Erik Voorhees has announced that SatoshiDice, by far the most popular gambling site in the Bitcoin community, is being sold in full for 126315 BTC, worth $12.4 million USD at the time of the announcement. Holders of S-DICE shares on MPEX are entitled to receive their share of that, 0.00126315 BTC per share since each share represents a hundred-millionth of the company, but Voorhees has arranged to voluntarily reward shareholders with the larger amount of 0.0035 BTC per share. This higher price is equivalent to 277% of the 0.00126315 BTC to which shareholders are contractually entitled, 175% of the share price immediately before the buyout and roughly equal to the original S.DICE share price when SatoshiDice first had its initial public offering in 2012 (although a bitcoin was worth less than $15 then and is worth $80-$90 now).
“While I know some S.DICE owners intended to hold for a long time,” Voorhees writes, “and will thus be dismayed by the buyout, it is my sincere hope that this compensation level will be amenable. It is substantially higher than the contract mandates, and it is almost 3x higher than all private owners are being paid. It has not been easy to negotiate to this level, but I believe it is the right thing to do.”
SatoshiDice is now one of the largest businesses in the Bitcoin economy, beaten out by the mining company ASICMiner, worth roughly $150 million, and perhaps Bitcoin merchant and exchange juggernauts such as BitPay, BitInstant and Coinbase, all of which have received millions of dollars in investment. The company’s success can be attributed to its simple interface: the site maintains a number of Bitcoin addresses, each representing a particular chance of winning, and users can simply send bitcoins to that address and immediately receive either the amount sent multiplied by a specific amount or a micro-payment to confirm that that particular bet lost. The most popular address, 1dice8EMZmqKvrGE4Qc9bUFf9PX3xaYDp, for example, has a 48% chance of returning double the amount sent. As a result of this simplicity, almost as soon as the site was first created it rose to become respoonsible for roughly half of all transactions on the Bitcoin network; even today, nine of the top ten Bitcoin addresses with the highest activity belong to SatoshiDice. More recently, SatoshiDice saw it in its legal interests to start blocking IP addresses originating inside the United States from accessing the site. The move sent share prices crashing down, but proved to be only a minor impediment to users seeking to make SatoshiDice bets; using SatoshiDice requires nothing more than a Bitcoin client and knowledge of what SatoshiDice’s addresses are, and the latter can be found simply by looking at blockchain.info’s popular addresses page.
The site was also a major sponsor of the Porcfest event in New Hampshire this June; aside from that, however, over the past few months the site has somewhat faded into the background as more mainstream businesses like payment processors, exchanges and hedge funds entered the limelight. Voorhees himself has switched focus to Coinapult, a company in Panama whose sole function is currently allowing Bitcoin users to send bitcoins over email, but which soon intends to rapidly grow to serve functions such as merchant services and Bitcoin exchange – essentially an equivalent of Coinbase serving customers outside the United States.
SatoshiDice shareholders on MPEX should expect to receive their 0.0035 BTC payout in a series of payments over the course of the hours following the sale, and operators of “pass-through” services allowing Bitcoin users to indirectly invest in S.DICE on other exchanges such as Bitfunder are responsible for carrying forward the dividend to their users. Altogether, S.DICE investors have come out with a very good deal: despite the Bitcoin price rising by a factor of seven, those who invested in the original IPO are getting the same amount back that they put in, and can also keep their dividends over the course of the past year – amounting to a total of 20% of the share price. Altogether, SatoshiDice was a highly successful example of what Bitcoin stock markets can do; ordinary people located anywhere around the world with as little as 0.0035 BTC to invest were able to financially participate in the development of the largest Bitcoin gambling site in existence. Businesses like Bitcoin Pride are taking advantage of the same opportunity, allowing them to crowd-fund tens of thousands of dollars of capital when doing so before would have required finding a single angel investor and giving them a considerable degree of control over one’s business. As more businesses start using these kinds of micro-stock-markets, especially outside the United States as governments outside the US tend to have much less restrictive securities laws, both Bitcoin gambling and Bitcoin investment are proving to be very promising markets for the months ahead.