Oilcoin, one of the newest available cryptocurrencies, is aiming to become the first fully compliant digital currency backed by valuable real-world assets: in this case, oil.
Oil is the most commonly traded commodity in the world. It trades mostly on the New York Mercantile Exchange (NYMEX), ICE Futures, the Dubai Mercantile Exchange (DME), and the Central Japan Commodity Exchange (C-COM).
In fact, the oil market is worth more than all raw metal markets combined. The market currently sits at around $1.7 trillion per year. The highest metal market, being gold, sits at $170 billion per year, and all metal markets combined (including: gold, iron, copper, aluminum, etc.) total $660 billion per year – still only a fraction of the value of the oil market
After taken a look at these numbers, it’s no surprise that someone has taken the worlds largest commodity market and is attempting to use it to back a digital currency, especially with how popular cryptocurrencies are becoming, and how successful some have become.
Whether you are an avid cryptocurrency investor or a total noob to world of digital currencies, this article will help you understand everything you need to know about Oilcoin.
An Introduction to Cryptocurrencies
Before we jump into explaining what Oilcoin is and how it works, we figured some of you might benefit from a quick introduction to cryptocurrencies in general (as they can be quite confusing to wrap your head around).
So What Are Cryptocurrencies?
A cryptocurrency is a medium of exchange, created and stored electronically, in which encryption techniques are used to regulate the generation of units of currency and verify the transfer of funds, operating independently of a central bank.
Cryptocurrencies are unlike physical currencies in a number of ways.
The most obvious is that cryptocurrencies are strictly digital – they don’t come in any sort of physical form, such as coins or notes; they only exist on computers.
Secondly, these digital currencies do not hold any intrinsic value. What this means is that they are not redeemable for any other type of commodity. For example: you cannot trade a cryptocurrency, such as bitcoin, for another commodity, such as gold.
The last, and probably most distinguishable, difference between cryptocurrencies and standard physical currencies is the fact that the creation and supply of cryptocurrencies are not determined by a central bank. Instead, algorithms and the users themselves control the creation and exchange of cryptocurrencies.
As cryptocurrencies are so different from the physical currencies we are used to dealing with, it is also important that we understand how transactions involving them differ from the types of transactions we are familiar with as well.
How Are Cryptocurrencies Used?
Cryptocurrency transactions are most similar to the transactions we do daily via our debit and credit cards. Currencies are sent and received electronically, where a system records these transactions.
The major difference between these digital transactions and the ones taking place through our debit or credit cards is that rather than the governments issuing the currencies and the banks keeping record, it is all done through an algorithm.
When a user wants to send any amount of cryptocurrency to another user, the transaction is recorded and broadcast through a peer-to-peer network, where it will be validated and confirmed. Those who are responsible for confirming these transactions are known as miners.
Miners are individuals who confirm transactions by solving cryptographic codes (like puzzles) in exchange for new pieces of the currency. Until a transaction is confirmed it is only “pending”. Once it is confirmed, however, it is permanently added to the database.
We know, we know… that was a very brief and rather vague description of how cryptocurrencies work.
The truth is, you don’t actually need to know the details of how these transactions are processed in order to successful use a cryptocurrency; all you need to do is create an account and begin buying and selling your desired cryptocurrency.
However, if you would like to get a more in depth look into these processes, you can read more about them here.
Now that you have a better understanding of what cryptocurrencies are and how they are used, let’s take a look at one specific up and coming cryptocurrency that every digital investor is sure to want a piece of: Oilcoin.
What Is Oilcoin?
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Oilcoin is one of the newest cryptocurrencies available on the market today. It is both the worlds first commodity-backed digital currency and the first fully legally complaint currency.
Who Created Oilcoin?
Oilcoin was founded by a team lead by former commissioner of the US Commodity Futures Trading Commission, Bart Chilton.
Assisting Chilton with the regulatory and compliance side of business is Joe Cisewski, former Chief of Staff and COO at US CFTC and former Branch Chief of the Division of Trading and Markets at the US Securities Exchange Commission.
Darius Brooks and Daniel Eisner are the two in charge of the projects structure and execution. Brooks is an Energy and Technology Investor and Entrepreneur who was formerly with the Thomas Lee Company, and Eisner is the leading Corporate Attorney and Senior Partner of DLA Piper LLP.
Taking care of the technology and development for Oilcoin is Jonathan Levine, former Head of Global Technology for Rakuten, and Darren Sri-Jayantha, Senior Blockchain Software Engineer.
This team brings with it a strong, diverse set of assets and impressive collective record of experience in many different fields, all with their own benefit to the Oilcoin project.
What Makes Oilcoin Unique?
Not only is Oilcoin the first cryptocurrency to link to a physical commodity like this, it is set to be the world’s first legally compliant cryptocurrency.
Like most other cryptocurrencies, it will comply with the key rules and laws required to operate as a Money Service Business in the US. This means it will adhere to the countries strict Anti-Money Laundering legislations and stay in line with various “Know Your Customer” requirements.
What really sets Oilcoin apart is the notion that it will be regulated in the traditional sense, how physical currencies are regulated, whereas all cryptocurrencies before it were unable to be regulated in that way because of their strictly digital nature. Oilcoin can be regulated traditionally because of its direct link to oil – a physically existing, traded product.
Not only will Oilcoin be highly regulated, but it will also be tangible, unlike any cryptocurrency before it.
Each coin will be anchored to the price of a single barrel of crude oil. Oilcoin’s value will move in tandem with the market price of these barrels – when the price of a barrel increases, the value of an Oilcoin will increase, and vice versa.
The founders of Oilcoin are hoping this strict regulation and one of a kind link to a tangible commodity will help Oilcoin lead as the safest, most trustworthy, and most reliable cryptocurrency available.
How Will Oilcoin Work?
As with any currency it will be affected by supply and demand. As demand for Oilcoin increases, the price value of one Oilcoin will increase, which will lead to additional Oilcoin being issued. The proceeds from the purchased Oilcoin will then be invested back into oil. This will strengthen the market, leading to a price rise in oil. It’s a cycle.
The aim of this link between Oilcoin and physical barrels of oil is to aid in alleviating the volatility of typical cryptocurrencies, making it a much less risky and more stable investment.
Getting Started With Oilcoin
When a new cryptocurrency is created, they are released through an ICO – Initial Coin Offering.
Oilcoin’s ICO is expected soon, as they were aiming for an early 2018 release. If you are keen to keep an eye out, you can stay up to date with all of Oilcoin’s ICO information, and more, here.
- Cryptocurrencies are digital mediums of exchange that operate independently of a central bank.
- Cryptocurrencies have no physical form, no intrinsic value, and are decentralized.
- Transactions using cryptocurrencies are processed and recorded digitally after being validated in the peer-to-peer network and confirmed by a miner.
- Oilcoin is the first commodity-backed cryptocurrency.
- One Oilcoin will be linked to the value of one barrel of oil; their values will move in tandem.
- Oilcoin will also be the first legally compliant cryptocurrency, following all rules and regulations set out in order to be a proper Money Service Business in the US, and will be regulated traditionally, as physical commodities are.
- Oilcoins ICO is set for early 2018.
Don’t let the world of cryptocurrencies intimidate you.
These digital currencies can be overwhelming for someone just starting out, but there are plenty of incredibly helpful and easy to understand introductions and how-to guides available for anyone interested in investing with them.
Before you begin pouring money into these digital markets, it is important to take your time and do some research so you understand at least the basics of what these currencies are and how they work.
That is why we’ve put together this article outlining everything you need to know about Oilcoin.
Being the worlds first commodity-backed cryptocurrency and the world’s first legally compliant cryptocurrency, Oilcoin is sure to catch the eye of novice and expert investors alike.
The Time Is Now
With Oilcoin set to be one of, if not the, safest and most trustworthy cryptocurrency in the world, it is a promising investment opportunity.
With Oilcoin’s ICO set to release soon, the time for doing your research and making decisions is now.
Of course, our article is not making any claims or providing any professional advice on the risks or rewards associate with Oilcoin.
If you feel Oilcoin is the right investment for you, we suggest speaking with a professional financial advisor who can help you determine whether or not Oilcoin is suitable for you, on both a personal and financial level.