BTCOR: spreading the wealth
Wednesday 10 June 2015
Thanks to an innovative use of new crypto technology, BTCOR - a company built on returns from gold, silver, bitcoin and forex trading - has made it easy for anyone to buy in at the level of risk and for the asset class they are most comfortable with.
In the real world, investing in gold, silver and forex markets is a tricky business. For starters, you’d better know exactly what you’re doing because speculating profitably isn’t for amateurs. A lot of people have found it’s a great way to make money evaporate. Of course, you can piggy-back on another trader’s success through PAMM (percentage allocation management module) accounts, but these aren’t always easy to access, there may be heavy fees, high buy-in prices, stringent KYC requirements… and so on.
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BTCOR, a relatively new crypto startup, has used a suite of new technologies hosted on the Nxt platform to make dipping your toe in the water much easier.
Leveraged plays on gold, silver, bitcoin and currency/stocks form the basis of BTCOR's strategy
At the core of the business are four speculative vehicles. These are essentially PAMM accounts, run by an experienced trader, and each specialised around one commodity or area: gold, silver, bitcoin and forex/stocks. Customers can access these in their rawest and riskiest form (also the form with the highest potential return) by buying dedicated tokens at the beginning of the month. At the end of the month, these are bought back, including any profits or losses. For example, you might purchase $50 from the forex ‘Totalizator’, as BTCOR term it. At the end of the month, BTCOR has made a respectable 40% on its account, so you receive $70 back. (Your capital is at risk, so if the trader loses out, so do you.)
That level of risk is where the next class of assets comes in, the ‘Series Ventures’. These are dividend-paying crypto-stocks, matching each of the four commodities. In each case, Totalizator returns are capped at 50%. A proportion of any returns above 50% are distributed to the corresponding asset. Thus purchasing the asset is a low-risk way to enjoy the returns from the underlying speculative trade.
Lastly, there is a further asset representing the BTCOR company as a whole. This receives the remaining proportion of any returns over 50%, and so is broadly analogous to an ETF, since it allows investors to put their money in a range of asset classes and spread risk.
It’s an interesting venture, for a number of reasons. Firstly, because it’s an example of a company that pulls wealth into crypto from the mainstream economy. A lot of trading goes on in crypto, but most of it is plays on bitcoin and alts - the same market just moving money around between traders. This one brings new money in from the fiat economy.
Secondly, it democratises an otherwise arcane form of investment. In the real world, these kinds of vehicles aren’t easy to access, and it’s hard to invest small amounts of money. This is a great example of the ways in which crypto-technology can level the playing field, through lower fees, reduced bureaucracy and genuinely borderless transactions.
Thirdly, it’s noteworthy from the perspective of self-regulation. After the initial ‘Wild West’ years, cryptocurrency businesses are recognising that they have to prove their integrity to their customers. Transparency is key, and businesses that don’t offer it are treated with scepticism. Aligning interests between asset issuers and holders is also critical. BTCOR has addressed this by ensuring that operators trade with a substantial proportion of their own funds, not just clients’ money, as well as an independent audit and various other ways facilitated by the blockchain.
Lastly, a proportion of revenues is reserved for a charity fund. Crypto (rightly) has a reputation for being the freest of free markets, but that doesn’t mean self-interest dominates everything. People are involved because they want to make a profit and see the world change - and there’s more than one way to achieve that.
In the coming months and years I'd expect to see a lot more businesses functioning in this way: taking an existing paradigm and democratising it through the technological advantages offered by crypto tech.
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