Onomy Protocol
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Onomy Protocol

How Reconstructed Crypto Payments Will Change the World

An effective payment superstructure is the grand dream of many cryptophiles. What is mass adoption if not the ability to pay for the things you want with the crypto you have?

The potential for crypto to provide a faster and more frictionless way to make payments — both internationally and domestically, in retail and in big business — will usher in the revolution that many in the space expect.

Several internationally renown payment processors are already green-fingered as they make their way through the crypto garden. However, there is still a lag between the vision and the reality, with the full convergence of TradFi with DeFi being the end-goal for many.

Payment Processors Already In Crypto

The shift to crypto payments has already begun!

The CEO of Visa — the world’s largest payment processor, has already said they are ‘leaning into the crypto space’, and have done so for years, as the opportunity to tap into crypto’s utility on top of the burgeoning fintech sector is too great to ignore.

Similarly, providers like FTX Pay & Shopify Crypto are making it easier for e-commerce merchants to accept cryptocurrency as means of payment, opening their business to many crypto enthusiasts. On the same note, Bitfinex Pay and their work on the Bitcoin Lightning Network is rapidly advancing the BTC-as-payment narrative.

Of course, we also ought to mention the myriad of crypto debit cards that allow for simple payments in your favourite supported digital asset both digitally, but also in physical stores. The best-known examples include Gemini, BlockFi, Coinbase, Binance, Crypto.com, and other exchanges partnering up with Visa and MasterCard for crypto-focused cards. Even CashApp is implementing crypto, allowing for simple P2P transactions between the platform’s users.

Recently, several large retailers with social clout, including popular meme stocks AMC and GME, announced they would be accepting payment in crypto. The coins announced included Dogecoin and Shiba Inu, as well as Bitcoin and Ethereum.

Pushing Crypto Payments Forward

While innovation is certainly ramping up, hurdles to payment processing still exist. Some include market fragmentation, as a provider may not accept your favourite crypto, centralised tunnels which may erode efficiency, and the lack of peer-to-peer transactions.

The problem with paying with crypto is that some solutions are too inefficient to work as a widespread payment mechanism in a peer-to-peer manner. Standing at the checkout of Gamestop waiting for your Ethereum transaction to go through while the queue forms behind you doesn’t make sense, and companies know that.

Add to this the problem of volatility, wherein the time it takes for the Bitcoin to transfer from one wallet to another, the price may change. It may be miniscule, and for any individual transaction it would not matter, but quickly adds up when it comes to millions upon millions of transactions on a global scale.

Lastly, setting up a merchant account with crypto payment providers is not always easy and represents an additional bottleneck in adoption.

The recent growth of crypto payment solutions, the emergence of stablecoins as an asset class, better UI/UX, and of course, a stronger infrastructure will lead to the convergence of these worlds and create a stronger, more inclusive payment system.

What Payment Processors Do and How It Works

If you use your debit card to buy a sandwich in the Bangkok airport, but your bank is asleep, then the payment processor will pay for you and take it from your bank in the morning. Such is also the case with existing crypto-focused debit cards, allowing instant payments as the crypto is converted to fiat, then processed traditionally via the banking system.

This is why fees exist, to manage that administration cost. It’s all a bit baroque, and as the world continues to internationalise, remittance and payment systems must improve.

Payment processors are aware of this. They want to be able to remit money faster, and cheaper. It serves their core business model. For crypto to truly go mainstream, it needs direct funnels to allow end users to shop with their crypto. That’s what Onomy Protocol is focused on, giving these payment processors the perfect on-chain environment to channel and manage their assets.

The expense of administering payment systems hurts domestically too, especially in developing economies whose financial systems are still too immature and the cost of administration too high. How many times have you gone to pay only to find that the establishment you are paying ‘doesn’t accept cards’. Why? Because it’s expensive on their bottom line to do so because of processing fees. While this is a non-issue in developed countries, it continues to be the case in some of the world’s nations.

Crypto will allow payment processors to set up instant financial frameworks through which they can deliver their services at a price point that introduces more of the underbanked world into the global distributed financial system, creating a consequent wealth explosion in countries as a single wallet can serve as the go-to platform to make any crypto payments directly.

How Decentralisation and User Experience Are Key to Global Adoption

As it stands, the current bottlenecks to crypto’s adoption as means of payment include third party processor fees, lacking scalability, and volatility concerns.

Merchants are accustomed to the existing infrastructure and most aren’t yet perceiving the benefits crypto payment would bring. If a shop was to take payment in bitcoin directly, they’d have to be keen on holding it for a while, exposing their business to volatility. Stablecoins are effectively clearing out the volatility risk in crypto, whilst providing an opportunity for the unbanked to hold any currency and participate in decentralised finance markets.

Reengineering Payments with Onomy

We propose a collaborative approach to sustain a staged migration from the current payments systems to a fully on-chain environment where all components are integrated for efficiency, simplicity, and inclusivity, hence positively contributing to the financial space as a whole.

First off, you need a non-custodial and permissionless infrastructure that has been built from the ground up to efficiently scale and provide the entire cornucopia of payment options from one single interface.

Then, you need a unique category of non-volatile assets that both small and giant merchants can integrate. One that adapts based on your location and customer base, while giving users direct ownership.

On the infrastructure side, the Onomy Network will be 100x times more efficient than Ethereum from day one by leveraging both a different architecture but also a set of high-performance validators to almost instantly verify transactions. This means that transactions take seconds to process, the same as a cash transaction would.

On the currency side, the Onomy Reserve will allow minting of decentralised and crypto-collateralized stablecoins pegged to the world’s major currencies, with non-custodial ownership. This means that merchants can take on-chain payments directly in EUR, JPY, GBP, USD, CHF, CAD, and many other currencies, removing the volatility concerns for both users and merchants.

Lastly, for true adoption to occur, convoluted interfaces that are confusing to crypto novices must disappear. This is why Onomy is building a cross-chain DeFi wallet able to store both our native stablecoins, but also other crypto-assets and NFTs, while allowing for cross-platform staking and governance functionality. On the payment side, the super app will allow for contactless payments on traditional POS card readers or direct sending and receiving of assets by scanning a QR code.

The aforementioned ingredients coupled with the existing infrastructure make for the complete recipe to mass-adopting crypto for payments. A street-seller flogging hot dogs would be able to take payment in all currencies, at all times — instantaneously — the same way a large international hotel would.

The possible economic benefit of all this is mind-boggling, and the ability to enact this in a decentralised manner with no central operator weighing down the process as an intermediary has the ability to utterly revolutionise micro-businesses worldwide, in every country of the world. This then is Onomy’s promise, a global remittance and payment system that a brand new business can set up within one minute on their mobile phone.

Hello world, what can I do for you? How would you like to pay? I can accept every currency that matters.

In time, by giving payment processors the tools for a truly integrative crypto payments system, Onomy will be the world’s local wallet — for users, by users.

How Card Payments Are Here to Stay

Of course, there is still a place for classic payment structures set up by Visa, Mastercard et al. in the new world of money. A recent boom in crypto-powered Visa cards offered by large centralised exchanges to allow people to spend their crypto in the traditional manner, and the large uptake of such methods (in the first quarter of 2022, $2.5 billion was spent this way), indicates the necessity to mix the old with the new. BlockFi and Gemini also offer crypto cards, and there is a current arms race between various providers in an attempt to woo crypto users and holders and gain prominence in this emerging space.

Onomy understands this and is working with institutions to facilitate card payments, and further simplify the current process. The genius here is that, because of the ability to mint currencies as required, the Onomy card will hold a mixture of appropriate currencies, and be loaded up with the right currency in stablecoin form at one click before taking any trip abroad.

A Global Payment System for a Global World

Onomy wants to revolutionise payments because it recognises that dismantling the banking system and replacing it with crypto is not about replacement, but about convergence.

By creating a single, user-owned payment network that anyone can trust, we tap into a global opportunity and will thus bring frictionless transfers of value to ecommerce and retail stores worldwide.

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