Bohan Huang is the Currency Development Officer at the Uro Foundation. The Uro Foundation is the non-profit volunteer organization that oversees the long term development, growth and maintenance of the Uro currency ecosystem.
Uro is a currency pegged to the value of 1 metric ton of Urea, the world's most important fertilizer responsible for over half of total world food production by volume. Urea is made from only energy, water and air - and its demand is based on the ever increasing need for food.
An international group of Urea sellers have joined the Uro Foundation to form a legal consensus, the Uro Protocol. This document set out clear procedures for the exchange of Urocoins for Urea shipments at the pegged 1-1 ratio. The protocol has been ratified by several Urea suppliers and is open to signing by any Urea seller.
The impact of URO on the agricultural sector is discussed in the whitepaper "URO: An International Decentralized Urea Exchange"
While the idea of an asset-backed coin is certainly not new, the Urocoin project certainly caught our eye due to its rather unique concept and application. And amidst the intense scrutiny and the backlash this cryptocurrency received from the community, the Cointelegraph decided to look further into the matter.
We would like to thank Bohan in advance for taking his time to address our questions.
CoinTelegrpah: How did you decide to create Urocoin? And why urea out of all the commodities that can be used to peg to a cryptocurrency?
Bohan Huang: Like many things in history, the creation of URO was circumstantial. I started up a company back in 2012 that focused on secure IP CCTV networks, software night vision enhancement and AI object detection (TruHD) that was later acquired by GES AU (which amongst other business activities had an ageing CCTV arm that was past its time technologically).
Brief exposure to Bitcoin from a colleague in early 2013 and the launch and massive success of Dogecoin caught my attention. This awakened me to study the true nature of money to get to the bottom of what was going on. I developed an understanding of fiat currency and an opinion of Bitcoin as “digital form of gold” from self study of economics (in my view, gold is not a great currency - its value is too detached from the basic, survival needs of civilization). This opinion led to a desire to involve myself in a project that can create a “digital everyday currency with a relatively stable value.”
The circumstantial part of the story is that I later discovered GES was part of an international group of companies headquartered in Hong Kong. [This was] when I met the CEO of Green Earth Systems Limited. Out of curiosity, the discussion evolved to me learning about the use of LC/SBLC/BGs (lengthy 3+ week delays, enormous 10% fees even on multimillion dollar amounts) as international commodities trading payments.
One thing lead to another and soon I became intrigued by urea, in particular its energy and food related properties. At this point I proposed URO, an elegant solution capable of solving 3 problems: urea commodity trading payments, urea hedging, and long term currency stabilization.
CT: You’re probably tired of defending Urocoin but we need to clear up the controversy swirling around it. So I apologize for being so frank but is Urocoin a scam? Do you have any evidence, documents etc. that could dispel the allegations?
BH: We have evidence and documents that me and the companies involved are not scams: urocoin.wikia.com/wiki/Proof_of_Concept
Basically the above link outlines most of the documents released in the past - a lot of it is confidential, censored and in hindsight it was inappropriate to reveal so much sensitive material.
CT: The developers have proposed that 1 Urocoin (current price - US$0.50) will ultimately equal 1 metric ton of Urea (approx. US$300). This begs the question of how truthful Urocoin’s 1-to-1 conversion of Urea is. Could you explain how this will work? And, in your opinion, is this the main driver of all the scam allegations?
BH: The total supply of Urocoins (~1.5 Million after 5 years) barely reaches 1% of the international urea market (150 million tones as of 2013 - sseassociation.org/Presentations/2013/Kornegay/2013-Kornegay.PDF).
Therefore, over the next 5 years, as we strive to increase adoption through marketing, the demand for URO (from urea wholesalers, futures traders, etc.) will far outstrip the total supply, causing exchange rate to stabilize around the market spot rate of urea.
In my opinion, it is indeed the low initial exchange rate of URO that is the main driver of the scam allegations - which is rather ironic.
CT: The URO Foundation protocol, which was signed by Crown Team Corp. and three other NIER (national import export representative) companies, commits members for 10 years to accept URO for Urea purchases. Is there any legal entity to enforce or stop these companies from reneging on their commitment?
BH: There are multiple avenues for legal action that consumers can take against the ratified urea sellers if they refuse to take URO as payment under the terms of the protocol - including involving the Fair Trading local regulators and the courts.
This is no different to Tesla motor's recent release of their new warranty policy, which promises free repairs for 8 years irrespective of mileage. The advantage of having the Uro Foundation oversee the Uro Protocol is that, embedded in the protocol, are clear procedures dictating the method to which any amendments can be proposed and affected - basically forcing transparent disclosure or plans 30 days ahead of time and delaying changes by at least 60 days before they take affect.
This additional layer of transparency protects investors and consumers from unexpected changes.
CT: Having read your interview with coinsource news on your IRC chat, there seems to be an impasse on the commitment vs. agreement issue. In this chat, you stated that you are welcoming everyone to advise on how to reduce risk for investors since there are no guarantees that the seller will trade you Urea for Urocoin. Have you considered using the blockchain as a possible way to ensure that all parties follow through with these commitments?
BH: There are many useful block chain options that are already available should the buyers and sellers wish to use them. These include 2-way and 3-way multisig, we are also researching BitHalo and services like Agreed (a commercial escrow service that currently caters for BTC and LTC).
CT: You have also stated that you are in discussion right now with exchange platform providers such as Draglet and AlphaPoint with the aim of establishing local fiat exchanges for URO in internationally under-banked nations like Pakistan, Iran, Bahrain, Indonesia etc. When can we expect to see these fiat exchanges to go live?
BH: We know the Pakistan one has submitted all their registration papers. A couple of others are preparing for registration. The Pakistan one at least will be fully operational before November.
CT: One of the main touted advantages of Urocoin is speed and convenience. How fast is the transaction compared to conventional methods and how soon will I receive my Urea order as a buyer?
BH: The acquisition of URO to complete a urea financial transaction, from the beginning to end, including waiting for local currency deposits to clear, takes between 1-3 days. In contrast, the standard instruments of payment - LCs and BGs - take at least 3 weeks to be issued by the buyer’s bank, and typically take another week to be verified by the seller's bank.
So the net saving in time for each transaction is about 3 weeks.
The actual delivery of the product, which occurs afterwards, is done in the same way as was done previously. After urea orders are confirmed financially, the refinery completes production and arranges delivery to the origin port between 30 to 90 days.
CT: Finally, is there anything else you would like to add?
BH: One of the main criticisms leveled at us is that we should have just issued an asset on Mastercoin or Counterparty and sold the tokens. If we had done this sort of IPO style release, we would be in a much better situation financially.
However, the legality of these IPO/ICO schemes is very grey, and to ensure the long term viability of URO, we wanted a clean start - hence the very mature, barren PoW blockchain setup, with no IPO, no premine and no complex block reward halving schemes. In fact, we have a constant 12 URO per block reward schedule until the end of the main distribution phase, which lasts for a fair 6 months from launch.
I have not heard of [Urocoin] at all. It seems there are new currencies popping up every day while we the community is working hard to reach mass adoption for Bitcoin. This being said, if there is a unique value proposition then it's never too late and there will be people trading it but I have not heard of this cryptocurrency yet and would have to do some research first.
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