Is there more to bitcoin than wild price swings? Many entrepreneurs say yes, and have their eyes on the day that people actually use their digital windfalls to buy things. We spoke to Austin Kimm, Cypterium’s IR director and co-founder, about why preparing for that day means building a cryptobank to make commerce with cryptocurrency a bit less…cryptic.
It was a regulatory headline kind of week.
Japan has said that cryptocurrencies are not currencies, a sentiment shared by South Korea.
And in the United States, the SEC has suspended trading in The Crypto Company until the beginning of the year, for what might have been manipulated trades and after shares jumped 2,700 percent over the course of a month.
Singapore has said buyers should exercise “extreme caution” when snapping up cryptos, and warned of speculation. Sharp price drops may be in the offing, warned that nation’s monetary authority.
From the whimsy department: Long Island Iced Tea company shares got a 289 percent boost after the non-alcoholic beverage firm changed its name to Long Blockchain – and will make the leap into decentralized ledgers.
From Crypto to Fiat, From Speculation to Commerce
Bitcoin has been around for roughly eight years, and Ethereum and a host of other cryptocurrencies for less than that. And the peril may be in the wild price swings – while the promise, say proponents, lies in changing the very ways people transact.
Crypterium bills itself as a “contactless cryptobank for everyone,” and debuted an initial coin offering (ICO) in November to raise capital for, among other things, developing virtual cards aimed at boosting liquidity, as cryptocurrency holders make the leap from investing/speculating to actual commerce.
As a digital-only cryptobank, Crypterium seeks to offer payment and service infrastructure, with the end goal of paying in cryptocurrencies via contactless payments, and integrating with cash register software as well as QR-based transactions.
The company has said holders are able to store, spend, exchange (and eventually, borrow) cryptos for instant processing and interchangeability between cryptos and fiat using mobile devices across 42 million payment terminals globally – and with no need for a plastic card.
In an interview with Austin Kimm, IR director and co-founder, the executive told PYMNTS that there are two parts to the crypto space. There are the tokens that are designed to be a currency, including bitcoin and Ethereum, of course. Then there is a whole host of tokens, he said, where the primary purpose is to have a utility function within the companies that develop them.
To make those tokens attractive, and to get people to put money into those companies, said Kimm, the tokens have bowed on exchanges, operating in environments akin more to stock markets than to money.
“Until we are able to change that dynamic, we are still in that crypto bubble, where you’ve got a select group of people – and it might be five million, might be 10 million – that own this crypto asset primarily for its potential increase in value over time,” he said.
But then again, there are roughly 100 new companies every month issuing their own digital currencies, and many of those tokens, said Kimm, “are going to find their way into the pockets of the average person.”
He gave the example of a gaming platform that already has its own digital currency inside the game, and wants to take that digital currency outside the gaming ecosystem, issuing some form of crypto token. Suddenly, millions of gamers are working with the crypto beyond the game, well away from gaming confines. Loyalty programs, he said, are moving down the path of issuing crypto tokens instead of points, with value to be realized within a store setting.
Crossing the Rubicon from investment to spending “is where companies like Crypterium are going to come in,” said Kimm.
Before getting to that spending embrace, he added, the company bridges the gap between crypto and fiat. “We have to go step by step,” he told PYMNTS. With such daily fluctuations afoot in the markets, he said, “you as a merchant cannot price your goods in bitcoin.” Until cryptos find a natural price level, Kimm maintained, the only viable option is to convert bitcoin instantaneously into the fiat with which the merchant is comfortable – from rupees to Hong Kong dollars to U.S. dollars, to name just three.
“We call ourselves a crypto bank,” he said, “but really we are not a bank at all.” Instead, he said the firm is “allowing people to really be their own bank.”
A bank enables consumers to make payments, get additional services, store currencies and so on. “We are facilitating people to do that themselves,” he told PYMNTS. The blockchain enables people to store assets inside the digital wallet, to mandate via smart contract a time-based transaction, with payment sent today but not to be opened till “seven minutes past midnight tomorrow,” as a hypothetical example.
In another example, Kimm noted a peer-to-peer payment from a migrant worker who sends money back home. Maybe today the Western Union transaction is handled in cash – but by using the blockchain and Crypterium, the transaction cost is “zero and [the transaction] is instantaneous.” Against the backdrop of a smartphone wielded in the transaction, this enables the unbanked to become their own bank.
“If you accept that we are in the digital age” and you accept the concept of digital money, Kimm said – and if you accept that crypto is acceptable as money – mobile will be a universal option for transacting. He offered up an anecdote he’d read of a doctor in Brazil who changed his practice into a crypto practice. Using cryptos offers up control over currency and transactions, beyond the state/government influence that might be held over more traditional bank notes and coins.
Such government control begs the question of how Crypterium seeks to move into markets where there are varying levels of acceptance of cryptocurrencies at a policy and governmental level. Speaking generally, “you have to have a country-by-country strategy,” he told PYMNTS, to bridge both crypto and fiat conduits, and where consumer behavior and uptake might be stimulated by the issuance of plastic cards (for transacting, of course). Issuing a Visa card is not a complicated process in the United States, he said, while doing so in Bangladesh might be relatively harder.
But if going down the pure digital path, Kimm added, “which is our focus … it seems strange to us to go down a brand-new currency and a whole new blockchain and then go back onto old-world technology, which is effectively the plastic card and all the limitations that brings.”
The firm does have the ability to issue payment cards inside the application to be used as virtual cards. The company will likely have to adopt KYC and other initiatives, Kimm said, that “any bank issuer who is taking on digital cards would want.” Thus, Crypterium is seeking to partner with banks that have NFC capabilities, for example, and where that bank would already be able to issue digital Visa cards.
Kimm likened the approach to PayPal, where that firm did not create the infrastructure it used, using a traditional approach to find a new user base. “What we have done, during our token offering,” he said (which has several weeks left to run), “we think we’ve done both parts at the same time,” having had the token sale and built the user base. “We’ve got 150,000 people who have registered to use our platform, already,” and the firm expects to have 200,000 people registered to use it in the near term. “It’s not about going out and paying people to use our platform,” he said.
“What is critical is finding alliances with companies that have a need for this type of service” to change crypto into a currency that others can accept.
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