BSave is a Bitcoin savings platform that offers security and interest for those HODLers who deposit with them.
An unfortunate feature of Bitcoin is that it really does bring out the scammers, people who offer much and then abscond with the money when things start to get too hot. At first glance, I thought that BSave looked like another one of these. On the other hand, and very unlikely for a scam with no real product, they garnered 400,000 dollars in VC funding in October of last year. Further, since their rollout at the North American Bitcoin Conference in Miami, they have had high profile bitcoiners like Simon Dixon of BnkToTheFuture speaking out on their behalf.
I got in touch with Jonathan Azeroual, CEO and cofounder, to ask some of the questions I had about the service.
BW: You state that the average interest earned is something less than three percent per annum. What is the business model that lets you profit off the deposits you take and pay out this interest?
JA: Our business model is simple; we take your deposit and loan them with exchanges that offer margin trading. We developed in-house algorithms that maximize the rate you will lend. The exchanges lend at interest to their customers and the interest paid to BSavers for their deposits. We created an easy to use solution for people who want to earn some interest but do not know what is margin lending (mainstream oriented) or do not want to waste time lending by themselves.
BW: There is an adage in Bitcoin that if you don’t hold the private keys, the coins are not yours. What guarantee do depositors have that they’ll get their coins back if your business model doesn’t pan out or you get hacked?
JA: Deposits are invested in the margin market with exchanges that require minimum equity. Therefore, if margin requirements are not met, that exchange user is “called out” of their position. As a result, the BSaver cannot have funds loaned out that will disappear. Additionally, we use BitGo’s security for our service and BitGo is among the most respected firms in the Bitcoin ecosystem. Plus, BSavers will have revolutionary 2FA security option very soon (stay tuned!). For better transparency, we will also publish a live proof of reserve co-branded with BitGo. We are working on it.
Basically, if one loans out their Bitcoin, one does not hold their private keys. At BSave, we have the philosophy that Bitcoin should be mainstream and we don’t think this will be possible if people hold their private keys. The right balance has to be found between ease of use and security. We integrate the best technology, follow the best security practices and rely on the best security firms to secure our funds. Now, we are focusing on make the experience easy, accessible and seamless for the average user.
BW: What is your relationship with Coinbase? Do you have a formal deal with them to allow you to do this, or are you completely separate from Coinbase and using them for convenience?
JA: After months of using Coinbase’s API during our beta phase, in addition to positive contact with them at the moment of and shortly after our launch at Bitcoin Miami, Coinbase let us know that we no longer had access to their API.
Within five minutes of the news, the team began the hours long process of migrating our service and furthered strategic talks with other wallet providers.
We worked day and night to quickly and securely provide a new solution for our customers and beta testers. Now, any Bitcoin hodler is able to withdraw, deposit, and earn interest! We are confident our service will be completely updated by next week with many new features including 2 factor authentication, plus we have some fantastic partnerships in the pipeline.
We understand how things can change in the blink of an eye, and you have no other choice but to get right to work and make it even better than before. I’m confident we’ll be better off by having to push ourselves through these changes, and BSave will excel even more now.
We have many exciting, strategic relationships with other wallet companies, and other businesses in our pipeline and we will be sharing that news soon.
This interview was conducted by email. It has been lightly edited for clarity.