Concept: A Bitcoin-based Stock Exchange, Sans GLBSE
Nefario's GLBSE failed due to the stocks being centralized and poorly managed. What inspired Nefario was the fact that Bitcoin makes this possible when it wasn't before. You can't trade US dollars and other currencies on the web like you can with Bitcoin; especially with an unregulated stock exchange. However, his concept has problems of its own. Let's say somebody took the GLBSE concept and revamped it with a better website to trade the stocks with: Instead of the stocks being tied to one exchange, they are issued through independent blockchains much like Bitcoin's. So, if an exchange closes for whatever reason, companies and individuals can retain control of their stocks and choose to trade them however and wherever they please. Of course all stocks and securities would be managed through one sensible user interface; all else remaining independent. To me, this is the obvious solution. The real question is if there is a place in the darkweb (it won't thrive elsewhere) for unregulated Bitcoin-based stocks and securities? Do people truly want this?
Are there any private stock exchanges that deal with Bitcoin exclusively?
I think a neat idea would be to create a dark pool or private trading company that brokers shares only with Bitcoin. Independent companies could choose to become listed, the incentive being that they do not need to rely on the (centralized) dollar. Does anyone know if anyone has created something like this? Additionally, while this idea is not completely decentralized, has anyone created a completely decentralized stock exchange based on the blockchain? Any and all input is greatly appreciated.
ICO's are the new IPO's. Making Ethereum the new GBLSE
First, I may need to provide some background, as many of you may not have been around in 2012 and 2013, so you may not remember GLBSE, BTC.TC, havelock, bitfunder and a few other "bitcoin stock exchanges". On those exchanges, companies could list securities like company shares and bonds, which where traded for bitcoin. Initially, mining bonds where the most popular security, allowing people to invest in bitcoin mining without having to own and operate any hardware, while allowing miners to raise capital and sell off the risk of future difficulty increases. Revenue from mining was then paid to bond holders as "dividends". In theory, a sound concept and the precursor to cloud mining. In practice however, these bonds quickly became a mania. They where trading at prices that made no economic sense at all, anyone with a calculator could easily see it was impossible they would yield a positive ROI. Miners and scammers quickly caught on to that, and sold more bonds then they had hardware for. But they kept rising in price, and people kept buying them, expecting to sell them later with profit. Soon after, all kinds of companies launched IPO's on these exchanges. Some where legit, many dubious, most where pretty obvious scams. It didnt matter, IPO's where as much a hype as ICO's today, and virtually never failed to sell out in record times, raising millions of dollars. Almost nothing was scrutinized, anyone scammer with a tiny amount of photoshop knowledge or anyone promising to achieve some ridiculous ROI had no problem raising millions. After the companies, came the investment funds. Someone raised bitcoins through an IPO, and used that money to trade in other securities listed on that same exchange. Then they launched a second IPO for another fund, and used fund A to buy shares in fund B, and fund B to buy shares in fund A. Prices went through the roof. You couldn't make up stuff like that, it was hilarious. Almost nothing that was traded on those exchanges, had any real value. A few notable exceptions include Asicminer, which raised money to develop an asic, actually managed to get it produced as one of the first ever bitcoin mining asics, sold in large quantities and made a huge profit, paying back investors through dividens many times the IPO value. It was the largest success story by far, but even that ended with an exit scam when the anonymous founder ran off eventually. Around 2013, the SEC intervened, closed a few of the largest exchanges, charged and fined some of the operators and issuers. Other exchanges collapsed or vanished. Tens of thousands of BTC where lost. Im not aware of any company that was launched on any of those exchanges that still operates, except for the gambling site satoshidice (which was among the ones fined by the SEC). What caused this to happen? The enormous rise in value of bitcoin created a group of early-investor millionaires, who believed in crypto currency, who where accustomed to double or triple digit gains in a very short time and who had money to burn. Many of them got rich "by accident", not because they did a lot of due diligence or understood the risk/rewards or even the technology. This gullibility was clearly seen with Trendon Shavers aka Pirateat40, who at that time operated a gigantic, half million bitcoin ponzi scheme by promising 7% weekly returns. These people where very likely to invest large sums of money in risky crypto related startups, expecting a repeat of the success of their early bitcoin investment. This created a self fulfilling prophecy where IPO's always succeeded, prices always went up, creating gigantic bubbles. Fast forward a few years. Besides bitcoin millionairs, we now have ethereum and a few other altcoin millionaires. Instead of IPO's, we now have ICO's. Instead of GLBSE, we have ethereum as the enabling platform. Instead of tradeable funds, we will soon have things like iconomi. Instead of bubbles created by funds investing in each other, we will have blockchains that are denominated in each other. And instead of thinking security regulation can be avoided by denominating an investment in bitcoin, we have people thinking regulation can be circumvented by calling something a token. Am I the only one having a terrible deja vue?
An Insiders Take on CoinTerra & the Bitcoin Mining Sector
Having been involved in Bitcoin since 2011 and on the inside of one of the 28nm Bitcoin mining contestants for the past two months, here is my story. Feel free to skip the long intro to skip to the present: I added it because people might want to know where I'm coming from. My elevator pitch is that I discovered Bitcoin in 2011 while traveling in Argentina, and after doing research I started recommending it as an investment to the subscribers of my financial newsletter in early 2012. BTC was $5 back then, so we did well with that. Here are some links of the things that I've done in Bitcoin:
Since the beginning I've been thinking a lot about how I wanted to invest in Bitcoin. It has always made plain sense to me to begin with buying coins, as it is like an ETF on the entire Bitcoin economy. However, in early 2012, just the idea of buying bitcoins was a pretty scary prospect. I consulted with two core developers who actually tried to dissuade me from looking at Bitcoin as an investment. One said it was still very much an experiment, the other said (correctly so) that there were still substantial security risks. Eventually it was my experience in Argentina's difficult economy (rife with currency crackdowns and capital controls) that convinced me to take the leap - I decided that there was enough demand and enthusiasm for financial freedom in the world. Enough for some crazy people to keep funneling resources into Bitcoin, resources that would support the idealist hackers and maverick entrepreneurs to make the technology of cryptocurrency a success. So I started buying bitcoins, considering myself lucky because my friends in Latin America had it much tougher: they had to mine most of their cryptocurrency in their basement with graphic cards because of the harsh capital controls that prevented them from sending money abroad and buying them on an exchange. In all, 2012 was a difficult year for Bitcoin. The 'old' bitcoiners were still psychologically numbed from the huge decline in price, and the newbees were continually scared by new scandals: the Bitcoinica thefts in May and July, the BTC Savings and Trust-ponzi implosion in August, and the Bitfloor theft in September. The price of Bitcoin hovered between $5 and $13 all year, the mainstream media ignored or at best scorned Bitcoin, and I for one was mostly happy to still have an unscathed wallet. Throughout the year I wrote about Bitcoin practically every week in my email updates and every month in my printed investment newsletter. It was often a frustrating job, because my many of my subscribers are babyboomers or from an older generation who don't intuitively grasp the concepts of peer-to-peer, open source, online, etc. I received a good number of emails accusing me of promoting a ponzi scheme, and my publisher (who does all the promotion for the newsletter) was very sceptical and tried to persuade me to write less about Bitcoin and more about traditional investments like gold and stocks. I think this tension/struggle is part of what prevented me from exploring the investable side of the Bitcoin economy for quite a while, although I did buy a few Bitcoin mining stocks on the GLBSE. (Compliments to the miners that kept paying out dividends even after the wild ending of this stock exchange - COGNITIVE is one of them) Attending the Bitcoin London conference organized by Amir Taaki in late 2012 was definitely a turning point for me. Cryptocurrency suddenly became tangible and real, and I think that was the case for many people there. During Amir's conference, I made friends with Jim from MultiBit and Nejc from BitStamp. I likely missed an investment opportunity with BitPay (even though Tony Galippi was just as impressive back then as he is now), and I tried to persuade GLBSE's Nefario to start talking to a lawyer about the legal risks of running a Bitcoin denominated exchange. Josh from Butterfly Labs made an announcement there in London, and that was my first experience with the excitement and controversy that characterizes so much of the Bitcoin mining industry today. Meanwhile my investment newsletter kept doing well, and I decided to make a move to South America to expand my horizon. That's how it happened that I was with my friends in Buenos Aires when the March-April 2013 explosion in price happened: an exhilarating time, and I'm still grateful for their long term Bitcoin experience which helped me make the right decisions for myself during this period. Still I kept thinking about how I could invest some of my gains back in the Bitcoin economy. Chasing a dollar profit doesn't make sense to me, so I had to identify business models that gave perspective for making a multiple on my bitcoins. Bitcoin mining felt like an interesting fit, for several reasons. First, I spent the past few years studying the gold mining industry and the parallels and differences with Bitcoin mining are absolutely fascinating to me. Next, in the short run I am not at ease regarding the authorities ability to attack or destabilize the BTC network. Many will object by saying that the Bitcoin network has a hashrate that's currently 40 times faster than top 500 supercomputers combined. However, that is misleading because the equation would change dramatically if those computers were equipped with specialized ASICs that can be produced for a couple of million dollars. This is what Jim Rickards referred to when he said "technologists don't understand the world of power politics and malicious actors: there are people who don't care about the cost. (…) If they want to destroy a system, and they have to pay to do it, they'll do it. It's not necessarily more expensive than buying an aircraft carrier or building a submarine." This is the reason why I think it's crucial to push up the network speed as close to the physical limits as possible. Once the miners are working on the smallest node and with the most efficient chip possible, it will be much more difficult for a malicious entity to do a 51% attack on the network. (By the way, much respect to the small bitcoiners and basement miners for this: they are the ones that have been bankrolling the expensive development of ever more sophisticated ASIC chips. They are the ones that are slowly turning the once brittle skeleton of the Bitcoin network into an indestructible Adamantium shield.) Finally, it seemed obvious to me that the Bitcoin mining market was about to enter a consolidation phase, in which the market would increasingly sponsor the more reliable and technically gifted chip producers, which will eventually create a more stable environment for everyone. How exciting, to try and witness from the first row how an entirely new industry grows from childhood/adolescence towards maturity! Enter CoinTerra. I first met Ravi Iyengar and his team members at the San Jose Bitcoin conference, where they pitched for an angel investment in their company. I was immediately impressed by their passion, technical pedigree, and understanding of the workings of Bitcoin. I was definitely intrigued and after the conference we kept the communication lines open. Back in Belgium I met with two interested angels who happened to be Belgian, too. I then talked to different people with hardware backgrounds to verify whether Ravi's team really was that good judging by the industry standards. They were. I started getting excited. From there on, things began moving fast. The two Belgians got in and the more I talked to Ravi, the more I was impressed with his cogent reasoning, his decisiveness, and the speed by which he absorbs large amounts of new information. By mid July I finally made the decision to also come in as the third angel investor in CoinTerra. When I talked about the company to Timo Hanke (German cryptographer and author of the Bitcoin Pay-to-Contract protocol) he was intrigued, did his own due dilligence, and soon after became an investor in, and later a team member of CoinTerra. Other investors and advisors that came in on the angel round had reputable backgrounds in the software and hardware industries, precious metals, telecom, and law - all of whom shared a great and genuine passion for Bitcoin. I began feeling very fortunate to be able to follow this project from such a close perspective. After some days, because of Ravi's high energy and magnetic enthusiasm, the following turned into involvement. When I was invited to come to Austin, Texas to help out, I jumped in with both feet - I've been here for a week now. One thing I noticed when getting involved with CoinTerra more closely, is that the communications part of the equation needed improving. I can understand how the issue came to be. Ravi is in the first place an engineer and a team leader, and he started structuring his company from that same perspective. Even today most of his focus is directed to closely managing all the engineers (in Austin, in Raleigh, and also in India) to make sure that the risks involved are managed to the greatest possible extent. The engineering roots of CoinTerra are also reflected in the initial vision behind the company: to build large and efficient mining data centers, deploy them worldwide, and to then offer cloud hashing services to the public. However, the still uncertain legal repercussions of that lead to a change in strategy. Instead, CoinTerra is now working on providing chips and rigs for the general public, and leaves it for the customers to decide where and how to mine with them. Now, I understand and appreciate how very skeptical a large part of the Bitcoin mining community has become. People have invested a lot of resources in brave but often very inexperienced teams who have not always been able to deliver on their promises. It has been a road of trial and error, and the errors of some have proven painful to many. I can say that I understand what it means to have skin in the game of the mining market; I am an investor in a company that has announced but not released a manufactured product on the market yet. And I stand by it: I think CoinTerra is working on fantastic products and has great future potential as a company. Would I like to make a return on my investment? Of course, that will be the best proof that it fulfills the potential that I see in Ravi and his team. That said, even to just be involved in this technological arms race that is taking place in Bitcoin mining, where hyper competitive capitalism is miraculously creating a very pure public good, is a real privilege. I think the sector will further mature and that we will see more and more reliable companies emerge over time, and all the while the Bitcoin network will grow stronger and stronger. I'm happy to take questions if you are interested. Best wishes, Tuur
Colored coins (decentralized exchange): we need developers to complete client implementation faster
It is a bad thing because it bloats blockchain. The approach we use now puts no extra data into blockchain, it creates only ordinary Bitcoin transactions, which are not different from trade transactions. Vilifying colored coins for this reason makes as much sense as vilifying selling coffee for Bitcoins: if millions of cups of coffee will be sold each day, it will create a lot of blockchain bloat!
You should use a separate blockchain because it rustles my jimmies. Well, we use specifically the Bitcoin blockchain for a good reason: it enables trading securities for Bitcoins directly, with no 3rd party involved, and securely. This is what we want and this is what people want.
Namecoin was first! Yes, it was, so? Use of Namecoin names for trading has much higher overhead. It is outright impossible to create a private currency on top of it, for example.
But, cross-chain trade script. It exists, but it isn't as good as atomic coin swapping which we use.
Anti-dust patch killed colored coins. It made order-based coloring much less convenient, but we now use a more general theoretic model which allows us to use different 'color schemes'. Particularly, improved version of order-based coloring eliminates all inconveniences created by anti-dust patch.
Mixing and diluting problems. This can happen only if there is a bug in colored coin wallet. But you can lose your money if there is a bug in a Bitcoin client, e.g. some people managed to pay as much as 200 BTC in fees because client software forgot to include change output. At least with colored coins, if shit happens you can try to get compensation from an issuer, as it is easy to prove that coins were destroyed. And if he is kind enough, he will just send you replacement. Also, we now use better wallet architecture which will prevent problems like this.
I'm interested in buying bonds, but I don't know quite how it works. I have an account, but before I do anything, I want to know how long until the bonds will be paid back, and what it means (for gigamining) that they can be bought back [at any time for 1.05 percent ....]. Where can I go to find out everything I need to know? I don't really know how the real stock market even works.
Here's the cliff notes version. Diablo is a talented BitCoin developer who started a mining fund on the GBLSE. He initially offered shares with a valuation of 1btc each, which were to be used on future mining hardware and infrastructure purchases. Now it is apparent that he has likely not purchased any hardware, and he has been diluting value in a series of stock swaps reportedly as low as .0133btc/share. Usagi's post is a good jumping board into the topic. Shareholders have been demanding some kind of action by the GLBSE operator nefario. Just another train wreck to watch, I suppose, this one presumably not pirate related. Take it as another learning lesson/cautionary tale.
Please excuse me if this is a silly question, but if we put aside our love for the idea of a truly free market is there any significant advantage of the bitcoin based stock exchange over regular one? I see two obvious disadvantages, that's for sure.
No "insurance", whole thing can poof disappear with my money over night. Some companies are 100% anonymous! With no media to watch the market all an investor has is trust.. not a valuable thing these days.
Bitcoin exchange rate. How can I make a long term investment if I can't be sure of the real,actual value of the company I co-own. Won't speculation bubbles (I hope it's the right term, not a native speaker here, sorry)ruin the stock market repeatedly? Correct me if I'm wrong, but isn't there one in the building right now?
I have calculated ((amount of money/exchange rate)/stock cost*average dividend)52weeks that on the most popular stocks with about 300 USD I would earn only about 12USD. 4% annually.. What am I missing? that's not much.. I have 6,3% on a deposit account:p
EDIT 2: Oh right I got it. I forgot to multiply it back to USD. The money you earn isn't 4%, it's 84%! Unless the Bubble cracks.. What do you think? Oh, and btw - if anyone knows any good article on GLBSE please post link in the comments! GLBSE - https://glbse.com/ ;TLDR; Problem solved - it's about insane amounts of money
TL;DR - There are a small number of specific questions at the bottom I'd like some discussion on. As I've said before on this reddit, I'm in the process of planning a Bitcoin-based business. In short, I want to open a lingerie store with my wife. I live in an area with very low operating costs, and could probably find the investment through traditional channels for as little as we need. My concept, though, is to align the business with Bitcoin for mutual benefit. In all of our local advertising - radio, TV, and newspaper - we would mention that we preferred payment in BTC, thus increasing awareness in our region. Our online store would include prices in both BTC and USD, and include automated payment processing for both. We would heavily advertise to the tech-aware crowd, again raising awareness of Bitcoin in a key demographic. I'm also trying to find a supplier for our primary products that would take payment in BTC, even if only to convert it out to fiat currency on the other end. I'd like to be the first physical goods retailer with an entire supply line - from manufacturing to retail sales - run on Bitcoin. I've reached out to a few industry contacts in Somalia, China, and the Philippines to try and find a supplier. I figure that there are lots of Bitcoin enthusiasts out there with coins stockpiled, either as an investment for monetary gain or as an investment in the future of an alternative currency for political reasons. The latter's interests would be well served by investing a small portion of their holdings in a business like this, as our efforts would stimulate the real-world, non-speculative transaction volume for Bitcoin. I've seen the GLBSE, and I'm not too impressed with the site. The idea seems sound, though I'm still a little fuzzy on the mechanics. Is GLBSE a serious enough platform to handle this sort of venture? It seems like the daily transactional volume is measured in fractions of a BTC for most companies at best, but that doesn't tell the whole story in my opinion. I would also need to speak with an attorney before launching this, to be clear on the implications of accepting outside investment via Bitcoin. I know there are "qualified investor" rules surrounding stock issuance if done as a corporation, but I'm not sure anyone knows how or if those translate to a virtual currency. If there is no legal way to accept micro-investment from the Bitcoin community, I'm willing to ignore those laws if and only if it is acknowledged up front and all investors are aware of the risk before committing. I'm an Anarcho-Capitalist and firm on those beliefs - I am also very serious about honoring any contract I enter. If I am able to organize this within the law, then I will. If not, then I will do my best to identify specific laws potentially broken and the risks associated with that, and will not deviate from that plan. I am willing to make my identity known to investors via any reasonable means. There would be none of this "MyBitcoin" saga associate with any business of which I am a part. Finally, I do see this as am investment. I would be happy provide some level of mutually agreed-upon visibility into the books and day-to-day operation of this enterprise for the benefit of shareholders. While my wife and I would wish to remain majority shareholders, we would plan to cap our actual salaries at a very low level and take most of our profits via dividends, which would provide powerful incentive for us to make the shares a profitable investment - if you don't make money, we wouldn't make money. I'm interested in any insight anyone here might have into this concept. My specific questions include:
Are there any other businesses out there that have done something similar?
Has anyone dealt with taxation on transactions done in BTC?
Is GLBSE a viable platform upon which to build capital investment
If GLBSE is not suitable, would a private platform, based on Bitcoin, with the ability to securely buy and sell shares and receive dividends independent of a central exchange be an interesting proposition?
Has anyone dealt with establishing supplier relationships based on Bitcoin?
I have a unused security on the Global Bitcoin Stock Exchange that I could use for Civcraft Diamonds. Who's interested in selling their Diamond on consignment to dozens of investors?
http://glbse.com Basically, you transfer me your Diamond on Civcraft and I create stocks for them on the GLBSE at your price in Bitcoin, plus a slight fee for my time and paperwork. An investor or a Diamond buyer buys them on the stock exchange and I send you what is owed in Bitcoin. You can take that Bitcoin and use it to buy more Diamonds, convert them to USD/EUROs/etc. on http://mtgox.com. Let's say you buy Diamond stock on the stock exchange and you want to redeem them for actual Diamond on Civcraft? You simply email me at the email listed on the security, say you are making a redemption, you transfer me the securities and I bury your Diamonds at a hidden coordinates minus a set fee. Any questions, interest, thoughts?
Hello, I am new to Bitcoin and find it fascinating. So far I got a couple goals for today which is to build a web app that uses blockchain API and to actually get some bitcoins. In the meantime, I was wondering if I can get some help regarding basic BTC questions.
If you get an address, and have payments sent to you, how are people able to determine how much money you have? What steps do they do to figure this out?
The blockchain is not designed in a way where you can easily get information correct? You have to know more than python basics and have good programming skills as their seems to be no API, and no methods of just querying the data to get basic stats such as "latest transaction" or "biggest transaction ever"....
In order to get bitcoins, you have to have an address and a digital wallet. This digital wallet is 1 file and its upon you to encrypt it and keep it safe. If someone gets this file, you have lost your bitcoins and not getting them back. Many people back up their digital wallet. Is this correct?
When reading many stories about bitcoin theft, what is the usual gist? Dont most of these hackers get digital wallets that are encrypted? How do they make use of it, crack it...or its not encrypted at all?
What is one of the common thing/method that can drive bitcoin value up? What is one common thing that can drive bitcoin value down?
Can anyone name some people who sell products on a bitcoin market and make money? ie. someone who sells snacks, clothes...whatever....is anyone making money other than big shops who have lots of investment money such as Butterfly Labs or that cupcake store..... I am interested in smaller people making money etsy-style I guess...
What was GLBSE? I still cant even understand how the stock market...is GLBSE just people pooling bitcoins together and investing in other project/companies?
What is Bitfloor? It says trading bitcoin, but I have no clue what that means. And the site offers a dead link to explain it. Does it mean people have bitcoin they want to get rid of in exchange for what though?
Compared to all the crypto methods out there, what is Bitcoin's crypto considered? Is it military grade for example? A popular standard or something new and fresh?
Its highly unrealistic for people to think of methods on making Bitcoin illegal corrrect? It cant be stopped it seems...
Co-vestor is a website that lets you copy the investment portfolios of others. I suggest a site that will allow people to build private and public bots that trade in Bitcoin, related currencies and other assets (e.g. GLBSE stocks).
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