Sirwin
Sirwin

A System of Investing for the Lowest of the Low: Greater Good Part 2

By Codeinmy | Digital Mind Fortress | 5 Jun 2021


Great Ideas for the Greater Good continued...

Like many, I joined the crypto game late.  The millionaires had already been made.  Doge Coin was fueled up and on its way to the moon.  Apes were pumping money from GME into SHIB.  I was still trying to understand why decentralized was an advantage and how I could play the game. I'm not saying money couldn't be made still, for those with the nerves of a gambler.  Crypto is still in the early stages, and those who invest wisely will reap huge rewards.  But it takes money to make money, and I am investing on a shoestring budget.  

One afternoon at work I'm watching my BTC and ETH go up and down and wishing I had $100K to buy all the dips. It occurs to me that the few hundred dollars I am investing is life changing money to millions of people.  I am telling myself that it's not worth watching it all day for $100. But so many people would watch all month for $100.  They would forgo sleep and food and fun. I realized how much better they would be at playing the market, at timing the trades than I would be.  So my mind started crunching scenarios.

You see, for work I am an enginerd. I manage portions of a manufacturing process that is very labour intensive.  I think I'm pretty good at it, and what makes me good at it is my ability to organize the process. In my younger days I was an avid Starcraft player. As I've gotten older I've improved my multi-tasking and managing skills, and applied them to my work environment.  So you might say I organize systems for work and play.

That's enough of story time.  Now to the idea:

Goal: Harness the time, thinking power, and drive to succeed of the great undiscovered minds around the world to provide investing capital for the less privileged. 

Method:

1) Give them seed money

2) Provide a platform

3) Reward success

4) Repeat

 

Step 1: Seed money

These people need something to invest with. We can't give them each a fortune, so we start very small. Each investor can't turn $1 into $1000 overnight, but they don't have to. One thousand investors have a statistically better shot at making money, considering they have no experience and we are picking them essentially at random.

To make sure the money gets invested we lock the seed money in. The first dollar cannot be removed from the system.  If they give up trying to make money it gets rolled back into the seed pool.

Step 2: Provide a platform

If I tried to invest $1 I'd get nowhere.  A single stock transaction is $9.99. Investing less than $100 makes it very difficult to turn a profit at all. These $1 investors will need a platform with fees so low that they can earn money with a dollar.  Tron is probably the only crypto that would work. Converting coins on Binance or another low-cost platform could be viable too. They have to be allowed to make as many trades as they want. The faster they can trade the more they can play. We don't want to incentivize simple buy-and-hold strategies.  Our investors need to learn, which they will do by reading and practicing.

Step 3: Reward success

This step holds the real key to growth. We're targeting low capital investors.  They are doing this to better their lives, not for entertainment.  They need real value for their family.

First dollar is locked in.  You lose it, you're out.

As your investments go up your earnings get divided. For round numbers we can say 50% of what the "House" earns goes back to the House. When you turn your $1 into $5 you've doubled the House's money and successfully seeded a new investor.

Table of returns

All the other money is yours. If you want to pull it out and buy a sandwich, that's your right.  If you keep it on the table you can grow it faster.  Those who wait with patience and risk a little more get rewarded more richly.  This will be a real test for some, and it's how we will find the real rockstars of trading. Risking it all for the long term gains takes more than brains, it takes guts.

Now to go a little further, how do we really push the rockstar investors to excel? They are going to need more seed money. So as they prove their mettle at certain intervals we give them more seed money.  Imagine at $10 they get another $10 seed money, locked in for trading only.  They could take their $10 out now and keep trading.  Or they can double their profits.

So let's say someone has produced 100 times their initial investment in 6 months, and they did it wisely (not just one moonshot). I know an outside investor with a heart of gold and he want to back this individual to get some gains of his own.  Opportunity of a lifetime for our rockstar! This platform now provides a way for the generous backer to drop some more seed money on our investor by buying into his "fund". He puts another $50 in to the pot.  Now the investor has $1 + $10 "house" seed money (locked in for life), his own $100 which he earned through wise investing, and the new $50 (not his money) for a total of $161. The house owns 11/161 of the fund, the backer owns 50/161, and the investor owns 100/161. The fund grows 10% more, and the profits are split according to their investment in him, with our rockstar investor keeping 100% of the earnings on his own money and 50% of the earnings on all of his backers' money. If he pulls his own money out he cuts his portion of the profits.  If he gets more investors he gets more to invest with and more to earn.

Step 4: Repeat

These numbers will need to be massaged, but the principle is this: an investor gets seed money and keeps a portion of all the returns.  The amount he doesn't keep goes back into seeding the next person, or paying backers for their reward.

 

So tell me what you think. Am I nutty? Is my math bogus? Maybe this already exists. Show me why this couldn't work in the comments.

 

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