How it was. Evolution of Minexcoin payment system. (Part 2)
first element of the ecosystem was MinexBank, but rate volatility
control wasn’t its initial function. Even after the development of other
elements, its core function hasn’t changed; it is proved by the project
positioning in media at the beginning of the ICO.
Bridge between economies
that time, the main function of the bank was to become a bridge between
the existing fiat system and crypto economy. Using debit cards, we
planned to reduce the barrier between these two economies. With the help
of debit cards people could buy anything for minecoins in any place
where Visa or MasterCard is accepted, and do it on the same day when
they got a card. The operation principle is quite simple: if you
replenish the bank account with the minecoins, the funds are
automatically converted into the national currency of the holder; if the
holder wants to buy a product or service for the minecoins, he
replenishes the account in national currency and the bank automatically
converts it to the minecoins at the current rate.
pace of the process of blockchain technology implementation into the
economy is influenced by the speed of circulation of new digital money.
Special ATMs for such coins would reduce the costs of using the
terminals of fiat banks and would increase the circulation speed of the
cryptocurrency assets. But at the same time, there was a probability of
full or temporary failure of bank to service the network of crypto coin
ATMs because of the actions of national financial market regulators.
Considering these aspects, we tilted toward our own ATMs.
well as today, at that time crypto economy was developing rapidly. Many
people started to build their own mining plants or buy ASIC. Many of
them had access to cheap electricity, necessary premises, and specific
knowledge, but in order to develop the farm, they needed financing. To
take a loan in bank is not an option, since on the one hand high
interest rate would make business less cost efficient, and on the other
hand bank can turn down an application for credit, just because it
doesn’t understand what mining is. As the result, there was a lack of
the next function of the bank was crypto economy financing. Crediting
was divided into two types: large credits (for mining farms, hardware
and software crypto projects) and microcredits (consumer crediting).
main task of microcredits was to give those, who have no access to
traditional banking services, an opportunity to get financing. A
distinctive feature of regular microcredits is high interest rate, but
we aimed reducing it by cutting costs due to decision making automation.
Analysis of loan debtor should be carried out on the basis of his
activity in Minex Ecosystem, i.e. analysis of the volume of coin
circulation within his minecoin account, history of created/bought/sold
assets on MinexExchange, and other features. It would help to determine
the level of financial solvency and probability of credit default. To
reduce the credit default, the legal presence of bank was necessary. But
we also faced the problem of credibility of potential depositors to the
bank. Since without quite long history, credibility level would
approach zero, and we understood that.
of funds on the accounts could choose on their own how the bank should
use their funds. Unlike traditional banks, where it is the bank that
makes decisions on how to use money, we offered a choice. Bank clients
could keep money on deposits — in such a way this money would be used
for financing the above mentioned projects and microcredits, while
clients would receive interest due to interest payments on the loans;
the second option was a simple freezing of funds without giving the bank
the right to use them.
up, it can be said that initially MinexBank wasn’t designed as an
algorithm for volatility control, but rather as a regular banking
institution with updated functions.
Reasons why we decided not to create an analogue to a regular bank, even a blockchain-based one:
To use bank as an intermediary in the process of crediting and
acquiring is a short term outlook, rather than a prospect for many years
to come. We believe that the future belongs to P2P payments using
mobile gadgets. That is why we came to a conclusion that a simple
substitution of one intermediary by another one, even by a
blockchain-based one, would be ineffective.
2. Another problem that pushed us for the decision made is human factor risks.
this post, we’ve shared our thoughts occurred during the creation of
MinexBank. Taking into account the fact that the idea of volatility
control occurred much later, in order not to break the chronological
order, later we will tell about the arguments that have formed a basis
for the decision to give such a function to the bank. And in the next
post we are going to talk about MinexPlatform, and why we believe it to
become a catalyst for economic development and innovations in the world.
How it was. Evolution of Minexcoin Payment system. (Part 1)