BitReserve Launches API for its Cloud Money Platform

Bitreserve’s API is the first time developers and businesses have been provided with access to its financial services platform, or any other cloud money-like services.
Bitreserve Connect gives people the ability to access Bitreserve’s free global money storage, transfer and conversion services. It also allows bitcoin payment startups to accelerate product development with a premade payment infrastructure, that can be transparent as it’s built on top of the public blockchain. It will also enable developers to send precious metals and fiat currencies through Bitreserve’s platform.
“Through a platform like Bitreserve Connect, this is the first time significant innovation around money in the cloud can scale to businesses — to drive some of the most fundamental and influential ways money is able to move between people.”
— – Halsey Minor, Bitreserve CEO and Founder
Another benefit of the API is Bitreserve’s Anti-Money Laundering (AML) and Know-Your-Customer (KYC) compliance infrastructure, giving businesses a head start with financial regulations.
“This enables developers to focus on their core product, not the expensive and time consuming task of building a financial services backbone.”
— – Minor
The service launched with three startups already integrated. Bitcoin atm network LibertyX, which has linked into the existing atm infrastructure around the United States and Mexico, hopes to serve a remittance channel for unbanked Mexicans living in the US.
The other two companies are international bitcoin payroll service Bitwage, and e-gift certificate provider, Easy Money. Both companies serve international groups of customers who have limited access to the traditional banking system, making this a potential viable option for them.
“Sending money across borders is a nightmare. Paying employees in different countries means fees for the employer and the employee, plus it adds uncertainty of when wire transfers will actually come through based on differing banking systems around the world."
— – Jonathan Chester, Bitwage COO
Challenges for the unbanked
Bitreserve announced last week that it was removing all fees for converting currency from bitcoin to the various fiat currencies supported by the platform, including BitUSD and BitEUR. The startup allows you to peg your unruly bitcoin to the price fiat currencies and precious metals, although fees still apply to converting to metals. BitReserve launched with the ability to send money between users for free and has positioned itself as new kind of financial system, “where it’s free to hold, send, receive and convert money.”
However, Bitreserve doesn’t solve the issue of getting bitcoin in the first place.
Despite allowing users to hold digital versions of fiat currencies, the Bitreserve system does not allow users to deposit or withdraw fiat currency. Bitcoin is the only way in or out. That means users can’t benefit from Bitreserve’s services until they’ve first purchased bitcoin elsewhere.
Depending where you are located, buying bitcoin can be very difficult and expensive. This can be particularly difficult for those in developing economies, where it can be impossible to obtain digital currency.
It also limits the utility of Bitreserve. There is no way to convert BitUSD to actual USD without first converting to bitcoin, withdrawing that bitcoin from Bitreserve to an exchange, and selling it for dollars there.
This is especially true for the methods of obtaining bitcoin that don’t require a bank account, like the in-person trading website LocalBitcoins, where buyers often pay a premium of up to 10 percent over market prices. For emerging economies, where liquidity is lacking, the margins are often greater. This makes obtaining bitcoins expensive. Once you get into the Bitreserve system it is free, but there is a cost to get there. For the unbanked, this cost can be prohibitively expensive.
According to Changemoney.org, a Bitreserve website that shows data about its platform and where in the world it is used, most of the company’s users are in developed markets. These countries include the United States, Europe, Australia, Israel, and Canada. Only three developing countries, Argentina, Myanmar and Russia, have a relativley large amount of users storing assets with Bitreserve.
While Bitreserve sounds like a great idea, its ability to provide low-cost money transfer and conversion trails the adoption of bitcoin, which is concentrated in developed countries. In the future bitcoin may have much wider adoption, inclusive of emerging markets, and greater liquidity. Until then currency conversion fees aren’t Bitreserve users’ biggest cost, it’s obtaining bitcoin.
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