Crypto world division revealed by Bivenden

The author is a participating editor at FT

BTCS, a public crypto company, offered its investors a so-called "bividend" this week-a one-time payment of five cents per share that is either payable in dollars or in Bitcoin.

It is a small company that was only lifted to Nasdaq last year. One could consider the bividend as a stunt, as a clever piece of investor relations with a Twitter-friendly brand name. It is a way that the CEO of BTCS, Charles Allen, happily recognizes. He wanted people to see the value of the company and read his documents. Success!

Behind the bividend is a bet that could have much greater consequences if it is correct. Everyone offers to pay investors in Bitcoin because BTCS has 90 bitcoins in his balance sheet, which have a value but have no productive purpose. Bitcoin, so everyone, is an unproductive asset that "only sits there literally". It could appreciate. But it does not generate any income, which in the past was the purpose of a listed company.

BTCS was founded in 2013 as a pure cryptocurrency company in today's pre -Kambrian era. It started in e-commerce with the sale of products for Bitcoin. It went to Bitcoin mining, suffered from what everyone calls a "crypto winter", then spent some time to buy Bitcoin and Ethereum and considered what was next to do. According to its last quarterly submission, the company now holds two types of cryptocurrencies that are in different parts of its balance sheet.

In addition to cash in the US dollar and invoice delimitation posts, the company holds $ 3.2 million in "digital assets/currencies". These are the 90 bitcoins sitting in the state treasury and. . . nothing. The company also has $ 8.8 million of "digital assets/currencies", the core of its new strategy. The currencies used are mostly Ethereum. You have a job and achieved sales of $ 1.2 million last year (the number is unchecked, but agrees with the company's certified quarterly reports).

These are also small numbers. What matters is the distinction. The Ethereum has a job. The Bitcoin not. BTCS has started with staking - Ethereum and some other cryptocurrencies to place in a kind of digital trust account and to compete with a chance to check a transaction book. The more coins you have used, the higher the likelihood that you will check the main register. The reward is a fee of more coins. The company also operates so-called Validator Nodes-Staking pools that bring in the coins of others outside of its balance sheet.

The Bitcoin protocol is not designed for stacking. Bitcoin should simply sit there by nature, hopefully be more valuable and be transferable if necessary. This is good if you hold Bitcoin and look optimistically into the future. However, it is bad if you are a listed company that tries to achieve income. Bitcoin in particular has always been bet that the more people keep it. However, there is a difference between "holding" and "useful".

The bividend is strictly not a dividend - a profit that is distributed to the shareholders. Rather, it is a capital return. The bividend is therefore tax -free for the shareholders. It also makes it a bit like a share buyback, a tacit confession that says here, take it because we have no plans for it. If BTCS is right, Bitcoin is heading for strange dusk. It is not entirely ready. It is also not a productive value.

After the announcement by BTCS, Hanno Lustig, economist at the Stanford Graduate School of Business, pointed out that the company was in a long tradition of distributing factual dividends. In the 17th century, he wrote that the Dutch West Indies company paid out dividends in Nelken.