AugmintPay

২৩ জানুয়ারী, ২০১৯ প্রেস রিলিজ ফিরে

Why is the mass adoption of crypto payments stalling while existing payment services are converting Bitcoin to fiat at the moment of purchase?

Stablecoins 

According to stablecoin fans, the biggest barrier to widespread use of cryptocurrencies in everyday transactions is their high price volatility. That is why Bitcoin and other inflexible supply-based cryptocurrencies have been used mainly for speculative purposes. However, the speculation is a good game only until there are enough speculators who buys the coin what you speculate on. The way in which market caps are calculated always be repriced based on the current market sentiment and leaves the cryptocurrency market open to huge fluctuations. That makes using most cryptocurrencies for daily transactions inconvenient and simply not reasonable.

The adoption of stablecoins such as Tether, MakerDAO, Augmint, Circle, Terra which effectively solve the problem of volatility could be a catalyst to the establishment of the crypto economy becoming mainstream. These crypto assets are designed with flexible supply to minimize volatility so that they could be used for purchases, financial services and holding rather than speculation.

However, despite of that some stablecoins successfully maintain the steady state for long term, up till now they are far from mass adoption. All of their use cases are related to speculative purposes. Nearly 91% of MakerDAO users just want to make an offer in USD-fixed price speculating on other volatile cryptocurrencies and 9% of them seize the opportunity of hedging by leveraging their cryptocurrencies (ETH) to secure personal loan denominated in Dai. Augmint, Circle, Tether and Terra users also stuck into the same role; stablecoin owners convert their coin to fiat currencies such as USD or EUR whenever they want to purchase something. Needless to say, stablecoins would be useless if you can only buy fiat currencies with them.

Then, why haven’t stablecoins spread yet? There can be more reasons for this. First of all, the galaxy of stablecoins is just after the big bang, within the crypto universe, which one still being in the nascent phase as well. So, the awareness of these coins is low even among the coin owners. The second one is coming with the first one. Though the number of stablecoins has been booming for the last couple of years, no one has found the killer app and/or use case yet. Third, uptil now not every crypto asset can be leveraged. The aim of tokenization is to change it. Tokens are work by removing the valuable data from your environment and replacing it with datas stored on blockchain. At 2018 there were several initiatives emerged providing security tokens which potential market capitalization can be easily valued at over $1 trillion already, once the crypto industry figures out how to facilitate security tokens.

In order to accept tokens for collateral which are not on Ethereum blockchain (e.g. BTC) it should be able to execute transactions on cross-chain. These protocols will enable low threshold to convert any digital asset (such as BTC) from any blockchain into a corresponding proxy asset (such as Augmint tokens or Dai).

Therefore the market stalled at the place where:

(1) there are not any retailers behind stablecoins, who are incentivized to accept stablecoins

(2) there is not enough demand for stablecoins; that non-crypto owners see why stablecoin based payment would worth for them more than fiat money

The right use case

If the goal is facilitating the widespread of cryptocurrencies the best use case is the fundamental feature of any kind of money, that is the payment. Therefore, should design a payment service possessing more favorable features comparing to the fiat payment solutions. Namely:

Currently merchants are already willing to accept crypto assets. There are several retailers who accept these kinds of assets, and most of them are in the US. On the other hand, crypto owners are also not reluctant to liquidate their volatile crypto assets if they want to get the desired services. Plenty of them uses Bitcoin payment API services such as Bitpay.com priding themselves on 1M visitors/month, or Spectrocoin.com enjoying  600k visitors/month.

AugmintPay aims to facilitate stablecoin based payment services. Actually the market is already matured to adapt this kind of service: There are lot of webshops built on Magento and Shopify which could optimize their profit by a stablecoin based payment service instead of tradition cryptocurrencies. And crypto owners also could hedge their positions by leveraging crypto assets to secure stablecoin loan. If 2018 was the age of stablecoins, maybe 2019 will be the age of stablecoin based payment services.

Áron Ecsenyi