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Author Topic: GLBSE feature request: "Transparent Funds"  (Read 1418 times)
cytokine
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May 23, 2012, 08:19:16 PM
 #1

Hi BTC community, and in particular the GLBSE creator Nefario!

I have a few ideas/suggestions for the GLBSE that I would like to share publicly to spark conversation. I love the GLBSE and want to see it grow and become more professional so that hedge funds like mine have a chance to really shine.

One problem the GLBSE faces is the fact that it isn't possible to prove the legitimacy of companies on the GLBSE; however, it IS possible prove the 100% legitimacy of funds with some small changes. Specifically, I am proposing a new category of asset to be created: "registered transparent fund".

A registered transparent fund has the following characteristics:

  • The fund manager DOES NOT have the ability to withdraw from the fund.
  • All assets in the fund must be GLBSE securities (as a side effect of the fact that the manager cannot withdraw), and the fund's holding are posted publicly on the GLBSE with a one-month lag time (to prevent competitors from simply copying your investment strategy).
  • The only way a fund manager profits is by receiving a specific % of earnings. This can be hard-coded into the fund when the shares are created, and cannot be modified unless 50%+ of shareholders agree to an increase.

What say you? I think it's a great idea because then investors don't have to blindly trust fund managers - trust can be 100% assured. The only trust necessary is to the integrity of the GLBSE.

I would also be willing to put equity into the GLBSE to help develop these new features. I believe in it strongly; the potential is truly unbelievable.
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kronosvl
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May 23, 2012, 08:28:03 PM
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There is still room for abuse, even with this conditions. A manager could try to manipulate the market in order to increase balance in another account. Look at the LIF fiasco. The manager didn't withdraw the money out of GLBSE. When he decided to end the fund he simply dump all the shares, driving some of them very low. I think he didn't profit from that just because it wasn't his goal but someone else can try again.

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cytokine
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May 23, 2012, 08:35:41 PM
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There is still room for abuse, even with this conditions. A manager could try to manipulate the market in order to increase balance in another account. Look at the LIF fiasco. The manager didn't withdraw the money out of GLBSE. When he decided to end the fund he simply dump all the shares, driving some of them very low. I think he didn't profit from that just because it wasn't his goal but someone else can try again.

The concept of a "registered fund" certainly wouldn't 100% eliminate abuse - nothing can. However, I can definitely see it helping, and if I were to invest with someone else I would want it to be such a fund.

That said, the main problem you mentioned (market manipulation) will eventually resolve itself as GLBSE market cap and liquidity improves.
Stephen Gornick
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May 23, 2012, 09:55:13 PM
 #4

I'ld like to see a feature that goes even further: position transparency

So maybe a "registered" fund, and an "open registered" fund type.

The open registered one lets an investor see how many btcs are invested in funds at that time, and the specific allocation of shares held in each of the assets, trade history maybe even, etc.

Otherwise, an unscrupulous fund manager could have 100% invested in an asset that is under that fund manager's control (or benefits the manager in some way, such as kickback or inside info).

cytokine
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May 23, 2012, 10:41:28 PM
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I'ld like to see a feature that goes even further: position transparency

So maybe a "registered" fund, and an "open registered" fund type.

The open registered one lets an investor see how many btcs are invested in funds at that time, and the specific allocation of shares held in each of the assets, trade history maybe even, etc.

Otherwise, an unscrupulous fund manager could have 100% invested in an asset that is under that fund manager's control (or benefits the manager in some way, such as kickback or inside info).

True, and I think registered funds should have their positions completely open to the public - however, I'm opposed to showing positions in *real-time*, because for those like me with a proprietary approach to investing, I would not wish to have others able to emulate my trades.

I think the one-month time-lag on releasing information publicly would be perfect to provide transparency without sacrificing the fund manager's investment edge.
Nefario
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May 24, 2012, 02:38:12 AM
 #6

This is actually a really great idea, I don't think the name registered fund is great, probably "transparent fund" would be more descriptive.


I'll have to add this to the list of changes for GLBSE

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cytokine
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May 24, 2012, 02:59:17 AM
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This is actually a really great idea, I don't think the name registered fund is great, probably "transparent fund" would be more descriptive.


I'll have to add this to the list of changes for GLBSE

Groovy! Yeah, I like "transparent fund" better as well.

I updated the OP to reflect the new name.
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May 24, 2012, 06:36:50 AM
 #8

trust can be 100% assured.
Not quite 100 %. As Stephen Gornick has pointed out, a fund manager could create another GLBSE asset "SCAMS-R-US" and use the registered fund's funds to buy it and cash out.

I'd like to see more options for collaborative assets, where certain actions require m or n directors to approve.

cytokine
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May 24, 2012, 07:59:55 PM
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trust can be 100% assured.
Not quite 100 %. As Stephen Gornick has pointed out, a fund manager could create another GLBSE asset "SCAMS-R-US" and use the registered fund's funds to buy it and cash out.

I'd like to see more options for collaborative assets, where certain actions require m or n directors to approve.

Good point, I didn't think of that; I'm not sure how that potential can be eliminated.
Sukrim
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May 25, 2012, 11:06:40 AM
 #10

You could display the assets the fund is currently invested in, the amount + price of trades however only get released after a set time (between 0 and 28 days). This would at least immediately show that something fishy is going on.

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cytokine
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May 29, 2012, 08:27:18 PM
 #11

Another thing I just realized - this feature will have the side-effect of making the GLBSE safer from hacking ( actually "cracking" is the correct term, but the stupid media ruined the word "hacker"...). Even if a fund owner's account was compromised, the cracker would not be able to directly withdraw from the fund.

They could still, of course, withdraw from the fund owner's account or trade into a "dummy" fund, but that would be much harder to do.
Francesco
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September 11, 2012, 11:27:51 PM
 #12

Umh... bump?
I mean, really.

Half the Bitcoin investment world is crumbling under our feet, and I am surprised the major economical activity left is not betting on who will go burst next.

Why that? Because people where claiming to have assets to guarantee the investments... and now it turns out they had everything with Pirate. People investing with them were essentially buying a black box; and it turned out to be empty.

Now people are starting to tell investors what's in the box. MOVETO.FUND was one of the first that I recall, and now also NYAN, Flying Dutch etc. publish regularly a spreadsheet of their situation. But they could be lying. Madoff started his massive Ponzi by falsifying the books of his hedge fund -in spite of being on a very regulated market.

Now that the Pirate story ended this bad (and with other 7%/w dark boxes ready to take his place, like OBSI.HRPT), who will ever trust anyone with his money anymore?

This is the answer!  Smiley Cytokine was really ahead of time. There is something we can trust, after all (if they create assets for their backings, and make a transparent fund out of them): it's you GLBSE showing us they really own the assets they claim, and guaranteeing month after month they are still there; ready to be locked and really and transparently used to pay back investors if things go bad.

If you could also verify the assets are trustworthy (maybe that's what you plan to do with blue market? asking for instance mining bonds to direct that much hashing power to a dummy pool, to prove ownership), then the GLBSE could be the force that drives the entire market out of this swamp of black boxes and disappearing trust. I guess in the current confused market situation the ones jumping on ship would set a high bar and be greatly rewarded by investors for this, so a new transparent standard would be soon imposed.

This needs to be done, imho.
Nefario
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September 11, 2012, 11:37:09 PM
 #13

I don't agree on an issuers accounts being made open to everyone, however there is a need for more transparency.

This is why there are now 3 markets on GLBSE, with Blue requiring a treasurer and an external auditor to approve the books.

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Francesco
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September 12, 2012, 05:54:58 PM
 #14

Blue requiring a treasurer and an external auditor to approve the books.


Great! Can't wait to see it populated.
flower1024
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September 14, 2012, 09:22:21 AM
 #15

This is actually a really great idea, I don't think the name registered fund is great, probably "transparent fund" would be more descriptive.


I'll have to add this to the list of changes for GLBSE

+1

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