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This is a working version of the Fund Manifesto.

The purpose of this document is to involve the maximum number of people in the discussion up front, in order to ultimately ensure the best possible wording of the Manifesto and to achieve a significant simultaneous initial distribution of shares.

Preliminary registration

Yes, I’ve read the Manifesto and am interested in joining the Fund from the time of its formation

Goals of the Fund

It is good for Bitcoin users to bring more people into the new economy. The greater the population and turnover, the better the quality of the environment. Experience working with new economic tools could be an advantage that can be translated into personal wealth. We all benefit from a growth in the number of bitcoiners.

The popularization of bitcoin is happening all by itself. The appearance of new decentralized protocols and economic enclaves is inevitable. However, there may be some hitches along the way. Without going into too much detail, we can mention two main factors: probable laws that will affect each person directly (for example, laws hindering the installation of a bitcoin wallet), and “cooperation” with large firms whose infrastructure might be essential for bitcoin to work (remember, for example, the story of PayPal vs. Wikileaks).

Taking all this into account, we believe that the bitcoin community faces the following challenges:

1. To have the bitcoin economy infiltrate the off-line world. This can be done in many ways; one is the bitcoincard. This is necessary both to parry likely technical attacks, and also to bring the retrograde part of society (on which reactionary members of the elite always rely) into the new economy.

2. To begin to account for ownership rights in technical form, similar to the bitcoin protocol itself. The world benefited from the fact that monetary transactions became decentralized, open and anonymous. Accounting for ownership rights will serve as a similar upgrade. Of course, the bitcoin protocol can’t be transferred directly, if for no other reason than the fact that anonymity requires a more subtle approach.

So, what we are proposing is a public discussion, and then the public formation of a new breed of collective investment fund. Naturally, having to deal simultaneously with the risk of the undertaking itself and the risk of a non-traditional financing procedure is scary. However, the Wall Street model of corporate financing of development of the bitcoin economy would be a complete oxymoron. Also, a series of recent large investment rounds have shown that risk in the traditional sector has grown noticeably (for example, the later-stage valuations for Zynga and Facebook were somewhat off the mark). Now then, let’s take a closer look at the goals and proposed structure of this alternative type of fund. The main goal of the Fund is to spread bitcoin all over the world, making life more peaceful, free and fair. More specifically, the Fund should:

1. Gather enough funds to produce a sufficient number of bitcoincards to meet current demand.

2. Support projects in the bitcoin economy that use bitcoincards or related applications in their operating model.

3. Make joining the fund as simple as possible for everyone interested.

4. Account for the ownership rights of fund participants using a register with an unparalleled technical level of transparency and decentralization.

5. Ensure unprecedented transparency in every aspect of project development.

6. Protect the project to introduce bitcoincards and related applications from the traditional infrastructure of venture capital and the stock market.

7. Minimize or liquidate project risks associated with the management of traditional legal entities, their potential liabilities and the fact that they are open to lawsuits.

8. Simplify and reduce the price of the cash flow traffic necessary to organize production and delivery of cards.

9. Minimize or liquidate the tax burden on the project.

10. Generate profits for fund participants.

Entry in the register of the Fund

You can join the Fund simply by depositing coins in one of its wallets. The management of all of the Fund’s wallets will be described soon. The entry in the Fund’s register is a single line (time of joining, the unique code of the owner, number of shares, public key of the owner, last valuation of the Fund by the owner and its date/time).

The code of the owner is a regulated set of symbols that is assigned to an investor. For example, John Smith or Fr56H 456Y. The time of joining is the moment of receipt (accurate to the second) of coins by a wallet belonging to the Fund’s set of wallets. The register services entries with the same owner’s code but different times separately. Any consolidation techniques or external resale are performed at the sole discretion of investors.

The number of shares is determined using a basic iterative formula. Suppose there are two entries in the Fund at a time t0: on 10% and 90% of the shares, respectively. The total value of the Fund has been announced as X coins by mutual decision of the two owners. In general, a simple system of weighted voting is used to take decisions in the Fund: the representative behind each fund entry can submit the wording of a decision for a vote (in this case, the announcement of the price); during voting, the weight of the votes (voting power) will correlate directly with the shareholding, without any privileges. As for the specific task of valuation of the Fund, the result is equal to the weighted average amount, and the last entry (decision) of an individual participant is shown in the register of rights itself.

Of course, owners may overvalue the fund, but this will only result in the drying up of the inflow of new investors, leading to a forced revaluation. So, from the time t1 the amount Y is deposited, and the corresponding third entry is made in the register of the Fund: (t1, user_3/(X+Y)%, key_3). Accordingly, the 10% and 90% shares of the previous owners are reduced by 10%*Y/(X+Y) and 90%*Y/(X+Y). For example, if Y=X, the new shares will be 5%, 45% and 50%. In other words, it is enough for someone to contribute an amount to the fund that exceeds its valuation to gain control over the fund.

Once again: the Fund is valuated on an ongoing basis; the current supply of potential investors is counterbalanced by the ambition of the voting investors. If there is a sufficient number of both, the process becomes smooth and effective. There could be as many alternative and independent websites for valuation of the Fund by potential investors as needed.

The problem of the Fund being undervalued (due to owners of entries in the register who do not pay attention to the Fund) is easily resolved: the valuation is only taken into account if it is sufficiently “up to date”. The period to obsolescence of the valuation is set from time to time by a specially announced vote, similar to the Fund’s other important decisions.

The last variable mentioned in the register entry (the owner’s public key), the secure voting system (the log of the Fund’s actions), the management of all the Fund’s wallets, the principles of the register’s distributed storage protocol, the log of the Fund’s decisions, and the other technical aspects will be set forth in more detail by the group of potential investors that have tentatively signed up (see the section “Launch of the Fund” below).

Intellocratic model of Fund management

The Fund does not have a board of directors, management company or other structure with some sort of exclusive rights. The activity of the Fund is absolutely transparent. All actions that involve costs using the Fund’s cash are entered in a single log. The log of actions, like the register, is distributively stored. It cannot be lost or replaced.

Any Fund participant can forward an action for consideration. A decision of a weighted average majority is needed for the action to proceed. When taking computable (“smooth”) decisions (for example, valuation of the Fund), the result is a weighted average numerical figure. For example, in the case of the two entries in the register (10% and 90%), during the valuation of the first participant of 1000 coins and the second of 2000 coins, the valuation of the Fund will equal 0.1*1000+0.9*2000. When taking quantum decisions (one specific wording from several proposed options), the option that receives a weighted average majority of votes is chosen. For example, in the above case of the two entries in the Fund, all such decisions will be taken by the owner with the largest share in the Fund.  One can assume that the two-dimensional structure of the log will become unworkable fairly quickly. Therefore, when determining the density and level of diversification of the required decisions, the Fund will be forced to transition to one of the models of network intellocracy (democracy in which each vote has a weight corresponding to its proven expert status). Such algorithms exist, but the choice of a complicated model will slow development at the early stages. Real, practical steps (and the unavoidable small errors) are needed to find a truly suitable method of crowdsourcing. 

Cooperation with the non-bitcoin world 

Diversification, namely a large number of legal entities throughout the world, is needed to ensure the security of the Fund’s property. This property consists primarily of bitcoincards and their components during their production and delivery. We must reduce the temporal, spatial and judicial (legal) concentration of property to a minimum. The path from components belonging formally to their manufacturers to the anonymous cards in people’s pockets should be as short as possible time-wise, and as complicated as possible from the standpoint of the plurality and bifurcation of chains of ownership rights.

Launch of the Fund

The Fund should be organized in a way that excludes any type of manipulation. If there is a sufficiently large number of entries in the distributed register, manipulation will be nearly impossible. At the initial stage, however, the aforementioned arrangements could be open to manipulation. For example, a majority of owners could agree on a temporary (and simultaneous) decrease or increase in valuations in order to bar certain investors from the Fund (or, on the contrary, to “ram through” certain investors). 

To minimize such occurrences, the following must be done: 

1. As many participants as possible should be recruited up front (prior to the general opening of the Fund), so the vote on the valuation can be taken calmly, outside the software procedures of the Fund. This first group should join the Fund at the same time, at the time of its opening. 

2. The software codes responsible for the distributed keeping of the register and the log of actions of the Fund should be made publicly available in advance, to exclude mistakes and manipulation in the future. The capacity of the mechanism for maintaining the log to debug itself should be tested.

Preliminary registration

Yes, I’ve read the Manifesto and am interested in joining the Fund from the time of its formation