The World Needs a Better Digital Wallet
Even though they are among the most popular and fastest growing apps, digital wallets are far from safe.
The world’s two most popular smartphone payment apps; Alipay and WeChat Pay, might soon run out of money. Those digital wallets might not contain the funds to cover all the payments made in their apps. Theoretically, that would generate a liquidity crisis like the one that triggered the Great Financial Meltdown of 2007 and 2008.
The People’s Bank of China (PBOC) is so scared of such a crisis it acted, The Financial Times reported. China’s central bank ordered the wallets’ operators to keep enough funds in reserve to cover payments.
Digital Wallets can Trigger a Cashless Catastrophe
It is easy to see why the PBOC is frightened. Statista estimated that We Chat Pay; owned by Tencent Holdings (HKG), had 600 million users in August 2017. Alipay; owned by Ant Financial, reportedly had 400 million users. That means the two payment apps have one billion users.
Problems with just two popular digital wallets can trigger a financial crisis that would affect up to one billion people. Chaos would result because many Chinese no longer carry cash. They use WeChat Pay, or Alipay instead, if either of those apps stopped working, average people could not buy food for their families.
A probable outcome of a digital wallet liquidity crisis in China would be riots. Desperate mobs might smash their way into supermarkets in search of food.
Can Cryptocurrency and Blockchain Provide a Better Digital Wallet?
Intriguingly, cryptocurrency and the blockchain can provide the building blocks of a better digital wallet.
Many of today’s digital wallets do not contain funds. Instead, products like Apple Pay or Venmo provide a pass through to a bank or credit-card account. This works fine if the connection is seamless. Any blockage to connection funds can lead to a liquidity crisis.
A blockchain wallet can contain actual money in the form of cryptocurrency. Theoretically, it would be possible to build a digital wallet that provided instant access to cryptocurrency funds.
An inherent advantage of a blockchain wallet is that the cryptocurrency can be stored in the cloud or in a hardware wallet. A hardware wallet is a small electronic device specifically designed for cryptocurrency storage.
Therefore, a blockchain wallet can allow a person to store funds outside the banking system. That might help individuals avoid some effects of financial crises such as bank runs or the collapse of institutions.
The drawback to such wallets is that today’s blockchain is not fast enough to process transactions efficiently. The team at Rubius estimated that it can take up to 10 minutes to process a Bitcoin (BTC) transaction in its whitepaper. To make matters worse, Bitcoin transactions can cost up to $55 to process.
Rubius is Building a Better Blockchain Wallet
A goal at Rubius is to build a better blockchain wallet that everybody can use. Rubius’s solution Aryl is an open-source application based on the Ethereum blockchain platform.
By using Ethereum, Rubius’s experts believe they can reduce the time of a cryptocurrency transaction to 14 seconds. That transaction will utilize Aryl, the Rubius (RUBY) cryptocurrency, and the Rubius platform.
Beyond speed, Aryl will reduce the risk of liquidity problems with its Volatility Shield feature. The idea behind the Volatility Shield is to keep one’s money in a stable currency or a fiat currency, rather than a volatile cryptocurrency.
The Shield feature will automatically convert your currency to your preferred storage currency upon receiving funds. When sending payments, the Shield feature will convert your funds from your storage currency to your preferred payment currency. All you need to do is select who or where you want to send the payment — the rest is handled for you.
These conversions performed by the Volatility Shield feature are facilitated by Rubius’s cryptocurrency exchange, which is called Rubiex. In time, the company plans to grow Rubiex into a multi-asset trading platform, where equities and cryptocurrencies are traded side-by-side.
Some Advantages to Blockchain Wallets
An obvious advantage to Aryl (and its Volatility Shield) is that it would be possible to make transactions at brick and mortar stores with it. Merchants would more likely to accept such a wallet because the Volatility Shield would enable fiat currency payments.
Another benefit would be the ability to convert altcoins in to fiat currency. Fiat currency is convertible into cash and withdrawn from ATMs or registers.
A final use for Aryl and the Volatility Shield would be to transmit cryptocurrency payments via social media. That can allow people to instantly pay bills or send money to family and friends via cryptocurrency. The hope is to make Aryl as convenient and easy to use as Venmo.
The blockchain provides several more layers of security and encryption than traditional wallets. That might plug some security holes in today’s payments.
One way a blockchain wallet would be more secure is to allow transactions without a direct connection between payment systems. Companies like Walmart are refusing to accept Apple Pay and Google Pay because they are afraid of giving outsiders access to their payment systems.
Blockchain wallets would eliminate that worry, by allowing a merchant to receive a payment without establishing a direct connection. Instead, the connection would occur outside the system on the blockchain.
Blockchain and cryptocurrency offer the promise of safer and more secure digital wallets. It will require large amounts of research and development to make such wallets a reality.
The purpose of Rubius Inc. is to conduct that research and development.
Learn more about Rubius at:
https://rubius.io/rubius-whitepaper.pdf
Chat with the Rubius team on Telegram here:
