Devcoin Investment Case

1. Introduction

This serves as a Devcoin Investment case. It is meant to be short and concise , detailing the requirements for setting up the investment, describing the target of the investment and giving a short overview of the business risks and opportunities involved. This company will indirectly invest in Devcoin as set out below.

2. The Setup

The investment is structured through a company/entity that will hold the investment. The company is funded by its founders and, possibly, (other) investors. The company is meant to be flexible and easy to operate. The final choice for the type of company to use is subject to legal and tax considerations. Optionally, the company can be formed and operated in the form of a fictional company that issues shares via Cryptostocks. Those shares are fictional in the sense that the shares are issued and managed in the digital realm via the Cryptostocks website only. No share certificates are issued.

One step further in the digital realm would be the issue (and transfer) of shares in the company by means of a crypto block chain that serves as share capital. It is noted that this concept has not been developed yet and for now only exists as an idea (see more on this concept here). Shares will be issued against payment of the initial capital (in the form of Devcoins or other crypto currency. An investor can invest with fiat money by exchanging fiat for the applicable crypto currency and using that crypto currency to pay up the initial capital call.

3. Goal: creating exposure in crypto with immediate return

The goal of the investment is to create exposure to crypto currency but also creating an immediate return. Investing directly into cryptocurrency establishes the exposure, but does not give a return.

Investing in selected stocks will generate an income stream from dividends. Therefore, the investment will consist of buying existing shares in companies that have an exposure in crypto currencies. Since the specific aim is investing in Devcoin, the company will buy crypto stocks at that pay dividend in Devcoin. The companies to invest in will be selected on the criteria of regular dividend payments and an annual return (calculated in Devcoins) of at least 5%.

The income stream in Devcoins can be used to either:

  • pay a periodic dividend to the investors;
  • buy more crypto shares; or
  • making other (crypto) investments.

If the dividend revenue is sufficient, the company could also use this income stream to promote Devcoin. For instance, the dividends could be used to offer additional bounties for preselected achievements that will help build the case for Devcoin.

The shares in the company can be traded on on an open market (traders need to sign up with Cryptostocks though).

4. Some information on Devcoin

This paragraph is based on the information provided at Devtome. Devcoin was started round and about August 2011. A block is made every 10 minutes on average. Instead of the 50 Bitcoins per block (nowadays reduced to 25), Devcoins are generated at 50,000 per block. 5,000 go to the miner and 45,000 to the people distributing Devcoins to artist and contributors.

With this information, we can establish the amount of Devcoins generated over time:

  • every 10 minutes: 50,000 DVC
  • every day: 7,200,000 DVC
  • every year: 2,628,000,000 DVC

There is no hard cap. As long as Devcoin remains existing, the annual increase of DVC will be some 2.6 billion DVC. The 50,000 DVC each block does not half at set moments in time like Bitcoin. The lack of a hard cap will be less concerning over time. This is not a problem in the longer run because the amount of Devcoins issued each year is fixed and thus the annual inflation rate will decrease over time.

Essentially, after 5 years the inflation rate is negligible compared to the potential value increase associated with crypto currency the next decade.

The graph below presents the inflation rate of the issue of Devcoin.

5. Risks, opportunities and strengths

Opportunities and strengths identified for this investment:

  • given its slightly inflationary character, it is expected that Devcoin will be borrower friendly. Furthermore, the potential borrowers of Devcoin can be expected to seek the funds for repayment of their loans by fulfilling the goals set by bounties, thus building the Devcoin community while repaying loans.
  • Devcoin has a stable and very driven community of intelligent and devoted people.
  • an immediate 5% annual return on Devcoins.
  • this liquidity can be used for pay out, additional Cryptostocks or other investments. This also provides the option to directly promote Devcoin.
  • potential increase of the share value of crypto shares held.

Risks associated with this investment:

  • there is a risk associated with crypto currencies in general (security protocol can be hacked/flawed), very young technology, not crossed the Chasm yet etc).
  • the price of Devcoin will fluctuate.
  • Devcoin will have a firm initial inflation rate, making this investment a long term bet.
  • the return on Cryptostocks and the continued existence of Cryptostock website and companies are not guaranteed.

Cryptocurrency | Devcoin Info | Finance | Investing

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