Bitreserve Expands to India and Mexico; Partners with Mexican Billionaire
Bitcoin bank Bitreserve , founded by CNET founder Halsey Minor in 2013, shields its customers from the volatility of bitcoin by instantly locking deposits to a fiat currency selected by the customer, for example the US dollar. If you make a deposit in bitcoin to Bitreserve, you don’t have to worry about volatility, because your bitcoin can be converted to dollars on-the-fly and appear as dollars in your balance. So Bitreserve users don’t lose money if the exchange rate of bitcoin goes down – if they have chosen to convert part of their holdings to, say, $1,000 USD, they will continue to have $1,000 USD in their account regardless of any fluctuations of bitcoin value.
Of course, the reverse is also true: if the exchange rate of bitcoin goes up, you don’t make money. But today risk-averse bitcoin users are scared of volatility and many fear that bitcoin will continue to dive as it has done in 2014. In the harsh reality of today’s economy, most individuals and small businesses must carefully manage their finances, and are unable to tolerate even a small degree of volatility.
“Bitreserve is on a mission to democratize the use of digital currency by protecting businesses and consumers from the risks inherent in the bitcoin model,” notes a Forbes review quoted on the Bitreserve website.
Bitreserve users can fund their accounts with bitcoin, and can choose to hold their funds as bitcoin or “bitcurrencies” permanently pegged to gold or to a growing list of fiat currencies, including dollars, euros, pounds, yen, and yuan. Users who choose to convert their bitcoin are still able to send bitcoin payments to other Bitreserve users or external bitcoin addresses, but their bitcoin holdings fluctuate with exchange rates, whereas their converted holdings stay stable.
Recently Bitreserve announced the launch of two new bitcurrencies: the bitrupee (BitINR) and bitpeso (BitMXN), pegged to two key developing world currencies – the Indian rupia and the Mexican peso – now supported by Bitreserve’s cloud money system. Mexican Bitreserve customers will be able to hold their funds in Mexican pesos.
The most interesting part of the Bitreserve announcement is:
“The bitpeso is key to realizing the potential of our partnership with Bitreserve’s largest investor, Ricardo Salinas-Pliego, one of Mexico’s most admired entrepreneurs and the Chairman and CEO of Grupo Salinas, one of Latin America’s largest and fastest-growing business groups.”
Salinas-Pliego is the fourth richest person in Mexico behind Carlos Slim and the 168th richest person in the world, with an estimated net worth of US $8 billion in March 2015.
Grupo Salinas, a group of companies with interests in telecommunications, media, financial services, and retail stores, is a pioneer in bringing basic financial services to the poor and working class through its retail and banking arm Grupo Elektra. According to the official website, Grupo Elektra, Latin America’s leading financial services company, is “focused on the base of the pyramid” – the large mass of Latin American financially disadvantaged citizens and migrant workers in the US. The Bitreserve announcement notes that:
“With over 2,600 retail outlets and bank branches throughout Latin America, Grupo Salinas will be a key partner in bringing the benefits of Bitreserve’s cloud money system to millions of Mexicans working in the US and hundreds of millions of consumers and businesses throughout Latin America.”
The wording of the announcement and the business model of Grupo Elektra imply that Bitreserve wants to grab a slice of the large market for remittances sent from migrant Mexican workers in the US back to their families in Mexico, in partnership with a major financial services company and community bank. The plan combines the faster and cheaper remittances permitted by Bitcoin with the convenience of using the national currency.
The announcement also reveals that Salinas-Pliego is now the main investor in Bitreserve, but the amount of his investment hasn’t been disclosed.