Blockchain-Based Automation Changing the Crypto-Payments Space
Automated systems comprise a fast growing technology paradigm that is already changing various industries, especially the payments industry. And, while various online payments companies offer their customers perks similar to those given by traditional banks, nowhere is there potential for radical value transformation in payment systems usage incentivization greater than in the blockchain space.
A Payments Problem Meets a Decentralized Solution
The portion of the payments space representing startups and smaller companies like Venmo or Square Cash, while robust, still only comprise fragmented solutions that together could be powerful. More unfortunate is that cryptocurrency is simply not able to be spent widely due to low mainstream adoption outside of crypto enthusiasts and investors, which by and large prevents merchants from promoting their sales to crypto users. Integrating existing payments solutions to act like dominant payments companies like Visa could be a solution.
Automated decentralized payment solutions for cryptocurrencies are quickly gaining ground in the blockchain space. Token rewards apps incentivizing merchant orders and purchases for raw materials, goods and services, and crypto-to-fiat exchange are grabbing large amounts of market share in this niche field. Similar apps targeting consumers with token-incentivized borderless payment options, loyalty programs, and exchanges for promotional goods are also doing well.
Together, apps like these could do an excellent job of breaking down barriers between crypto teams, goods, and customers. Incentivizing cryptocurrency usage across supply chains and within consumer segments would increase the volume of crypto transactions and provide a strong avenue towards mainstream usage.
The Public is Ready for Auto Crypto Payments
The market for such solutions is robust. According to the Cambridge Center for Alternative Finance, 75% of US consumers who owned cryptocurrencies in 2016 used those currencies for payments within a 12-month period, unique active users of cryptocurrency wallets numbered between 2.9 and 5.8 million in 2017, and 48% of Coinbase users use Bitcoin as a “transactional medium”— defined as making one payment per year. Japan, South Korea, and Germany have fully integrated cryptocurrencies into their economies, with the U.S., Canada, U.K., France, financial institutions and governments catching up.
Adopting automated payments solutions would allow governments and large financial institutions to unlock unprecedented value. According to CoinMarketCap, 1,570 cryptocurrencies exist globally with a total market cap of around $345 billion. The palpability of the addition of crypto payments solutions creating outsized economic value increases upon considering that Visa, making merely 0.0952 basis points off of every transaction it processes, currently makes $2.9 billion in revenue per year processing transactions with only 180 globally recognized currencies.
Bringing Products to Market
One secure way to deliver such services to users at scale is by utilizing consensus algorithms to computationally equate proof of sale (POS) with proof of stake on the blockchain, then integrating existing POS solutions with proprietary software to enable merchants to process payments in cryptocurrency. While many solutions such as Square Cash, B2BinPay, and CASHLINK work with selected cryptocurrencies and merchants, new, specifically decentralized payments solutions for crypto like Paytomat and On Track Innovations have combined the features of services like these.
The former uses proprietary automating software with merchant partnerships to facilitate cashless transactions between cryptocurrency developers, merchants, and consumers across all cryptocurrencies in the mass market. A ready-to-use solution extending blockchain into existing POS platforms, it allows merchants to adopt blockchain-based payments automation without having to buy new hardware or software. The latter uses its own proprietary software to automate crypto payments in micro markets and across selected IoT devices. Both are examples of a growing generation of blockchain companies using amalgamated use cases of existing solutions to incentivize customer segments to build cryptocurrency usage with everyday purchases.
These new use cases are doing uncommonly well. As of this writing, Paytomat has facilitated over 100 partnerships with Ukrainian merchants to allow their customers to seamlessly transact with cryptocurrencies. Having processed over 700 transactions in the past 6 months, their use case is an example of a growing trend of crypto companies using proprietary technology in combination with B2B partnerships to create greater efficiencies internally and for end users at scale.
Sudip Banerjee, Chief Analyst at Paytomat, says:
Cryptocurrencies are borderless, transparent, secure, and eventually they will become a big part of the global economy. Three things are needed for their wider adoption: payment infrastructure, user-friendly tools, and additional incentives. Paytomat is designed to combine all three: we plan to expand globally through the decentralized franchise model; our solution is compatible with most major operating systems and commercially available hardware; our blockchain-based loyalty program will reward merchants both for accepting crypto, and users for paying with crypto. Everybody wins.
Dmytro Baimuratov, Blockchain Evangelist at Paytomat, adds:
To ensure the reliability and enhanced flexibility of the PTM blockchain, we introduced the Point-of-Sale as Proof-of-Stake (POS as PoS) distributed consensus algorithm. We ensure distributed consensus by relying on a network of our merchant nodes, which are physically owned by merchants who are our customers. We originally planned our software architecture to be as expandable and modular, as it is possible. Integrations like ours are among the top-3 demanded functionalities for 2018, according to recent studies.
Automated crypto payments tech is the future, and the examples provided here present salient examples as to how use cases are already being facilitated in mass markets. While the space has potential, the people leading it will need to foster growth and innovation in the space for its value and utility to grow in the coming years. In addition, investors in the space will need to engage in deals to help grow it. Investing in public blockchain companies like On Track Innovations or those doing ICOs like Paytomat is one way. Developers in the space can also make this happen by engaging in public projects that blockchain companies release to write scripts to their code, and so on. When everyone participates, the ecosystem works.
How do you think blockchain-based automation will impact the crypto payments space? Do you think it will encourage more mainstream usage of cryptocurrency? Let us know in the comments below.
Images courtesy of Shutterstock, Square