BITEX
EXECUTIVE SUMMARY
The time when cryptocurrencies become first-class citizens of the digital economy is
fast approaching — the question is not “if” but “when” this will happen. When that time
arrives, the need to provide financial services for this emerging economy will be critical
to fuel its growth.
Bitex expects to be ready when that time comes by becoming the first locallyembedded
crypto bank. It aims to provide financial services to the cryptocurrencybased
digital economy that is relevant and useful to the local customer base in each
region where it operates, while being available globally. Bitex will provide
cryptocurrency-based banking services for digital customers through a licensed
technology platform available to local partners.
Bitex’s crypto-banking services include:
● Customer care, user experience and governance that is localized;
● An ERC-20 compatible digital wallet for securely storing a customer’s
cryptocurrency balances on a personal mobile device;
● The ability for using the mobile wallet with a virtual debit card for payments,
exchanges and transfers;● Various Point of Sale solutions (both hardware and software based) for
merchants to accept payments in their local currency from consumers;
● Currency exchanges between the G20 fiat currencies and various popular
cryptocurrencies;
● Large scale business-to-business payments;
● Personal loans.
Bitex will launch in mid-2018 with a subset of banking services offered to customers in
8 countries (Hong Kong, India, Japan, Korea, Philippines, Singapore, Thailand and the
United Arab Emirates), with plans for expanding its reach in the future. Services will be
operated by local partners that license the Bitex platform as a franchise and who will
register with the financial authorities in their respective countries. By working with
local partners, who have a much better understanding of local customers and
regulators and making available localized applications and customer support, the Bitex
crypto-banking platform becomes the most accessible crypto-banking solution on the
market.
MOTIVATION
Crypto banking Marketplace Considerations
The Rise of Crypto-exchanges. It is the rare person these days who has not heard of cryptocurrencies, if only vaguely
and very likely in connection with that sensational cryptocurrency Bitcoin. While
Bitcoin has been around since 2009, its recent sky-rocketing valuations and the
speculative market around it have motivated many to try and mimic its success by
creating and offering alternative cryptocurrencies. Of these, one particularly stands
out — Ether (ETH), the fuel that propels the Ethereum1 blockchain. Ethereum is the
main platform used at this time to create DApps (Distributed Applications), with each
DApp’s service accessible through the purchase and exchange of a bespoke
cryptocurrency (the application’s medium of exchange) created for that purpose. As of
March 2018, there are about 4597 cryptocurrencies2
listed through various crypto
exchanges3
, with varying degrees of utility, liquidity and trading volume.
Cryptocurrencies Are Moving Into Everyday Commerce. However, crypto exchanges offer only the ability to exchange one’s holdings between
currencies (fiat/crypto and crypto/crypto) which serve only a small part of the financial
needs of a growing crypto-economy. If commerce based on cryptocurrencies is to
progress to the point of having these accepted as a proper medium of exchange for
goods and services and take its place as a peer to fiat currencies, it is necessary to
create new institutions that can cater for the needs that people have come to associate
with financial transactions. These include the ability to store currency, exchange
between currencies as needed, use currencies for payment of goods and services,
automate bill payments, take out loans, etc. — in short, the services currently provided
by commercial banks throughout the world.
A crypto-bank, therefore, is the new institution required for this growing digital
economy based on cryptocurrencies. It goes beyond the confines of a traditional
commercial bank by offering services to its consumers on.
● a global scale, unhampered by national boundaries, although subject to
national/local laws pertaining to banking and finance;
● a decentralized, distributed and immutable ledger which cannot be affected by
any single point of failure or compromise;
● the ability to carry out pseudonymous transactions between parties where
trust is captured through cryptographic means rather than written contracts or
external supervision;
● include cryptocurrencies as equal partners to fiat currencies in transactions
between individuals, individuals and businesses, and between businesses;
● the ability to conduct escrow payments through cryptography rather than
traditional, time consuming payment methods.
Motivation for the Bitex Crypto-banking Solution
Restoring faith in banking. When creating a crypto-banking solution, Bitex has been motivated by the need to go
back to the original purpose for a bank, namely an institution that helps the economy
function and grow by providing a way to manage savings, provide means for payments
and money transfer, and facilitate loans.
Serving local needs. Bitex believes that it can make the greatest impact on society by working at the local
level, and ensuring that the benefits of this new cryptocurrency-based digital economy
can also be felt by those under-served or left out of the current banking system. Thus,
instead of starting out immediately as a global bank, Bitex wants to ensure that its
solution has a local impact.
Go to Market in Asia and the Middle East. Bitex believes that the best way to deliver significant local impact quickly is to focus on
regions where mobile connectivity dominates, and where traditional banking/financial
services do not adequately serve the majority of the population. This gap can only
increase when the economy moves to the use of cryptocurrencies.
Mobile connectivity will continue to grow and Asia will continue to drive a large part of
that growth as global economic power shifts from mature markets to the emerging
economies in that region. Low access to banking services coupled with high
penetration of mobile devices serves this unmet demand for alternatives to traditional
banks.
Motivation for a Blockchain-based Crypto-banking Platform
Using the Ethereum blockchain. Blockchain-based solutions built on Ethereum, using public distributed ledgers, cryptotokens
and smart contracts offer participants a means of creating value through
trusted and transparent interactions on a global scale. This structure is particularly
suited for the creation of a banking platform.
Financial Ethereum-based Smart Contracts. For example, a crypto-bank account holder can create a smart contract to pay a certain
amount of cryptocurrency to another external account at regular intervals (as a utility
bill payment, for example). Another example might be a simple payroll for small
business crypto-bank customer, where a contract distributes cryptocurrency to several
accounts belonging to her employees in some proportion on a monthly basis.
Such contracts are recorded on the blockchain, and the participants can look therein
to be reassured that the contract was coded as agreed. Yet another example of a
commercial smart contract might be a purchase of a certain expensive item by one
party from another, where the payment is held in “escrow” by a third party and not
released to the seller until the buyer confirms that the item has been received.
Blockchain-based financial services without intermediaries. Thus, various straightforward financial constructs such as escrows, disbursements,
etc., can be carried out on the Ethereum blockchain in a transparent and automated
way directly between the participants without the need to involve entities outside the
system or rely on any centralized entity.
STAKEHOLDERS AND SERVICES ON THE BITEX
CRYPTO-BANKING PLATFORM
The following subsections describe the stakeholders/participants in the Bitex cryptobanking
ecosystem and the service available to or provided by each. The two main
components of the Bitex crypto-banking platform are:
● BitexPay, the next generation payment solution for both consumers and
merchants; and
● EZBitex, the currency exchange and banking infrastructure with a
decentralized, distributed and immutable ledger provided by Bitex, which
underpins the functioning of the entire system.
Services for Customers
Bitex customers will be able to avail of bank-like services (payments, currency
exchange and transfers, debit card, and personal loans) that will be offered in 8
countries initially.
Specifically, consumers will be able to take advantage of the following services.
Payments to Merchants using BitexPay
BitexPay represents the service offered by Bitex to consumers and merchants for
payment of goods and services using cryptocurrencies.
Merchants will be able to accept payments in cryptocurrencies or fiat currencies of
their choice.
Consumers who sign onto the BitexPay solution will be provided with ERC-20
compatible wallets that contains their cryptocurrency holdings. Initially, Bitex will only
support the following cryptocurrencies: BTC, ETH, and LTC and the Bitex Coin, XBX. As
new currencies are added to the EZBitex exchange, consumers will be informed of the
availability of these via mail or social media.
Figure 1 shows the relevant entities that participate in a simple payment scenario.
The components in a simple payment scenario.
When a consumer wants to purchase an item, the merchant presents him with a
payment screen showing the price in various crypto and fiat currencies accepted on
the EZBitex platform. We will discuss the various merchant options for getting
payments in a later section; here we describe the scenario using a mobile app.
shows the UI of the BitexPay merchant app, which receives in the
background information from the EZBitex platform on the latest exchange rates for
cryptocurrencies and between crypto and fiat to calculate and display the asking
price in the currencies accepted by the merchant.
: The Merchant App’s UI. The merchant may also accept whatever the consumer wants to pay and have it
converted automatically by the EZBitex platform into the currency he desires.
When the consumer confirms the purchase, the appropriate amount is deducted from
the consumer’s Payment Wallet. The EZBitex platform credits the merchant’s wallet
with the purchase amount less a transaction fee (as a percentage of the purchase
amount and calculated in XBX tokens at the prevailing market rate). The merchant can
also request that this amount be converted into fiat currency and sent to his preregistered
(traditional) bank account, which transfer is carried out by the EZBitex
platform.
The interactions in a simple purchase.
By maintaining suitable balances in their Payment Wallets, consumers can also set up,
via the EZBitex platform, typical recurring payments for utilities, subscriptions, etc.
Trading. Consumers that wish to trade in cryptocurrencies using the crypto-exchange services
of the EZBitex platform will populate a Trading Wallet associated with their account.
The crypto assets in this wallet can be used for various orders for margin trading, limit
trading, leverage, etc.
Currency exchange. The EZBitex All-in-One exchange will offer conversions from crypto to crypto, from fiat
to crypto and vice versa, or from fiat to fiat.
The crypto currencies that will be listed will be added to from time to time, with an
announcement made to the consumers via email and social media.
Consumers can populate their Trading Wallet for purposes of cryptocurrency
buying/selling by : transferring fiat currency from their bank accounts to their account on the
EZBitex platform, which can then be converted into cryptocurrencies of their
choice and used for further buying/selling;
using a credit or debit card to purchase cryptocurrencies offered on the EZBitex
platform.
Staking. To encourage use of the Bitex banking platform, consumers will be rewarded for
holding XBX tokens. The amount of XBX tokens maintained by the consumer on the
EZBitex platform will be held in a Staking Wallet.
The reward will be in the form of discounts on transaction fees for cryptocurrency
exchanges. So long as the customer has staked an appropriate amount, the customer
will automatically get the quoted discount on transaction fees independent of the
profitability or expansion of the EZBitex platform.
Loans. Consumers that wish to obtain loans from Bitex by offering a cryptocurrency as
collateral will be provided with a Loan Wallet. This wallet maintains the state of the
loan and its payback. Loans will be made in XBX tokens, and the loan amount will be determined by the
collateral supplied by the borrower. Initially, the collateral of loans will be based on the
borrower’s bitcoin (BTC) (or another accepted cryptocurrency) holdings and the loan
amount will be a percentage of that. Thus, for example a borrower with 1 BTC will be
able to borrow the equivalent of 65% of the BTC’s value ($6500/- assuming 1 BTC =
$10,000. The loan amount will be the equivalent of $6500, denominated in XBX at that
token’s market exchange rate.
Services for Merchants. All merchants will need to undergo a Bitex Know-Your-Customer (KYC) , Anti Money
Laundry (AML) and Certified By Bitex (CBB) process before being registered for a
merchant account. Once registered the merchant’s location will be added to our GPS
location server so that customers can find our CBB-verified merchants for the offered
services.
In-store or physical purchases. Merchants can offer payment options to purchasers of their goods or services using
the BitexPay merchant app on a portable device or, for those customers presenting
physical cards, via a BitexPay card reader or a Point of Sale terminal.
Various Bitex payment terminals for merchants (available and ready for
use)
In cases where a consumer wants to use his physical BitexPay card but the merchant
does not have a card reader, the consumer’s credit card number can be manually
entered by the merchant on his BitexPay merchant app and the purchase screen can
be presented to the purchaser for signature.
Online purchases. Online merchants will be provided an API which integrates a payment gateway
provided by Bitex that allows the merchant to accept the BitexPay card for purchases.
Transactions will be routed via this gateway to the EZBitex platform for approval and
payment (from the card holder’s Payment Wallet).
Business to Business payments. The EZBitex platform will offer a payment gateway through which merchants or
businesses with Bitex accounts can pay each other for goods and services. This
payment service will operate globally.
The merchant/business that wants payment for goods or service provided can
generate an invoice or a payment request in the form of a QR code or link which is
shared with the payer. The invoice also contains information similar to those used in
traditional cross-border banking payments including the payment purpose and the
registration and tax details of the two parties. The link in the invoice takes the payer to
a payment page on the EZBitex portal where the details are confirmed.
“Kiosk” Merchant App for “Traditional Money Exchangers”
The Kiosk solution is designed to help cryptocurrency-rich consumers in locations
where fiat currency is preferred or commonly used.
Current traditional money exchangers (i.e., those who are already licensed to offer
exchanges between fiat currencies) will be able to offer the Bitex-branded crypto
exchange solution through which they can offer exchanges between supported
cryptocurrencies and between cryptocurrencies and fiat currencies.
THE BITEX CRYPTO-BANKING PLATFORM — EZBITEX
The Bitex crypto-banking platform allows consumers to process payments, transfer,
exchange and take loans in cryptocurrencies, all from their smartphone.
The backbone of the Bitex crypto-banking platform is the decentralized exchange
called EZBitex. The EZBitex platform will:
● Offer conversions from crypto to crypto, from fiat to crypto and from fiat to fiat
all in this one exchange;
● Offer payment gateways (provided by established third parties such as
Braintree or Stripe) for the purchase of cryptocurrencies using a credit card,
debit card or online banking;
● Host the various types of consumer wallets (Payment, Trading, Staking, Loan)
associated with consumer accounts and provide the various services described
in earlier sections;
● Provide APIs to access the EZBitex functions to third parties that want to use
EZBitex as their payment platform;
● Provide Bitex-branded ATMs in locations where Bitex operates, to allow use of
physical and virtual BitexPay cards as well as third party “Powered by Bitex”
cards;
● Offer business-to-business payments for goods and services with invoices and
receipts.
The EZBitex platform software will be licensed by Bitex to local partners who will obtain
all necessary permits from the local financial authorities for operating franchises in
that locality. EZBitex will launch in mid-2018 with a subset of banking services offered
to customers in 8 countries (Hong Kong, India, Japan, Philippines, Singapore, South
Korea, Thailand, and the United Arab Emirates), with plans for expanding its reach in
the future.
Initial franchise holders of the Bitex Platform. By working with local partners, who have a much better understanding of local
customers, partners, and regulators, and making available localized applications and
customer support, the Bitex crypto-banking platform becomes more accessible and is
a major differentiator compared to similar efforts.
SUPPORT FOR THIRD PARTIES
“Powered by Bitex” branded cards
Third parties, such as large merchants, can issue their own debit or charge cards
(physical and/or virtual), for payments at their online or offline stores. Such cards.
Such parties can create their own wallets and the EZBitex payment platform will host
the Payment Wallets for the corresponding consumer accounts. Payments for
purchases made with such cards will be deducted from the consumers’ wallets on the
EZBitex platform.
All transactions on the EXBitex platform will require payment of fees in XBX tokens.
Bitex will provide a physical card reader to merchants that allow them to read all
cards that are “Powered by Bitex”.
Powered By Bitex Branded Cards
3rd Party development for the EZBitex platform
The EZBitex platform will offer APIs to key functions of its global platform to allow
developers to create local banking applications. To this end, Bitex will provide the
following resources:
● The Bitex Open API will allow local merchants to implement BitexPay and
“Powered by Bitex” applications that are tuned to local needs (e.g., language
support);
● A Bitex Marketplace where various merchant applications developed
through the Bitex Open API are available to other merchants;
● A Bitex Developer Program that encourages local developers to work with
local merchants to bring novel applications to the Bitex marketplace.
Serving a local market is not as simple as translating an app’s screen to the local
language. There are subtle cultural contexts10 beyond language that have to be
respected and used for the most compelling user experience, ones that engage and
maintain “stickiness” to the offering.
Bitex-branded ATMs
Bitex will use third party hardware to host ATMs that are connected to the EZBitex
platform, such as Lamassu, Genesis ATM, and Sumo ATM that have gained a market
share of 70% + in the ATM market. Figure 7 shows some examples of such ATMs.
Such Bitex-branded ATMs, which will be available in the locations where Bitex offers
services, will allow consumers to use their physical or virtual BitexPay debit cards to
withdraw, deposit, transfer and carry out other financial transactions associated with
their BitexPay wallets
Bitex Branded ATMs
THE XBX TOKEN
All financial transactions on the EZBitex platform will be fueled by the XBX token. The
XBX token is therefore the utility token that allows various stakeholders in the Bitex
financial ecosystem to use its offered services.
These tokens, of which there will be a total of 300,000,000, will be available only during
the Initial Coin Offering (ICO). No XBX tokens will be issued after the ICO.
The following table shows the different membership levels based on the amount
staked and the corresponding discount offered on transaction fees.
illustrates the various ways in which XBX tokens are spent or earned, as
described in the previous sections.
BENEFITS OF THE BITEX CRYPTO-BANKING
PLATFORM
The Bitex crypto-banking solution requires consumers to maintain their own crypto
wallets (the Holding Wallet) on their mobile devices. No private keys for this wallet are
shared with the EzBitex platform. A truly decentralized way of storing the other
customer wallets (Payment Wallet, Trading Wallet, etc.) on the Bitex platform and using
the platform only when needed will allow Bitex to ensure that customer assets are safe
from hacking or other attacks. Alongside with this, Bitex will encrypt development
source code as well as use PCI Standard Certification for security in the near future.
Merchants have multiple options for receiving payments - via a mobile EZBitexPay app,
QR codes, and card readers. Online merchants can add BitexPay as a payment option to their e-commerce portals.
Again, for simple merchants (such as street vendors) the ubiquitous mobile device can
be the merchant’s receiving wallet. There is no need to have a traditional bank account.
Funds raised during the ICO will be governed jointly by the shareholders of the local,
licensed companies in each of the countries where Bitex will operate. A local company
will be registered in each country where Bitex will operate, with the company obtaining
any licenses necessary to operate as a local crypto bank.
Those shareholders that hold greater than 50% of the shares of the local company can
vote on the directions to be taken and use of the funds raised in the ICO.
Bitex Global has already raised USD 2,760,000/- through the sale of Bitex franchise
licenses to partners in twelve countries. The money raised from local licensees will be
used for creating the local infrastructure needed to support the EZBitex banking
platform, including registrations, salaries, legal and regulatory aspects, and localization
of the software.
The price of a XBX token for purchase during the token sale will be based on the
following ETH/XBX exchange rate:
The conversion rate USD/ETH will be changed every day to adjust to current valuation.
The sale of XBX tokens will be conducted in two phases, as follows.
Early investors will be incentivized with a bonus of additional XBX tokens based on
their purchase amount as shown in the following table.
The pre-ICO phase will begin at 12:00 PM GMT on May 8
th 2018.
All XBX tokens not sold during the pre-ICO will be made available to the pool of
remaining tokens not issued and will be sold during the ICO.
A minimum of 180,000,000 XBX tokens plus the remaining tokens not sold in pre-ICO
phase will be available for sale during the ICO phase.
The ICO phase starting date will be no later than June 16th 2018, with the actual date
announced once the pre-ICO phase has ended. Communication on the starting date
will be done via our official website and related social media accounts.
Token Distribution Model. The maximum number of XBX tokens that can be issued is limited to 300,000,000.
The distribution of tokens during both phases of the ICO is shown in Figure 9 below.
70% of the total amount of tokens issued will be sold during the pre-ICO and ICO
phases to the public.
15% of the total amount of tokens issued will be held in reserve for use in future as
decided by the governance committee.
The governance committee will be lead by the CEO of Bitex Global and the license
holders of the Bitex and EZBitex platform. Funds raised during the ICO will be governed
jointly by the shareholders of the local, licensed companies in each of the countries
where Bitex will operate as described in this White Paper as well as those of future partners when they join Bitex. Three or more audit companies will be used to audit the
funds usage to ensure an efficient and transparent usage of the ICO funds.
The post-ICO token distribution
10 POST-ICO FUNDS DISTRIBUTION
The distribution of the Funds after both phases of the ICO is shown in Figure 10 below.
The funds raised from the sale of XBX tokens that take place during the pre-ICO and
ICO phases will be used for the following purposes in the proportions shown:
● 47% will be spent on ongoing development of the Bitex, EZBitex, and BitexPay
platforms;
● 17% will be spent on registration fees, legal and accounting expenses for
building franchises in more regions where Bitex seeks to register its financial
services;
● 13% will be spent on marketing ap physical locations (Kiosks and Retailers), the
Web (through social media) and using cross-border payments partnerships;
● 10% will be spent on recruitment of a banking team with expertise in the
financial industry;
● 8% will be spent on administrative expenses for running Bitex Global;
● 5% will be spent on investment in development of Bitex-related apps and
platforms supporting the future expansion of Bitex.
LEGAL NOTICE
The XBX token does not have the legal qualification of a security, since it does not give
any rights to dividends or interests. The sale of XBX tokens is final and non-refundable.
XBX tokens are not shares and do not give any right to participate in the general
meetings of Bitex Global Singapore Pte Ltd. XBX tokens cannot have a performance or
a particular value outside the Bitex Platform. XBX tokens shall therefore not be used
or purchased for speculative or investment purposes. The purchaser of XBX tokens is
aware that national securities laws, which ensure that investors are sold investments
that include all the proper disclosures and are subject to regulatory scrutiny for the
investors' protection, are not applicable.
Risks. Acquiring XBX tokens and storing them involves various risks, in particular the risk that
Bitex Global Singapore Pte. Ltd. may not be able to launch its operations and develop
its blockchain and provide the services promised. Therefore, and prior to acquiring XBX
tokens, any user should carefully consider the risks, costs and benefits of acquiring
XBX tokens in the context of the crowdsale and, if necessary, obtain any independent
advice in this regard.
Important disclaimer. This white paper shall not and cannot be considered as an invitation to enter into an
investment. It does not constitute or relate in any way nor should it be considered as
an offering of securities in any jurisdiction. This white paper does not include or
contain any information or indication that might be considered as a recommendation
or that might be used as a basis for any investment decision.
Governing law and arbitration. Any dispute arising out of or in connection with this contract, including any question
regarding its existence, validity or termination, shall be referred to and finally resolved
by arbitration administered by the Singapore International Arbitration Centre (“SIAC”)
in accordance with the Arbitration Rules of the Singapore International Arbitration
Centre ("SIAC Rules") for the time being in force, which rules are deemed to be
incorporated by reference in this clause. The seat of the arbitration shall be Singapore.
The Tribunal shall consist of 3 arbitrators. The language of the arbitration shall be
English.
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