I started within the crypto industry in 2013 launching Uphold, the payment service and exchange that created one among the primary stablecoins. It still allows users to shop for and trade bitcoin and 15 fiat currencies today. At the time, Coinbase required traders to sell bitcoin and send the cash back to their bank accounts. It had no USD service. We wanted to offer traders the power to convert bitcoin to their native fiat currencies and back again without leaving the ecosystem and to send funds all the way back to their banks. Back then, holding fiat “stablecoins” on a service like ours wasn’t well liked during a bitcoin-or-nothing world.
In 2019, as traders sought more pricing stability, we saw the increase of Tether and its many competitors. Stablecoins became the answer to maneuver fiat among exchanges without using banks directly. Fiat trading on blockchain has exploded and US dollar-backed stablecoins have attracted quite $4.5 billion of investment. What this proves is that fiat and crypto were never enemies. They were complementary in any effective trading ecosystem, and both have prospered.
For convenience, crypto-users got to be ready to use their bank accounts to buy products and services. If, instead, you force them to open an exchange account and to use some new, volatile sort of money with low liquidity just to use your service – then you’ve created significant friction. If blockchain-based businesses are to succeed, they need to be as convenient to use as non-blockchain services.
At VideoCoin, a corporation building a decentralized video infrastructure platform, we asked ourselves an easy question. If Paramount Pictures or 20th Century Fox were a VideoCoin customer and that they wanted to spend $100,000 a month on our video encoding service, would they be willing to open an exchange account, hire a trader to avoid driving the worth up at acquisition, then deposit funds whose value on our services would fluctuate every minute of each day? You see the matter, here.
Our competitors at Amazon Web Services let customers use a daily checking account altogether its forms – mastercard, wire transfer, ACH, and so on. These methods are simple to use and therefore the value they deposit doesn’t fluctuate significantly from moment to moment. albeit we are building a service that’s dramatically lower priced, the payment friction would be so great it might substantially hurt our ability to compete.
We collaborated with a third-party (which we’ve yet to announce) to make a fiat-based blockchain connected to banks. This provides access to traditional payment methods like credit cards and ACH while keeping all of the inherent benefits of blockchain. Even the gas – the fuel necessary to try to to any transaction on a blockchain network – is fiat-based creating the primary tokenized fiat blockchain supporting smart contracts and traditional payment methods. This model allows 20th Century Fox to pay in dollars and our workers (data centers) to be compensated in dollars upon completion of verified work. No friction, just lower cost.
Tokens used as payments aren’t competitive with fiat when it involves reaching customers outside of the crypto ecosystem. Unfortunately, most of the business world today lives outside of the crypto ecosystem and that they don’t have access to crypto exchanges, but they are doing have credit cards. we’d like to form VideoCoin as easy to use as the other competitive service, if not easier.
EMBRACING FIAT PAYMENTS isn’t CAPITULATION, IT’S the primary STEP TOWARD MAKING the companies WE ENVISION REAL.
At VideoCoin, our utility token VID plays an incredibly useful function in securing and powering the network, ensuring the foremost qualified network operators are serving customer needs. The VID token doesn’t act as a payment mechanism. Instead, it’s a reputational staking mechanism for building the worldwide infrastructure that runs the worker nodes on the VideoCoin Network. Miners are continuously selected by the VideoCoin Network services algorithm as operators to process video files supported three factors: quoted price, number of staked tokens, and performance. This drives the smallest amount expensive and highest quality network operators to perform—the best rise to the highest. Staking is that the perfect use for tokens during a utility model. rather than burdening the network with payment friction, our tokens power the network to function securely and reciprocally, workers receive staking rewards in fiat.
This means customers of the VideoCoin Network pay in fiat, the info centers get paid in fiat, and people staking are paid in fiat plus alittle staking reward in VID tokens. Reward tokens are automatically purchased by the Network from exchanges, at the then-prevailing price, when employment is started so stakers find yourself with fiat they will send to their bank and alittle additional amount in tokens.
Just as Tether, Paxos Standard and other stablecoins have made it easier to use exchanges, trade and move money into and out of the banking industry, so can also a fiat-integrated blockchain liberate crypto from payment friction, which may be a business killer. If crypto startups want to require market share from traditional businesses, they have to permit for the convenience of fiat-based payments.
In 2020, those that have come to the present understanding are going to be poised to compete outside of the narrow crypto domain. These are the very people we would like to interact when the VideoCoin Network reaches full system release in May 2020. Embracing fiat payments isn’t capitulation, it’s the primary step toward making the companies we envision real.