A new trend has been spreading across the globe, with digital currencies such as bitcoin becoming more and more popular and accepted in online markets.
For El Dorado natives Michael and Nathan Senn, the recent trend became an opportunity as the brothers began to develop and launch their own form of cryptocurrency called Superior Coin.
Digital currencies were intended to be used to buy things, but lately they’ve been seen more as an investment. The currencies trade on private exchanges with little regulation or protection for investors, and no country or central bank is behind them.
“It’s not a U.S. based currency,” said Michael Senn, CEO of Superior Coin. “It’s a worldwide currency.”
Michael Senn said his brother, Nathan, got the idea when he was involved with a website where a user performs small tasks and gets paid by a virtual currency, points, that can then be used to pay other users to perform tasks. The issue, Michael Senn said, was that it was closed off to anyone else.
“It was all a closed ecosystem,” Senn said. “As in you cannot inject U.S. dollars into it and you cannot take U.S. dollars away from it. … The idea was to try to replicate that and use real money.”
Michael Senn said Nathan Senn began to look at an open source code recommended by Roger Ver, who is now known as “Bitcoin Jesus” and was an early investor in the digital currency startup and other bitcoin related startups.
Once Nathan Senn had figured out how to modify the code and gain success, he launched a test network that was replaced with a live network on July 1, officially launching the coin.
Now there is a team of people working on the digital currency across the world, from the U.S. to Japan to South Africa.
Michael Senn described Superior Coin as a rival to other cryptocurrencies on the market such as bitcoin.
“The whole movement of the currency is to try to replace the … dollar, the euro … all the different government-based currencies in the world as being a faster and more secure decentralized type of payment,” Michael Senn said. “Anybody can make a payment from one person to another without having to go through a bank or going through a government. It can cross borders and cross time, there’s no limits on when you can send or how you can send or where you can send.”
The coin is traded on three exchanges, and users can then trade the currency for other digital currencies, such as bitcoin. Then, a user can exchange bitcoins for U.S. dollars straight into their bank account. Michael Senn said the currency is used for micropayment transactions, as well as through a WordPress plugin that websites can use to take payment in Superior Coin.
Superior Coin, Michael Senn said, is different from currencies like bitcoin in that it is truly private and untraceable.
“It’s completely anonymous and untraceable,” Senn said. “A lot of people have a misconception that bitcoin is untraceable, but bitcoin is completely traceable, it’s completely transparent.”
Michael Senn said there was an initial partnership with a website to develop Superior Coin, which was broken in July and replaced with a new partnership with a different site, kryptonia.io.
But that initial partnership did not end amicably, and there are now at least two stories of how Superior Coin was developed.
When searching online for information on Superior Coin, a user is very likely to come across petitions, Facebook posts and other entries penned by Michael Q. Todd, who has claimed that Superior Coin was stolen from him by the Senn brothers toward the end of July. A petition on Change.org from Todd to keep Superior Coin off public exchanges has 100 signatures as of Saturday and claims that Nathan Senn is trying to con people out of their money through the venture. Todd refers to Nathan Senn as a former employee and programmer of Superior Coin.
Michael Senn said Todd had been trying to make a successful cryptocurrency for several years and allowed Nathan Senn to develop Superior Coin and start using it on Todd’s site to promote the currency and the site at the same time. Michael Senn said the partnership dissolved toward the end of July when it appeared that Todd was trying to take the $600,000 in startup funding for Superior Coin and walk away from the Senn brothers to complete it himself.
“Todd starting demanding that Nathan turn over the money,” Senn said, noting that Nathan Senn had full control and access over the project’s funding because “it was 100 percent Nathan’s project.”
After the partnership soured, Michael Senn said Nathan Senn and Todd parted ways, with Nathan Senn even leaving Taiwan, where he and Todd had operated, to take the project to the Philippines, where he’s been operating ever since. But Michael Senn said Todd has been continuing to try and get his version of the story out through social media and online portals.
“But the project has been proven to be sustainable on three different exchanges,” Michael Senn said. “There’s a company that’s been formed under Nathan’s name. It’s a completely legit company based out of Belize. … We have a community behind us, we continue working to deliver on the promises that we made to the people that initially bought into the initial coin offering.”
“He’s basically a scam artist,” Michael Senn said of Todd.
Digital currencies have skyrocketed in recent years. As a result, some investors have joined the frenzy and made eye-popping profits, while a growing number of skeptics have called it a bubble that will end in pain. Bitcoin is up more than 10-fold from early 2017, when it was worth less than $1,000. But bitcoin has been particularly volatile recently, and in mid-January was down by nearly half from its peak of more than $19,000 last month.
It may be a while, if ever, before investors can buy an exchange-traded fund made up of digital currencies, as federal regulators have a long list of questions they want answered before such approval can come. Earlier this month, the Securities and Exchange Commission sent a letter listing more than 30 of them to trade groups representing the investment industry.
Among the concerns listed: How would funds determine the value of their holdings when prices for digital currencies are so volatile? And, what steps would funds take to ensure they can cash out investors who want their money back each day? The SEC also expressed concern that digital currency markets have higher opportunities for fraud and manipulation than traditional securities markets.
An exchange-traded fund is similar to a traditional mutual fund, except that investors can buy and sell it throughout the trading day. A digital currency ETF would allow mom-and-pop investors to own bitcoin and other digital currencies without going onto the private exchanges they trade on.
On Friday, a senior U.S. Treasury official touring Asia urged banks and financial regulators to do more to tighten oversight of trading in cryptocurrencies. Sigal Mandelker, the Treasury undersecretary for terrorism and financial intelligence, recently told Congress that money laundering related to cryptocurrencies was “an area of high focus” for the Treasury Department.
Reports from The Associated Press contributed to this article.
Madeleine Leroux can be reached at 870-862-6611 or email@example.com.