The Bilur, a new crypto currency, has just been launched in Geneva to compete with the Bitcoin. Its value is backed by that of oil. But this indexation on the price of oil is not synonymous with the absence of risk.
It was created by a London based company, R Fintech PLC as an alternative to the Bitcoin. If it is best known, the Bitcoin is not the only virtual currency. Peercoin, Namecoin, Litecoin are other virtual currencies that are inspired by and similar to the Bitcoin.
The company’s website indicates that the Bilur is a digital currency, based on a peer-to-peer Blockchain network. Unlike other virtual currencies, the Bilur is indexed to oil. 1 bilur is worth a tonne oil equivalent or 6,481 barrels of Brent. If we take into account the average price of Brent barrels since the beginning of the year, a Bilur is worth 356.45 dollars (326 euros). To attach the value of the Bilur to that of oil, R Fintech bought a million barrels of oil, stored in Texas. “As the balance sheet grows, more oil will be acquired, with stockpiled reserves in billions of barrels,” the statement said. The Bilur, like the Bitcoin, does not depend on a central bank, but it is guaranteed by a physical asset, much like the first banknotes were based on the quantity of gold held by the issuing State . “It is very difficult to create a link between a bilur and a physical object,” explains Alexandre David, product manager at Eureka Certification. “We can not control something like the quantity of physical petroleum to the number of bills in circulation.”
The company mentions on it’s website that, “The bilur, compared to the rest of cryptocurrencies, has a real, tangible value recognized by the entire financial community that gives credibility. The bilur has no transaction costs like the rest of crypto currencies. The bilur as a financial tool is tremendously more efficient than any other asset. It is bought, transferred and sold in an agile way without any kind of commissions. The bilur is the future!”
However, since no bank provides the counterparty-risk, it is difficult to have any guarantee tat the bank offers better security than the Bitcoin. It is true that Bitcoin rests on the supposed inviolability of the Blockchain and on the fact that the money supply will reach a maximum of 21 million units. Theoretically, the oil guarantee offered by the Bilur should offer greater security. But for lack of a responsible organization, it is not easy to understand who would intervene in the event of bankruptcy of the Bilur.
Technically, the Bilur rests on the Blockchain of Ethereum, competing with the Bitcoin. This protocol uses Ether as a unit of account, mostly used to pay for intelligent contracts. It is supported by Microsoft, Intel, JP Morgan Chase and other banks. But the support of these banks concerns only the technological aspect of Ethereum. It has no legal or financial value. In addition, the protocol for exchanging the Bitcoin is totally decentralized whereas this is not the case with Ethereum. “Ethereum’s environment makes it easier to create new services such as the Bilur,” said Alexandre David, “but these new systems are in fact centralized, enabling a company to get paid on transactions. ”
R Fintech PLC is a British company which has set up offices in Geneva for the launch of the Bilur. Officially, it wanted to get closer to the “world’s best experts in areas that mainly affects Bilur, financial instruments and energy assets. In fact, Bilur is an ETF (exchange traded fund) a listed index fund. The year 2000 saw many complex financial products flourish, indexed to physical assets. Some, indexed to US real estate loans, have been associated with the 2008 crisis. “In the case of the Bilur,” concludes Alexandre David, “we should be able to check the white paper that explains how the system works and scrutinize the code. But for now it is very difficult to audit who is behind the operation. ”
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