much specific to anything I'm researching because it's a universal concern for any vehicle.

[Inedible]

Let's say you're totally legitimate (your personal details are available for anyone to contact you and find out more about you).

What exactly is it that you need to know?

What technical hurdle are you coming up against?

What information do you need to make a decision whether to take this forward?

Surely as a forum, we can all provide you with that information and then you can assess whether this will work or not.

Surely this would be a better route than you to keep proving yourself to us and us continuing to grill you?

Thanks -- the thread is getting long and I actually got a lot of what I needed in PMs.

It's great that people are happy to PM you (I'd bear in mind the number of con artists going around - don't take this as an endorsement that you, or I for that matter, aren't in that same group) but I'd recommend you keep the technical details public where details don't impinge on regulations. This will a) help others and b) save a lot of people a lot of time when answering.

Main things I'm wondering is how much, if at all, large BTC holders see as a value of public vehicles backed by BTC.   As suspected, for some it's no advantage at all,for others it's perceived as a major advantage.

When you say how large BTC holders value public investment vehicles, you mean those interested in becoming involved? I would think all of them would be interested in any legitimate means to increase their wealth. What you'll see here is a very protective and vocal part of the community defend itself from perceived threats.

The technical hurdles mainly relate to security of large numbers of Bitcoin -- in two phases, one in setup and another for an operational fund.   How would people secure their Bitcoin in escrow so something along those lines.  If we bought something like the amount BIT has which is $70 mm or so, (this would be money from public investors) what are the best practices for that.   I'm a bit aware of the 2/3 Armory solution where two of three people need (piece of ) a key....also there are 100 (1000?) years plus of good physical security best practices which have been used for metals and gems etc. so that part is not new....it's the main weakness point of transitions to the physical security in cold storage.

As far as securing Bitcoins is concerned, it's very similar to standard IT security for banking. I guess the operationally, only you know the requirements as you're the only one who knows how the underlying investment vehicle works.

To move forward there are still some regulatory things I'm looking at and also weighing the benefits and drawbacks....I mentioned that I think I have a method of listing which is superior to an ETF and it is in many ways....but it does have some drawbacks....for example it is more static than an ETF without need to worry about redemptions....but less scalable than an ETF....the Winkelvoss fund could literally be worth $100 billion if BTC grows enough.....this model that would be much harder....but it would be quicker to market for the first new $100-200 mm or so which would be a good inflow into BTC.

As an investment vehicle, I guess the liquidity will determine the types of investors (I still find it incredible that a currency can be used for investment) but as long as there are longer term investors around, there will be interest.

[Inedible]

Someone said that with BTC security one can never be paranoid enough. 

 In speaking with VCs and others I think some in the investment business may be underestimating security issues. 

At least in my career we have never had to deal with this type of security.  Someone can raid a huge NY PE firm, hedge fund or even investment bank and there is nothing to steal which could easily be converted to cash.   

However, when we talk about $100 mm chunks of  Bitcoin floating around on a piece of paper that if someone even snaps a photo of it's gone....that's a new world.   People who run gold ETFs most have never seen a bar of gold.....this is different.

People should be aware of things which no one is ever concerned with, no matter how far fetched because no instrument like this has existed before.

So security is a main thing....but not so much specific to anything I'm researching because it's a universal concern for any vehicle.

Security will be a major issue but no more of an issue than for electronic banking.

I don't understand your comment about theft of bitcoin by taking a picture as that would only be the case if you printed out the private key to a wallet. There would be no reason to print that out unless your investment vehicle demands it.

Not knowing how REIT securities work I can't really comment but I do wonder why you'd need to reallocate the underlying Bitcoins to a new shareholder. Doesn't the share abstract away that need? (This paragraph is more to address your comment earlier about handling thousands/millions of private keys etc.)

[DPoS]

I think dude is trying to get info on writing a script for next Die Hard

..We stole $100mm bitcoins but wait..  everyone can see we stole $100mm of THEIR bitcoins...  Hmmm.. the chopper isnt gonna help this heist..  we have to rethink it...  tumblers tumblers tumblers

[Bostonbitcoin]

Security will be a major issue but no more of an issue than for electronic banking.

Are you kidding ?

In "electronic banking" there is almost no way anyone can steal significant amount of money without beeing caught and the money recovered.

I agree with ghdp.

I was at a $20 bn boutique fund the other day talking BTC with the owners -- I looked around the office and noted that there really isn't anything anyone could steal.   If a criminal walked in you could give him free reign -- what could he take?  Client lists? 

If he was REALLY clever he could figure out where to wore money....then what?  He'd need to have a wire to a bank where he could wore it to another etc.    Opening anonymous Swiss bank accounts to receive a $10 mm wire the next week is purely a product of the movies (or maybe might have worked in the 1960s) -- there is almost no way people could move real money like that.

Bitcoin on the other hand -- all someone needs is to take a photo of a private key.

The Die Hard comment from DPoS is a real point!  The reason we saw heists like the Lufthansa heist in the movie Good Fellas (which was a real heist) stop is not because criminals got more honest but because there isn't anything to steal.   Now, with bitcoin there is again and when we talk $10, 20, 100 million worth... All bets are off....people have sent entire teams of heavily armed people to kill for a lot less.   Not to be over-paranoid but I think Wall St. firms who think they can simply use the office safe and building security for 45,000 coins are making a mistake.

[mrefish]

I'm looking at time delayed transactions, might be useful for the warm wallets used in these funds.

   
--Delayed transactions (using nTimeLock)--

https://bitcointalk.org/index.php?topic=131443.0

Something to experiment once I'm ready to play with raw transactions.



This leads me to wonder about certification tests, I suppose each unstolen wallet is evidence of some ability.

[Inedible]

Security will be a major issue but no more of an issue than for electronic banking.

Are you kidding ?

In "electronic banking" there is almost no way anyone can steal significant amount of money without beeing caught and the money recovered.

Security is THE issue when dealing with bitcoins. Especially with bitcoins that you have promised to keep for somebody else.

Are you kidding?

People steal funds electronically all the time.

Sure, Bitcoins are harder to trace but do you think the banks have thought, "You know what? Let's just make our systems slightly secure. We don't want to make it too difficult for people to steal money."

No, what they've done is strike a balance between security and convenience.

Sure, you could make it a requirement that you need go into the bank with a DNA sample to make a withdrawal. That would be damned secure but ultimate completely impractical.

Bitcoin could be made 100% secure, it would also be 100% inconvenient.

So yes, securing Bitcoin will be no different to banking.

Recent losses on credit cards amounted to $190B - if it were that easy to trace, surely they wouldn't be losing so much would they?

[Inedible]

Security will be a major issue but no more of an issue than for electronic banking.

Are you kidding ?

In "electronic banking" there is almost no way anyone can steal significant amount of money without beeing caught and the money recovered.

I agree with ghdp.

I was at a $20 bn boutique fund the other day talking BTC with the owners -- I looked around the office and noted that there really isn't anything anyone could steal.   If a criminal walked in you could give him free reign -- what could he take?  Client lists? 

If he was REALLY clever he could figure out where to wore money....then what?  He'd need to have a wire to a bank where he could wore it to another etc.    Opening anonymous Swiss bank accounts to receive a $10 mm wire the next week is purely a product of the movies (or maybe might have worked in the 1960s) -- there is almost no way people could move real money like that.

Bitcoin on the other hand -- all someone needs is to take a photo of a private key.

The Die Hard comment from DPoS is a real point!  The reason we saw heists like the Lufthansa heist in the movie Good Fellas (which was a real heist) stop is not because criminals got more honest but because there isn't anything to steal.   Now, with bitcoin there is again and when we talk $10, 20, 100 million worth... All bets are off....people have sent entire teams of heavily armed people to kill for a lot less.   Not to be over-paranoid but I think Wall St. firms who think they can simply use the office safe and building security for 45,000 coins are making a mistake.

Why are you printing out private keys? This is the equivalent of printing out your banking password. In fact it's worse - it's the equivalent of leaving your money on the table instead of in the bank.

I can see no reason why you'd print your private key out. Are you needing to transfer the base asset of your investment vehicle?

I get that you might not have a full understanding of how Bitcoin works but this is a fundamental misunderstanding you have here.

I own Bitcoins. You could walk into my office and there'd be nothing you could steal that would endanger my funds any more than the $20 bn boutique fund.

[Inedible]

If he was REALLY clever he could figure out where to wore money....then what?  He'd need to have a wire to a bank where he could wore it to another etc.    Opening anonymous Swiss bank accounts to receive a $10 mm wire the next week is purely a product of the movies (or maybe might have worked in the 1960s) -- there is almost no way people could move real money like that.

I forgot to mention, in today's Bitcoin world, you have pretty much the same problem.

Any large exchange requires you to be identified before they allow you to cash out to fiat.

[Inedible]

Now, with bitcoin there is again and when we talk $10, 20, 100 million worth... All bets are off....people have sent entire teams of heavily armed people to kill for a lot less.   Not to be over-paranoid but I think Wall St. firms who think they can simply use the office safe and building security for 45,000 coins are making a mistake.

I think I see the issue you're trying to raise.

You're saying Wall Street will want to treat this just like an ordinary security which of course it can't be because this asset is a currency.

You'll need banking expertise to secure the asset but the instrument itself can be left out on someone's desk.

Are you thinking that there are going to be bonds or something with private keys printed on them? This could be the cause of the potential scalability issue you mentioned?

If that's the case, you really don't need to do that. The private key doesn't need to be printed and you could still have claim to a tranche of Bitcoins.

[mrefish]

Why are you printing out private keys? 

For cold storage, the standard in the Bitcoin fund industry is to use BIP 0038 for a password protected address.

"TW: They’re in safety deposit boxes in different cities. "

http://www.businessweek.com/articles/2013-08-08/cameron-and-tyler-winklevoss-on-bitcoin-and-their-public-persona