Individual Private Equity
I am considering creating a token of individual private equity.
Here's the basic idea:
- I'll create a token with a fixed supply, likely on BitShares. Let's call it d-token. 100% of the initial d-token supply is granted to my account 'd' on BitShares.
- There will be a fixed limit to how many d-tokens I can sell each month from the account 'd'. Perhaps this can be maintained as a smart contract, but otherwise it will be trust-based.
- At the end of each month, at my discretion I will spend an amount of money purchasing d-tokens directly from the market, at market price.
- At the end of each month, at my discretion I will burn an amount of d-tokens in my possession.
- Upon my death, as long as foul play was not involved, all my material and non-crypto wealth will be sold and the money used to purchase d-tokens from the market. Afterwards, all d-tokens in my estate will be burned. This part would be a binding legal contract (I would likely work with a lawyer on the details).
- At the same time, all crypto wealth I have shall be made irrecoverable. This is to counterbalance a potential incentive to bring about my early death, if my estate became valuable. As long as my crypto wealth is significant relative to my non-crypto wealth, and I am continuing to buy and burn d-tokens, it should be preferable to encourage my longevity rather than my demise.
- Fiduciary responsibility will be made very limited in this concept. There will be no responsibility to increase the value of the tokens quarter on quarter, etc. Instead the system will be intended to work on incentives and trust (this is not a trustless concept). I may have fiduciary responsibility to increase my net worth over the long term, to divulge honest estimates of my asset holdings (not necessarily going into details) and debts, to divulge any new debts I take on or if my net worth goes negative.
Are there any obvious flaws in this idea? And how would you address those flaws?
Great idea! Good luck
looks a great idea but it will not be that easy mate.
Tax planning may cause this mechanism to be less attractive for certain individuals. For example children of the deceased.
One other thing to consider is the probate process. Your assets will not be liquid after your death and an executor will be required. This process can take a long time to settle and with multiple individuals having shares in your estate it becomes messy, especially for personal inheritance.
Another thing that comes to mind is what happens if you stop issuing this token at some stage for some reason. People who bought tokens may potentially be able to sue you for your estate.
Lastly for such a low volume coin It would also be good to specify the precise market for which you would be purchasing from and where all debts are settled.
I think my mechanism simplifies it (although I acknowledge that it requires hiring someone to actually sell everything in the estate). The purchasers of the token do not actually own the estate. The contract deliberately avoids such ownership, it merely states that the money gained from the the sale of all assets will be used to purchase the tokens. It would be made clear that the tokens do not represent shares in the estate, not in a traditional sense.
I probably should have used a better title, because the tokens do not represent equity in the legal sense. They would be a pseudo-equity, like many existing crypto tokens. I don't believe any crypto yet represents equity in same sense as company shares.
I'm not sure how or why. If anything, existing token holders would benefit from a cessation of issuance. That would make the tokens they're holding more scarce when it came to executing the contract.
If it turns out that the law of one country is not amenable to this concept, it would have to be done in a country which is. In practice it would likely use language similar to the EOS ICO terms.
Certainly. This post is only a basic idea, there would have to be more detail for the real thing. If I issued the token on BitShares, then the BitShares decentralized exchange would also be where settlement happens.
Sounds like your d-tokens will be backed by your cryptos. Are you setting up a crypto fund similar to ICONOMI.
That's not the intention. The idea is that any way I manage to make money, it should come back to equity holders in the end. It's trust based and not truly "backed" except by my material assets at time of death. I do of course hold cryptos, but I'm not about to make my crypto portfolio public. Obviously my Steem account already is.
If I can't make money or if I'm an untrustworthy person, the equity isn't worth much. If you can reasonably believe that I can accumulate wealth AND that I will buy/burn tokens OR I will die with positive net worth (excluding crypto) then the token will have non-zero value.
For that reason it would make much more sense for someone who knows me and can judge those things to invest in me than for someone who does not.
This type of system will likely develop as a platform in the coming decades. I wrote an article about it on a throwaway blog years ago, long before I heard the word Bitcoin.
But we're not there yet and it won't work on an individual level unless the individual knows a lot of people.
Justin Bieber could do it though!
Great idea. Wish you luck whit the project.
Nice!
Why not? Love your ideas and great blog content @demotruk!
That is, your tokens will be provided with your real estate? Will they be a type of stock?
They would not be a real stock. They would not provide ownership to my real estate. They are a token involved in a contract. It's best not to try and relate it to existing concepts of equity, the assumptions do not carry over. I probably should have avoided using the word 'equity' at all.
Nice info.