Erik Voorhees, the Panama-based Bitcoin entrepreneur, has sold one of his ventures for 126,315 bitcoins or, by my calculations at the time of writing, around $11.4 million. The business is a Bitcoin (BTC) gambling site called SatoshiDice or S.DICE.
The identity of the buyer has not been disclosed although I suspect BitCapital MD John Bridge, quoted on the Coindesk website, is on the money when he theorises it’s an established gaming company looking to branch out into Bitcoin. (If you need a primer on how Bitcoin works, incidentally, click here — you will note that the name “Satoshi” refers to the pseudonym of Bitcoin’s creator, and also the smallest current unit of the crypto-currency.)
S.DICE’s model is simple: players send bitcoins to S.DICE’s addresses, each of which carries a different percentage likelihood of doubling the player’s money (or returning a “you lose” micropayment). Those addresses rank as the most popular in the whole of Bitcoin-dom, so it’s no surprise that S.DICE is reportedly the leader in this field, with rivals including Just-Dice.
As U.S. laws forbid businesses from taking money for online gambling, many see Bitcoin as a possible way around such regulations — although it should be noted that SatoshiDice blocked U.S. IP addresses back in May, based on legal advice. The site itself is hosted in the Netherlands, Iceland and Ireland.
Voorhees’s dice business floated last year on the Romanian Bitcoin securities exchange MPEx, and the entrepreneur said on a forum that investors would get their money back, and then some:
“According to the MPEX Agreement, MPEX holders are entitled to receive 0.00126315 BTC per share, alongside other private owners. However, for the good of the MPEX holders and for the sake of the general Bitcoin community, which the site always has intended to support and nurture, SatoshiDice has arranged to pay MPEX holders an additional .00223685 BTC per share bringing the total to 0.0035 BTC per share.”
Conceding that some investors who had “intended to hold for a long time” may be displeased, Voorhees suggested they were getting a “277% premium over the sale price and a roughly 175% premium over the current market price of S.DICE shares on MPEX” (although mathematics suggest those are actually only 177 percent and 75 percent premiums respectively).
The reactions on the forum ranged from the congratulatory to the deeply suspicious, with the latter variety highlighting the buyer’s anonymity and crying “scam” – though without any overwhelming evidence that I could discern.