Friend in Debt Vs. Venmo: Round 2
This is the second round in an epic, winner-takes-all bout between BlockMason’s revolutionary new application, Friend in Debt, and its plain, old, smelly, unattractive cousin, Venmo. Round one, examining flexibility, went handily to FiD. Now, it’s time for…
Round Two: Scalability
TL;DR: Venmo has made casual payment between friends a simple matter in the United States — FiD will do that for the world.
As with any platform that involves multi-party interactions, payment applications are significantly more valuable when they have a high user population. While Venmo has become ubiquitous in some American urban centers, FiD has the potential to develop a considerably larger user base, increasing its worth as a global payment and debt tracking platform.
From Sea to Shining Sea…but No Further
If you’ve recently traveled outside of the U.S., you may have been frustrated when you went to split your meal costs and found out none of your new, hip lederhosen-wearing friends had Venmo. Sure, you might think Jan and Gunter were too busy gyrating until 5 a.m. at the discotech to sign up for such a useful app, but this time it’s not their fault — only Americans can sign up for Venmo.
In fact, not only does Venmo require users possess a U.S. phone number and U.S. bank account, but Venmo technically doesn’t support transactions between parties that are not physically located in the United States. So, even if both transactors have Venmo accounts linked to an American bank, but the transaction occurs outside the U.S., Venmo may not support the payment or assist if there is some sort of issue with the transaction.
Beyond Venmo, there aren’t many other good, cheap solutions for completing international monetary transactions. Wechat and Alipay are popular platforms in China, but virtually nowhere else in the world. Paypal, Venmo’s parent company, charges a fee for sending and receiving international payments, and when you add in the cost of currency conversion, the money lost on an international Paypal transfer can be as high as 10%. That’s not even counting the 2.9% charge if you are receiving the payment for goods or services.
Based on this evidence, it is unsurprising Venmo only supports payments between users in USD. FiD, by contrast, supports debt tracking in WHATEVER THE HELL YOU WANT. You can pay in American Dollars, Thai Baht, Bitcoin, Ether, or even THE NEXT BIG THING!
Banking the Unbanked
One of the major limits of most digital wallets, including Venmo, is that it demands users link to a bank account. As mentioned, Venmo doesn’t currently allow users outside the United States, but even if it did, significant expansion would be severely hampered by the banking requirement.
In wealthier economies, banks are such an entrenched institution that many are surprised to learn vast swaths of the world operate with limited or no access to banking or credit. In Southeast Asia, Africa, the Middle East, and Latin America, such financial disadvantages burden regional economies, restrict fiscal growth, and obstruct individual actors from exercising power over their financial transactions.
Despite relatively little access to large financial institutions, many in these regions possess application capable mobile phones enabled with both data and wifi. Such individuals present an obvious market opportunity for FiD, as they have a clear incentive to manage their finances in a secure, digital fashion from their phone — further demonstrated by the rise of ‘mobile phone minute currency’ in eastern Africa, a system far inferior to FiD in terms of scale and efficiency.
Faster Than A Speeding Bullet
We all know that a major problem with the Ethereum network is transaction speed. Right now, Ethereum has a maximum speed of 20 transactions per second. That’s Usain Bolt-esque compared to Bitcoin’s 5–7 transactions per second, but slothlike beside Paypal (averaging 193 transactions per second) and Visa (capable of 56,000 transactions per second). This may seem like a bullet in the head for casual-use dapps like FiD, but fortunately, one of the Ethereum Foundation’s major goals is to massively increase network speed and scalability. It is estimated that forthcoming off-chain settlement networks like Raiden may be capable of handling up to a million transactions per second, and BlockMason has already begun researching our own proprietary off-chain settlement solution. In the meantime, Ethereum’s future POS system has been reported to be mining blocks at a rate of one per three seconds. Vitalik Buterin also just announced the future implementation of Plasma, which could drastically increase the speed and reduce the costs of microtransactions. Between network scaling and the development of off-chain transaction options, the Ethereum Network will likely see a dramatic increase in transaction speed, a critical step for any dapp with a large user base.
This network speed increase is especially notable when compared against Venmo’s sluggish bank transfer wait times. While Venmo allows you to make payments without bank confirmation, such that all associated funds are effectively usable within the app instantaneously — transferring money to your bank account could take up to three days. This wouldn’t be a problem if it had a greater variety of use cases, but as discussed in Part 1, Venmo is unfit for any large payments or business transactions. Therefore, if you have money in your Venmo account but need to use it for anything other than small peer-to-peer payments, you may be forced to wait for your funds to clear transfer. More than frustrating, this wait time is dangerous and limits one’s ability to properly respond to an emergency or surprise financial scare.
FiD, by contrast, allows users to settle debts near instantly, limited only by the speed of the Ethereum network, which the Ethereum Foundation plans to increase in the near-term. As soon as a transaction is confirmed by both parties, the funds are secured in your digital wallet and ready to use for any purpose you see fit.
We would never tell you how and when to spend your money. Why let Venmo do it?
