cryptocyprus (OP)
|
|
September 15, 2013, 05:36:12 PM Last edit: September 15, 2013, 08:39:32 PM by cryptocyprus |
|
Great post and questions HeRetik!
This project sounds very interesting, but I'm still not sure what to think. To be honest it sounds pretty crazy, but then again it might be just crazy enough to work. I do have a problem with the aspect of centralization though. If this takes off, it will bring quite some volume to the market, but it might also become a single point of failure, not unlike the legacy banking system. If this project goes awry and non-Bitcoiners lose money (i.e. your Fiat clients) the media is going to have a field day. Bitcoin should still be considered a highly speculative investment, therefore bringing "civilians" into the mix that are just looking for a safe place to store their Fiat seems pretty risky. Banks using high risk assets for saving accounts is partially what caused this financial mess in the first place. In other words, please make sure to have proper contingency plans and exit strategies prepared to avoid financial damages to your clients and reputational damage to Bitcoin. Nonetheless it's great to see a fresh, bold project apart from the regular mining operation or gambling site. Especially one that aims to propagate the mainstream use of Bitcoin.
100% agree that we shouldn't become a single point of failure, that is why we want others to follow in our footsteps once we have shown that Bitcoin can be adopted en-mass.
We are using multiple signature addresses to ensure that if we as a business fail, the depositor can gain access to their Bitcoin through a separate legal entity. This step by step process will be provided on account opening and available online, to ensure that the customer is well aware that they could get their Bitcoin out of their wallets if we were to go out of business.
Bitcoin will always be highly speculative and extremely volatile until it attracts more users and has many more real world applications, the volatility will only be addressed through volume, something we will be contributing towards. As our customer base grows naturally retained deposits shall follow suit, the more Bitcoin we hold for our customers, the more we will know what is happening to a larger percentage of the coins available. (For demonstrations sake and ignoring slippage; if we had a customer deposit €1m into a 12 month time-based deposit account, at the current price on Bitstamp $125.64 that would equate to BTC10640.7195, we would know that those 10640.7195 Bitcoin cannot be dumped onto the public markets to influence the price negatively for a minimum of 12 months, but that would only happen if we needed to liquidate those coins, to cover the withdrawal.)
It is still early for Bitcoin, however it will always be "early" if the big steps towards mass-adoption are never taken.
2 questions:
a) I'm not sure whether I understood your course of action correctly.
Step 1: Buy up Bitcoins on the free market (ie. other exchanges) which will serve as your backing
We will not acquire all of our coins on the free markets, doing so could mean that we are initially buying off the back of our own hype, so we will also be purchasing them away from the exchanges. We are also in talks with the owners of trading platforms, that operate out of Cyprus (for tax reasons) to ensure they integrate Bitcoin on their platforms, we are also proposing that the board members of the companies, that own these platforms partake in our lobbying efforts.
Step 2: Keep the Bitcoins in the local market (ie. Neo) and trade them at local prices
That is what Bee is for, to create somewhat of a closed loop economy, thus ensuring the maximum number of Bitcoin can remain here in Cyprus. Once others follow our lead it will present more opportunities to establish a new global infrastructure to allow frictionless cross border transactions between our own institutions. This would also allow the migration of customers deposits to others offering the same user friendly services should for any reason one of the businesses fail.
Step 3: Buy / Sell Bitcoins on the free market to make your Bitcoin holdings correspond to the Fiat your clients have deposited (at a much smaller Volume then Step 1)
Yes but also including other platforms that we shall trade on, we do not trade the funds held in our customers wallets, once the rate changes locally we shall automatically balance their Bitcoin from our own reserves, will will never be illiquid unless we cannot acquire enough BTC to complete the adjustments required following a drop in price, to our depositors wallets, as previously mentioned in the thread I shall be providing an updated prospectus either Monday or Tuesday that includes scenarios that include the worst possible case scenarios and their effects on our reserves and the strength of our business.
Step 4: Profit / Loss depending largely on the difference between the Fiat holdings of your clients and the Bitcoin backing required.
We will be introducing other financial related products to increase the amount of revenue streams we have, these include; insurance products, lending, international money transfer services and many others.
Is this correct or did I miss something?
b) What figures are you basing your estimated numbers of accounts on (eg. 3100 accounts in February)? Your expected reach in advertising, number of current account holders of traditional banks, number of people closing accounts with traditional banks... ?
We have a strategic partnership with Telia & Pavla BBDO who will be responsible for our marketing and PR activities, they have worked with some of the largest brands in the world and achieved great success when launching new innovative products to the Cypriot market. The figures in relation to our marketing reach for television advertisements are included in the prospectus, the reach is forecast at 85%, whilst targeted at those between the ages of 25-54. We also have radio, print media, online media and out of home campaigns (Billboards both inner city and along the motorways) happening alongside our below the line campaigns.
Sorry in case any of this has been answered before. I very much appreciate your transparency and responsiveness so far.
We want to be transparent with everyone and thank you.
|