Exploring the CyberMiles ecosystem: Payments in the digital currency age
How crypto payments can drive institutional blockchain adoption, a #CMusecase
Among the 20 most populous nations today, which together account for nearly 70 percent of the world’s total population, a full 17 of them are considered developing economies* or otherwise classified as emerging markets**, according to the International Monetary Fund.
- China* — pop. 1,393,490,000**
- India*— pop. 1,335,630,000**
- The United States of America — pop. 327,652,000
- Indonesia* — pop. 265,015,300**
- Brazil* — pop. 209,446,000**
- Pakistan* — pop. 201,652,000**
- Nigeria* — pop. 197,135,563
- Bangladesh* — pop. 165,013,000**
- Russia — pop. 146,877,088**
- Japan — pop. 126,590,000
- Mexico* — pop. 124,737,789**
- Ethiopia* — pop. 107,534,882
- The Philippines* — pop. 106,313,000**
- Egypt* — pop. 97,389,400
- Vietnam* — pop. 94,660,000
- The Democratic Republic of the Congo* — pop. 84,004,989
- Germany — pop. 82,740,900
- Iran*— pop. 81,702,300
- Turkey* — pop. 80,810,525**
- Thailand* — pop. 69,183,173**
These countries, including newly-industrialized ones like Brazil, China, India, Indonesia, Mexico, The Philippines, and Turkey, share in common both exponential economic and population growth. People in these countries also, by and large, tend to be extraordinarily young. In fact, three of them — D.R. Congo, Ethiopia, and Nigeria — rank among the 20 nations with the youngest populations: only 17 years old on average!
You may be thinking, What does this all have to do with digital payments? Simply put, developing countries with young, fast-growing populations and economies are ripe to adopt transformative technology, including blockchain and cryptocurrency.
A Mobile Millennium
Many developing countries lack sophisticated financial markets or infrastructure, making easy access to capital unavailable to businesses and consumers who, in turn, rely mainly on a cash-based (or even barter-based) system for everyday commercial and peer-to-peer transactions. Being untethered to conventional payment methods (credit and debit cards, for example), and less entrenched in the way things are done (such as carrying a wallet or a purse, as is prevalent in the western world), also opens up interesting — and potentially lucrative — opportunities. The same goes for mobile technology.
Recent reports and news headlines say it all:
- Signs point to the developing world skipping past the eras of landlines and desktop computers and going straight to mobile (source: UNICEF)
- Developing world hits 98.7 percent mobile phone adoption (source: The Register)
- Today, more people have access to mobile phones than to electricity or clean water — and it’s making a difference in the fight against global poverty (source: USGIC)
The latter is especially revealing. In 2000, only four percent of people living in low- and middle-income countries had access to mobile phones. By 2015, that number had risen to well over 90 percent. Even in sub-Saharan Africa (where, incidentally, D.R. Congo, Ethiopia, and Nigeria are located), there now are more than 76 mobile cellular subscriptions for every 100 people.
The Sky’s the Limit
While last year 30 million people ditched the landline, an additional 200 million came online — adding to the burgeoning (yet already massive), global customer pool for digital payment products and services. This has led to some powerful declarations from the crypto community. Just this week, the CEO of Coinbase predicted, per Bloomberg, that within the next five years, we shall see a wave organic adoption of cryptocurrencies.
This is notable given that 40 percent of the world’s Internet users (and growing) have made purchases online — more than a billion people. Factoring in the average online shopping cart abandonment rate of nearly 70 percent, and the potential of blockchain to facilitate better/more conversion gets interesting.
“The payment space is huge,” Ryan Taylor, CEO of Dash, said at this summer’s BCI Summit, where CyberMiles addressed the Tokenization of Commodities. “When you think about micro payments, think about the Internet, which drastically reduced the cost of information transmission.” As a result, Taylor added, consumers today have access to real-time information — and far more of it.
Pay as You Consume
“We haven’t even dreamed up all of the possibilities for micro payments.” Taylor said. “When you reduce the cost of transactions, just as you consume the cost of information, it opens up a world of possibilities — new areas of opportunity for business.”
According to Kent Yan, CEO of TraDove, micro payments will work beautifully on the blockchain. This is particularly the case in developing countries where there aren’t entrenched financial systems. Consider cross-border remittances. While the current system is too expensive — and too slow — the typical action of sending a wire transfer internationally is both omnipresent and distributed, boding well for blockchain adoption. Yan predicts that the groundswell of support for more efficient, less expensive money movement methods will come from the user side.
But it’s more than just straight cost savings. Two-sided (read: P2P/C2C) marketplaces in particular can benefit, namely from streamlined processing of payments for everyday transactions. Here’s how it works today:
Take credit cards companies like Visa and MasterCard — the leading financial “middlemen” between a buyer and a seller. As Merchant Maverick explains, they act as associations, creating credit cards that hundreds and hundreds of millions of consumers use daily for all kinds of purchases. Meanwhile, banks such as Chase, Citi, and Wells Fargo, are commonly in league with them, issuing credit cards cooperatively. (American Express and Discover compete as associations in a different way, assuming the role of a bank and, in turn, developing and issuing their own cards.) Add to this arrangement credit card processors, which act as messengers between sellers and these associations; merchant account providers, which manage the backend; and payment gateways, which route the actual transactions at the point of purchase, and that makes for a time-consuming (and costly) third-party matrix.
To that end, a handful of pain points that blockchain can address emerge:
- Transactional (and flat) fees
- High charge-back rates
- Hyperinflation (in countries like Venezuela, another situation altogether)
Accounting for these fees and rates, often their associated costs get passed on to consumers (and in certain industries — gambling sites, porn sites, etc. — from dishonest consumers to honest consumers, Taylor noted). Now imagine that cost savings could be passed on instead.
Blockchain can, in Yan’s words, actually compliment legacy systems. And in countries where cash is still king, it holds enormous potential to simplify B2B and C2C payment networks. Not if but when is key.
The CyberMiles Solution
Focusing on where blockchain technology can be implemented more easily, inexpensively, and efficiently, CyberMiles is realizing the full potential of blockchain 3.0. And unlike existing blockchains, ours is a specific network (for e-commerce) catering to specific use cases in the market (in this instance payments).
Crypto payments, as a mainstream alternative to conventional methods, hinge on the willingness of average consumers to use them. Take the ongoing efforts to make digital currency practical/widely used worldwide via the stable coin.
- Fiat-collateralized: centralized and backed by a real-world asset (ex. Tether)
- Crypto-collateralized: backed by another cryptocurrency vs. a real-world asset (ex. MakerDAO)
- Non-collateralized: decentralized and not backed by either another cryptocurrency or a real-world asset, but rather a “seigniorage shares” method that uses smart contracts as well as algorithms to maintain the value (ex. Basis)
The CyberMiles team believes that the collateralized stable coin approach is more mature at this point of history. However, a smart contract-based, collateralized stable coin requires trusted oracles to monitor fiat accounts in off-chain banks, as well as cross-chain crypto asset monitoring and transfers. Both oracles and cross-chain transfer are notoriously difficult and inefficient in today’s Ethereum and EOS blockchain networks. At CyberMiles, meanwhile we have innovated on both consensus and virtual machine layers to enable such use cases. The CyberMiles virtual machine (CVM), for example, allows “trusted smart contracts” that only can be updated by the current Delegated Proof of Stake (DPoS) validators to act as oracles. It provides many computational enhancements to enable cryptographic verification of cross-chain assets that was not possible before.
With an oracle-enabled “smart business contract” application, virtual machine optimization, and crucial interoperability, the public, open source CyberMiles blockchain promises to deliver lower transaction processing fees with less lag time. From paying bills online to conveniently purchasing items at checkout, the convenience factor is huge.
Further, we’re looking to empower the CyberMiles community to innovate on our collective behalf, while building on alliances with online marketplace and e-commerce portals (LightInTheBox, The Dallas Mavericks, among others). Ultimately, we aim to make digital payments as prevalent as the Internet that connects us, wherever we all are in the world.
If you have use cases (e.g. DApps and side chain ideas) for the CyberMiles blockchain, please email business@cybermiles.io for collaboration/ investment opportunities.
