New virtual currency tied to oil takes aim at bitcoin

By AFP   May 2, 2017 | 09:52 pm GMT+7

The new currency is expected to be less volatile while retaining many aspects of virtual currency trading.

A new virtual currency launched Tuesday aims to rival industry leader bitcoin by pegging its value to hard oil assets, a first in the rapidly growing digital money sector.

The currency called "bilur" and created by London-based financial services company R Fintech uses the technology pioneered by bitcoin, while trying to offer an alternative for those weary of the wild fluctuations that have plagued digital currencies.

"This is the first crypto-currency with a real value", R Fintech Ignacio M. Ozcariz chief executive told reporters in Geneva.

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CEO of London company R Fintech Plc, Ignacio Ozcariz gest Pures as he speaks during the launching of the Bilur, a cryptocurrency aiming to compete with bitcoin, on May 2, 2017, in Geneva. Photo by AFP/Fabrice Coffrini.

To start, the company has valued 1 bilur as equivalent to 6.5 barrels of brent crude oil, making it an asset worth $356 (326 euros).

Texas-based oil company Hockley has initially set aside 1 million barrels of crude as collateral to underpin the currency but has told R Fintech it can ramp up if bilur becomes popular.

Like bitcoin, bilur is run with so-called blockchain technology, where encrypted digital coins are created by supercomputers, regulated and controlled by a community of users who try to guard against counterfeiting.

Bitcoin was the world's top performing currency in 2016 and continues to hover around record highs of $1,400, after being worth just a few cents when it launched in 2009.

It has appealed to those interested in bank-free transactions and to money not controlled by a government or central bank.

But detractors have suggested that bitcoin could ultimately be undermined by its volatility, noting that the currency dramatically lost 75 percent of its value in 2013.

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CEO of the London company R Fintech Plc, Ignacio Ozcariz (R) and R Fintech Plc head of business development, Usama Al Ali (L) pose during the launching of the Bilur, a cryptocurrency aiming to compete with bitcoin, on May 2, 2017, in Geneva. Photo by AFP/Fabrice Coffrini.

Bilur is targeting those who like aspects of virtual currency trading but would prefer funds supported by a fixed asset -- similar to a gold standard for traditional currencies.

"We're still a crypto-currency, we're just backing it up with a real physical thing", said Usama al Ali, an IT specialist at R Fintech.

With the project in its infancy, there are no merchants accepting bilur as a valid form of payment.

Bitcoin is in contrast increasingly accepted by merchants worldwide.

R Fintech said it aims to make money through a small management fee, charging bilur holders roughly three percent per year.

The name "bilur" is the Basque language word for "chain", a nod to blockchain technology, the company said.