DEVTOME.COM HOSTING COSTS HAVE BEGUN TO EXCEED 115$ MONTHLY. THE ADMINISTRATION IS NO LONGER ABLE TO HANDLE THE COST WITHOUT ASSISTANCE DUE TO THE RISING COST. THIS HAS BEEN OCCURRING FOR ALMOST A YEAR, BUT WE HAVE BEEN HANDLING IT FROM OUR OWN POCKETS. HOWEVER, WITH LITERALLY NO DONATIONS FOR THE PAST 2+ YEARS IT HAS DEPLETED THE BUDGET IN SHORT ORDER WITH THE INCREASE IN ACTIVITY ON THE SITE IN THE PAST 6 MONTHS. OUR CPU USAGE HAS BECOME TOO HIGH TO REMAIN ON A REASONABLE COSTING PLAN THAT WE COULD MAINTAIN. IF YOU WOULD LIKE TO SUPPORT THE DEVTOME PROJECT AND KEEP THE SITE UP/ALIVE PLEASE DONATE (EVEN IF ITS A SATOSHI) TO OUR DEVCOIN 1M4PCuMXvpWX6LHPkBEf3LJ2z1boZv4EQa OR OUR BTC WALLET 16eqEcqfw4zHUh2znvMcmRzGVwCn7CJLxR TO ALLOW US TO AFFORD THE HOSTING.

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Penny Auction Business

Purpose of this article is to talk about a penny auction business to help bring in profits to the Devcoin project.

The Vision

To create a sustainable open-source business that is profitable. The business is owned and operated by Devcoin.

A penny auction website would allow you to auction off goods that are in demand for a final price as a fraction of the original cost in the marketplace, that is profitable for the owner at the same time. By allowing goods to be sold well below market value, interest will be high for such a website which will drive up demand for more goods to be sold.

The profit is derived from the selling of the medium of exchange used to place a bid so that they may win the auction. If each bid costs $0.60 for example then the breakeven point on a good which Devcoin purchased for $500 is quite low if we assume each bid will increment the auction price by $0.01. This is the typical setup on quibids and other penny auction sites that are wildly popular and successful. In this example the breakeven point is still well under market value of the good ($8.33)… if the auction settles for more than $8.33 we are in profit.

Market Opportunity

There are people with coins who want to spend them. There aren't many places that allow you to get what you want with coins, rather we are forced to use services for coins because that is all that exists. There is a huge first-to-market opportunity with many businesses that start to offer crypto-currency as an alternative form of payment. If this forces traditional businesses to adopt then it will create competition for the entire business world to adapt and help grow awareness for Devcoin and other coins. Why hasn't it been done yet if it’s such a good idea? Because the crypto domain is in its infancy so as an early adopter those who start first will come out on top likely.

Distribution of profits

If we accept Devcoin/bitcoin/litecoin/etc in exchange for bids then at the end of the month or start of each round, any bitcoins/litecoins can be exchanged for Devcoins at market to help stabilize the price of Devcoins, and the pool of Devcoins can help fund bounties/devtome or any other project that needs Devcoins that would normally take the coins from shares. Essentially those who would normally sell, now give it back to Devcoin for goods/services. Those shares should now be worth more over time, and thus allocated more efficiently opening up opportunity to purchase more goods for the auction site itself. We can use the extra shares now to fund more into this business or other businesses that drive in profits like this one. Opening a gateway into a higher magnitude of profit sharing businesses and driving more and more profit into the Devcoin project. All profits shall be measured in Devcoins.

Paying for Goods through Auction

Initially when the user wants to qualify to win an auction he/she must buy bids at a set rate in fiat or coin terms. Once they do this, they may place bids for a chance to win an auction. Once they win the auction it is theirs and they pay for a shipping amount which is given to them by the auction website, depending on a courier quote (size/weight dependent). If the user gets lucky and bids at the right time without getting outbid they will win an auction for an item which may be well below market value. If they bid actively from the start to the end, to outbid another user who does the same, then there is a chance that the user may effectively end up paying more for the item had they simply used a Buy It Now feature, or bought it elsewhere at market value. They may use a buy it now feature that would simply let them buy the goods at the market value we deem appropriate and allow them to keep their bids. This way you don’t have unhappy customers that end up paying more than market price for goods. Worst case, you have them paying what they would have paid in the store anyways.

Tax + Business Registration

If we allow purchase of bids via fiat (paypal etc) then we probably have to register with anti money-laundering agencies under each jurisdiction we allow users to register from as well as requirements of imposing tax based on where you are. If we only allow bids purchased via crypto currencies, then this may be omitted so it is a design decision to do such a thing. I initially would say to omit fiat altogether to avoid legal issues. If the business gets big enough we may still have to comply with tax regulations in which case we would manually add the tax to the shipping cost which the user would pay anyway prior to shipping the item out to the user

Shipping

We don't have a warehouse to store materials so we would find items to auction off that support drop shipping, and then ensure the vendors don't have specific marketing, or try to work on creating some packaging for Devcoin.

For starters we simply dropship the items from the vendor it was purchased from to the user who won the item. This reduces startup cost to simply buying goods and redirecting destination addresses.

Auction winner pays for shipping unless we are running a promotion for free shipping.

Keeping auctions coming and going

As a start we won't have many auctions but shares need to be given to the project to a purchasing admin that would allow the business to auction off items regularly. As a start we would have an auction for an item that is generally desired by a lot of people, once a day and as liquidity picks up and we are able to procure more Devcoins to purchase items we supply more to the business to auction off. I propose 100 shares each round to start, 25 shares per week. The purchasing admin must see that they convert the shares to a medium of exchange that allows us to purchase the item physically. They must do so in a cost effective manor so that they won't adversely affect the market bias, or try to do so as transparently as possible and using limit orders, not at market unless there is sufficient liquidity within a few satoshi's of the market price. If there is no liquidity, we cannot hold any auctions until some buyers arrive at one of the exchanges. If there are any unused coins from the last round that were not used to purchase items for auction then it is used for the next round and fewer coins are given to the purchasing admin the next round for auction purchases.

Comparing with what we have now

Why do we need all this? Consider the alternative, we do nothing. We fund devtome as our only share-receiving project with an average 500 shares per month and we wait until the ad revenue rolls in, first it needs to support itself, and then it needs to be profitable. I doubt any analysis was done to figure out the cost and profit margins of quality writing, which is hard to come by in itself. Such a business model needed just as much analysis if not more than what I am proposing so as an alternative we would have a competing business fighting over shares and we would at the end of each round see tangible results. Worst case it would be like devtome, but it would dilute shares that are currently given to writers. So in effect, to the Devcoin project it would see no difference than what the state of it is today in terms of monetary benefits that the projects bring into the community. However the quick potential of profits for such a business as this proposal would be that the worst case scenario would be very unlikely and most likely pay for itself at the very least. Of course admin payments would have to be factored in but I think over time there should be a large surplus between cost of inventory and received payments of that inventory resulting in profit to cover for any costs.

Marketing

A potential pitfall for such a system will be in the way it’s marketed. A lack of marketing effort may lead to a lack of bids and thus likely losses on auction items. I suspect that as awareness grows and marketing effort is sufficient that many people will result in joining to take advantage of such deals that aren't available on quibids or large players that do not offer crypto-currency for bids.

If any of the big players end up accepting crypto-currency and we would request for Devcoin to be accepted, that it would help the cause of being able to spend Devcoins greatly. I would say at that point if our site is not profitable much longer that we would close shop as long as the high volume sites accept Devcoin. It is adaptable to the market, such that if the large players removed Devcoins from their payment mechanism then we could start up again with the upfront cost of marketing again ( We should probably wait at least a few months before closing if this happens ).

Another form of marketing the website shall support is through affiliate or referral marketing mechanism that allows a logged on user to be able to send an email to someone and if that person signs up, they both get some sort of bid compensation. Another form that may be useful is to provide a referral in the url when someone is signing up, so the referrer may receive free bids. Any form of marketing would have the the person signing up through a referral receive some sort of deposit bonus.

Open Source

Any templates or website code we use will be open source on github and we will integrate the Coinpayments plugin with default currencies we see fit ie: Devcoin/bitcoin/litecoin the pairs that offer some sort of liquidity for Devcoins on exchanges. The Coinpayments plugin charges 0.5% fee standard flat rate plus any devcoin fees for transactions, as a relay to your wallet address from the customer’s address.

Anyone is free to fork/clone and create their own version of the business. However any startup costs/funding for inventory etc. will be done by that third party and they will have to assess if it is advantageous to do such a thing. However if they do succeed in their endeavors it will create some healthy competition and drive more traffic at first to our website as being first to the market. We have advantage of funding based on liquidity of Devcoin and since we are first to market, it will only solidify the business and bring more speculators to bet that the Devcoin auction site and project itself is on an upward trend.

However once many sites start to open up because of the profit opportunity and the market grows for sites accepting crypto-currency, I think our goal has been reached at that point, and we only hope that since we provided the source code for them that they would simply allow payments via Devcoins as a token of gratification. This is the open source model that is at the core of the Devcoin project and follows the morals of founders and admins for a vision of open source projects that help better the world, and at the same time benefit shareholders of the currency. We can then either rely on those new sites to be able to spend our coins or we continue to offer a service that people will depend on to have the quality they need. The business would have had to have created a loyal user base by that point to continue to be profitable in the long run.

Administration/Division of Responsibilities

I propose the following roles and pay where each share is about 10 hours of work:

Founder admin (1 share)

a. Makes decisions in the best interest of Devcoin and the business

b. Works with all admins to ensure they have what they need (the air food and water for each role), and to ensure they are doing their job adequately.

c. Assign coins to external projects as requested by another admin and accepted by Devcoin project as a whole, based on availability of coins in the Devcoin business wallet (see 4d).

Source admin (1 share)

a. Small code updates, cron jobs for small automatic scripts

b. Ensures the github repository is up-to-date with the latest changes, and the website is in stable running condition

Web admin ( 1 share )

a. Web server routine stuff to ensure the website hosting has no issues

b. Maybe pays and gets reimbursed for hosting

c. Any CPanel MYSQL or any database issues come to him

d. First point of contact for customer queries, perhaps through a live chat? Available in a timely manner for the customer.

Purchasing/Shipping admin (2 shares)

The Purchasing admin will receive 100 shares per round and use 25 per week to ensure there is a flow of auctions happening at all times. This may change depending on how many things we want to sell.

a. Purchase and procure goods/services for auction, keep an available record of purchases and sales for the reporting admin to report metrics at the end of each round. May have to purchase bitcoins or transfer to fiat using the exchange using limit orders when there is sufficient liquidity.

b. Ensures items are shipped/drop shipped and change status of auction items based on status of the item being shipped.

c. Deals with customer enquiries about returns/shipments.

d. Takes any coins that were used to purchase bids that are not Devcoins and purchase devcoins in the market. Place all coins in a single wallet to be used for other projects.

Report admin ( 1 share)

a. Report metrics for each round including profits made based on all items that round

b. Different views of breakdowns to look at data similar to the share breakdown

c. Ensures that the reported profits reflect the coins inside of the business wallet.

Business


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