When Kim Dotcom announced that his Megaupload2/Bitcache investment offer would only accept bitcoin, many assumed that it was a way to prevent any law enforcement effort to seize the funds. Given that the fundraiser is reaching the half-way mark on the Bnktothefuture online investment platform, the controversial content entrepreneur has addressed some questions that investors have raised.
Simon Dixon, CEO of Bnktothefuture, recorded a Youtube interview with Kim Dotcom that aired on the Max Keiser show. Keiser noted at the outset that Megaupload2 fundraising offer on the Bnktothefuture is “rapidly getting to the 50% level of the minimum goal and looking quite exciting.”
Dixon, who noted the fundraising is approaching the “half a million mark” with bitcoin only, has been reviewing investor feedback.
Keiser, based in London, arranged the interview for Dixon, based in Singapore, who interviewed Dotcom in New Zealand.
MegaUpload2 (MU2) is a privacy-centric file sharing and storage platform. Bitcache is an attempt to develop modular applications as a software-as-a-service; some of the Bitcache modules will be tested on MU2 as the first client.
Because of legal disputes with the U.S. government, Dotcom does not own the companies but serves as its evangelist, according to Bnktothefuture. Dotcom is working to support bitcoin micropayments with MU2.
Dixon, based on investor feedback, wanted to address valuation, the general lack of readiness of people to invest in bitcoin, some technical details about bitcoin and the MU2 legal structure.
To “sweeten the deal” in terms of valuation for the initial investors, Dotcom said everyone who is investing within the first million minimum goal can invest the same amount they’ve invested already and double their shares. “If they buy the same amount of shares again they have bought in the first million, they basically get a 25% discount,” Dotcom said.
The first investment will be at the full valuation, the second investment will be at a half-price valuation, and overall they’ll end up with 75% of the current valuation, Dixon noted, to which Dotcom concurred.
Dotcom came up with another sweetener about anti-dilution for the next two years. He said one concern is people are worried about getting diluted in the second or third investment round. “We’re going to give you a warranty; if you are in the first round of investors, you’re not going to be diluted in the second or third round,” he said.
The second major objection is there are some larger investors struggling because they are new to bitcoin. The services they use to transfer bitcoin are restricting their activity. To address this, a bank transfer option has been developed. “Once this video goes live, that bank transfer option will be available,” Dixon said.
Another issue is that die-hard bitcoiners don’t think there’s enough “juice on the bone,” Dixon noted.
Dotcom said the bitcoin blockchain is limited in the number of transactions it can handle. “If those limitations wouldn’t be there, we wouldn’t really have to innovate as much because we would just utilize the blockchain,” he said. “In order to provide a service that works with bitcoin, we have to create our own payment solution, and the bitcoin basically enter to the ‘bitcash’ wallet on our system, then use off chain and can then be reintroduced into the blockchain when the bitcoins leave our system again.”
There is not a major security concern since most transactions are minor, Dotcom said.
“Once the chain developers have come up with a solution to these limitations, we will not require to be off chain,” he said. “Our expectation is we will have millions and millions of users from the get-go providing critical mass to the service. We don’t want a limiting factor to be the blockchian as it currently is.”
Dotcom’s legal counsel has addressed some of the legal questions posted on the Bnktothefuture forum, Dixon noted.
“I want to take bitcoin mainstream,” Dotcom said. “In order to do that, we need to have a really powerful, popular site that can carry bitcoin to the next level. And I believe that MegaUpload2 can be that site. I believe at some point we will have hundreds of millions of users. At launch, we’re going to let the 200 million viewers that I had in the past know about this service.”
“MegaUpload2 is more than a business; it’s a movement.” he said. “It’s more than just storing and sharing files. It’s about Internet freedom. It’s about technology providing us with our basic human rights that the laws are not protecting anymore. We are using technology to make sure that users can interact privately.”
I want bitcoin to be the next big thing; way bigger than it already is.
Bitcoiners have varying views about MU2’s chances for success and about being associated with a file sharing platform that ran afoul of the law. Dotcom’s legal battle with the U.S. government continues.
Dotcom promised that former Megaupload users’ accounts will be re-instated, which could spell future legal complications since the first Megaupload encouraged users to post copyrighted content, some have noted.
Dotcom sees MU2 as a reunion of all the loyal users who were made “homeless” when the former site was shuttered. Dotcom claims the new venture will launch with the original Megaupload user database intact.
An U.S. indictment against Dotcom, dating back to January 2012, led to an FBI shutdown of Megaupload and a dramatic raid at his New Zealand home. The government accused Dotcom of copyright infringement, racketeering and money laundering.
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