Coinapult - The Company
Coinapult was set up in 2012 by Bitcoin veteran Ira Miller, currently the CTO. It aims to solve one of the most difficult problems facing merchants who want to accept bitcoins for standard transactions. If it does so (the beta was released at the end of July 2014) it stands a credible chance of winning a major part of the market share for merchant services, as well as becoming a well-established wallet.
What is the Issue Coinapult is trying to solve?
Because the market for Bitcoin and cryptocurrencies is still relatively young, the market can still be moved by major buy or sell orders. Such movements can see over 10% of the value of cryptocurrencies wiped out in a single morning, only to see it swing the opposite way the day after.
This gives merchants a particular headache. If the margin (that is, profit) on the thing they’re selling is less than the percentage swing in Bitcoin value, they can see the value of their sale disappear entirely shortly after making it. In the worst cases where the goods need to be bought from a wholesaler before shipping on (e.g. in dropship sites) it ends up costing the merchant more to buy the goods than they get from selling them.
Rather than accept this risk, many merchants simply do not accept Bitcoin. However, those that do usually convert the Bitcoin immediately into USD or similar fiat currency. This increases the cost of sale by adding a transaction cost, which strictly speaking isn’t necessary.
How does Coinapult LOCKS work?
Coinapult is essentially a hosted wallet. Coinapult LOCKS is a function within that wallet that allows the user at any time to take a portion of the bitcoins held and ‘lock’ the value against a different asset type. At time of writing this was USD, EUR, GBP, Gold and Silver. There is a limit to the amount locked ($3000 per transaction) and a cost, the spread of the buy order from the market index. This amounts to around 1-2% charge to lock the coins.
It’s important to understand that the bitcoins in the wallet are still bitcoins - they are redeemable from Coinapult at any time. Coinapult assumes the volatility risk on behalf of the user. However, by aggregating the value of the bitcoins locked, Coinapult can buy the real assets in the background and hedge that risk.
How do you use Coinapult LOCKS?
All transactions must be carried out through their portal. Within the portal is the usual set of functions you’d expect - to be able to send BTC and receive BTC, generate new public keys, view transactions and so on.
The innovative part - the lock itself, is very simple to perform. A separate screen allows the user to select a value from the overall balance for the wallet, select one of the asset classes and types, an lock it in place. The lock can be undone in a similar fashion. Each type of asset has it’s own balance for the BTCs currently locked under it.
What are the risks in using Coinapult LOCKS?
As with all new services, the primary risk in placing bitcoins with Coinapult is that it is a centralized service in a decentralized world. This adds a necessary requirement to trust Coinapult that they are doing what they say they are doing, and that they themselves are taking precautions against losing your bitcoins.
That’s not to say that there is any reason not to trust Coinapult; it’s simply that any need for trust in the transaction chain by its very nature adds risk.
However, for merchants who would otherwise have to bear volatility risk themselves, hedging against that risk by accepting the trustworthiness of Coinapult is probably a rational move. The company has a good pedigree, claims to invest heavily in security, and has good backers.
Recent Company Tweets from Coinapult
Coinapult in the News
The Merkle (blog) - 4 weeks ago
A lot of different companies want to bring Bitcoin to the Telegram network, and Coinapult is the latest business to launch their solution. Tender Wallet Bot, as this feature is called, sits on top of...
CoinTelegraph - 2 days ago
To prepare for better merchant integration, Dash is currently working with financial service providers Crypto Capital and Vogogo as well as developing open-source integration libraries for Coinapult,...
CryptoCoinsNews - 12 months ago
Coinapult will no longer be handling the fiat side of its business, instead handing over this side of its operation to Crypto Capital, Inc., a company which is licensed to do business in the United...
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