Topic: Proven project with real profit potential. Islamic Bank of Bitcoin revived (Read 319 times)

   Watching these idiotic ICO's has really got me thinking... why are people dumping literally hundreds of millions of dollars into garbage that with 99 % certainty will never be profitable- except of course for the developers with their fat salaries.

   People are pouring money into projects that are documented to an extent that if you were to go to a real proven venture capitalist and present them, they literally might beat the presenters up for trolling them or call the police to report a scam. People are only getting away with this imo because of the extremely high level of general ignorance about blockchain, smart contracts, and economics.

     I have an idea that is actually sound, and if the right talent gets behind it, it could easily be extremely profitable.

    It is based on the concept of hybridizing proven business models, in order to reduce barriers to entry for new potential cryptocurrency users/investors by centralizing multiple functions on a single platform. Furthermore, it is given a huge boost by being powerfully incentivized to a so far largely untapped market using a unique marketing approach that can draw in wealthy investors who would otherwise never consider investing in crypto or a service like this- and it has virtually unlimited potential for expansion.

     The project would need a CTO with a strong background in web security and programming, a CFO with an understanding of accounting. Ideally we would want to initially set mechanisms in place for a high degree of transparency to gain the trust of investors, and perhaps this could be achieved with an ICO structure that requires participation of investors for releasing funds.

       The services I am talking about hybridizing would be best exemplified by Coinbase or Xapo, and conventional retail banks and cryptocurrency and forex exchanges, eventually branching into financial products once the initial exchange is established. Furthermore, some of the advantages of decentralization can be captured by providing a blockchain based, decentralized crowdfunding platform for projects both inside and outside of the blockchain space, while simultaneously offering. Clients can offer investment vehicles as well as investing in indexes and investment vehicles provided by the platform, effectively allowing clients to choose their level of engagement in how their deposits are managed, allowing anything from ICO style funding to mutual funds to microfinance aggregates to cryptocurrency or real estate indices.

   To break it down, here are some of the features that would be offered to customers(these functionalities would also be developed in this order divided into three phases):

Phase One

Coinbase phase

-Online wallets in major cryptocurrencies.

-A built in cryptocurrency exchange allowing the purchase of major cryptocurrencies, as well as supporting populat currency pairs.

-Fully transparent, trustless wallet options.

-Cold and hot wallet options.

-Debit card that can be linked to any wallet.

-Support for deposits and withdrawals in major global currencies as well as the currencies of target markets.

Phase 2 Retail banking phase

-Wallets offered in major currencies that can also be linked to debit cards, possibly via a native token akin to XRP.

-Gold and silver bullion wallets and seamless exchanging of bullion for cryptocurrency, within the limits of what reserves can allow.

-Subcontracted bullion and cash withdrawals and deposits with physical locations provided by a trusted 3rd party partner institution.

-Located in a tax haven with the most possible protection for privacy of clients, while still allowing full integration with conventional banking institutions.

-Online management of wire transfers and records.


Phase 3 Investment banking

-Indigenous crowdfunding platform, as well as a token exchange and forum, allowing clients to discuss, publicize, and list their own projects, as well as invest in other clients projects.

-Microfinance initiatives with a charitable focus.

-Fully transparent risk weighted financial products, including cryptocurrency, real estate, and microfinance, with varying maturity periods, ie. 1, 2, or 5 years.



     In other words, a one stop solution for trading, investment, and wealth management that helps individuals, private enterprises, and institutions integrate cryptocurrency functions while enabling them to profit from price development, as well as enabling clients to both insulate themselves from volatility and inflation while still offering a variety of investment options.

    The need for such a service has been my own life, living simultaneously in various countries, managing various projects, and dealing with international wire transfers, has given me the impression that the present financial institutions are hopelessly antiquated. I need a bank that offers various solutions and back doors for moving funds and financing trade.

   The model of banking should be similar to the ideal model of government- a lean centralized authority that provides a framework in which people can connect with eachother and do business without facing impediments. Cryptocurrency is a major step in this direction, but to achieve wider cryptocurrency adoption, we need more services that integrate with people's lives while allowing them to enjoy the efficiency gains of cryptocurrency.

   For my own business, I need to purchase coffee in Colombia, and ship it to Egypt. I need to pay for transport, warehouses, and processing on both sides, and I prefer to keep the bulk of my funds in bitcoin. I would like to not have to deal with multiple bank accounts in multiple countries anymore, and I'd like to be able to use blockchain verification and contracts to avoid piles of unnecessary paperwork and having to be physically present for transactions, and I'd especially like to not have banks skimming interest off of my wire transfers by holding them longer than necessary.

   Coinbase has provided for a lot of my individual needs by linking with my bank account, and by means of the Shift card allowing me to purchase bitcoin and use it for my personal expenses, but I want an online bank that can handle high volume transactions for trade deals, as well as provide investment options not just for profitable projects, but for projects I can believe in, enabling a more grassroots and hands on form of financing and investment that still harnesses some of the benefits of centralized approaches, while simulatenously utlizing mobile banking to provide services from the unbanked, integrating with services like Mpesa, as well as drawing from this huge pool of potential clients. I want to be able to hold my deposits in bitcoin or altcoins, but rapidly be able to make transfers to conventional financial institutions on short notice if necessary without keeping large reserves of fiat.

    The first question to a critical mind should be "What you are proposing starts out as an exchange like hundreds of others- and your growth model requires building a large user base. What differentiates this exchange from any other to attract customers?"

    The answer is this will be the first cryptocurrency exchange and the first integrated retail bank and investment platform integrating cryptocurrency targeted primarily at Muslims. The absence of cryptocurrency services catering to Muslims represents a huge market gap and the first company to enter this space stands to profit enormously.

     Whether people like it or not, the Islamic world is undergoing an awakening in which many people are becoming increasingly religious- and this is leading to increasing dissatisfaction with convential financial services for a number of reasons, including the use of interest, the trading of derivatives and futures, which is not allowed in Islam, insurance services which are considered unlawful by many religious scholars, as well as financing for projects like casinos, pornography production, alcohol production and distribution, as well as media with content that many Muslims consider immoral and do not want to support. Furthermore, increasing awareness of the role of fiat currency in fuelling the conflict and instability in Muslim countries has many educated professionals in the region looking for alternatives to dollars as a store of wealth. Inflation rates are also high in many Muslim countries, which means Bitcoin and cryptocurrencies could prove attractive, as has been the case in places like Argentina and Venezuela.

    The Islamic financial sector has consistently outpaced the growth of the conventional financial sector since the liquidity crisis of 2007-8, demonstrating double digit growth rates, with the total value of the sector estimated at $2 trillion.
    
       The only major exchange in the Persian gulf region is BitOasis, and having used their services I can really say it does not compare well to competitors like Coinbase or BitStamp. Also, it is geared toward a secular rather than religious customer base. Many wealthy potential investors are hesitant to invest in cryptocurrency because they don't understand the moral implications of it, and it would be possible to get the endorsement of established religious scholars who have a great deal of influence among Muslims. Religious authority is decentralized in Islam, but if you can imagine the effect of the pope endorsing Bitcoin you can get an idea of the effect religious authority figures could have on the demand for cryptocurrency services. A large part of the reason a major fatwa has not yet happened is largely because no one has been soliciting it, but doing so could be good for both the company and cryptocurrency in general.

     Many of the aims of bitcoin are compatible with Islamic principles, like the preservation of individual wealth, the ability to exchange value independent of government controls, and the ability to store and transfer wealth without being involved in an industry rife with the practice of interest banking. By utilizing a marketing approach based in religion, a brand can be built in an incredibly short time period that already has the emotional basis of familiarity and trust that is the hallmark of any successful product.
      
     In the initial phase all accounts associated with the exchange would be held with Islamic banks to minimize exposure to non-Islamic business practices, and if the business grows enough to provide retail banking, a physical vault with security would be required. If the business grows enough, there would have to be distributed reserves in vaults in several countries to mitigate political risk.

      Most of the revenue would come from fees on exchanges. It seems like it would make more sense to provide services like wire transfers and debit cards at cost or for free, as this would then attract customers who use other services.

    The exchange could also run its own blockchain for managing ownership stake in projects- more or less a bitshares for Muslims that can also function as the backbone of both the currency exchange as well as the halal token/securities exchange.

   Anyway, these are just some preliminary thoughts, if anyone us interested or has thoughts or suggestions or is interested in participating, I may start working on a more formal business plan.