Last Update
May 10, 2018
With the advent of Bitcoin, founder Satoshi Nakamoto ignited a financial revolution that would reverberate throughout the international marketplace. The most notable ramification from the emergence of Bitcoin, is its ability to put the world’s financial power back in the hands of the people. Nakamoto could see that if people controlled their own financial destiny, not only could they bypass the dishonest banking system, but this new form of currency could potentially play a role in uniting our badly torn and fragmented planet. Without any governments or banks to separate us; financially speaking, people could unite and mutually benefit from one another.
Sadly, all these years later Bitcoin and Cryptocurrency exchanges remain separated from mainstream society and divided amongst themselves. When asked about the difficulty of entering the cryptocurrency market, Rick Falkvinge, CEO of BitCoin Cash and founder of the Swedish Pirate Party stated, “I t is complicated, it’s too complicated. It is not usable enough. It is not usable enough at all.” Most people do not have a positive experience when first using Cryptocurrencies, necessitating a learning curve. Unfortunately, the separation does not end there. Cryptocurrency exchanges are extremely localized and do not trade with each other. While this practice may be profitable for the exchanges bottom line, it is not beneficial for people who want to trade across exchanges and take advantage of better prices.
The elimination of separation is the goal of BitCoinage. We will create a whole new sector in Cryptocurrency. One that exists between the centralized banking system and the decentralized world of Cryptocurrency. A hybrid area where people who are new to Cryptocurrency can have peace of mind, while enjoying financial freedom from the banking system. We will make it easier for people to get into Cryptocurrency and create the first exchange that can trade across platforms using something called arbitrage trading.
BitCoinage is the next revolution needed to put the world’s financial power back in the hands of the people. In this whitepaper, we will cover the essentials of this new sector as well as the architecture of our new innovative Arbitrage Exchange. We will also take a look at our roadmap for the evolution of this radical hybrid area and examine the potential macroeconomic benefits offered by these groundbreaking concepts.
3.1 Arbitrage Exchange Trading (the first-ever)
Mutually Beneficial Partnerships
BitCoinage will be constructed with the necessary permissions to allow users to make trades across exchanges worldwide. This will be made possible with the use of exchange application program interfaces (API’s), intermediary wallets, and direct access to exchanges in countries with struggling economies. Our unique exchange will take advantage of any price differences in Cryptocurrencies that may exist across exchanges. This difference in price is called Arbitrage and can be created by an increase in market demand due to a country's failing economy.
*Case Study (Middle October, 2017)
When Bitcoin was worth $5,000 on the American exchange Bittrex, it was simultaneously worth $10,000 on Golix.io, a Zimbabwean exchange.
In traditional markets arbitrage exists because of market inefficiencies and the opportunity is often eliminated in a matter of seconds. In Cryptocurrency, arbitrage can exist for a very long time as it is often caused by an increase in demand that is enabled by the localization of exchanges.
3.2 Bots That Learn How You Trade
BitCoinage will employ machine learning in their creation of an arbitrage-finding bot, codenamed “Bloodhound.” This bot will begin by analyzing the last 5 years of trading data across all exchanges in order to uncover patterns in price arbitrages.
The arbitrage bot will be able to understand when a currency is overvalued on a particular exchange and notify users. It will create an entry each time someone trades a currency at a differing value from the average, until a pattern is established of those exchanges where arbitrages appear most frequently. These patterns often point to inexperienced traders, localized exchanges, and newly-listed currencies.
Then, the bot will make use of integrated trade API’s with exchanges to buy, sell, and transfer currencies across those exchanges. This process is called “triangular arbitrage trading.” The bot will be able to execute a trade and immediately initiate a transfer back to the users wallet.
We believe these arbitrage opportunities will exist for quite some time, as newcomers are continuing to enter the market in increased numbers. Exchanges are still localized and new currencies are constantly being listed.
Additionally, the volatile nature of Cryptocurrency consistently creates significant price differences between exchanges.
3.3 Enterprise Blockchain: Decentralized Storage For Centralized Data
Corporate assets, such as wallet keys and data belonging to the machine learning algorithm cannot be stored on the Ethereum blockchain. In order to ensure trust between users and the network, as well as guarantee that assets will not be manipulated or compromised, that data will not be completely centralized. Employing an enterprise blockchain for storing exterior corporate assets will mitigate risk by transferring the asset burden to multiple administrators.
3.4 Atomic Swaps: The Future Of Currency Transfers
Cryptocurrency exchanges have been targeted by the community as a problem in need of a solution. They have inconsistent fee structures, widely different API’s, and strong centralized ties to fiat currencies. Atomic swap technology has been cited as the solution to the problems posed by exchanges.
BitCoinage will work at the cutting edge of cross-blockchain development in order to benefit from an early implementation of atomic swaps between frequently-traded currencies. This will allow for a lower fee and faster trades between a wider range of currencies, a more dynamic and efficient currency distribution structure, and safe, trustless trade with foreign and low-capital exchanges.
3.5 Intuitive User Experience: User-friendly User Interface (U.I.)
The BitCoinage U.I. will be as familiar as a traditional bank account and as user-friendly as finance-management software (ie. Mint). All controls will be clearly and intuitively explained within the layout and the front page will be structured to present users primarily with the most profitable trades. Currency purchases, sales, and transfers can be performed on our portal through the dynamic use of exchange API’s. As a result, interactions will be consistent and simple despite the wide variety of exchanges supported.
3.6 BitCoinage X: A Token-Based Arbitrage Utility
XBCN: The official token of BitCoinage will allow access to all of the services we provide. For example, in order to use the Bloodhound Arbitrage bot, users will have to purchase and spend their BitCoinage tokens, or stated colloquially “feed the hound.”
Platform: As an ERC-20 token, XBCN will be built on top of the Ethereum Blockchain, the token with the second largest market cap under Bitcoin. This will allow XBCN to rest on the most reputable and innovative decentralized blockchain in existence today. As such, Ethereum will provide solutions in everything, from the issues of Proof of Stake V.S. Proof of Work, security of the network, and the constant need for a dynamic economic platform as it exists in the rapidly growing sector of Cryptoeconomics.
Storage: As an ERC-20 token XBCN can be stored on any Ethereum wallet such as the popular myetherwallet. It will also be compatible with Ethereum Blockchain hard wallets such as Trezor or The Ledger wallet for those wishing to store their XBCN tokens offline.
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