Halsey Minor is the founder and CEO of BitReserve, he became popular as the founder of CNET networks.Currently, he is taking his company towards another novel technology wave.
They revealed a bitcoin-wallet service back in May.The wallet service will be ready for public use towards the end of September. The company’s crypto-currency boasts a few features that differentiates it from other wallets.The wallet uses the low-transaction costs and efficiency of Bitcoin and also promises to lock in customer’s digital currency deposits at a fixed exchange rate.
This service does not permit actual exchanges between bitcoin and fiat currencies. Instead, it promises to absorb and manage risk if value of bitcoin drops.This is done by maintaining and publicly presenting an asset reserve containing all of its clients’ dollar and other currency denominated deposits.The main aim is to avoid the extreme price volatility, which has been the crypto currency’s main deterrent for typical users.Therefore, BitReserve offers them a cheap and reliable service for money transfers.
Mr. Minor said that they want people to stop speculating about bitcoin and accept it for all its great features.A core target market for this service is the same as the target market of remittances, using which immigrants in the United States send money to their home countries.Only remittances from the US to Mexico were as high as $22 billion in 2013, based on information from the World Bank.
BitReserve hopes to take a part of the market away from leading providers like Western Union which uses a very costly banking system to transfer money, by locking the rates in dollars or Mexican pesos.They also keep minimum transaction fees, as low as 0.45%.Bitcoin is constructed on top of a decentralized network of computers that approves peer-to-peer transactions without the need of costly intermediaries like banks and credit-card companies.This independent structure helps to keep down the underlying costs of money transfers and payments.However, the crypto currency is extremely volatile, which led to a loss of almost 50% of its value against the dollar in 2014, after it gained 5,500% last year.
Bitreserve lets people to transfer funds to other users in digital form easily for a very low cost, very much like other Bitcoin based digital wallet services.What is different is that this service allows users to fix their digital assets in their home currency.Then, Bitreserve manages the risk by buying the underlying currencies immediately and investing them in reserve assets.An essential part of this system is that users must trust Bitreserve and believe that it stands behind the fixed exchange rates.
Their perception of the reserve management is important.The service wants to convince users by publishing and by constantly updating the breakdown of the reserve’s assets. It is expected that the portfolio will include temporary bonds and other low-risk, highly liquid securities.BitReserve will earn profit based on the degree the return on reserves beats its users’ assets.
Mr. Minor stated that holding money is a part of its own business model.
