The savings account interest, a first for the Bitcoin space, will be fixed at 2.18 percent per year for a six month promotional period.
Payment of that savings account interest will be supplied from the earnings of BTC.sx, a popular bitcoin trading platform that has brokered over 60,000 trades with a total value of over $50 million.
AllCoinsNews was in London last week and had a chance to meet up with two executives from BTC.sx, CEO and founder Joe Lee and CMO Josh Blachford, to discuss the new savings account service. They have offices in CAPCO’s London headquarters in the “Silicon Roundabout” area.
Joe Lee, Founder and CEO, believes that the savings accounts will appeal to millennials.
We believe we are setting the future standard of savings accounts. Millennials are about to become the world’s most powerful demographic. We are seeing these digital natives rapidly adopt new products for alternative investment and saving opportunities.
FinTech startups have a once in a lifetime opportunity to revolutionize banking. We are very excited to be pioneering digital currency savings accounts.
The savings accounts are powered by Blockchain technology. This allows users to independently verify the safety of their deposit on the Blockchain’s public ledger. The interest payout is also calculated from Blockchain data, which permits users to verify they are being paid the correct amounts.
Lee told AllCoinsNews:
Besides being the first Bitcoin savings account, it is first savings account using the Blockchain. In our system it takes the spirit of Bitcoin and allows anyone to independently verify being paid the correct interest.
With the current price volatility, there are a lot of bitcoins that are being held on to by investors. According to BitcoinRichList.com, over $750 million worth of bitcoin sitting idle. Joe Lee and his team hope to provide customers a place to hold on to that currency.
The big driver of these interest rate accounts, the BTC.sx trading platform itself, plugs directly into multiple exchanges and permits its users to trade on all those exchanges from one platform.
Our trading platform is similar to a brokerage model. We connect to the exchanges and act as a broker for our clients. It allows us to be more neutral.
The story of BTC.sx really began when Lee was an investment banker in Australia and, in 2011, read the famous Bitcoin Whitepaper written by Satoshi Nakamato. Lee was so taken by the Blockchain technology that he eventually left investment banking to dive head first into the Bitcoin ecosystem. With an initial $100 investment, Lee developed his own trading bots that generated more than $200,000. He then focused on developing bitcoin trading infrastructure, which eventually resulted in the roll out of BTC.sx.
BTC.sx was selected in early 2014 to be a part of Seedcoin’s startup incubation program, receiving 500 bitcoins in investment. As a result of Seedcoin’s backing, BTC.sx was able to accelerate growth internationally.
They have road the ups and downs of the Bitcoin roller coaster. Their brokerage model has nonetheless had success, including signing deals with some prominent exchanges Bitfinex, Bitstamp, and New York-licensed itBit.
The BTC.sx trading platform is also rebranding as Magnr to emphasize the integration of the two products. It generates revenue from traders, which will partly be paid as interest for the savings accounts. The trading platform’s security features include cold storage and human audits of withdrawal requests. Traders can increase market exposure with up to 10:1 leverage. BTC.sx uses direct market access, which means the platform does not trade against users, and trades actually create buys and sells directly on the supported exchanges.
It should not be a surprise that BTC.sx management has a lot of faith in the future of bitcoin. However, it is about more than just the currency.
Lee believes that bitcoin is undervalued as its utilitarian value for other applications is growing. He pointed out how significant financial sector players like investment banks Morgan Stanley, Goldman Sachs, UBS and Barclays, are investing and researching Blockchain technology. That trend is in regard to the technology rather than the currency.
They are looking at the utilitarian use of the Blockchain rather than the currency itself. They are looking at using it for cost savings for their institutions.
Lee highlighted the power of the Bitcoin Blockchain network:
No one can argue with the network effect. In computer science, that is very hard to achieve. It is similar to the Internet… everyone is trying to use the new technology for cost savings.
BTC.sx, now becoming Magnr, is in fact led by investment banking veterans. Joe Lee formerly worked for Barclays Bank and Australia’s Macquarie Group. Magnr COO Colin Kwan served at the senior management level at UBS and Deutsche Bank, and ensures the company’s products have institutional-grade quality and compliance.