BitShares Forum
Main => General Discussion => Topic started by: Xypher on January 02, 2016, 10:06:26 am
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Ever since I came across crypto's I have been fascinated about the offerings it makes to the masses. When I look at the blockchain, I see a symbol of rebellion crafted in the heart of the recession of 2008, created as the ultimate weapon designed to empower the average individual to live his or her life with liberty and freedom without being subject to the manipulation of government, religion or banks. The transparency of the blockchain, the cost-effectiveness of transfers and the ease of 24/7 remittance without being independent on 3rd parties are each indicators of the way e-commerce would be in the 21st century : Independent of a central authority and empowering to those using it. However, when we look at the past 5 or so years of crypto, the trends have not been the way the founder of Bitcoin probably envisioned it to be. To begin with, we have the constant hacks and theft from centralized exchange, then there's the block size debate that's rampant with Bitcoin as of now and amongst alt's there's the constant challenge of attaining scale and profitability while staying legal. Fundamentally, when I look at systems like NXT and Bts, post their cheap remittance prices, and quick tx times, the most beautiful aspect I see is the DEX - especially when it comes to UIA's and AE's . This post suggests a means to garner legitimate activity on the decentralized markets while ensuring investor funds are well taken care of.
The primary challenge with a UIA / Asset is ensuring organizations behind them stay legitimate on the long run. In a large number of cases ,investors are often aware about the happenings of the organization and possess very little control over how the money will be utilized by organization. One of the means of verifying legitimacy is by providing company details to those investing. However, this provides very little control on the company and due to the same founders are almost free to do whatsoever they please with the funds they have. If we look at the history of crypto-oriented IPO's there have been in numerous cases where founders have almost shown zero accountability in regards to the funds raised and investors are left dumbstruck as to what's truly going on.
However, it also needs mention that the UIA / Asset exchange is a key player in how economics and capitalism itself might work in the 21st century. It decentralizes the way companies raise funds and individuals buy into organizations. If an organization seems fairly legit and largely successful then non institutional investors should be able to trade and buy into the shares of the organization without having to go through the hassle of going through funds or heavy capital requirements. As of now, most of our work is oriented towards bringing the banks and NASDAQ like organizations onto the blockchain, but what if...things weren't like that ?
What if individuals here could buy into a possible unicorn or start-up raising seed stage capital from a major accelerator ?
What if shares that are currently only with FII's (foreign institutional investors) were made available to investors here ?
What if you could go long / short just like we've been doing with existing market pegged assets ?
This is an early stage proposal for what I think is a good direction to head in.
1. A hedge fund is set up with investors from the community
2. AML/KYC requirements are taken care of via 3rd party integrations (Jumio ? )
3. The fund manager speaks with FII's and Accelerators about purchasing shares with money from the hedge fund
4. Shares are listed on the DEX for purchase.
5. Prices fluctuate depending on PR / announcements of the start-ups.
6. As more individual investors buy in - to buy into Unicorn start-ups, the underlying currency appreciates in value.
My proposed solution definitely has its flaws. To begin with , here are some
1. The hedge fund could go rogue and run away with people's money
2. Untimely setting up of deals with FII's and accelerators could cause issues
3. The FII and the hedge fund could go rogue with insider trading
4. Market crashes are a given (Imagine ever note shares being on the DEX now)
5. Whales will hold on to their cash to see it appreciate in value
6. Trading fees could be an issue (but hey there's FBA)
7. Anonymity will not always be possible
8. Professionalism of the highest order will be needed from the hedge fund manager.
What am proposing is a means to buy into start-ups that range from seed to pre-ipo - depending on the amount of capital available.
I will soon be in talks with accelerators and FII's in regards to investigating the legalities and possibilities in this direction.
In case you'd like to make a joint effort, please do ping me via PM or e-mail xypher@null.net
P.s - I understand this is a very flawed "napkin" concept as of now - and will take atleast 3 months to come into something that's solid / viable. This thread is solely for discussing the challenges and possibilities involved.
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Additional Question : Would it be smart to set up an offshore entity / fund - trading shares in mainstream / public market stocks - on the Dex ? Say the fund buys shares - and lists them on the dex and then permits the market to fluctuate in accordance with the market variance. Am talking about being inclusive of publicly traded stocks .Would individuals want to buy into it?
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Additional Question : Would it be smart to set up an offshore entity / fund - trading shares in mainstream / public market stocks - on the Dex ? Say the fund buys shares - and lists them on the dex and then permits the market to fluctuate in accordance with the market variance. Am talking about being inclusive of publicly traded stocks .Would individuals want to buy into it?
I think dacx.com was doing this.
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Additional Question : Would it be smart to set up an offshore entity / fund - trading shares in mainstream / public market stocks - on the Dex ? Say the fund buys shares - and lists them on the dex and then permits the market to fluctuate in accordance with the market variance. Am talking about being inclusive of publicly traded stocks .Would individuals want to buy into it?
I think dacx.com was doing this.
Yes, but it slowly died out / I don't know what's going on with them off late.
The fund am talking of will probably work with mainstream investors, be non-anon and have individuals with prior experiences in banks .
Building something like this on top of BTS makes sense due to the speed of tx's and conf times.
There's also the Nxt Asset Exchange.
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Yes you can do public offerings of equity to the public now so there is a very good business opportunity here.
If you want to raise up to $1,000,000 in the US you will be able to use equity crowdfunding with Title III of the Jobs Act:
http://www.forbes.com/sites/chancebarnett/2015/10/30/sec-approves-title-iii-of-jobs-act-equity-crowdfunding-with-non-accredited/
If you want to raise up to $50 million you can use Title IV Regulation A+ of the Jobs Act. I call this the mini-IPO.
We plan to use the DEX for share management and fundraising in addition to angel funding. I encourage others to consider this route since Title III should be official very soon. It may be better to establish a relationship with a website like Crowdfunder.com, but there is an opportunity for a new crowdfunding business on the DEX as well. A lot of it is marketing, connections and distribution so it may be better to work with an existing crowdfunding website rather than creating it from scratch.
The hedge fund part of it can be done as well.. If you have less than 35 accredited investors you can use Reg D to create a hedge fund here in the US. I've explored this option some time ago. That's another business altogether if you want to create a fund to invest in cryptocurrencies or companies.