Cryptocurrencies are here to stay – the crypto markets have survived criticism, skepticism, vilification, and outright criminalization from traditional financial institutions and governments. There are more than 1,800 coins, tokens, and altcoins in the market and the number is consistently increasing as new ICOs make their way to exchanges. The market cap of cryptocurrencies market is currently valued around $218 billion and the number could jump as high as $1 trillion if the prices cryptocurrencies return to their 2017 highs.
A quick glance at the usage stats of cryptocurrencies shows that that the number of Blockchain wallet users worldwide has jumped from 3.17 million in Q1 2015 to 25.7 million in Q2 2018 – a 710% increase in about than 3 years. However, the increase in the number of cryptocurrency users hasn’t necessarily translated into an increase in the mass-market adoption or transactional use of cryptocurrencies. Most of the people buying cryptocurrencies are only buying crypto in response to its speculative hype in the hopes that they will also become Bitcoin millionaires. This piece provides insight into two projects that could activate the transactional use of cryptocurrencies.
Here’s why not many people are buying stuff with crypto
Satoshi Nakamato didn’t create Bitcoin as a speculative investment asset. In his original paper, he described Bitcoin as a “purely peer-to-peer version of electronic cash would allow online payments to be sent directly from one party to another without going through a financial institution.” In fact, the world investment wasn’t mentioned once in the 9-page document but he mentioned “transaction” 69 times in the document.
However, the truth remains that cryptocurrency in its currently existing forms is impractical for transactional or payment purposes. Transaction times on cryptocurrencies are painfully slow as Bitcoin processes 7 transactions per second and Ethereum process about 25 transactions per second. Secondly, cryptocurrencies are incredibly volatile with the double-digit fluctuations not seen as particularly worrisome. Below are two blockchain projects working on solving the payments problem for cryptocurrencies.
TOSBlock is bring cryptocurrency payments to the real world
Tosblock (T.OS) is trying to bridge the gap between the digital world where cryptocurrencies seem to make sense into the physical world where you might need to buy coffee, French fries or pay for a haircut. Tosblock is introducing two coins from the same code; the first coin is TOSC, a tradeable cryptocurrency like all other cryptocurrencies found on exchanges; the second coin is TOSP, a cryptocurrencies pegged to the local fiat currency of the user and designed to be used only on a private blockchain.
Users can buy/sell/trade TOSC on exchanges using fiat or other cryptocurrencies but the only way to get TOSP is to convert your TOSC into TOSP within your wallet or get paid in TOSP. When a user wants to buy stuff from a merchant using cryptocurrency, the price of the item will be provided. The buyer then converts their TSOC into the exact TSOP equivalent and send the funds to the seller. The seller in turn rests in the knowledge that the value of the TSOP won’t fluctuate with the volatility in the general cryptocurrency industry and the seller can convert the TSOP to fiat at their convenience.
One of the key selling points of T.OS is the fact that it offers faster processing times that might encourage mainstream users to explore cryptocurrencies as a viable means of funding transactions. For instance, Bitcoin can process about 7 transactions per second but TSOP is robust enough to process about 1000 transactions per second. More so, while the mean block time on the Bitcoin blockchain is 10 minutes the mean block time for TSOC is 1 minutes and the Block time for TSOP is 4 seconds.
Akaiito for spending crypto in the real world
Akaiito is fundamentally a peer-to-peer network of platforms where people can buy and sell goods and services while conducting transactions with a single cryptocurrency token. Using a mix of an online marketplace, rental marketplace, services, and mapping technology; Akaiito makes it easy for consumers to find places where they can spend cryptocurrencies around them as well as information on the types of cryptocurrencies accepted in such places.
Once a user opens their Akaiito app to access maps, they will see places such as stores, restaurants, café, cinemas where they can spend crypto. They will also see places where they can pay for car rentals or apartment rentals with cryptocurrency. Sellers also get to list their products/services, choose fixed or floating prices, and sell to buyers in different places while getting paid in cryptocurrency.
Akaiito’s value proposition sets it up as an aggregator that could unify merchants in a disconnected crypto world. The firm has completed its ICO and it would be interesting to watch how it successfully executes its idea to create an enabling environment for spending cryptocurrencies everywhere.
Disclaimer: This content does not necessarily represent the views of IWB.