If the price of NXT where to rise rapidly what would happen to SafeHash?
Could the new commitment to pay 24000 NXT per month for 30 months to pay of the loan from NXTGlaive be met?
Could the original commitment to return 1 NXT/share to investors be met?
Sadly, I know nothing about the origins of NXTGlaive and more particularly:
What happens if SafeHash misses a payment?
What happens if SafeHash cannot pay at all?
These are all good questions for PrintShop.
Thanks for asking. I'm always happy to answer questions.
SafeHash's backing is valued at 199,122 NXT and is comprised of various assets such as Coinomat, STORMWIND, and USDbitfinx. Our USDbitfinx is worth about 85,000. This backing is kept in strict proportion to the number of shares we sell, while the mining assets are a "soft restriction" meaning we act to keep the value of our mining assets greater than the amount of backing (but this is actually irelevant to guaranteeing 1 NXT per share). Our current figures are mining 183,097, backing 199,122, and payable shares 164,127. This means that we currently have about 35,000 extra backing with which we could sell new shares, or buy more mining, and still have the capacity to trade assets for 1 NXT per share should all mining go to zero.
If NXT suddenly appreciated in value, the question is, how would we continue to guaranty 1 NXT per share? The answer is that we maintain a
margin of safety such that it is reasonable to assume we will be able to meet any rise in NXT. For example, I just pointed out we have an extra 35,000 NXT in backing assets. Should the price of NXT suddenly double, and our USDbitfinx fall by 40,000 NXT, we will still have roughly enough to cover all sold shares. This margin of safety is currently being expanded by the accumulation of NXT (via our right to retain 25% of profits per week). Right now we're small enough, and have a large enough margin of safety, that a sudden currency fluctuation will not hurt the fund. But this is indeed a very important issue for the future. We're very bullish on NXT, we are aware of the dangers of currency fluctuation, and we are accumulating NXT to insulate ourselves from even the most remote chance of a problem.
After this week's dividends we expect to have 40,000+ NXT (NXT, not assets) in addition to asset backing. Within another six weeks we expect to have the fund fully backed by NXT.
We like to keep this backing very visible by placing very large bid orders for SafeHash shares. There's currently an order up for 14,000 shares which I plan to increase to 25,000 after this week's dividends. This helps investors sell out at any time without losing any money.
The next questions are about NxtGlaive. To understand the NxtGlaive situation, you have to understand that there are four parties in this room.
1. Shareholders, who are guaranteed:
- 50% of profit from the mining assets we invest in,
- a guaranteed buyout at 1 NXT
2. SafeHash, which maintains NXT and mining assets in on behalf of shareholders, such that #1 can be guaranteed.
3. KPS
- Private company, dealing solely with NxtGlaive
4. NxtGlaive, who is investing in the backing of SafeHash and is not concerned with the operation of SafeHash.
Note that regardless of what happens to #3 and #4,
so long as SafeHash retains 1 NXT per share, investors are protected. The loan, KPS, NxtGlaive, and currency fluctuataions are red herrings. Nothing which happens to NxtGlaive or KPS matters to SafeHash investors.
From SafeHash's perspective, investors are buying a product and NOT shares in the underlying company "SafeHash". To oversimplfy, SafeHash has obtained all of KPS's assets and is repurchasing KPS shares out of the sale of those assets and the ongoing retained profits of SafeHash, while the actual cash profit of KPS is being used to buy NXT and pay NxtGlaive.
In short, all investors care about is the fact that SafeHash contains the appropriate mining and non-mining assets, and a significant amount of NXT to cover currency fluctuations.
This makes the question "What if SafeHash cannot pay at all" irrelevant, because it is obvious that SafeHash contains all the required assets to complete these goals.
There is however one question I have not been asked and that is "Why/How"? Since, obviously, we could just invest into mining ourselves and keep all the profits. The answer is simple. Risk.
If we just invested into mining, we stand to lose ALL our money.
If we create an asset like SafeHash, we use the return to guarantee the existing debt. Our personal return is lower -- in this case just 25% to 50% of the profit from mining. But our risk goes to zero over time. This makes sense when you consider that real world companies often pay just 3% per year. Like Johnson and Johnson. Or Bell Telephone. We are more than happy to get 3% per WEEK with zero risk -- this is even less risk than investing in Bell Telephone. SafeHash is essentially just a form of disciplined investing, where we occasionally "take profits" and as such cannot "lose money" past a certain point.
I hope this has been clear, if there's anything else just ask!
