Art by: Jing Jin
Last week we brought you news about Bitreserve and its addition of Gold to its supported currencies/commodities. Today, they are announcing an arguably more exciting addition. Starting in 2015, Oil will be added as a commodity customers can easily and quickly invest in and even spend with, using the Bitreserve system and the Bitcoin network.
The potential implications of this are difficult to overstate. With the addition of oil to the Bitreserve market, they are opening up one of the most volatile, valuable and commonly used commodities in the world to a new and massive, group of entry level investors. Investing in and obtaining oil is extremely difficult for end users.
As Bitreserve mentions in its blog post, oil prices vary drastically throughout the year, causing income issues for shipping companies, airlines and other companies that depend primarily on transportation. With the Bitreserve system and its bitoil commodity, customers will be able to buy their oil when prices are low and then sell it when it is high and use it that to purchase oil when they need it.
For individuals, Bitreserve mentions a scenario where customers are able to skirt gas prices by using bitoil, buying when it is cheap and then saving it on their card until needed when gas prices are high again. They mention a scenario where users pay at the pump with their Bitoil card. Presumably they mean selling their bitoil and transferring it to a fiat capable card, but it is hard not to imagine a product that allows users to spend from their Bitreserve card oil or other card, directly at POS systems using a debit card similar to the one offered by Xapo. To be clear, Bitreserve has given no indication that such a product is coming, but it would be the logical next step.
Bitreserve allows customers to hold their value in five different fiat currencies, Bitcoin or Gold. More precious metals are expected soon, like Silver and Palladium, but the exact date of their debut is not yet known. Users are able to hold their value in whatever currency and track it with a combination of the Bitcoin blockchain and Bitreserve's proprietary Reserveledger.
The gritty details on the Bitoil system have yet to be released. We don't know what companies Bitreserve will use to buy and hold oil with. We also don't know what form exactly that the oil will be held in, an ETF, ETN, a stock in a company like the U.S. Oil Reserves, or physical oil through a broker like BitReserve's Bitgold commodity is. Physical oil is the easiest assumption considering Bitreserve's stated goal of keeping their investments simple, but that cannot be confirmed until more details are released. It should be noted that the "bbl" on the Bitoil card is the abbreviation for one barrel of crude oil.
Like all of Bitreserve cards, Bitoil will be easily spent anywhere that accepts bitcoin. The potential effects that this will have on oil, essentially changing it from a commodity to a sort of hybrid currency that also has real life applications, has yet to be seen.
Bitreserve Founder and CEO Halsey Minor will be speaking at the Bitcoin Conference in Dubai next week about Bitoil. Presumably, he will let more details slip then.
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