Real BitOil whitepaper

1. Summary

Real BitOil (ticker BIT) is a planned digital token whose value tracks the price of one barrel of West Texas Intermediate (WTI) crude oil. Small amounts are counted in micro BitOil: 1 µBIT = 0.000001 BIT.

This is a research draft. No token exists, nothing is for sale, and every design choice below may change after legal, financial and security review.

2. Why oil?

Almost all stablecoins track the US dollar, so they carry the dollar's inflation and depend on banks and government debt. Crude oil is a real, globally traded commodity — around 100 million barrels are used every day, and its price is set continuously in deep public markets.

A token tied to oil would let people hold or settle value in barrels rather than in any one currency, with a price anyone can check.

3. Stable in barrels, not in dollars

This is the most important thing to understand: BIT would not be stable against the dollar. If oil goes from $80 to $100, one BIT goes from about $80 to about $100 — and it falls just as easily. Oil can move 5–10% in a day during big events.

BIT is designed to stay equal to one barrel. That suits people who want oil exposure on-chain, energy businesses that think in barrels, and anyone hedging against currency weakness. It does not suit someone who needs a fixed dollar amount next week.

4. The unit and the price

• 1 BIT = the value of 1 barrel of WTI crude, quoted in US dollars.
• 1 µBIT = 1/1,000,000 BIT. At $100 oil, 1 µBIT ≈ $0.0001.
• Reference price: today we use the front-month WTI futures price (NYMEX) from public feeds. A live token would need a robust price feed ("oracle") built from several independent sources, with rules for outages, market holidays and contract roll dates.

5. How the value could be held

Three models are under study. None has been chosen.

• Physical oil in storage. Most direct, but storage, insurance, transport and quality checks are expensive, and almost no holder wants actual barrels delivered.
• Regulated oil futures plus cash. Easier to run and audit. Futures must be "rolled" every month, which can cost or earn money (contango and backwardation), and needs a licensed manager.
• Over-collateralised crypto ("synthetic"). Runs entirely on-chain, but needs a lot of spare collateral to survive oil's swings and depends heavily on the price feed.

A mix is also possible, for example futures for most of the reserve plus cash for redemptions.

6. Creating and redeeming tokens

In a reserve-backed design, new BIT would only be created when matching value enters the reserve, and destroyed when someone redeems. Redemption would most likely pay the cash value of a barrel rather than physical oil. Who may create and redeem directly (for example, verified institutions only) is a legal question still open.

7. Transparency

• Public reserve dashboard: tokens in circulation vs. barrels-equivalent held.
• Independent monthly attestations and a yearly audit.
• Published methodology for the price feed and the futures roll.
• Open-source smart contracts, reviewed by independent security auditors before launch.

8. Risks

• Price risk: BIT moves with oil and can lose a large part of its dollar value.
• Roll and basis costs: futures-based reserves can drift from the spot barrel price over time.
• Counterparty risk: custodians, brokers and banks holding the reserve could fail.
• Price-feed risk: wrong or manipulated prices could mis-value tokens.
• Smart-contract risk: bugs can lose funds, even after audits.
• Regulatory risk: rules may restrict where and to whom BIT can be offered, or stop it entirely.
• Liquidity risk: in stressed markets it may be hard to redeem quickly.

9. Legal status

Depending on its design and where it's offered, an oil-linked token could count as a commodity product, a derivative, a security or an e-money/payment instrument. In the EU, MiCA treats tokens referencing a commodity as "asset-referenced tokens" with licensing, reserve and disclosure rules. In the US, the CFTC and SEC may both have a say.

Nothing will be issued or sold until qualified lawyers confirm a lawful route, and only in places where it is allowed. If there is no lawful route, Real BitOil will not launch.

10. Play BitOil

Play BitOil is a free game using play µBIT, so people can get a feel for an oil-denominated unit with no money involved. Play µBIT has no cash value and will not be converted into Real BitOil; holding it gives no right to any future token.

11. What happens next

Legal review → reserve and audit design → a test network with no real value → a launch decision. Progress is posted on the updates page. This paper will be revised as each step completes.