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Offline wesphily

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Bitshares and LLC
« on: January 20, 2015, 03:22:46 AM »

Hello,

I have been spending a lot of time learning everything I can about real estate from a veteran in the field. I am now in the phase of creating a business plan. My intention is to create a LLC that will invest in real estate. Is it legal to sell shares in a company through bitshares if it is a LLC? If it is not legal then is there a creative way that I could incorporate bitshares to increase investment leverage?

If this is not the correct place for this then please feel free to move the post

Offline toast

Re: Bitshares and LLC
« Reply #1 on: January 20, 2015, 04:04:04 AM »
Bitshares provides you with the tools you need to legally issue shares of your company onto the BTS blockchain. In particular, you need to have the ability to whitelist keys and freeze share transfers and trading.

There's not really a "shortcut" to going around the laws you need to follow for a traditional security. The few business models that can be fully "DACified" are rare, and real estate investing is not really one of them.
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline wesphily

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Re: Bitshares and LLC
« Reply #2 on: January 20, 2015, 04:35:10 AM »
I definitely do not want to get around laws. My goal is to increase my leverage so that I can do larger and more profitable deals. I am hoping that I can utilize bitshares in some way to accomplish this.

Why would real estate not be "dacafiable?" There are several publicly traded real estate firms.

Offline toast

Re: Bitshares and LLC
« Reply #3 on: January 20, 2015, 04:40:31 AM »
I definitely do not want to get around laws. My goal is to increase my leverage so that I can do larger and more profitable deals. I am hoping that I can utilize bitshares in some way to accomplish this.

Why would real estate not be "dacafiable?" There are several publicly traded real estate firms.

Basically you're looking to issue your equity onto a blockchain. You can do that!

Being publicly traded doesn't make your company decentralized or autonomous. You will still be a traditional centralized company with a traditional centralized incentive structure, you'll just have your shares use hip new technology instead of being listed on NASDAQ.
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline wesphily

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Re: Bitshares and LLC
« Reply #4 on: January 20, 2015, 04:51:14 AM »
I definitely do not want to get around laws. My goal is to increase my leverage so that I can do larger and more profitable deals. I am hoping that I can utilize bitshares in some way to accomplish this.

Why would real estate not be "dacafiable?" There are several publicly traded real estate firms.

Basically you're looking to issue your equity onto a blockchain. You can do that!

Being publicly traded doesn't make your company decentralized or autonomous. You will still be a traditional centralized company with a traditional centralized incentive structure, you'll just have your shares use hip new technology instead of being listed on NASDAQ.

That's exactly what I want to do. The reason I'm not going to be listing on Nasdaq/S&P 500/whatever is because my company would not qualify. It could qualify on bitshares though. It would enable a small business like mine to conquer larger deals while returning decent profit to serious investors.

However, would this idea be completely dismissed since the company itself would not be a dac? Has anybody else discussed an idea like this?

Offline CryptoPrometheus

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Re: Bitshares and LLC
« Reply #5 on: January 20, 2015, 04:56:19 AM »
Is somebody working on a whitepaper for User issued assets? I too have been trying to find answers to  questions about their function and how they allow compliance with securities laws.
"Power and law are not synonymous. In fact, they are often in opposition and irreconcilable."
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Offline toast

Re: Bitshares and LLC
« Reply #6 on: January 20, 2015, 05:08:56 AM »
Is somebody working on a whitepaper for User issued assets? I too have been trying to find answers to  questions about their function and how they allow compliance with securities laws.

http://bytemaster.bitshares.org/article/2015/01/09/Overstock-to-Crypto-Stock/
Do not use this post as information for making any important decisions. The only agreements I ever make are informal and non-binding. Take the same precautions as when dealing with a compromised account, scammer, sockpuppet, etc.

Offline wesphily

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Re: Bitshares and LLC
« Reply #7 on: January 20, 2015, 05:12:18 AM »
Some people create a new LLC for each deal depending on if the same partners are used are not. LLC is popular due to no double tax. Would it be ideal to create a new asset for each deal? I could setup the terms so that investors know exactly what they could return.

The only downside is that I'm not sure how to make it trustless. I'd have to somehow prove to others my intent to perform.

Offline cube

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Re: Bitshares and LLC
« Reply #8 on: January 20, 2015, 05:30:17 AM »
Some people create a new LLC for each deal depending on if the same partners are used are not. LLC is popular due to no double tax. Would it be ideal to create a new asset for each deal? I could setup the terms so that investors know exactly what they could return.

The only downside is that I'm not sure how to make it trustless. I'd have to somehow prove to others my intent to perform.

Even though LLC can avoid the so-called 'double tax', a corporation will give you better legal protection.  The entity is separate from the individual.  A corporation issues shares and you can use bitshare as a tool to issue share as tokens.  You can use the user-issued-asset for this or you can have your own bitshare tool where each 'bts' is treated as a share in your corporation.
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Offline wesphily

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Re: Bitshares and LLC
« Reply #9 on: January 20, 2015, 12:44:28 PM »
Some people create a new LLC for each deal depending on if the same partners are used are not. LLC is popular due to no double tax. Would it be ideal to create a new asset for each deal? I could setup the terms so that investors know exactly what they could return.

The only downside is that I'm not sure how to make it trustless. I'd have to somehow prove to others my intent to perform.

Even though LLC can avoid the so-called 'double tax', a corporation will give you better legal protection.  The entity is separate from the individual.  A corporation issues shares and you can use bitshare as a tool to issue share as tokens.  You can use the user-issued-asset for this or you can have your own bitshare tool where each 'bts' is treated as a share in your corporation.

That may be the only true way. It is many times more cumbersome/regulated/expensive to do though. My hope is that bitshares has the power to enable people on the lower end of the spectrum. If it can't then I'll need to wait for a feature/coin that can if it ever exists. "Doing for business what bitcoin did....." I'd like to believe small businesses were thought of in that quote. The first coin that can incubate small businesses will easily beat out other coins.

Offline bytemaster

Re: Bitshares and LLC
« Reply #10 on: January 20, 2015, 01:08:31 PM »
Bitshares can do your accounting and track property rights, but it cannot make it trust free. 
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

Offline xiahui135

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Re: Bitshares and LLC
« Reply #11 on: January 20, 2015, 01:16:30 PM »
What will happen if someone lost his/her token? In real world, you can get back the account will your ID card or other things. it is dangerous to use bitshare because once one's computer is hacked and the shares will be lost and could never get back.
Can some give solutions to solve this problem?

Offline wesphily

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Re: Bitshares and LLC
« Reply #12 on: January 20, 2015, 01:47:54 PM »
Bitshares can do your accounting and track property rights, but it cannot make it trust free.

I understand how it can do accounting. How can it track property rights?

Offline wesphily

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Re: Bitshares and LLC
« Reply #13 on: January 20, 2015, 01:56:39 PM »
What will happen if someone lost his/her token? In real world, you can get back the account will your ID card or other things. it is dangerous to use bitshare because once one's computer is hacked and the shares will be lost and could never get back.
Can some give solutions to solve this problem?

This is a unique problem to crypto shares. There most likely is not a solution that you would like. I expect that it would mean that you just lost a lot of uninsured money. You could try to use law to find and sue the guilty party, but the chances of that being successful or almost -%.

Offline bytemaster

Re: Bitshares and LLC
« Reply #14 on: January 20, 2015, 02:28:58 PM »
What will happen if someone lost his/her token? In real world, you can get back the account will your ID card or other things. it is dangerous to use bitshare because once one's computer is hacked and the shares will be lost and could never get back.
Can some give solutions to solve this problem?

This is a unique problem to crypto shares. There most likely is not a solution that you would like. I expect that it would mean that you just lost a lot of uninsured money. You could try to use law to find and sue the guilty party, but the chances of that being successful or almost -%.

With new UIA system you can white list owner accounts which will prevent theft by strangers and who ever is in charge of "the books" can retain full control over all shares.  As long as they don't lose their cold multi-sig keys then it should be fine.

That said, this market is very young and immature so use at your own risk.
For the latest updates checkout my blog: http://bytemaster.bitshares.org
Anything said on these forums does not constitute an intent to create a legal obligation or contract between myself and anyone else.   These are merely my opinions and I reserve the right to change them at any time.

 

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