For decades now people have been talking about the future of a cashless society.
It was always the stuff of science fiction since the reality of having no cash faced too many hurdles. Between banks, currencies and borders, it didn’t really have a feasible way to be done.
With blockchain technology, suddenly those barriers are starting to fall.
Moving away from cash is not only achievable but it is starting to seem inevitable.
In fact, OmiseGO, a Thai, Japanese and Singaporean company, is already using the blockchain to that effect. It’s still early, but it seems to have the foundation laid for a system that works between blockchains. Enabling transactions for B2B applications right down to ordering your morning cup of coffee without needing everybody to operate on the same system or application.
What is OmiseGo?
OmiseGo started in 2013 in Asia as a Stripe-like payment system. Working mainly as a mobile app, people have been using it as an easy way to make payments or buy goods.
As they transition from a centralized database system to the blockchain, the way to look at it is not as an altcoin, but as a financial platform that unites many different platforms.
To become a mainstream application, OmiseGO realizes that they need people and businesses to use it without realizing they are using the blockchain, or need to know how a blockchain works.
The real beauty of that premise is that it will enable different blockchains to communicate with each other so you won’t need people to all be on the same platform. If people with a OmiseGO wallet could only transact with other users with the same wallet, you can see how limiting that would be. With OmiseGO, it doesn’t matter what app or platform they use to be able to make a transaction.
OmiseGO describes itself as: “The answer to a fundamental coordination problem amongst payment processors, gateways and financial institutions”. In other words, to act like an exchange without needing to be an exchange.
There are tens of millions, if not more people, in Asia right now that don’t use banks and want an easier way to use cash. Whether it’s to make payments, buy something or even transfer money to friends or family, even across borders. Right now many are using OmiseGO as their bank. They fill their wallet with whatever currency they want and use it to buy things, make payments and even send currency across borders to friends and family.
How does OmiseGO differ from an exchange?
OmiseGO is currency agnostic. That means that it is not tied to any one currency over another. In a typical exchange of Bitcoin to Ethereum for example, you would have to buy BTC with cash, then find an exchange that converts BTC and ETH, then send the BTC from your wallet to the exchange, then convert the BTC back to fiat, then finally to ETH. With a lot of transaction fees and time required to complete what should be a simple transaction.
OmiseGO is an application that allows different blockchains to operate with each other. (Interoperability is a word that you will hear often when discussing blockchain potential) Since it is currency agnostic, it doesn’t matter what type of currency is in your ewallet, you don’t need to go to an exchange to get another currency. The wallet will communicate across blockchains. Sort of a liaison that links different chains without needing to be on the same platform.
Streamlining this process of exchanges opens up a huge swath of the financial market that paves the way for the phasing out of cash and makes digital currency, or even digital assets, a mainstream currency.
How Can OmiseGO Be Used?
There are infinite ways for this system to work, but for the sake of brevity and simplicity I will give just a few real world examples of how this will be implemented.
Let’s say you are businessman or tourist from the UK. You will be going to a few different countries with different currencies. As you exit the airport at your destination, you can pass right by the currency exchange windows as you won’t be needing any local currency.
You go to a restaurant and pay with your OmiseGO wallet that has BTC, the restaurant only takes Swiss Francs. Not a problem. The wallet takes the BTC out of your wallet and sends the exchange in Francs to the restaurants bank account.
In another example, you need to pay your electricity bill. You don’t have a bank account, either because you are trying to live off the grid, don’t like how unsafe your information is in a central database, or you simply don’t qualify for a bank account. You now can use your wallet with whatever the currency of your choice is and make payments to other institutions.
Let’s say that you are a loyalty member on many different stores. Rather than keep a dozen loyalty cards on you to accumulate points as you shop at those stores, you can have them all linked into your wallet. When you use your wallet, it updates whatever the relevant loyalty program is.
Then, there is the possibility of loans when you don’t have a bank. With platforms like EthLend and SALT, you don’t need a bank to get a loan. You can use your cryptocurrency in your wallet as collateral to secure a loan that can be used for anything you want. And since you can use your wallet for non crypto transactions, it doesn’t matter what currency you take your loan out in.
As I said, these are just a small fraction of the possible use cases of OmiseGO. And they only represent consumers. There are infinite applications for B2B transactions and foreign exchange markets, to name only a couple.
How Does the OMG Token Work?
OmiseGO is a proof of stake concept, so tokens buy the right to validate transactions.
OMG tokens will be the token to pay the transaction fees for things like making payments, currency exchange, etc.
The value is in the stake of the blockchain. The more transactions the more tokens distributed, the more value they have.
Ignoring the silly name of the OMG token, it is an ERC-20 token on the Ethereum blockchain until OmiseGO has finished its own blockchain. Right now the ICO sale of the tokens is being used to develop the platform. It may take a while before it is complete and may see many iterations before it feels completed.
Using tokens as incentive rather than a currency is becoming the easiest way to fund a huge project like this one without needing to go for venture capital.
As more and more aspects of finance are being disrupted, the more likely we are to see cashless societies come to fruition. OmiseGO is in an enviable position to be the company leading the way to this future.