Golix.com is great for doing transactions that are under $2K but let’s face it: when you create an order to make a buy/sell that is over $2K, it’s very hard to:
- get that order filled,
- in one transaction and
- at the same price
In the best case, you can only hope to get 2 out of 3.
Because of the challenges moving large sums of money to and from Zimbabwe, we have received lots of requests from companies that need help buying/selling large sums of bitcoin and we’re seeing this demand on both sides. We have introduced over-the-counter trading to allow these customers to buy/sell large volumes of bitcoin. Before we get into what that is and how it will work, let’s first look at the problem:
If you visit Golix.io to buy/sell large volumes of bitcoin, you run into the following problems:
- Slippage — This occurs when you buy/sell bitcoin at a price that is different from the one you’re expecting. An example is when you make an order to buy bitcoin at the price you see but there is not enough liquidity on the market to get your order filled at the price so you end up buying the rest of the bitcoin at a higher price. Because of slippage, you end up paying a premium for your bitcoin.
- Not enough liquidity — In many cases, if you decide to do a transaction that is over $2K, there just won’t be enough liquidity on the market to fill your order. Sometimes, even if you’re willing to pay a premium.
We spoken to both buyers and sellers who are having trouble trading because of these two problems.
We are going to deal with this the same way most stock and securities exchanges deal with these scenarios and that’s through OTC (over-the-counter) trades. In an OTC trade, a large transaction is facilitated, not through the public exchange, but through different, private channels.
How Golix OTC transactions will work
- Customer A, who is a verified Golix customer, contacts us and says: Hey, I want to buy $1 million worth of bitcoin.
- Customer A transfers the $1 million to the BitFinance bank account and Golix holds this money in escrow. This means that Golix will hold the $1 million until the transaction is completed or canceled.
- Golix makes contact with other registered OTC traders and says, "We are looking at buying this currency at a price of this much. Minimum transaction is of $20000. Any takers?"
- The first interested traders deposit the Currency into their Golix wallets. Those bitcoin are also held in escrow.
- The price used for the OTC transaction will be the mid-price (that is, the middle of the spread or the average of the best bid and ask)
- Sometimes we may use the 6, 12 or 24 hour average mid-price to ensure a fair price for both buyer and seller
- Golix charges the buyers a fee that is in line with our fee structure.
- Golix charges the Customer A a fee that is in line with our fee structure.
- Golix transfers the USD to a bank account of the sellers choice and
- then transfers the Currency to the buyer.
Advantages of OTC
- No/low slippage in the exchange on your transactions — you buy/sell all the currency you want at a guaranteed price.
- Companies can buy/sell bitcoin in larger volumes and the settlement is done quickly.
- There are no big spikes or drops in the exchange rate for other Golix users.
Who will be our target OTC Customers
- Companies that are having trouble transfering money outside Zimbabwe (or receiving money from Zimbabweans)
- Companies that want a cheaper way to send money to Zimbabwe (or receive money in Zimbabwe)
- Reverse remittances (for example parent who wants to pay college tuition)
- Organisations (for example those that want pay back offshore loans or dividends to investors)
- Exporters (farmers, manufactures,..)
- Remittance companies
What else you should know
- For an introductory period, Golix will only charge a fee on both parties for all OTC trades.
- For this introductory period, the minimum we shall be accepting for OTC sell orders is 15BTC
- The minimum we’ll accept also for buy orders is $10K
- If you’re selling BTC, we’ll require the bitcoin to be in your Golix wallet with at least 3 confirmations
- If you’re buying BTC, we’ll require the money be in the Golix bank account at the time of trading.
- If you’re buying as an individual, you will need to have a verified “Level 3” Golix account.
- If you’re buying on behalf of a business or fund, the entity should have a verified “Level 3” account on Golix
- Once we have email/phone/WhatsApp confirmation from both parties, we execute the trade and levy a fee on both sides of the trade
- OTC trades will show up in our 24 hour volume but they will not impact/close any orders on Golix or change the exchange rate.
Becoming a Golix OTC customer
To become an OTC customer with us is as simple as filling in a form. Visit our page How to register as an OTC customer for more information.
Historically, it has always been difficult and expensive to move money from one country to another. It costs $50 to make a $50 wire transfer from Zimbabwe to USA. Bitcoin is changing that.
Technologies such as bitcoin and the Internet have made this world a better place.