Coinarch is a bitcoin investment service offering more than a standard bitcoin exchange through the use of bespoke tools to support return on investments.
Through the use of both long and short trading mechanisms, Coinarch allows customers to use leverage to boost profits in either rising or falling markets.
As traditional investment tools have not been readily available for bitcoin in mainstream markets, Coinarch seeks not only to bridge the gap but also provide more flexibility for low and high-volume private traders, while maintaining maximal security and placing control and flexibility in the customer’s hands.
The customer interface on Coinarch revolves around a BTC and USD wallet. Funds may be stored in either currency, while payment for investment products is deducted from the USD wallet first with BTC used to make up any remaining balance.
Coinarch currently operates two main investment tools, the Booster and the Maximiser.
Booster allows investors to increase their exposure using a leverage feature.
- Investors choose an initial investment amount (which can be as low as US$10), a leverage level (which can be as low as 2x and as high as 8x) and a direction (‘long’ profits as the bitcoin price rises and ‘short’ profits as the bitcoin price falls).
- Once entered, positions can be tracked continually online. Coinarch does not use margin calls, meaning there are no ongoing payments required on the part of the investor.
- Positions contain a stop loss feature which automatically limits any losses to the original amount invested without the investor needing to track this manually online.
- When the investor closes the position, any profits made are paid to the USD wallet.
Maximiser allows investors to earn high rates of interest in flat markets.
- Investors choose an initial investment amount (which can be as low as US$100), how long to invest for (minimum 30 days) and a final reference price (referred to as a strike).
- Interest payments are up to 50% per annum.
- Like Booster, investments may be tracked online in real time and can be closed out at any time.
- Unlike Booster, the investment period is predefined and positions are automatically closed out at maturity at which time investors receive a payment to their USD wallet or BTC wallet depending on the final bitcoin price.
Coinarch’s basic premise is to bring the world of investment tools to bitcoin in a format accessible to even novice traders. Its tools are hence streamlined and only as hands-on as investors themselves require; positions may be left alone for the duration or tweaked as necessary for those with experience.
As is becoming the standard with newly launched profession bitcoin services, Coinarch has invested in considerable security measures and a bespoke operating system to meet both present needs and future expansion.
“Coinarch has been built by a mix of experienced investment bankers and experienced developers, meaning we have real expertise in the two most critical areas of our business,” says CEO Jeremy Glaros.
“Importantly this means we have risk covered from both a technical and a financial viewpoint, a critical combination in the bitcoin trading space. It also means we can offer new things that no one else in the bitcoin space can.
“The best example of the latter is the launch of our new product, the Maximiser. This product is completely new to the world of bitcoin and opens up new and exciting ways to invest in it. We have a number of other products in this vein in the pipeline too, so there will be a lot more exciting options for Members to come.”
Exchange fees are currently 0.20%, with both bid and offer spreads incurring 0.40%.
Booster positions are charged daily and gap risk fees, which vary depending on whether a short or long Booster has been selected.
Rates are visible on the Coinarch website.
Rather than requiring additional payments, Coinarch deducts fees from the value of positions prior to making any payouts. This makes managing positions much easier for investors. It also means investors can invest their entire available balance in products as there is no requirement to maintain a balance for margining or fees.
Maximiser positions do not incur fees.
Coinarch was formed in the first half of 2014 from a partnership group of developers and investment bankers.
CT: What has the response been like so far to the product launch?
JG: The response so far has been great. We launched our site in public beta in late June and have been fine tuning things since in response to feedback from our customers. We now have a world class system backed by world class risk management.
CT: Could you tell us more about the biggest challenges you are currently facing?
JT: One of the technical challenges we were facing when we first started was to choose which technology stacks fit best to the development of our platform. Whether to choose a more agile and easy-to-dev technology so that we can hit the market faster, or a more sophisticated one which costs more time for development but provides benefits of easier extensibility in the long-run. In the end we decided to use both, choosing an easy-to-dev framework for the front end website and a sophisticated one for our back end core engine.
JG: From a purely business standpoint the challenges have been primarily around resourcing and prioritizing. We have lots of things we want to do and a limited pool of resources to do it. This makes picking the best path tricky.
The other big one is regulatory uncertainty. Unlike some others in the bitcoin space, we welcome the prospect of regulation if it is done well as we feel it will help us better plan for the future. At the moment, I think we (and the bitcoin community as a whole) face the very real risk of poorly thought-out regulation suddenly being introduced. This would be disastrous for the industry.
CT: Long-term trading means funds being stored long-term. How is Coinarch tackling the essential issue of security to avoid any form of loss or theft?
DW: In dealing with security on a bitcoin platform there are three main aspects that we have to consider;
- Application Security
- Infrastructure Security
- Bitcoin Wallet Security
The application has to be designed with a security conscious mind as to not allow malicious intruders to manipulate the system. We cohere to the Open Web Application Security Project (OWASP) to build in the most secure way possible. In saying that we also understand in application development there is room for error. This is why we regularly have third parties penetration tests and external white hacker evaluations.
Infrastructure design is paramount when looking after clients valuables. As bitcoin isn’t regulated there is no standard on how the Infrastructure must be constructed, which gives way to bitcoin companies designing a network how they see fit whether it be to save on cost or time and effort. At Coinarch we comply with the Payment Card Industry Data Security Standard (PCI DSS), a standard that is recognized amongst the information security community and are regularly tested for this.
When dealing with bitcoin, Coinarch implement a three-tier wallet architecture used to keep the majority of bitcoins held in cold wallets so that they are inaccessible to the vulnerabilities of the internet. When needing to get bitcoins from a cold storage wallet, all of it is withdrawn (some to the transaction, the rest to other cold wallets) and then the wallet is removed, meaning that our cold wallets will only touch the internet once and then be removed from use. Furthermore, internally we have strict policies in place that only directors have access to bitcoin cold wallets, relieving risk that we are attacked from the inside.
Finally, as the bitcoin culture is constantly changing one of the most important areas of security is continually staying up to date. We use https://Bitcoinsecurityproject.org and https://www.owasp.org as great sources of information when it comes to keeping security tight, which is a requirement to avoid any form of loss or theft.
CT: What future plans for Coinarch are you most excited about?
JG: I am excited about both our new products and the 'trading experience' changes we have planned for our platform. We want to make sure our Members have access to world leading products but we also recognize the need to help people less familiar with trading through some of the early steps, something we expect our trading experience changes will achieve.
More than that, though, we are excited about Bitcoin. The Bitcoin technology is amazing and its applications so far barely scratch the surface, making it a great space to be in. We are really excited to be playing a part and in time intend to offer the tools to make bitcoin a fully-fledged financial ecosystem.