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Author Topic: [GLBSE] BDK -- LIQUIDATING UNDER NEGATIVE EQUITY PROVISION --  (Read 18468 times)
Kluge
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June 13, 2012, 11:12:41 PM
 #141

*straightens tie, exhales slowly, keeping in mind that BTC was worth ~$5.20 at the last valuation*

Last Valuation on 5/28 -- today is 6/13

GLBSE Securities Re-valuation (reconciliation between BDK sheets & GLBSE 5dayavg):
Cognitive: BDK - .611BTC/share, GLBSE - .599BTC/share -- total loss of 12.672BTC on paper
BitcoinTorrentz: BDK - 1.01BTC/share, GLBSE - .74BTC/share -- total loss of 1.08BTC on paper
YABMC: BDK - .3BTC/share, GLBSE - .258BTC/share -- total loss of 675.444BTC on paper
REBATE: BDK - .201BTC/share, GLBSE - .172BTC/share -- total loss of 27.356BTC on paper
BitVPS -- new purchase: 0.003125BTC/share (27.68k purchased)


Total securities FMV change since last valuation -- loss of 716.552BTC.


ETA: Contract on GLBSE has been updated. Thanks, Nef.

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June 17, 2012, 04:45:41 PM
 #142

Hey, everyone. A small update. I've been neglecting the public spreadsheet a fair bit. "Keeping up with it" will largely be a problem of the past once BDK-BLoC is launched. BDK-BLoC will take on a larger scope than I originally imagined, effectively becoming the "me" most people talk to when they have business to discuss, and will handle CD sales and repays. Additionally, because I am able to separate access/edit privileges, I may soon hire and permit an employee to do some of the more time-intensive parts of maintaining that website (scoping out companies, ID verification, filing an internal evaluation with me, and calculating their credit score using banks' template Starfish generously posted which I altered a bit, as well as reviewing new financial reports the company submits and updating the credit scores as necessary). Additionally, I can give that employee my GLBSE .csv, BDK-BLoC .csv files, and have him fill out the I/O reports as appropriate. I do enjoy the accounting, but I don't have the time, and the spreadsheet's wildly out of date, with inaccuracies accumulating.


Hiring an employee allows me to spend my time talking with the Movers/Shakers, working on deals, and concerning myself more with meta, big-picture stuff, including fundraising for BDK and revisiting doing securities offerings for Producers. I've decided to remove my coins from Hermes/Icehill, which I got a green-light on yesterday, and will instead issue a lesser USD loan to Icehill's 20Mission Project at more reasonable rates. I also learned last night that I will be gifted a 5% equity stake in Icehill upon its public registration, which was very surprising, very pleasing, and very much appreciated. This asset will be considered a part of "BDK." I'm excited to continue working with Icehill and the associated players.

BDK dividends tomorrow will be ~.00045/share after I receive 18BTC from imsaguy, pay 36BTC interest to a CD-holder and 16BTC to BDK.BND-holders. There was another potential default on ~60BTC, which will be counted in next month's report (principal - bad-debt-sale) after I'm certain it's an intentional default.


Cheers!


ETA: If someone's interested in doing the tasks I outlined in the first paragraph, it should take 5m-90m per day (excluding additional workload upon BDK-BLoC launching) to reconcile GLBSE .csv & BDK Google Doc, and account for the daily transactions I'll email/Skype to you. Once BDK-BLoC launches, workload will increase quite a bit. Initially, I'll be willing to pay 1BTC/day (paid on Mondays when I do the rest of the dividends) - work on your own terms, just get everything in there and updated by the end of the day. Once BDK-BLoC launches, I'll probably be willing to move up to 2BTC/day, and give raises as workload increases if performance doesn't deteriorate. You must be fairly competent at spreadsheet software (incl. Google Docs), be willing to use Skype, and have the initiative/generosity to prettify & prune the sheets, adding new statistical calculations as would be helpful.

ETA2: Updated spreadsheet. The ~60BTC loan I talked about maybe being a default likely will not be. Lendee just contacted me. Cheers!

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June 18, 2012, 04:46:13 PM
 #143

Sorry for later-than-usual dividend - took car to mechanic, did some shopping this morning. Waiting on 6 confirmations. Dividend will indeed be .00045/unit.

Cheers!

ETA: Derp. They would have been .00045 if there were 8100 shares, not 9000. My bad  Lips sealed

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June 18, 2012, 05:06:12 PM
 #144

June 18 UPDATE
Dividend/share paid: 0.000406688BTC/share
Total dividend paid: 3.66BTC (I had a tiny amount leftover in the account, now that I've realized so true dividend paid is 3.66002 -- enjoy  Tongue)
Running total dividends paid in June: 13.49BTC

June 2012 Net Income Expectations
Optimistic estimate: 175BTC
Reasonable estimate: 75BTC
Pessimistic estimate: -50BTC
(Guesstimated weekly dividend payouts -- June 4th: 0.0BTC/share Actual: 0.0BTC/share, June 11th - .00063BTC/share Actual: 0.00121358BTC/share, June 18th - .00014BTC/share Actual: 0.000406688BTC/share, June 25th - .00036BTC/share)

ETA: Looks like GLBSE refuses to take dividends which aren't large enough to send at least one satoshi to each unit-holder. That explains why I had .00002BTC left in the account, so the actual total dividend was 3.65994BTC. The difference between that and what's owed will be carried over to the next month. Sorry.

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June 19, 2012, 04:38:06 PM
 #145

I'll have ~3.25kBTC coming to me within a week. I want to convert 1kBTC to USD to lend to a project I'm familiar with @ ~2.75%/month. Keep in mind that I paid 2.5%/month for USD deposits a bit over a month ago, and that depositor isn't me, so couldn't trust my intentions or know my situation as much as I can.

The remaining 2.25kBTC are currently uncommitted. I'd like to sell off into this rally and use the USD to loan to myself for the purchase of a house, and I'd like to pay no more than 2% monthly on it to be repaid as soon as our house in PA sells (it's been on the market for ~3 months, now, so I'm not holding out too much hope of it selling within, or otherwise have enough funds to pay it. Partial repayment would reduce interest payments.


Thoughts?

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June 19, 2012, 04:44:20 PM
 #146

Subbed, and interested to see where this might lead to.
Just one thing to add: Be careful that this might only be the start of a rally.  Wink

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June 19, 2012, 05:02:19 PM
 #147

Subbed, and interested to see where this might lead to.
Just one thing to add: Be careful that this might only be the start of a rally.  Wink
Yeah - there's fx risk. I'm thinking I should start trying to get more USD CD sales to hedge with, then I could effectively lock rates in -- as my USD debt decreases as BTC price rises, so too do the depositors' CD value in USD - and opposite if BTC decreases in price. The alternative is staying entirely in BTC, but dumping all my securities, because almost all of their BTC value decreases as the exchange rate rises. - and BTC's great, but for startups, USD pays the bills.

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June 22, 2012, 02:26:20 AM
 #148

Probably won't need a home loan at all, which is nice. Someone on the forum even offered me a free house (in need of some fairly large repairs/appliances [like... a furnace], but still crazy-generous). Figured out how to handle some tax issues in a brilliantly simple way... so everything's looking good.


BDK spreadsheets need a massive overhaul. It's not reporting enough information, and too much shit's lumped together when it should be split up, then all come together in the summary sheet. Google Docs is cumbersome and inadequate for complicated work. When I do the spreadsheet overhaul, I'll do my work in Excel, and publish sheets each week. I'm going back and forth from MI to IN to look at various houses, so haven't been around too much the past couple days, and will likely be only sporadically online for the next couple weeks. June 25th dividend guesstimate looks to be right on target ATM. Oh -- just noticed I messed up the last weekly report.... will fix that. ETA: Done.

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June 24, 2012, 08:34:52 AM
 #149

Relevant cross-post:

Fwiw, the end goal is to re-release BDK.BND @ .65%/wk (roughly 2.625% monthly, little over 40% per year - assuming you reinvest dividends -- without reinvestment, ~2.6% monthly, 33.8% annually). I intend for this to be the one and only reduction in rates, and in the contract, 6 months will be required to elapse before I recall the bond. 1%/wk is doable for now, but I'd prefer to allow allow investors to "set it and forget it," and this rate should be acceptable for many months, perhaps years. Some extra breathing room makes me happy, too.

The future BTC CD rate is intended to be 3%/32D, 6.75%/63D. The future USD CD rate is intended to be 1.25%/32D, 3%/63D. Bonds and CDs will, in some way, be allowed to convert to each other once everything's sorted out for the re-launch, which probably won't be until early August (+- a month) -- buyback will occur as soon as I get the funds I've requested back, which should have been nearly a week ago....

The BTC prime rate (minimum lending rate, reflects only BDK's opinion) is expected to be set at 3.55% per month, ~0.1267%/day. The USD prime rate (minimum lending rate, reflects only BDK's opinion) is expected to be set at 1.6% per month, ~.057633%/day.

Thus, for USD loans, a most creditworthy business can expect to pay ~51.985% annually for BTC loans. For USD loans, that rate will be ~20.983% annually. For comparison, SMB loans in the US are typically made with the business paying ~6-10% annually in interest. Meanwhile, US credit cards, which are more in line with what BDK-BLoC seeks to compete with, charge ~11-23% annually (avg is 14% or so for business cards). We'll get there eventually.


-----


Additionally, I ended up finding a different dev for BDK-BLoC (due to no fault of the original). The dev costs have not been determined, but will probably be around 150-200BTC. He's expected to start work this Thursday. A designer will not be hired. Maintenance costs will be ~5.5BTC/month total for two VPS servers (through BitVPS) + domain hosting. I believe BDK-BLoC will be worth the costs due to me being able to go on "auto-pilot" for some of the more trivial-but-time-consuming stuff, while helping Bitcoin businesses, and forcing transparency into the Bitcoiniverse. I will feel much more comfortable being able to secure low-risk loans, and pleased the funds are going toward projects which will ultimately benefit every user of Bitcoin. As such, I will resume taking on debt (I've been fairly aggressively buying back debt the past few weeks), which I believe will ultimately result in an increased %RoE. With BDK-BLoC establishing a relatively low "minimal profits" Prime Rate, and forcing the lending market below "natural" rates, I believe BDK will continue to nurture long-term beneficial business relationships with the Producers of the community, as well as foster trust with those businesses enough for them to purchase CDs in times when they have excess funds, even though I do not offer the high yields of many other lenders accepting deposits. The benefits of being a mutually-beneficial business as opposed to a regretted "lender of last resort" far outweigh the cost of operating at reasonable (though ultimately sustainable) profit margins on coin-shuffling. I'm extremely bullish on BDK's mid-term prospects, enough to offer any investor interested July pre-IPO BDK units well above market price @ .22BTC each and feel generous about it. There is a limit of 4k units to be sold by July 2nd, and none of them will be posted on GLBSE. As always, if they don't sell, they don't sell, and I keep the units for a later time.

Dividends are now expected to be roughly .00031/share, though that may change for the better tomorrow. Securities re-valuation and monthly guesstimates for July will be posted sometime before the end of the week. Additionally, I'll try to remember to clearly state BDK's position in the various securities held when I post the re-valuation. My current sleep schedule allows me to be up while family's asleep, so I can get a fair bit done. First priority is to get BDK-BLoC mock-up and formulas complete, then I will re-vamp the public spreadsheet. After that, there's a lot I need to think about regarding Icehill and 20Mission. I'm extremely excited to be hearing everything in development, and progress being made. For everything "lost" in the ASIC mining bond panic sales, the Icehill equity gift.... well - BDK is undervalued by a fair bit, IMO, though it will be difficult to determine by how much until a few months pass.  Smiley

I'm pleased to be meeting so many new people lately. We have added new people to our lending group, including finance professionals and academics, who will surely help us act more efficiently. The more people I know, the more I can do, and the better it can be done. Money's great, but it's easy to squander when not gaining wisdom from co-workers and associates. So - thanks, everyone, and a special thanks to those who call me out and keep me in line.

Cheers!

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June 24, 2012, 03:50:12 PM
 #150

Thanks for the big update, Kluge!

Maybe I've been afk too much, but I have a few questions:

1.  Are you still planning to move?  And find a "regular day job"?  If so, will this affect the amount of time spent on BDK (and hence the profitability)?

2.  BDK-BLoC is part of BDK, right? (won't be a separate glbse ticker)

3.  What happened to IOU?

4.  Would you consider publishing a proper Balance Sheet and cash flow statement at least monthly?  The spreadsheet is hard to follow for some of us more used to GAAP-style statements.

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June 24, 2012, 07:18:06 PM
 #151

Thanks for the big update, Kluge!

Maybe I've been afk too much, but I have a few questions:

1.  Are you still planning to move?  And find a "regular day job"?  If so, will this affect the amount of time spent on BDK (and hence the profitability)?

2.  BDK-BLoC is part of BDK, right? (won't be a separate glbse ticker)

3.  What happened to IOU?

4.  Would you consider publishing a proper Balance Sheet and cash flow statement at least monthly?  The spreadsheet is hard to follow for some of us more used to GAAP-style statements.
1. I still plan on moving, hopefully within a month, and it won't be somewhere terribly far away. The moving process should take less time than the Realtor process. I'll probably not take a regular day job - at least not for a year or so. Likely, wherever we move will require a lot of work to bring up to a habitable standard, and I'll probably take a day's break three times a week or so to do that. If I neglect BDK too much where operations are affected and it's noticeable, I'll spend more time on it.

2. BDK-BLoC is a part of BDK. Every loan and CD transaction relating to BDK-BLoC is counted as a part of BDK. What BDK-BLoC allows is the automation of many of my current tasks (among some other stuff), which are definitely "BDK tasks."

3. It's been tabled for the time being. AFAIK, that GLBSE account is still restricted. I'll probably get into doing something with a similar goal to IOU, but alone, and with less ambitious goals. IOUcoin.com may end up being repurposed as the site for BDK-BLoC. Dunno if that's too tacky, though, heh. Eventually, the name "BDK" needs to be scrubbed, and the lending operation renamed, as I originally tied the acronym to "banco," when BDK is not a bank in any manner of speaking. Being in the US, that poor word-choice could result in extreme legal consequences (depending partially on what the gov't determines a "Bitcoin" is) if I don't make absolutely sure nobody associates BDK with "bank."

4. I gave a monthly report for May @ https://bitcointalk.org/index.php?topic=77343.msg933687#msg933687 -- Same will be done for June. If there's anything in particular you want to see, I can include it. I'll look through some examples and try to better-standardize my books. I do need some education on GAAP, so I'll see what I can find. Then, when I completely overhaul my spreadsheets around the end of this week, there'll hopefully be something detailed, easy-to-follow, and perhaps even enjoyable to read (Graffs!).


Cheers!

ETA: Pleased to announce it's very likely BDK-BLoC will be released open-source. ETA2: I should also note all the important information which gets lost in this forum thread will be posted on the website. Can have it on an old, general-purpose host when I finish with the spreadsheet overhaul.

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June 25, 2012, 06:36:31 PM
 #152

Dividends ended up below target. To pay dividends for BDK.BND & BDK, I had to sell some YABMC, resulting in realizing the loss of ~9BTC. Bad month as far as profits go. Will be pleased for it to end.

June 25 UPDATE
Dividend/share paid: 0.00023112BTC/share
Total dividend paid: 2.08BTC
Running total dividends paid in June: 15.57BTC

June 2012 Net Income Expectations
Optimistic estimate: 85BTC
Reasonable estimate: 50BTC
Pessimistic estimate: 25BTC
(Guesstimated weekly dividend payouts -- June 4th: 0.0BTC/share Actual: 0.0BTC/share, June 11th - .00063BTC/share Actual: 0.00121358BTC/share, June 18th - .00014BTC/share Actual: 0.000406688BTC/share, June 25th - .00036BTC/shareActual: 0.00023112BTC/share)

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June 27, 2012, 03:41:56 AM
 #153

20.01BTC paid for multiple VPS services, billed quarterly, so BTC6.67/mo will be counted as "Misc" starting next month. Expenses are one-off, so not really an operational expense, but a capital expense. My intent is to call hosting an operational expense, while the 150-200BTC for dev-work will be called a capital expense, amortizing over twelve months.

Thus, BDK-BLoC will effectively cost something like 21.25BTC/month for twelve months, only VPS hosting costs thereafter.

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June 29, 2012, 09:26:54 AM
 #154

It's very likely we will be starting July with a first week's dividend (July 2nd) of 0BTC, with another zero-week likely on July 11th. The 18th & 25th should show modest to respectable dividends. Depending on just how large the losses of the first two weeks are, I may eat whatever BDK-holders would otherwise be "liable" for ("liable" meaning losses would rollover and negate future dividends).

In the larger scope, it's likely earnings will be very low (potentially negative) for July, and possibly August, though things may pick up by then. Not to apologize for poor performance, but just to point out exactly why BDK's earnings are so bad lately - take a look at the Securities sheet. You'll notice both Hermes and GPUMoney. Combined, they make up almost the entirety of BDK equity. GPUMoney investment will likely be mostly refunded within the next couple weeks -- the objective of the project was to put out a miner which interfaced with a website, where individuals (gamers, likely) would run the miner, and accumulate points toward purchasing Steam items and games. Development for the project seems to have stalled, and has otherwise been fairly slow. With ASICs fast approaching, I do not believe the project has a profitable outlook long-term, and it seems like it will be scrapped, pending agreement by all investors. Hermes, as many are already familiar with, was a project intended to become the premier BTC listing platform, with emphasis on Kickstarter-like features, and giving Issuers a strong voice. This project has been put on hold for at least a couple months due to a dispute with GLBSE. There have been many changes and a restructuring of Icehill, the soon-to-be publicly-registered Icelandic company, which will implement developed projects (Kronos, REBATE, PawnCoin, and many others). While Icehill projects are still being developed, Hermes is currently not, and as such, the money invested will be refunded in full, but this relies on Icehill acquiring funds to do so. BDK has been gifted 5% of Icehill equity, which will be realized in the future, along with a valuation of what that's worth. However, while funds have been stuck in "Hermes," they have accumulated no revenues -- it was strictly an equity deal.

So, what that last paragraph effectively means is that BDK's earnings this month are effectively the reflection of BDK operating as if it had no equity for the whole of June. As investment money is refunded, it can be used to generate revenues for BDK, which is when revenues will pick back up. I do not know exactly when that will be... I was hoping about two or three weeks ago, but it may be a couple weeks in the future, still. I've been experimenting a lot, trying to figure out what works and what doesn't. Moving BDK from loans to securities was a high-risk move which did not pan out exactly as I would have liked. This is certainly not limited to Hermes (in fact, the 5% equity gift from Icehill, I believe will be worth >$40k within a year, and will be the largest, most ambitious, and long-term-minded service provider in the whole of the community, with a great many services to fall back on if they have both studs and duds). Rest assured, BDK will never again be majorly involved in equity, but hold very little other than debt. Though, that isn't to say BDK will not take on additional tasks such as purchasing and repackaging/reselling securities from project managers.

Future spreadsheets will need to start accounting for depreciation of mining bonds, which will cut hard into profits, because it should have been accounted for in the past, but I neglected to do, assuming the market would not react nearly as harshly as it has to recent events. Combine these loss-creators with amortization of BDK-BLoC capital expense starting next month, I would guesstimate it's almost certain July will be a negative-profits month if I am unable to quickly secure repayment of investment money into no-longer-developed ventures. Once investment money is repaid, however, %RoE should be around 4-8% monthly (if BDK had funds to repay almost all deposits and bonds, June %RoE would have been around 6% -- May's 17.7%RoE was definitely a fluke).

I do have some positive news, though... BDK-BLoC is currently in development, and the dev's doing great work. He's very communicative, accepts pay by milestones completed, and walks me through what I don't fully understand. BDK will likely be renamed to IOU. This is a wholly a legal precaution, to prevent BDK from being confused with a bank. Simply saying "BDK" stands for nothing is inadequate when it's been put out in the past that BDK represents "Banco de Kluge." It does not. "BDK" is not a bank. Possibly, the project will be renamed "IOU," after the tabled "purchasing/reselling" venture, which may also pop up again in some form by the end of this year.


Any comments/questions - I'm all-ears.

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June 29, 2012, 03:21:04 PM
 #155

I appreciate your frankness in reporting, Kluge. I think the up and down are to be expected in a start up operation of this type and the weekly dividend cycle in the bitcoin world exaggerates this. Meatspace companies usually pay dividends biannually, so these up and downs can be smoothed out and not affected so much by the timing of transactions (which is not to say that window dressing does not occur).

Value investing is the flow of capital from impatient to patient hands, and I believe long term investors in BDK will benefit from patience in seeing the value realised.

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June 29, 2012, 03:58:49 PM
 #156

Meatspace companies usually pay dividends biannually, so these up and downs can be smoothed out and not affected so much by the timing of transactions (which is not to say that window dressing does not occur).

I think you meant semi-annually (twice a year).  And really most dividends are quarterly (4x a year).


Value investing is the flow of capital from impatient to patient hands, and I believe long term investors in BDK will benefit from patience in seeing the value realised.

+1 to this.  Keep the train on the tracks and moving forward, Kluge, and you'll get us all there.

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June 30, 2012, 04:10:41 AM
 #157

I appreciate your frankness in reporting, Kluge. I think the up and down are to be expected in a start up operation of this type and the weekly dividend cycle in the bitcoin world exaggerates this. Meatspace companies usually pay dividends biannually, so these up and downs can be smoothed out and not affected so much by the timing of transactions (which is not to say that window dressing does not occur).

Value investing is the flow of capital from impatient to patient hands, and I believe long term investors in BDK will benefit from patience in seeing the value realised.
It physically hurts to have to report 0BTC dividend weeks - doing it weekly definitely creates a lot of pressure, and creates anxious thinking which could otherwise be put into something productive. It causes hasty decisions. There's some burn-out being caused by frequent dividends, too. I agree that patience in investing is preferable, but I was doubting investors would feel the same way and not demand extremely frequent dividend payments. I'll consider going to monthly dividend payments as was originally intended and review what I've written to see if I allowed myself to switch instantly or if I boxed myself into requiring 60 days before changing that. (I don't believe it was added to the contract that payments will be made weekly -- that was a last-minute pre-IPO change, which I imagine I assumed and wrote as temporary, but need to check). Since it's pretty close to August, and I don't intend to sell "too much" of BDK's profits, I guess I shouldn't care too much if share price were to drop to lessening the frequency of dividend payments, assuming investors are insistent on weekly dividends. There's really no need for BDK to fundraise by selling profit splits right now. When share price nears or surpasses the point where a buyback would be favorable to me, I can start comfortably selling more monthly profits. Fwiw, I don't intend to switch to quarterly or 2x-annual dividend payments, though I may switch to quarterly payments a year or two down the road if I end up sticking with this for years.

With BDK-BLoC (soon-to-be IOU-BLoC), BDK's becoming much more of a "fixture" than I originally intended. I was planning on leaving within a year and a half or so of starting, which would be around this time next year. I'll try to keep everyone up-to-date on my intentions. If anyone wants, they can get a hold of me on Skype as bdk_kluge (name Ben Malec) and ask me directly if they have any questions/suggestions/comments. I've been on Skype every day consistently for months.

I've been hesitant to disclose this publicly, but I'm only 21 years old. I do not have experience in this sector outside of the seven months with BDK, now. My work experience is comprised almost solely of filing paperwork, creating forms for employees, and doing payroll for a family LLC. I have no formal post-secondary education outside of a couple textbooks, and largely "skipped" high school. It's hard for me to justify my existence in my current capacity, and is why I'm pretty averse to taking on liabilities. If I get more comfortable with this, and have years of experience under me, that will change - but not before I fully trust myself to handle others' money in an amount greater than the amount I've put in. I am pleased to have people question everything I do and make suggestions. The Bitcoiniverse is a great place to experiment and learn, but it's not as though I have a board of 5-10 experienced people to bounce most of my ideas off of. I tell other lenders sometimes about my intentions, looking for input, but occasionally get no feedback. I can't guarantee I won't get defensive and angry if someone attacks my ideas publicly, but I'll appreciate it when I'm in a reflective mood.  Wink

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June 30, 2012, 06:08:00 AM
 #158

Meatspace companies usually pay dividends biannually, so these up and downs can be smoothed out and not affected so much by the timing of transactions (which is not to say that window dressing does not occur).

I think you meant semi-annually (twice a year).  And really most dividends are quarterly (4x a year).


I had a suspicion as I wrote that about whether is was the right term but was too tired to look it up. Frequency must differ by countries, because none of my share holdings pay quarterly, other than some hybrid debt securities.

It physically hurts to have to report 0BTC dividend weeks - doing it weekly definitely creates a lot of pressure, and creates anxious thinking which could otherwise be put into something productive. It causes hasty decisions. There's some burn-out being caused by frequent dividends, too. I agree that patience in investing is preferable, but I was doubting investors would feel the same way and not demand extremely frequent dividend payments.

As an investor focussed on long-term profits, I prefer my money managers to have a similar focus. Investors of other people's money with short-term goals will tend to focus on opportunities that deliver short term profits at the neglect of generating longer term value. It may also mean they will miss out on great investment opportunities that will not deliver profits, or will even show unrealised losses, in the short term, but that more than make up for it in the long term.

So I guess you need to decide on your timeframe and communicate that to your investors so that they either have the same focus or sell to those that do.

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June 30, 2012, 08:38:27 AM
 #159

Meatspace companies usually pay dividends biannually, so these up and downs can be smoothed out and not affected so much by the timing of transactions (which is not to say that window dressing does not occur).

I think you meant semi-annually (twice a year).  And really most dividends are quarterly (4x a year).


I had a suspicion as I wrote that about whether is was the right term but was too tired to look it up. Frequency must differ by countries, because none of my share holdings pay quarterly, other than some hybrid debt securities.

It physically hurts to have to report 0BTC dividend weeks - doing it weekly definitely creates a lot of pressure, and creates anxious thinking which could otherwise be put into something productive. It causes hasty decisions. There's some burn-out being caused by frequent dividends, too. I agree that patience in investing is preferable, but I was doubting investors would feel the same way and not demand extremely frequent dividend payments.

As an investor focussed on long-term profits, I prefer my money managers to have a similar focus. Investors of other people's money with short-term goals will tend to focus on opportunities that deliver short term profits at the neglect of generating longer term value. It may also mean they will miss out on great investment opportunities that will not deliver profits, or will even show unrealised losses, in the short term, but that more than make up for it in the long term.

So I guess you need to decide on your timeframe and communicate that to your investors so that they either have the same focus or sell to those that do.
Then I will be clear. (looked at thread -- I did indeed modify the contract to change time between dividend payments, so 60 days will be required before the changes can go into effect. I may as well prune the contract of largely-irrelevant provisions, and take the opportunity to better-word the contract so it can all be done on one day. Before and After contracts will be posted in reply below.)

Changes which will be made to the BDK contract, effective September 4th, 2012:

  • BDK will officially be renamed "IOU" -- On September 4th, 2012, "BDK" will become "IOU" on GLBSE. "BDK.BND" will become "IOU.BND" if there are any remaining BDK.BND units outstanding.
  • The first contract paragraph will be modified to read as follows:

"Ben Malec (referred to within this contract as "Operator") will issue 100,000 shares of "IOU Hybrid Instrument" (each representation of which referred to within this contract as "unit"). Each unit not controlled by the operator represents .0009% of IOU's monthly profit.  Dividends will be paid on the first of each month in an amount equaling .0009% of IOU's monthly profit to each outstanding share the Operator does not control. 100,000 shares will be issued. Shares can be bought and sold at will of the Operator, though he must abide by any and all rules set forth in additional provisions of this contract. IOU is not a bank, but a personal lending operation on the part of the Operator.

  • The "Operator Equity" provision will be modified to read as follows:

"Operator Equity" - The Operator holds all equity of IOU. IOU units are not tied to equity in any manner, and represent only .0009% of IOU monthly profits. IOU unit-holders are not allowed to issue binding motions, and no motion issued by the Operator to unit-holders is to be considered binding unless the Operator specifically declares a particular vote binding.

  • The "Buyback" provision will be modified to read as follows:

"Buyback" - At any time, the operator is permitted to initiate a forced buyback of IOU units on the listing platform(s) it is currently utilizing. The Operator will pay ((.32 Bitcoins + GLBSE 5 day weighted average of trade transaction amount per unit of IOU)/2). The Operator may buy back  IOU units on the open market of the utilized listing platform(s) on behalf of IOU at any time and at any price he wills.

  • The "Share Value Protection" provision will be removed, and its contractual bindings no longer valid unless reintroduced into the contract.
  • The "Shareholder Votes, Non-binding Motions" provision will be removed, and its contractual bindings no longer valid unless reintroduced into the contract.
  • Any reference to BDK not already mentioned which was made in the contract will be changed to instead reference IOU.

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June 30, 2012, 08:39:08 AM
 #160

Current ("old") Contract:
Ben Malec (referred to within this contract as "me," "myself," "I," and "operator") will issue 100,000 shares of "BDK Hybrid Instrument." Each share not controlled by the operator represents .0009% of BDK's monthly profit.  Dividends will be paid every Monday, starting May 7th, 2012. Dividends will not be paid on the first of the month unless that happens to be on a Monday. 100,000 shares will be issued. Up to 5,000 shares are to be sold on the second day of each month for four months, starting on the month of May, 2012. After that time, shares may be issued at will of the operator.

Additional provisions
"Operator Equity" - The operator holds all equity of BDK. Shares are not tied to equity, and represent only .0009% of BDK monthly profits.

"Shareholder Votes, Non-binding Motions" - While motions may be introduced, they are non-binding. They exist only so the operator may gauge opinion of those invested in BDK's success.

"Change of Contract" - The operator is fully permitted to change the contract at will, without consent of shareholders. However, the modified contract is not permitted to go into effect until sixty days after the changes are made public. When the contract is changed, the operator will honor the ability for shareholders to sell shares back to him at a price of .125 Bitcoins per share between the time a change is made and the time 60 days have elapsed since the change was made public.

"Buyback" - At any time, the operator is permitted to buy back shares issued. The operator will pay .64 Bitcoins per share if the operator buys back BDK shares prior to August 3rd, 2012. If August 3rd, 2012 or later, the operator will pay ((.32 Bitcoins + GLBSE 5 day weighted average of trade transaction amount per share of BDK shares)/2)

"Share Value Protection" - If shares trade for less than ฿.01 on GLBSE for at least 168 hours continuously, the operator MUST issue a bid order of ฿.05 in an amount which equals 50% of shares issued not controlled by the operator. The "168-hour timer" does not again reset for 26 weeks after the "Share Value Protection" provision was last called to action.

"Negative Equity and Operator Liability" - BDK is permitted to operate while having negative equity so long as BDK has not had negative equity for 90 consecutive days. On the 90th day of having negative equity, the operator will be held personally liable to pay shareholders $.10/share (or ฿.02/share, whichever value is lesser). In cases where BDK is unable to achieve due to reasons unrelated to BDK experiencing prolonged negative equity (operator experiencing imprisonment, debilitating illness, GLBSE being hacked and made unusable, EMP strikes, police raid, or death, for example), the operator is not liable.

"IPO Value Preservation, Operator Trading" - The operator is not permitted to ever sell shares for less than he previously sold them for. However, he may sell shares for an amount equal to or greater than the amount he previously sold them for at will.


New (will be effective on September 4th, 2012) Contract:
"Ben Malec (referred to within this contract as "Operator") will issue 100,000 shares of "IOU Hybrid Instrument" (each representation of which referred to within this contract as "unit"). Each unit not controlled by the operator represents .0009% of IOU's monthly profit.  Dividends will be paid on the first of each month in an amount equaling .0009% of IOU's monthly profit to each outstanding share the Operator does not control. 100,000 shares will be issued. Shares can be bought and sold at will of the Operator, though he must abide by any and all rules set forth in additional provisions of this contract. IOU is not a bank, but a personal lending operation on the part of the Operator.

Additional provisions
"Operator Equity" - The Operator holds all equity of IOU. IOU units are not tied to equity in any manner, and represent only .0009% of IOU monthly profits. IOU unit-holders are not allowed to issue binding motions, and no motion issued by the Operator to unit-holders is to be considered binding unless the Operator specifically declares a particular vote binding.

"Change of Contract" - The operator is fully permitted to change the contract at will, without consent of shareholders. However, the modified contract is not permitted to go into effect until sixty days after the changes are made public. When the contract is changed, the operator will honor the ability for shareholders to sell shares back to him at a price of .125 Bitcoins per share between the time a change is made and the time 60 days have elapsed since the change was made public.

"IOU Growth, Operator Performance Pay" - All profits accumulated representative of non-Operator units (.0009% monthly net IOU profits per unit) are paid out as dividends. Profits due to Operator units (all units not outstanding) are the Operator's. The Operator will pay 60% of his units' net profits back to IOU, and keep 40% of his units' net profits as a "performance pay." The Operator may choose to have BDK "withhold" his earnings in the form of an interest-free loan, though the Operator is permitted to recall that loan at any time he deems fit. Changes made to this provision require the standard 60 days and other restrictions outlined in the "Change of Contract" provision to take be put into effect.

"Buyback" - At any time, the operator is permitted to initiate a forced buyback of IOU units on the listing platform(s) it is currently utilizing. The Operator will pay ((.32 Bitcoins + GLBSE 5 day weighted average of trade transaction amount per unit of IOU)/2). The Operator may buy back  IOU units on the open market of the utilized listing platform(s) on behalf of IOU at any time and at any price he wills.

"Negative Equity and Operator Liability" - IOU is permitted to operate while having negative equity so long as IOU has not had negative equity for 90 consecutive days. On the 90th day of having negative equity, the operator will be held personally liable to pay unit-holders $.10/share (or ฿.02/share, whichever value is lesser). In cases where IOU is unable to operate as specified in the contract or has negative equity for over 90 days due to reasons unrelated to IOU experiencing prolonged negative equity (operator experiencing imprisonment, debilitating illness, IOU's current listing platform(s) being hacked and made unusable, EMP strikes, police raid, or death, for example), the operator is not liable.

"IPO Value Preservation, Operator Trading" - The operator is not permitted to ever sell units of IOU for less than he previously sold them for. However, he may sell units for an amount equal to or greater than the amount he previously sold them for at will.

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