Can someone please explain how they ever plan on turning a profit?
Let’s pretend that the deal is real and someone just bought 12500 metric tons for about $60 000. That puts them down about $3 000 000.
Until the price of URO/UREA reaches the same price as FIAT/UREA they will be losing money, and if it does reach the same price they still would not be making any money because they are selling UREA.
So do they only plan on making money day trading (which sounds extremely sketchy)? And even if they are, if the price of URO/UREA were to reach the price of FIAT/UREA there would be no reason for people to still hold the coin, which means they will have to buy back any coins that people sell or else they will be still be selling UREA at a loss.
Am I missing something?
Here’s why it makes sense for GES to support URO.
-potential to increase their customer base
In return for these potential benefits, they will take on the risk of selling Urea for uro at an initial loss.
Provided they are confident about the strategies and infrastructures that they have put in place to support uro, this risk can be negligible(even though the market might not know it yet).
As uro gains prominence the price will move closer to parity with urea price. Provided the company doesn’t have immediate need for cashing out uro. They might be willing to wait years for this to happen.
Also note that they are not putting their entire urea trading operation on uro, but only a small portion of it. So the lost they make on this initially can be offset.
Another interesting thing to note is that the price of uro will not always be trading equal to or less than price of urea. It will be moving up and down, especially when bitcoin experiences significant crash, Uro price will start to trade above the price of urea as uro will temporarily take on the role of safe asset within the cryptoecosystem. For a long term player these would provide ideal opportunities to cash out.
Look up the term ‘Loss Leader’