But wait, there’s more…
Not only do we need digital cash, we need it to do more, today. We need it to mimic a particular type of digital fiat in one moment, and then another type of digital fiat in another moment — one form for consumption, and another form to store value safely, protecting it from all transaction fees, taxes, and exchange costs. We need it today. And yes, we also need another form called Bitcoin, to do what it does well.
Complex global markets need more than digital cash. Individuals and businesses who must utilize both dollars and emerging currencies in North and South America hope to store their value today in dollars and consume it tomorrow by spending their local currency. The demand to move from a small currency to dollars and back again is constant. Bitcoin is a new and exciting tool in this struggle, but it is no a silver bullet today. Not yet.
Let’s review the basic transaction flows GetLoci supports, and make the following assumptions on comparable transfer prices: a) adding or withdrawing funds from a local exchange incurs a 1.5% fee, and b) exchange spreads of 100bps are added to the mid-market price for the day. We acknowledge the costs vary greatly by region, with the US being better served and cheaper than execution and service access than Latin America.
ARS → BTC → ARS = 2 x 1.5% = 3% fees plus 100bps spread over market x2 = 5% fees.
BTC is not generally suitable for a daily SoV, simply for its historical volatility, except for users of extremely distressed currencies like the Bolivar. BTC does provide unique transitive features offering users opportunities to protect value.
ARS → BTC → USD → BTC → ARS = 4 x 1.5% = 6% round trip cost assuming 0% volatility plus 100bps x 4 in spread fees = 10% estimated round trip transaction fees
GetLoci is building open systems to help users confront these challenges — either as residents of an emerging country, or as a resident of a developed country with active ties to an emerging one. Today’s Latin diaspora bears a heavy burden from the global financial system. GetLoci digital assets, including Loci AR, Loci MX, Loci US and Loci BTC among others, help users originate, transfer, and exchange Loci digital assets to protect their real purchasing power by avoiding this heavy toll.
Loci AR or Loci peso are a digital proxy for ARS payable locally in Argentina by electronic bank transfer [users mint digital assets directly in lieu of funding an exchange and then purchasing bitcoin by exchanging their local currency.]. See the digital asset agreement here: https://getloci.com/ldaa. Non-custodial Loci AR are originated exclusively by electronic transfer to an open system node; digital assets are in turn burned or destroyed by outgoing transfer from the same open system node.
GetLoci users are in exclusive control of the supply of Loci digital assets, each having a 1–1 relationship with an underlying currency payable locally. Originating pesos are held by a node and its performance guaranteed both by the node itself and indirectly by a sponsoring global guarantor. The central role of a node is to allow users the ability to mint digital assets for global transfer or exchange and to support local consumption (i.e. payments in local currency). Loci digital assets are a no-fee transitive unit that facilities global circulation of value among users outside the global financial system. Loci digital assets source their value in part from currency held in that system, by directly held assets outside that system, and a global performance guarantee of local payments on demand.
Loci AR, once originated, are digital bearer units, transferable instantly among eligible open system peers locally and globally; users of Loci digital assets never incur a transaction fee, but instead enjoy no-fee, no limit, no minimum transfers with eligible peers globally.
Open system users don’t pay a fraction of each transaction, but rather license network access. Licensing will be structured by category, feature set, and volume tier. Many folks will pay just $15 per month for a multi-asset Loci Pocket connecting them digitally with their global community — some, like users in Venezuela, will pay nothing at all to connect directly with their peers locally and to their community abroad. Larger volume users like merchants, and direct issuers of digital securities will help subsidize network access for users globally. GetLoci licensing sub-systems will be deployed during the second half of 2019. In the meantime, open system access is free for eligible users.
Now let’s compare the cost model of bitcoin and local currencies with Loci digital assets with Loci AR, ARS received locally in Argentina by the AR node, as our example. We’ll use the pricing assumptions from above again here.
ARS → Loci AR →Loci US →Loci AR →ARS = 0% transaction fees.
ARS → Loci AR → Loci US → Loci BTC → Loci US → Loci AR → ARS = 0% transaction fees.
[ARS → Loci AR→ Loci US → Loci BTC ]= zero transaction fees
[ LBTC →BTC → ARS]= BTC transfer + 1.5% plus 100 bps spread fee on BTC to ARS exchange.
By creating digital proxies for local currencies, GetLoci expands participation opportunities to users of emerging financial systems by creating cost feasible ways to connect to global markets locally.
To date, the R0.3 network now deployed supports users as they originate, transfer and exchange of digital assets among peers globally. In the coming weeks we will release version R0.4 featuring bid/ask open exchange markets serving users of Loci digital assets, options, and securities. Open market peer trading, until then, will continue to require participants to know their counterparty to complete an exchange.
Bitcoin may indeed be the only blockchain we need. GetLoci open systems help Bitcoin and other global financial systems work better together to protect user real purchasing power, today. Yes, that’s a lot more.
