Bitpark ICO: P2P Insurance & Mutual Aid Could Transform Finance
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Bitpark is creating a new peer-to-peer finance platform which uses CryptoCurrency to enable a wide range of new financial relationships. A crowdsale or ICO to raise funds for development and enable enthusiasts to invest in the future of the platform will run until 15th October 2016.
The end-product they aim to build is described as a being a ‘P2P insurance platform’ but, in fact, conventional insurance is only a small and rather uncertain part of the plan. The core of the platform is actually based around the creation of financial communities called Mujin. The way that these communities work is inspired by the Japanese mutual aid societies of the same name, which use a system of ‘rotating savings and credit’.
These mutual aid societies combine communications tools with the financial tools of CryptoCurrency through a ‘group wallet’, and can be used for a variety of purposes.
Whether or not Bitpark itself succeeds, this is certainly an interesting area that is ripe for development. One of the great advantages of cryptocurrency is that through multi-signature addresses or smart contracts in enables groups of people to collectively manage money without the need for any individual to hold funds, with the ability to set fixed rules which cannot be broken, to have multiple members involved in authorizing fund transfers with very little time or expense requirements compared to the use of fiat, and with complete transparency for each member.
What Bitpark can do
Mujin mutual aid communities allow groups of users to pay into a fund for a specific purpose. Money can only be paid out of this fund to the whitelisted addresses of its members, and only when multiple members sign-off on a withdrawal.
These communities must obviously be built on trusted relationships between members of a particular Mujin. A ratings system is being planned, to help users develop trustworthy relationships over the internet, but in the early days after launch I imagine these clubs will be most appropriate for use by real-world groups who already know and trust each other.
Some of these uses look very much like a kind of peer-to-peer insurance. For example, a group of friends who like traveling agree that they will pay into a Mujin fund and use it to help any member of the club who has problems while on vacation – basically providing travel insurance. Effectively, this is simply formalizing something that friends may do for each other already; this group may already be willing to help each other out by sending money if they get into trouble, but how do they know that money will be available when its needed without a fund? And if they create a fund without using cryptocurrency, somebody will need to take charge and hold the money. A Mujin fund allows this to be done without any individual needing to be put in charge and with built-in communications to keep everyone up-to-date with the status of the fund and organize payments when they are needed.
Many other kinds of relationships can be developed as an alternative to traditional insurance, particularly small pay-out short term insurance, according to the team behind Bitpark. But many of the most interesting uses are outside of what traditional insurance companies offer.
For example, a sports club may create a fund that pays out sponsorship to any member who qualifies for a major competition, to help them with travel expenses or the cost of taking time off work.
Savings clubs could be formed, allowing a social club to save up for an outing or event and involve the members themselves in decided how the funds are spent. For example, a local community might use something like a savings club system to pool funds to hold a street party or improve the local area.
Already these types of savings clubs, which follow the ‘rotating savings and credit’ model begin to look more like a kind of Credit Union than an insurance service. Indeed, I see no reason why they could not be used to create an actual credit union (where members prove their credit worthiness by making regular payments and can then apply for loans with the maximum amount pre-determined by how long they have been paying in). In fact, more formal P2P lending functionality is also part of the Bitpark roadmap.
Due to regulation, more traditional insurance products such as accident and sickness cover require the involvement of an established insurance company. To this end, Bitpark are exploring the possibility of creating partnerships with multiple insurance firms.
Although Bitpark are developing a wallet which can handle Bitcoin transactions, Mujin societies must use the native ‘BIP’ token.
To fund development, 70 million tokens, representing 70% of the total supply are being distributed to supporters who take part in a crowdsale that runs up until 15th October 2016.
The token will be tradeable after the sale is completed.