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Online Permie

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Let's say I have a stall at a farmers market where I sell my permaculture grown tasty food.
Demand is even greater than expected and I need some capital to expand.

Could I create a UIA 'farmstall' and then issue shares?
I am willing to sell up to 49% stake in my business so I send 51% of the shares to myself.
I then promise to get my customers to pay in bitAssets to a designated address that shareholders in my business can audit to check they are getting their fair share of profits.
Every week the profits are paid out to every 'farmshare' UIA.

To encourage customers to use bitshares I could offer to sell bitUSD from my phone to my customers so that they can pay to my auditable balance.
After selling lots of bitUSD I would then have a lot cash on hand that I could buy bitshares from the public with. So that at the end of every day I would be 100% crypto.
Even if no money is made on the spread I have solved the problems of cash storage, simplified my accounting, exposed new users to bitshares and attracted bitAsset sellers to my stall to impulse buy.

I understand that this might classify my stall as a money transmitter. Is there a way to get around this? Could I only buy/sell 'coupon' type UIA's that I then sell immediately for bitUSD on the DAC to get around this?

Instead of being a USD/bitUSD exchanger, become a USD/coupon(not money)UIA gift voucher exchanger. Perhaps this is another advantage bitshares has over bitcoin.
You can buy and sell numerous classifications of assets to get around legal troubles.

Is this a valid use case for BitShares?
If so, I think it would be good if we can have templates for how businesses can integrate and why they should
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Offline fav

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I understand that this might classify my stall as a money transmitter. Is there a way to get around this? Could I only buy/sell 'coupon' type UIA's that I then sell immediately for bitUSD on the DAC to get around this?


I wonder how they do it in NXT legally - there are some profit sharing companies. coinomat.com comes to mind, it's an exchange. maybe you will find an answer/ideas there and make a precedence for BTS?

Offline xiahui135

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there are many businesses in NXT which pay dividen.
And I hold some share of two via the asset exchange. I receive dividen from LIQUID, MMNXT now. And some other asset promise to pay dividen in the future, such as the decentralized exchange InstantDEX. I think Bitshares can do these too.

Offline BunkerChain Labs

You can call it a coupon if you like, but what you are describing in terms of the utility you are applying to it is clearly a security. Soon as you start talking about dividens and shares in profit and the like, you are selling a security, and given you are talking bitUSD I will assume you are referring to operating in the USA. So you are going to have to register your security with the SEC. So long as you do that and comply to all their regulations, you are going to be ok.

You mentioned coupons.. I have gone to lengths developing just that in the bunkershares offering. I am very careful and very clearly illustrate that it is NOT a share in the company and doesn't provide any kind of share in profits. It is a token, a voucher, that can be bought and sold for product.

I don't know the farming industry well enough to advise, but I would imagine there is a similar opportunity to utilize UIA with your customer that would be delivered in the form of vouchers to provide discount purchase. A 10% savings on their PO constitutes a 'payout' so to speak.

Hope this helps.
« Last Edit: May 12, 2015, 02:06:51 PM by DataSecurityNode »
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Online Chuckone

How complicated legally would it be to basically sell those UIA as vouchers for a part of the future production instead of selling it as shares that will entitle the owner to a share of the profits? Similar to what crowdfunding sites do. Let's say someone bought a voucher worth 5$ and in exchange of that UIA in the future the producer commits to send a basket of fruits and vegetables?

It could only be done locally in that particular case, but it would bypass the fee required by crowdfunding sites (not sure if there's an advantage VS the fees to create a UIA).
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Offline BunkerChain Labs

How complicated legally would it be to basically sell those UIA as vouchers for a part of the future production instead of selling it as shares that will entitle the owner to a share of the profits? Similar to what crowdfunding sites do. Let's say someone bought a voucher worth 5$ and in exchange of that UIA in the future the producer commits to send a basket of fruits and vegetables?

It could only be done locally in that particular case, but it would bypass the fee required by crowdfunding sites (not sure if there's an advantage VS the fees to create a UIA).

I have created something to facilitate just that I call SAFE.. Synchronized Asset Futures Engine. It will be part of the bunkershares opportunity as well.

What you are describing sounds perfectly OK as it is a straight forward barter transaction.

You UIA could be sold at a set price for the futures and then redeemed for product within the SAFE system where they would redeem their UIA for the fruit basket in your example.

You are on the right track with how UIAs can be used without complications and with greater utility than any stocks or shares could ever offer! Keeps the SEC in their chairs instead of at your door too. ;)
« Last Edit: May 12, 2015, 02:05:36 PM by DataSecurityNode »
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Offline maqifrnswa

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This isn't a money transmistter problem, this is a securities problem - like datasecuritynode is discussing.

Read up on:
http://www.sec.gov/news/pressrelease/2015-49.html
http://www.sec.gov/rules/final/2015/33-9741.pdf

Summaries:
http://www.crowdfundinsider.com/2015/03/65007-the-reg-a-bombshell-50m-unaccredited-equity-crowdfunding-title-iv-takes-center-stage/
http://www.forbes.com/sites/chancebarnett/2015/03/26/infographic-sec-democratizes-equity-crowdfunding-with-jobs-act-title-iv/

The next problem is whether or not using bitshares as an exchange is authorized for SEC A+ securities. If you use whitelisting on the blockchain, it is a gray area (you could claim that you are running an internal exchange to keep track of your crowd funding and just using bitshares as your ledger - maybe that's ok?)


As for coupons, you are describing a "CSA" (community supported agriculture):
http://www.nal.usda.gov/afsic/pubs/csa/csa.shtml
http://en.wikipedia.org/wiki/Community-supported_agriculture

That is easier and CSAs are totally legal. Pre-season you sell shares and every week you redeem shares for produce. That should actually be able to be done on bitshares (i think, but IANAL). The farmers markets where I've lived have lots of farms doing that, and I've bought shares before (and ended up with more collard greens than I know what to do with some weeks!)
« Last Edit: May 12, 2015, 02:00:09 PM by maqifrnswa »
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Online Permie

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Quote
That is easier and CSAs are totally legal. Pre-season you sell shares and every week you redeem shares for produce. That should actually be able to be done on bitshares (i think, but IANAL). The farmers markets where I've lived have lots of farms doing that, and I've bought shares before (and ended up with more collard greens than I know what to do with some weeks!)
That sounds much better.

Perhaps every industry will get used to pre-ordering products.
With 3D printing on the rise I can imagine the market will allow for more specialised products made to order with a bulk order discount if you're willing to wait for x other customers to commit to the order.
This is where you'd use the UIA to represent a product that will be produced in the future once a threshold number of UIA's have been bought. (This assumes that it is still cheaper to make items in bulk.)

A wholesaler may want to purchase a bulk stock of these UIA's and can hold the products 'in inventory' without actually needing to have physical storage. They have the products on the books and can plan their physical stock requirements as needed.
Advertisers who see potential in the product could also buy bulk UIAs with the expectation that they will sell that UIA to a customer for a profit before the UIA has been redeemed for the physical item.
A brick and mortar store expecting to make a physical sale of a product in the near future could then swap the UIA for the product just days before they expect to make a sale and their warehousing requirements are kept as efficient as possible.

Could a system like this make the manufacturing industry as a whole more efficient?
Companies may even be able to insure themselves against a fire in their warehouse.
By purchasing UIAs of all their stock and then selling the UIA back to the market as they make physical sales. Perhaps there would be some way for a large warehousing company could 'make the market' for UIA products that they house and also provide insurance.

Due to the time required to deliver physical goods these systems could only work if UIAs were adopted at very local levels. Small businesses would need to be incentivized to issue UIAs of their stock and future product lines.

Does anyone else think this is something possible with User issued assets?
« Last Edit: May 12, 2015, 02:25:49 PM by Permie »
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Offline maqifrnswa

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Now you're describing a commodities futures contract  ;)

http://en.wikipedia.org/wiki/Futures_contract

What I like about bitshares is it brings all these existing financial instruments to the scale of small business owners. And regulations are adapting simultaneously to allow such integration of bitshares with this concept of small-business securities/crowdfunding and you're right - why not get access to other instruments? Futures are definitely one that many small businesses could use for insurance/leverage that is more efficient and cheaper than their current alternatives.

Once turing complete scripting is implemented, there is nearly an infinite number and type of contracts that can be traded. It will be interesting to see what people do.
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Offline luckybit


I understand that this might classify my stall as a money transmitter. Is there a way to get around this? Could I only buy/sell 'coupon' type UIA's that I then sell immediately for bitUSD on the DAC to get around this?


I wonder how they do it in NXT legally - there are some profit sharing companies. coinomat.com comes to mind, it's an exchange. maybe you will find an answer/ideas there and make a precedence for BTS?

You can do it but it would have to be a cooperative or a decentralized collaborative organization and not a traditional business.
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