Create two fiat currency banks in Puerto Rico that operate with both fiat and decentralized crypto c

[John Congdon]

I don't think it's good enough for the equity to be pledged to assist the network. If we wanted to do that then we might as well just give the Dash foundation an open ended million dollars to do whatever they want with. When the dash network pays out from the budget, any control over those funds is ultimately ceded from the masternode owners to the bank equity owners, who are not obligated to do what the Masternodes want. I have no interest in becoming a shareholder or using budget funds to make the dash foundation or any other entity a shareholder in this startup. If the value here is to provide a service where businesses using dash can have easier access to the Fiat market, that is completely different to me than providing equity for loans which anybody can get from any bank.

I have an open mind of course, am willing to continue to listen to your proposal and what the other MNOs have to say.

The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..

 

[Instacoins]

The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..

Well you said the major advantage is the dash to fiat Conversion. You dont need a bank for that. We exchange dash to fiat for the spot price since we have a dash demand. So we are basicly doing that bit for free. I can see some advantages of a bank. But that would need to be planned upfront. The credit is none in my opinion. Neither is dash to fiat. You dont need a bank for that.

 

[John Congdon]

Well you said the major advantage is the dash to fiat Conversion. You dont need a bank for that. We exchange dash to fiat for the spot price since we have a dash demand. So we are basicly doing that bit for free. I can see some advantages of a bank. But that would need to be planned upfront. The credit is none in my opinion. Neither is dash to fiat. You dont need a bank for that.

The advantage is for merchants that are tied into the banking system where currently more than 99.9% of business transactions other than physical cash take place.. Do the exchanges such as Poloniex allow Visa/MC/Discover receipts and withdrawals? Is conversion automatic when needed? Generally conversion is not free as there is a bid ask spread and/or the exchange is taking a fee. Exchanges are not free services. In the case of the proposal we would be facilitating an efficient decentralized exchange within the bank and for the convenience of merchants and Dash acceptance.

 

[TroyDASH]

The MNOs would remain the owners of their portions, the Foundation would own the stock from from the $50-70,000 setup expenses which come from the treasury. Part of the idea of the use of the MNs portion would be to create liquidity for Dash / fiat conversion for business owners that need to continue to use fiat for their supply purchases which still need to be done in fiat. Thus businesses will not need to worry about accepting and holding Dash in quantity. It is an extension of the MN responsibility, however easy fungibility (seamless) of Dash with fiat IMO will be essential for broad acceptance in the market place.

The agreement of only a few of the MNs, for example 22 putting 1/2 of their current value will be enough to capitalize the bank, or 44 putting 1/4, can make the project happen. How the funds would be applied or used within the banks activities can be made subject to the MNs agreement or voting so that control over their funds would be maintained. As an example if it is decided to set up a debit card payment system those MNs that think that is important could vote to do that. An advantage is that the holdings of the MNs can be leveraged to do those projects as well, as long as the profit from the projects will pay for the extra credit granted. The basic idea is to integrate decentralized digital cash into the current fiat system to create complete ease of use. A bank has a very big advantage to accomplish that. Perhaps it will be very helpful for the Evolution project; it is very much in line with the objective of Evolution..

So you are seeking to raise $1.5m from private investors then, it really has nothing to do with whether or not they are masternode owners or whether they have any dash at all (it is up to you to convert into whichever denomination you want for your holdings). What is the order that you would like to see things happen? It would not be wise for the treasury to pay for your setup fees if you haven't secured the equity yet.

 

[akhavr]

The banks will be compliant with current US bank regulations and KYC. The purpose of the banks for Dash is to have a seamless interface with the vastly larger fiat system in order to serve its current and future business clients that at least for now must interface with that system.

1. Who will be held liable if things would go wrong, from regulatory and compliance perspective? For any business entity, the ownership structure is required to be completely transparent. For banks, I guess that looks more like financial colonoscopy. So, Dash Network won't be able to be a legal owner of the bank, nor the masternode owners.

2. What would be the governance of such bank?

3. What opportunities that would open in the fiat integration? For example, I could see such bank operating a ripple or stellar network node, in addition to the regular SWIFT payments. What else? (I don't see giving out credit through fractional reserve as a benefit, sorry)

 

[Instacoins]

The advantage is for merchants that are tied into the banking system where currently more than 99.9% of business transactions other than physical cash take place.. Do the exchanges such as Poloniex allow Visa/MC/Discover receipts and withdrawals? Is conversion automatic when needed? Generally conversion is not free as there is a bid ask spread and/or the exchange is taking a fee. Exchanges are not free services. In the case of the proposal we would be facilitating an efficient decentralized exchange within the bank and for the convenience of merchants and Dash acceptance.

From dash to fiat we would do for free up to certain Limits. So that cant be the major incentive.

 

[John Congdon]

Trust, DASH developers and community members, master-node owners, crypto-libertarians are high-educated people. They know about loan rate and bank's partial covering. But I suppose that we need a crypto to fiat converting system that free verily from bank and government control. Some time ago I learn an internal rules of international payment systems. All of them was founded by banks, and entirely follows KYC and other suck rules. IMHO, it will be a big mistake to play with system that destroy a base freedom principles.

ADD: Do you know about AdvanceCash corp.? What sort of main advantages do you propose?

The "system" follows known rules that are clearly stated and published that have been passed through legislation. While it can be time consuming and a pain in the ass there are people who are educated to specifically do those things. That's just the way the system is. Decentralization and the blockchain is bringing something far better, however until it is significantly more integrated into everyday procedures we need to deal with the crap too. That is what economic pioneers need to do in this case and it is doable.

From what I could tell about Advanced Cash Corp it is a payday loan style of company which generally charge outlandish fees for giving loans. I also noticed that it has a number of complaints against it. That has nothing to do with this proposal. The main advantage of the proposal is speeding up acceptance of Dash and crypto in general in the overall marketplace, as well as allowing Dash a means of expanding its physical presence in the world.

 

[John Congdon]

1. Who will be held liable if things would go wrong, from regulatory and compliance perspective? For any business entity, the ownership structure is required to be completely transparent. For banks, I guess that looks more like financial colonoscopy. So, Dash Network won't be able to be a legal owner of the bank, nor the masternode owners.

2. What would be the governance of such bank?

3. What opportunities that would open in the fiat integration? For example, I could see such bank operating a ripple or stellar network node, in addition to the regular SWIFT payments. What else? (I don't see giving out credit through fractional reserve as a benefit, sorry)

1. Banks usually are set up under a holding company and the investors own the holding company. As a corporation the banks will have officers and a board of directors and that is where the responsibility lies for meeting regs, mainly with the officers. An LLC structure would also be possible but pretty much same thing, manager and officers would have responsibility.The officers will serve as employees of the bank in maintaining normal bank functions. The operating style of the banks will be as offshore investment banks which means that they will not be doing any retail banking in Puerto Rico. Any retail services that the banks will be offering will be done over the internet, such as account setup, debit card processing and decentralized currency exchange. I don't see any problem with the Foundation or MNs being stockholders in the bank or the holding company, whichever seems to be appropriate in this case. The reporting of major shareholders is required however the threshold is 10% ownership. I don't see any one individual at this point or in the future having 10% or more ownership.

2. Governance is according to what is specified in by-laws so that can be adapted to the needs of this particular situation. We have flexibility here. We will want to run all of that by legal council too.

3. The main opportunities are to service business clients or people who are accustomed to using Visa/MC etc. payment systems and being able to integrate that with the decentralized digital systems. To me SWIFT is seeming a bit outdated though it could serve some correspondent needs. I could see the possibility of Dash taking on some of the role of Ripple. Access through the banks could certainly assist.In the meantime setting up nodes for Ripple and Stellar would be good.

I can understand negative feelings about fractional reserve (FRB) as I harbored those for a long time. However I realized a couple years ago that that system has been a very progressive influence in society and expansion of opportunity. The problem has been with who has been in control of FRB along with the high cost and who has benefited; it was initially used to give power to the rich or money powers and secondly to politicians at the expense of the general population.

In one very positive aspect FRB is a mutual credit system. The gateway to that has been previously through the rich but we can completely change that and that is the purpose of the two banks. I will suggest that you read the accompanying whitepaper if you have not done so.

 

[solarguy]

Using the fractional reserve system of the legacy banking industry seems antithetical to what crypto in general, and Dash in particular are trying to achieve. It's using leverage and debt to spend more money up front than we would otherwise be able to do. We literally have more money in the Treasury than we know what to do with right now, and it looks like the Dev team and the Masternodes are struggling heroically to grow and expand in a sensible and efficient manner. Suddenly having another 12 million debt backed dollars to throw at the world would only exacerbate that problem.

Plus, the ability to do this in a way that prevents the possibility of abuse seem problematic in the extreme.

I would have to vote no with my two MN's.

 

[John Congdon]

So you are seeking to raise $1.5m from private investors then, it really has nothing to do with whether or not they are masternode owners or whether they have any dash at all (it is up to you to convert into whichever denomination you want for your holdings). What is the order that you would like to see things happen? It would not be wise for the treasury to pay for your setup fees if you haven't secured the equity yet.

As I mentioned in the proposal all can be done on a trustless contract basis. That is part of what blockchain is about. I can raise from other private investors, yes, but it will probably not be their interest to assist the Dash community. However it would be of interest for the MNs to further participation in the Dash community I would think as it is a direct benefit to them.

As far as a sequential order I would need to see sufficient interest and a conditional commitment from the Dash community to do the project and then get a confirmed estimate as to what legal assistance and handling the application process will cost. From there we will need a confirmed commitment and start the application process which will involve paying for the setup. As I have noted several times what is invested by the Dash community will be to assist the Dash community. If you will read the whitepaper that has been submitted with the proposal you will find that the banks have a large economic vision of creating a far more egalitarian economy in the world. Basically that is to create sustainability and move out of a fossil fuel and military dominated industrial economy to a decentralized peace generating economy. Also to move to a decentralized political base. That is why I am very interested in helping to further a type of payment system that Dash represents.

I addition I would like to make some suggestions regarding how a currency actually functions some of which have been noted in the proposal. That is a separate but nonetheless an important area to discuss. If one really wants to create a currency that is functional and can be accepted as a currency it is quite different from creating an alternative payment system. IMO creating a decentralized functional currency would have some wonderful contributions to the general economy and world at large. The crypto world is still at some distance from accomplishing that though heading in a good direction.

 

[John Congdon]

Using the fractional reserve system of the legacy banking industry seems antithetical to what crypto in general, and Dash in particular are trying to achieve. It's using leverage and debt to spend more money up front than we would otherwise be able to do. We literally have more money in the Treasury than we know what to do with right now, and it looks like the Dev team and the Masternodes are struggling heroically to grow and expand in a sensible and efficient manner. Suddenly having another 12 million debt backed dollars to throw at the world would only exacerbate that problem.

Plus, the ability to do this in a way that prevents the possibility of abuse seem problematic in the extreme.

I would have to vote no with my two MN's.

As I mentioned previously, I can understand negative feelings about fractional reserve (FRB) as I harbored those for a long time. However I realized a couple years ago that that system has been a very progressive influence in society and creating expansion of opportunity. The very positive aspect of FRB is in creating and managing a workable credit system. The problem has been with who has been in control of FRB along with the high cost of how its has been applied and who has benefited.Initially it has been used to give power to the rich or money powers and secondly to politicians at the expense of the general population. So the gateway to FRB has been through the rich but we can completely change that and that is the purpose of the two banks. I will suggest that you read the accompanying whitepaper if you have not done so.

Using precious metals as a currency placed a lot of burdens on the people whereby an amount of capital needed to be amassed equal to the project that as yet had not been accomplished. Precious metals by definition are a limited asset where as the overall potential of someone to create is wide open. The movement to a credit based money supply gave the opportunity to many people to access their creativity once they had something to show more than wishful thinking. It relieved the burden of needing to amass a difficult to attain supply of capital in order to initiate one's project. That is why FRB has produced a previously unmatched development in the private sector that has lifted the overall standard of living to new heights.

As noted above the dark side, and yes there is a definite dark side associated with FRB, came from those who have had the most control over the system, not the system itself. The first formalization of FRB in 1694 was with the privately created Bank of England for the purpose of financing war and the unwarranted further enrichment of the already wealthy. That type of arrangement has been continuing to this day.

There is an old expression that says it takes a thorn to remove a thorn. We can use FRB to create peace just as well and the world sorely needs that type of development as rapidly as is possible. That is the full purpose of creating the two banks. The overall middle class has amassed a previously unmatched amount of capital. However that capital which is equal to at least $20 trillion in the U.S. alone is currently idle. It is the project of the banks to awaken that capital to be used for bringing peaceful development and abundance to the world.

I do not believe that FRB will be important in the future. As every community is educated in the true wealth that it has FRB will become unnecessary. However we are currently in something of an emergency situation to move out of a war based economy as rapidly as possible. And we still need to develop a currency that reflects overall economic development of all positive aspects needed by communities.

 

[akhavr]

1. Banks usually are set up under a holding company and the investors own the holding company

Who will be the legal owner of the holding company? I believe (and I would love to be proved wrong) that current financial regulations require the disclosure of the final beneficiaries in every case.

I will suggest that you read the accompanying whitepaper if you have not done so.

Yes, I will go and reread the whitepaper, as I've just glanced over it previously.

 

[solarguy]

I agree 182% with your ideals of encouraging renewable and sustainable energy and agricultural processes. I am intimately familiar with EROEI calculations for corn based ethanol production vs cellulosic (switchgrass and/or forest waste) ethanol. I was writing grant proposals for solar driven vacuum distillation of corn/mash based ethanol in farm sized production units in 1978. (Yes, I was naive back then). I am deeply involved in the permaculture and organic food movements.

I ran our car, truck and tractor and oil furnace on biodiesel that I made from used fryer oil for a decade. I built and operated, what I believe to be one of a tiny handful of successful house scale cogeneration plants that burned biodiesel to make electricity, but captured and used the waste heat for hot water and space heating. It operated at efficiencies that approached 80%, as opposed to the typical homeowner generators that are lucky to attain 25% overall efficiencies.

That's the long way of saying, I get it. I totally get it.

One of your basic premises is that these new Dash banks, will loan money exclusively to this kind of project, renewable energy, restoration agriculture, sustainable housing, etc etc etc. It is an enormously worthy goal.

I am unconvinced that there are sustainable cellulosic ethanol models, if they account for soil loss, and full and proper energy invested/energy returned analysis. However, I am open minded that there could be improvements to the point where switchgrass or sugar cane could be grown and converted to ethanol in ways that are legitimately renewable and regenerative.

BUT, I would have to see the data.

Further, I am still unconvinced that Dash could do fractional reserve banking in a way that uses loans/debt in a way that benefits all parties involved. The renewable energy movement is littered with failed projects that just never lived up to the optimistic efficiency and mass adoption projections. That is risk for the owners of the banks. And, there is still risk to people who borrow the money. Debt always comes with risk attached. Your kind of debt -may- be better and less risky than the legacy banking system, but it is still debt with risk.

What does the bank do if the project turns out to not be profitable? Do we foreclose? Do we take the houses away from the borrowers? Do we sell the assets of the ethanol plant for pennies on the dollar? I always like to have a plan for the best case scenario, but I also -must- have a plan for the worst case scenario as well. What happens if the banks are not profitable because too many of the loans fail?

 

[Biltong]

Proposal Evaluation Committee​

Hi John

Just want to find out if you are planning to submit your proposal officially, i.e. Pay the 5 Dash to submit it?
If so, do you agree to the PEC (Proposal Evaluation Committee) assisting you in preparing your Pre-Proposal?

The way we do it is to give a Report on your Proposal highlighting areas that you can improve.
As you improve the Proposal the Report is adjusted and this may be done a number of times (up to 5 or more), each time the chance of your Proposal being accepted by the MNO’s will increase.

The Report also has another function:
To give the Pre-Proposal a percentage mark. This percentage will make it possible to give the MNO’s and community a prioritized List of Evaluated Proposals. This list will save everyone time and increase the chance of your Proposal gaining votes.

However, please be aware that the PEC has not officially been accepted by the MNO’s. We are also in the Pre-Proposal phase, so you have no obligation to partake.
If you want to know who will be doing the Evaluations – see here: Official PEC Pre-P https://goo.gl/qrbeXK

If you do want to use our services (note this is a free service)
1. Please PM me on the Dash Pre + Budget Proposal Discussions Forum indicating agreement.
2. and if you have not done this yet, please read: How to submit a Dash Pre-Proposal https://goo.gl/7jmwXQ
3. Once you have read it you might want to adjust your Pre-Proposal before we submit the 1st Report, so I will wait for you to give us the go-ahead before we start the evaluation process.

If you don’t want the PEC to evaluate the Proposal – please PM me as well, then I won’t bug you again for an answer

Good luck with your Proposal!

 

[John Congdon]

Who will be the legal owner of the holding company? I believe (and I would love to be proved wrong) that current financial regulations require the disclosure of the final beneficiaries in every case.



Yes, I will go and reread the whitepaper, as I've just glanced over it previously.

Puerto Rico regulations say that one must submit an investor profile for investors that will own 10% or more of the financial entity. The territory of Puerto Rico is who is granting the bank license not the US government, that is to say that it is not a US national bank. There are both state banks and national banks and in this case territorial banks. The bank will need to meet all reporting requirements on transactions and KYC regs for account holders. This is a subject that can be run by lawyers but I very much doubt it will be necessary for all owners. For example the majority of banks are publicly owned. If someone buys stock in B of A, Chase, or Citi corp which is done everyday I can't imagine that there are any special reporting requirements. For major holders, such as over 10%, yes I can understand that. When I have some time I can read those reporting requirements due to federal legislation. There's a couple things to remember, one is that the US government is probably the biggest money launderer in the world, there are a number of reporting loopholes. If one owns up to 49% of an overseas business entity there are no reporting requirements to the IRS. Also your wording "final beneficiaries" applies to IRS trust regulations and estate planning rather than to legislated entities such as corporations, partnerships, LLCs, LLPs, etc. Legislated entities are very direct about who are the owners.

The shareholders will be the owners of either the bank or the holding company. As to which that will be will depend if it is prudent to have a non-profit be the holding company in which case I don.t believe that a non-profit can have shareholders. In all regards whoever is investing in the project will have direct legal ownership in which ever entity is needed to have ownership.The whitepaper goes into more detail about the management system for the bank if that is also your interest.

 

[Biltong]

Forgot to mention: We’ll be doing Reports on all Pre-Proposals in any case – towards the end of the cycle.

 

[Leonidas]

Hi John,

Here is your first report,

Couple of notes :

• There is NO pass/failure mark. The percentage simply allows us to create a Prioritized List of Evaluated Proposals. The idea being that a MNO with very little time can concentrate on Proposals at the bottom of the list only. MNO’s with more time will obviously look at all proposals as per normal
• The evaluation also enables the Evaluators to look for scammers etc and red-flag a proposal that is a possible danger to Dash. They have more time and tools to look for the tell-tale signs.
• How did the Evaluators decide on marks: PEC Evaluator Guidelines https://goo.gl/Futw1d
• MNO’s have been very lenient in the past. So even if you have, what you might consider a low mark, you might still pass the Vote
• Most Important: The evaluation is to give you an idea of where you can improve your proposal to have a better chance of earning MNO votes.

When you improve your proposal, please color all new material in red and don’t delete any word/sentence, but use strike through or underline. This will make it easier for the evaluator to find changes, when she or he re-evaluates your improved proposal. The MNO’s will also so be interested to see what you changed to improve your proposal.

Since you were unlucky enough to submit your Pre-Proposal just as the PEC started, you had a handicap: You did not know the importance of the Dash Project Proposal Template https://goo.gl/m0jgfS .

This Template was created some years ago by the MNO’s to get all the information that they need to make an informed decision. It is also the easiest way for you to earn extra marks If your proposal did not cover a question in the Template – just put the Heading and answer in your detail doc. If your proposal does cover the question: Just put the Heading with the words: See original Proposal.
E.g.: Project Scope - Milestones and Schedule: See original Proposal.

We know this is a painful bureaucratic exercise, but once you’ve done your improvements for this 1st one, the next couple of improvements (maybe just one?) will be easy, and of course – you are bound to have more proposals in the future!

Good luck