Confidence: A Cryptocurrency Perspective
In order for Cryptocurrencies and any other forms of digital and decentralised currencies to be successful in the long term, it is essential that the emerging cryptocurrency industry gains the overall confidence of both consumer’s and merchant’s and not just a small minority of enthusiasts and idealists. In order for this to be achieved, the industry needs to overcome a great deal of issues including regulation issues, scalability, price stability, being user friendly, consumer scepticism, and merchant scepticism as well as establishing a good reputation based on merit and a solid foundation.
Disclaimer: this is not financial advice and any cryptocurrencies mentioned or implied are not endorsements.
Scalability and Directed Acyclic Graph (DAG)
In the field of cryptocurrency and digital money, the term scalability refers to the speed in which an online or a point of sale cryptocurrency or digital transaction can be processed. One of the major problems with Bitcoin is that their Blockchain system can only process 7 transactions per second (tps). The Ethereum Blockchain System can process 20 tps. In order for a cryptocurrency payment or other digital currency payment system to have a realistic ability to compete with existing payment systems such as Visa, MasterCard and PayPal, the systems processing time needs to be just as fast or faster than Visa, MasterCard and PayPal. The processing speed of Visa is estimated at 56,000 tps.
Directed Acyclic Graph (DAG) is a faster and alternative payment processing system to the Blockchain system. Unlike the blockchain system which works through a method of peer to peer networking which slows down as the number of transactions increases, the DAG system works through a topological ordering networking system and speeds up as the transaction load increases in numbers.
Price Stability
Price Stability is an essential factor that is needed for a cryptocurrency or digital currency to be adopted by mainstream consumers and merchants. Without price stability the value of a currency is very unpredictable and subject to massive inflation or deflation and therefore too risky for consumers and merchants to use and trade with on a regular basis.
What is necessary for mass adoption?
No matter how technically good any system or technology is, the system or technology will never be widely adopted by the regular consumer or merchant if it can only be used and understood by a computer programmer or other specific type of technical expert.
A notable example of technology becoming user friendly is the transition of computers going from be something only a programmer or an expert can use to something almost anyone can use. The use of a Graphical User Interface (GUI on a Personal Computer (PC), Laptop, Smartphone or iPhone enables everyday people who are not computer programmers to users to use computers and other electronic devices that use a GUI.
In order for the average consumer or merchant to realistically and seriously consider using an alternative payment system and/or an alternative currency to FIAT currency, the alternative needs to be efficient, cost effective and offer the consumer or merchant, something, or multiple things, that their existing payment system does not offer.
3 Main Factors for Payment Methods
The 3 most common things that both consumers and merchants usually consider when choosing a payment system are fees or cost, scalability, and ease of use.
The 3 most common payment systems for online transactions between consumers and merchants are currently VISA, MasterCard and PayPal. These have 2 of the 3 most common things that were mentioned that both consumers and merchants usually look for in a payment method, namely scalability and ease of use. The fees are felt quite certainly by the consumer and the merchant has to have a rolling reserve.
Cryptocurrency Stable Coin Payment Systems
There are various models of stable coin payment systems that have been proposed by various cryptocurrencies. Tether is usually the best example. E-Gold and Carats are also examples. However all of these are pegged to something that is stable and thereby stable themselves. COTI is different, first it is run on DAG and second it uses other mechanisms to keep the COTI native coin stable.
Conclusion
There is no point in paying in a cryptocurrency, or fiat currency for that matter, that does not have stability. However there are 3 other factors that are a must for a payment method to work are low fees, high scalability, and it must be user-friendly. There are different models of cryptocurrency stable coins that have been proposed, like Tether, however COTI stands out uniquely as having all the factors covered. COTI is on GitHub at the moment and should launch soon. It is a promising project. Disclaimer: this article does not offer financial advice nor endorse any product named.
