Every week, if not every day, there’s someone with a new crypto acronym, story, or anecdote. Acronyms from BTC to ETH to NFTs are creeping into our language more often [some have been for longer than others]. Companies we never thought would take crypto risks are ‘buying into’ the industry.
VISA recently announced a move into bitcoin. Before that, PayPal announced plans to allow its users to use bitcoin on its platform. Elon Musk’s Tesla invested heavily in bitcoin last month and is accepting payment in bitcoin for their cars. Digital tokens, NFTs, are gaining popularity quickly, a recent example being the NBA partnering with Dapper Labs, a crypto company, to create their NFT: NBA Top Shop.
It’s hard to keep track and it is not looking like it will get any easier. What we can glean, though, are some consistent shifts in sentiment, clues to where the market is headed, telling us what the next bets the world might take are.
These three trends are exactly that; we see sufficient signals in the market to give an idea of what is likely inevitable. If we pay close enough attention, these developments will be unsurprising to anyone watching closely.
Unbanked mobile payments
The US has been using ‘mobile payments’ for a while. People are able to transfer money via e-transfers, Venmo, and PayPal. Those would be viewed as a version of mobile payments, where you can transfer cash from one account to another, using a mobile or basically an internet connection.
Today, there are three key facets to these mobile payments:
- Centralized system: when you make a transfer, you are transferring a representation of cash. Put differently, it is a digital code that you can take to the bank and get ‘cash’ for it. So it remains a proxy for cash. It is managed by the central system — they can change their value, or lock your account if they wanted to.
- Intermediary: in the case of a local currency, the intermediary is of course the centralized system. In the case of a decentralized currency, e.g. bitcoin, you would still have to use an intermediary app, e.g. Coinbase. This entity places itself between the users, it also takes a cut out of the transaction.
- Banked basis: what does this mean? Today, any users of PayPal, Venmo or otherwise are all banked users. Whether you are transferring US Dollars or bitcoin, you still have to use a credit card or a debit card on the backend. All those financial transactions are by banked individuals. If you ever tried to use any of these apps, including Coinbase, you need to get ‘validated’ first.
This is the status today.
This works well in the US, Canada, Europe. Most people are banked and have enough information to be validated. This validation is used to give comfort that the money they transfer you can be supported.
This does not work in developing countries. Developing countries are mostly unbanked. According to fintech futures, there are approx. 1.7 billion adults today who do not have bank accounts. They need a market to transfer money.
Enter: unbanked mobile payments
The new technology allows cryptocurrencies to be transferred using nothing more than a cellphone number.
Why would we want unbanked mobile payments?
- Well, they are unbanked: as mentioned, many households are so. This makes it inclusive to hundreds of millions of individuals excluded today.
- Transfer of core asset: what I mean is, what you transfer with those new platforms is not a ‘document’ saying you are able to get cash with it, it is the actual digital currency, the data behind it.
One of the first to head in this direction was Facebook’s Libra. Soon after, there was Metal Pay. Today, there is also Celo. All players in the space, slowly growing.
What needs to happen for them to succeed? User uptick. The point of inflection, when enough people are out there who use this mechanism, will be the beginning of a fast spread of the tech.
See more: Understanding forex market
Get in before this happens.
This is a tangent from the above.
I do find this worth a chuckle though, it will sound like history is repeating itself. This time, digitally.
So what companies like Metal Pay and Celo are offering, is also their own coin.
What is different from a bitcoin or a Z-Cash? It’s stable. It is pegged to a reserve asset. And this is why this makes me smile: it sounds just like the beginnings of the US Dollar backed by gold in its early days.
However, the real advantage is stable value. Today, crypto, though sometimes used for transactions, is mainly seen as an investment vehicle. Its value is too volatile to depend on for daily necessities like buying groceries or paying rent, where you need to know for a fact you have the value of the rent by end of the month.
Stable coins solve this issue by referencing their value to a reliable asset. Celo’s coin, cUSD, is pegged 1:1 to the US Dollar. Metal Pay offers a few stable coins, most also pegged to the US Dollar, and one of which, PAXG, is pegged to gold.
Content creator coins
You can create your own coin.
They’re not exactly NFTs as they’re not supported by a ‘digital asset’, they are instead backed by content.
One main company in this space is Rally. It’s the beginning of content creator coins, watch out for the potential. Rally has henceforth dubbed them Creator Coins.
These coins are a cryptocurrency, they are built on a blockchain platform, and each content creator can have their own branded coin, and currency. I can have IA-COIN if I wanted to create my own!
Why would you buy one though? It’s like investing in your favorite content creator. This can be as ‘traditional’ as popular artists, though it is mostly intended for influencers on YouTube, TikTok, etc.
Most recently, Lane8 and King of Leons have actually released their latest albums as content creator coins!
Why would anyone want to do that?
- The investor: share of their upside: if you are a fan of a TikTok user, and they release their own coin, you can invest in them, you share in the upside of their success. The more successful they are, the higher the value of their coin, the higher the upside you have.
- The content creator: if they are starting out, then this is a way for others to support them and to help spread their content since the investors in the coin have a vested interest. As they grow, and for all established creators, it’s a way to connect with their fans, “1 on 1”.
Of course, all of this is decentralized, i.e. on a DeFi, and no intermediaries.
Governments are showing openness to conversations on this, individuals are investing and starting their own coins, and investors are betting heavily on some of these companies [Celo recently received $20 million from investors].
This would mean we are seeing governance, a market of users, and money behind the ideas. There is a good chance these ideas are set for success. We can at least start by getting educated with the new concepts.