Reinventing: Blockchain

Everyday Payments

This article originally appeared in HuffPost on 12/28/17.

There is a natural evolution successful technologies all seem to follow, with a tipping point of widespread adoption launching them into our lives forever. They go from being obscure, with their validity or feasibility aggressively questioned, to becoming moderately known and accepted, to being spoken about with great passion, full of buzz words and flush with eager new users. This is where I feel cryptocurrency is now.

The next phase around the corner is the tipping point of widespread adoption. The reason I believe this to be true is due to the sheer number of new businesses and technology solutions being created using the backbone of the Ethereum Network. The evolution of the ERC233 token standard over the ERC20 token standard proves this to me even further. The technology is evolving to become smarter, more capable, safer, and more in line with the real requirements society demands with widespread adoption.

A good indicator of a technology reaching widespread adoption is if it can be shown to be in use millions of times per day (or perhaps Billions with IoT applications) for tiny transactions, spread out amongst a diverse group of people, and geographic regions. Right now, cryptocurrency does not enjoy this reality, just because the acceptance of it for everyday payments isn’t in place. Meaning, you can’t easily pay for your coffee, dinner, subscription to National Geographic, your haircut, or your monthly Netflix payment with cryptocurrency.

These are presently all handled outside the ‘crypto-universe’ so to speak, and instead, are processed by centralized technology that has long enjoyed widespread adoption and developed before the internet. In fact, when I was growing up, credit cards still merely used a carbon copy and signature verification. (How did that even work I wonder?) This is clearly a technology that was not designed with the current capability of the internet (let alone a decentralized ledger) in mind, and therefore, it seems to me that the writing is on the wall. These centralized technologies, like credit cards, are set to be replaced by decentralized ones.

The credit cards of today will evolve to include the benefits of cryptocurrency, as we see it move towards widespread adoption.

Before this happens, some solid solutions need to be in place. First of all, a system needs to be in place to accept the various types of transactions people expect and use on a daily basis. Until this system is adopted and in place, we can’t expect anyone to stop using the current systems.

I believe the main types of payments we make on a regular basis using our credit cards, and auto bank debits can be broken down into the following three categories:

  1. Single Payments — for one-off purchases, like coffee or dinner.

  2. Recurring (Scheduled) Payments — for monthly subscriptions, like a magazine or monthly in-app purchase.

  3. Shared Payments — for sharing a purchase, like a shared Lyft ride.

The blockchain and cryptocurrency payments can be used to achieve all three of these examples, and once more, with absolute security, and low fees. To date, the majority of retail commerce, both online and offline, revolves around credit cards: whether direct credit card processing or via ‘wrapper’ services. These methods impose high commission fees ranging from 3%-15% and feature other drawbacks to both merchants and consumers, that are common to centralized systems.

Cryptocurrencies hold a great promise to overcome these disadvantages but have yet to evolve into a widely accepted means of payment. Let’s take a look at a Blockchain startup working to achieve this, and how they are doing it.

Introducing, PumaPay.

They offer an open source free-of-charge blockchain-based protocol that decentralizes a whole layer of transaction processing services and offers solutions to the three main payment types I named above. Also, they offer solutions for standard payment features such as money back guarantees and restricted payments. Their comprehensive and flexible protocol allows adaptors to process transactions using nearly all the familiar billing methodologies and combine the best of traditional methods (credit cards) and blockchain-based solutions. And again, it’s a free-of-charge protocol that can save businesses and consumers significant amounts of money over time as they stop paying the commissions they have become accustomed to with traditional platforms.

They are introducing the PMA token, which they strive to have widely accepted by merchants of all sizes, around the world. Their PumaPay Protocol and tokens (PMA) will support the most common transactions in the online and offline spheres.

This breaks the barrier that is currently faced by businesses wanting to accept cryptocurrency, but unable to due to its lacking infrastructure limitations. PumaPay is poised to become this infrastructure that will enable widespread adoption of Cryptocurrency. Watch out Visa and Mastercard!

Here’s how it works:

PumaPay is built on the backbone of the Ethereum network and using the most recent ERC233 token standard. This is important to note because among other things, ERC233 removes the risk of tokens being lost due to incorrect contract executions. This StackExchange thread top response covers the differences well.

The Protocol and Token.

The PumaPay Protocol will be open to the community for development. While the protocol comes with built in modules to facilitate the main payments types outlined here, it is designed to encourage community development. It aims to become a standard platform that business can use to develop their custom blockchain payment solution.

The ‘PMA’ token will be th currency exchanged amongst users’ PumaPay Wallets. While initially, users will exchange ETH for PMA tokens, it’s ongoing value will be based on the general PMA market and it will be the stand-alone cryptocurrency on the system.

‘PullContracts’ and ‘PullRequests’.

These are the heart of the PumaPay system.

Pull Contracts allow for businesses to stipulate the cost and terms of a transaction. When a customer agrees to those terms, they complete the payment loop. The PullContracts are flexible enough to allow for one-time payments, recurring payments, shared payments, money back guarantees, restrictive spending rules, and more.

When a PullContract is agreed to by the consumer, a PullRequest is created to finalize the transaction and facilitate the withdrawal of PMA tokens from the customer’s wallet, to the businesses wallet. For example, when a customer buys a coffee, they agree to a PullContract which then allows a PullRequest for the cost of the coffee in PMA’s to be executed. If the PullContract included a cost-sharing function, the PullRequest could pull money from two different consumers wallets, and so on. In a scenario where there were insufficient funds for the purchase, the business would also immediately know, just like the way a declined credit card works today.

It’s important to note that PullContracts can facilitate essential consumer payment requirements that are required for business as usual, such as Money Back Guarantees. If a customer returns a product, a PullContract can facilitate the refund of a payment. To do this in the present cryptocurrency ecosystem would require too much manual labor, and PumaPay aims to automate this kind of every day transaction.

An additional payment tool possible with this platform is the idea of restricted payments. For example, a parent could provide their child with a set amount of funds for spending, but restrict the use of those funds to certain types of purchases. (i.e. School Supplies OK, but Candy is not). I feel this type of monetary control over money shared with another person could prove to be very powerful.

The PumaPay SDK

All of this will be made available and possible using the SDK for developers. Because PumaPay is a transaction free platform, and the only fees are those charged on the blockchain itself for transaction verification, there is enormous room for growth as this platform is adopted and build upon by its developers.

The use cases go on and on because the capabilities of a PullContract are as wide as a developers imagination. Any number of requirements could be coded to be met before payment is required or requested using a PullRequest. Integration into existing systems will just be a matter of businesses developing the code to trigger existing actions based on the PumaPay PullContract results. For example, an online subscription based system could grant a user access to premium app features after a PullContract is executed successfully.

The future of everyday payments is changing quickly, and it seems safe to say that blockchain will play an integral part in this equation. PumaPay’s solution offers a great potential solution, and I look forward to seeing this platform evolve. They have an exciting roadmap ahead of them, and I highly recommend taking a peek at their website.