Cryptocurrency Payments Everywhere Is Goal of Crypteriumbr>
Crypterium is a cryptobank, claiming to offer lower transaction fees and faster processing for customers using its digital app, which it envisions as the payment processor of choice for retailers in the global economy. The company’s goal is to expand payment infrastructure and create new cryptocurrency payment scenarios offering lower interest rates.
IR Director and co-founder of Crypterium Austn Kimm explained the plans to Block Tribune.
BLOCK TRIBUNE: Crypterium — tell me how it works. Give me a scenario where someone is using it.
AUSTIN KIMM: Okay. Crypterium, in the long-term, will provide all the functions that you expect from a bank. But in the short term, when we launch, what we will enable customers to do is effectively use the cryptocurrencies as though it was an everyday fiat currency that you can use in the real world. They do this through the mobile phone, the smartphone. What happens, in practice, is the customer will download our digital bank. Let’s just call it an application for simple terminology. They download our app. They would attach the cryptocurrency either to the digital wallet that is available inside the app, or after we’ve launched, they will also be able to attach any other sort of crypto wallet that they currently have their assets in. They then use our application when they are approaching, let’s say a Visa terminal, or a MasterCard terminal, or UnionPay, or any of these payment terminals that has an NFC capability.
So, a near field communication capability. What I mean by that is simply where you just touch the phone to the terminal, and the terminal will read the data from the phone, and the payment goes through. Now for the customer, that payment would be in the cryptocurrency of their choice, and for the retailer, it would be in the fiat currency of their choice. In a practical example, you go to Starbucks, Starbucks charges you an exorbitant amount for a coffee. You pay five dollars. They charge you five dollars, it pops up on the payment terminal. You open our application on the phone, you put the phone to the terminal, and the terminal, the phone will say, “Do you want to pay five dollars worth of Bitcoin, or Ethereum, or Dash,” or any of the other cryptocurrency that they might have in their wallet.
The customer says “Pay,” and then that’s it. The retailer receives five dollars, the customer has just spent five dollars worth of cryptocurrency. That’s probably the simplest way to understand how it can work.
BLOCK TRIBUNE: What cryptocurrencies are going to be available?
AUSTIN KIMM: We start off with the main cryptocurrencies. Let’s call them currencies to start off with. All of the cryptocurrencies that you could say are readily available on exchanges, because obviously a key requirement for us is that we need to be able to exchange. As long as it’s available on the key exchanges, then that cryptocurrency will be available. Eventually, not on day one, but eventually within let’s say a reasonable period of time, within the first six months, those crypto tokens, which are also available in exchanges, we will also enable people to be able to spend those as well. They key point is, will it be available on exchanges, and is it readily available for us to make that exchange?
BLOCK TRIBUNE: Are you going to coordinate all cryptocurrencies into your system?
AUSTIN KIMM:I would differentiate between the currency and tokens. Let’s call the first, the first main currencies would be Ethereum, Dash, ZenCash, etc., the main currencies. The tokens which are being issued by, let’s say the individual companies, some of which are utility, and some have additional functions. They are also available in exchanges. To start with, we have let’s say the top 10, but eventually, yes. If it is available on an exchange, probably more than one exchange. If it’s available on, say numerous exchanges, so that there is a market, there is not going to be a liquidity problem for that particular token, then we will enable you to use that token.
BLOCK TRIBUNE: Now, fees are a major issue for transactions. Tell me about your fee structure, and how it will work for the retailer. I assume that they’re be going through Visa, MasterCard, whatever, and for the user.
AUSTIN KIMM: Yeah, absolutely. In practice, actually what happens is we partner with an existing Visa provider. We are not a digital bank. We are not licensed as a digital bank, we have no intention of becoming a licensed digital bank. We have partners, and those partners have already the necessary agreements with Visa, or UnionPay, or whoever, to issue digital Visa cards. Now, when you are using our application, we’re inside that existing environment. We’re not creating a new environment on top of that, we’re inside that existing environment. If the merchant is already paying 3%, or 4%, or 2%, whatever his fee structure is currently for Visa, inside that fee structure, as you know, part of it goes to the bank that’s issuing the Visa card and part of it goes to Visa or UnionPay itself.
We do not add an additional layer on top of that. We effectively share, in the proportion of the fee that is currently being directed towards the bank. There’s not an additional layer of cost. It’s within the existing cost, and that’s if we use the NFC capability. Now, at the other end of the equation, we do charge the customer a small fee for the transaction. We charge the customer half a percent of the transaction fee. If the transaction was $10, then we will charge that customer five cents to make the transaction. It’s a little bit more complicated than that because they don’t actually get charged in the currency, they get charged in our tokens, but effectively let’s just say that there is a half a percent charge for the customer at the front end, but at the back end for the merchant, there is no change.
BLOCK TRIBUNE: So, to participate in your app, the customer is going to have to essentially buy some tokens and load a wallet with that. Tell me how that works.
AUSTIN KIMM: When we launch, you’re quite right. As a customer, you need to have our token for a transaction. The simplest analogy I would like to use is, you’re buying our tokens in the same way as you’d buy, I don’t know, advance pay for a theater ticket or something like that. You go to the theater, your hand over your tickets, and that gets you in. It’s pretty much the same princple for us. We have, so far, approximately 50,000 token buyers in our ICO. We’ve already got 50,000 people wo have our token. and we have something like 250,000 people who have registered to use the platform. So clearly, we’ve got a five-to-one ratio here. What is likely to happen in practice, going forward, is that the vast majority of our platform users will not be token-owners at the time that they download their application, and that they attach their crypto asset to our wallet.
In the same way that I use HSBC, I’m not an HSBC share holder. That’s going to be a very common feature for us, but at the time of the transaction, we effectively facilitate the instantaneous purchase of that token for the customer. If the customer does not own that token at that time, effectively, let’s say using the example I used before, five cents worth for the fee, the 0.5%, that would be used to purchase five cents worth of our tokens from a facility that we create inside the application. So, although the customer can use the tokens which he already has, if he doesn’t have them, we effectively facilitate that at the time.
BLOCK TRIBUNE: You are making money from the customer fees, and from the banking fees as well?
AUSTIN KIMM: Actually there are two sides to it. Of course, there is a merchant fee, and there is also the customer fee, but what we do is, we effectively give the customer fee almost back to the token community. What we do is, when the transaction takes place, we charge half a percent. Let’s say, for the same of argument, we did, let’s say a million dollars worth of transactions. That would be $5,000 worth of fees. Those $5,000 worth of fees that are charged for the transactions, as I say, in most instances, the customer won’t actually be using it on tokens. He will be using tokens that we had to facilitate for him from the market. When he uses the token to make the transaction happen, we burn the token. The token is effectively the fuel for the transaction.
We destroy the token at that time, or that part of that token. Gradually, we are reducing the supply of the total amount of tokens out there, but in doing so, we’re actually putting that fee back into the marketplace to buy the tokens to make the transaction happen. We actually generate no income from this front path, this 0.5%. Crypterium doesn’t actually take any of that income itself. It’s being used, effectively, to let’s say support the strength of the token, and as I say, it’s a gas to make the transaction happen. There is that side, and then the other side of the equation, the merchant fee. Of course, we earn our income here, and a third of that fee, we also put back to our token holders through a form of loyalty fund. That’s where the income stream happens, but the front-end part is really being used to effectively make the transaction happen, but to also feed the token holders.
BLOCK TRIBUNE: Where will this app be able to be used? What countries are you going to roll out in?
AUSTIN KIMM: Actually, because we’re using existing NFC technology in an existing infrastructure, it can be used absolutely anywhere. The beautiful thing about the way our, let’s say solution is set up, first of all it’s a totally digital solution. You do not need a plastic card. In the same way you if you’ve got Apple Pay, for example, you don’t need a plastic card to make Apply Pay work, or Samsung Pay, or any of these payment solutions. We have that same effective capability. You could be in Bangladesh, or you could be in Colombia, or you could be in the United States. It doesn’t really matter, provided that, of course, you’ve provided the necessary information to open up the account through our platform. We can issue a digital visa card to you practically anywhere on the planet, and therefore you can use it anywhere.
Because we’re tapping into an existing infrastructure, we don’t have to spend months building a capability in any one country. If we were issuing plastic cards, for example, if we were issuing some form of crypto-Visa card, then we’d have to build an entirely different distribution mechanism. But because we are completely digital, we are not really bound by individual countries. Now, of course we are going to target some markets greater than others, but we actually don’t have a boundary as to which countries we can operate in.
BLOCK TRIBUNE: What’s the landscape for terminals that have that near-field communication capability out there? Is it vast, do almost all terminals have it, or is it something that is going to have to be implemented?
AUSTIN KIMM: Actually, that’s a good question. At the moment, we estimate there are 42 million of these terminals all the way around the world, and it’s growing all the time. When people are replacing their old terminals, which you had to stick the card in or swipe the card, they are replacing them with the NFC. 42 million, by the end of next year it might be 50 million. It’s 42 million as of, let’s say six months ago. I couldn’t tell you what the number is today, but it is growing at a very fast rate. If we’re being honest, then we can say that most of those terminals are clearly in the more developed markets. If you’re walking down a high street in a village in India, you’re probably not going to find one of these terminals, and you probably have the same issues in many different countries.
So, our business model actually has two approaches to it. The first approach is the NFC capability, which will enable us to target, let’s say the more advanced economic nations straight away without any infrastructure change. In other countries, which are equally attractive for a completely different reason, then we also have a payment solution which is not using the existing infrastructure. Effectively, what we provide is for the merchants to download a merchant version of our application, the customer to use the standard version of our application, and the two things can talk to each other. We actually provide merchants with a completely alternative solution to the Visa terminals. If, for example, you were going down that high street in India and they didn’t have an NFC, if we were able to roll it out there, we could roll it out without that infrastructure.
I think the best example of that, and it’s not us. The best example of that would be looking at something like WeChat in China, which now has something like 40% of all payments, all electronic payments go through effectively the QR code reader system. Our system is very similar to the WeChat type system, or the Alipay system, but it’s not our priority to roll that out first, because of course that is much more complicated than just using an existing infrastructure that is already sitting there, waiting to be used.
BLOCK TRIBUNE: Is there a way that the customer who walks into a store can identify whether or not the terminal is in fact NFC compliant?
AUSTIN KIMM: Yes. I mean, all of these terminals will have, the basis of the image is three little bars. It looks like a wifi bar. If you see those three little bars on the terminal, then it is NFC capable. It’s a standard, universal sort of image. Now maybe, each country will have its own additional versions of this, but if you are using NFC, once you’ve used it once, you’ll be able to spot what it looks like.
BLOCK TRIBUNE: Okay. What is the difference between what you do, and what Bitpay and others are doing? What’s your differentiation?
AUSTIN KIMM: Well, ultimately we’ve all got the same goal. We’re all trying to make the cryptocurrency a usable money. At the moment we call it a currency, but really it’s an asset that most people are using for investment purposes, mostly. We’ve all got pretty much the same goal, but I would say that the core difference between what we’re doing and what many of the others are doing is that we are 100% digitally focused. For example, if you went to TenX, or Token Card, or one of those players, their approach is to issue a Visa card, or an equivalent type of structure as a Visa card. There are some companies out there, which are actually issuing their own payments now with terminals. For us, they require a new level of infrastructure type management, and they require a different level of distribution approach than our approach.
We are 100% digital. We have no intention of issuing a plastic card, or our own special Visa terminal type equipment. That gives us, in our opinion, a number of advantages. Now somebody might argue there are some disadvantages, in that people like plastic cards, etc., but we believe that if you’re in the crypto space, you’re quite comfortable using a mobile phone for payments. The advantages for us, by being completely digital, is that we are able to partner with other companies much quicker. Let me give you an example. A company that we are talking to has a platform that enables people to basically buy assets in a different country than the one we’re in. For example, if you’re in Ukraine, and you want to buy an asset, let’s say you want to buy Apple shares on the New York Stock Exchange, you just can’t do that.
You can, but it’s a very complicated process. This company has already completed its ICO. It’s raised a lot of money, and it’s built the platform that enables that to happen, but they also need to be able to convert that crypto asset into a currency, because the New York Stock Exchange, at the moment, won’t accept Ethereum, for example, to buy its shares. They’re talking to us about how we could integrate our service inside their platform. Now, if our service had to have a plastic card, that would be very complicated, but because we don’t have to have a plastic card, because we’re completely digital, basically all we need in that instance is for them to promote. This is how you’re going to do it, download this particular application. We don’t mind if it was white label, but that’s not our objective to white label, but we wouldn’t mind. We have a payment from that can deal with pretty much any customer in any country as soon as they download the application and attach the necessary data.
I would say that’s the key differential with our approach than some of the other companies, but ultimately we have the same goal. We are very comfortable with that, because we believe the more companies that are in this space, the better, because this market is going to be very, very big. They say that the cryptocurrencies are worth about $500 billion today, maybe in five years’ time it’s several trillion. If that is being used for transactional purposes, which we believe it will be, then we don’t mind if there’s 20, 30 companies out there, because even just a 1% or 2% market share will be a very big number.
BLOCK TRIBUNE: A lot of people are saying when the lightning network kicks in, that’s when things will really get interesting. What say you?
AUSTIN KIMM: I would agree with that. I mean, at the moment, where are we at with cryptocurrencies? It’s pretty much an investment tool right now, and I think what’s happened in the last three months about Bitcoin has actually been very good for the crypto community because, my sister, for example, now knows what a Bitcoin is, and she never would have understood cryptocurrency. People are asking questions about it, but until it starts to become something that the moms and dads, and the 18-year-olds are getting somehow in their daily vocabulary, and potentially it becomes part of a loyalty program, or becomes a token inside the gaming platform that has a real-world value. I think that’s when it’s going to take off.
In my opinion, we’re in an environment where we’ve got maybe five million users, but they’re not really users. They’re buyers and holders. It will take off once some of these ICOs that we see out there really start to kick in. So, I don’t think it’s based on any particular blockchain, or any particular platform. What will happen is when, let’s say Walmart, and I’m not saying Walmart is going to go down this path, but let’s say Walmart says, “Instead of giving loyalty points, we’re going to give some form of crypto loyalty platform.” Or a gaming platform says, “Instead of having our internal gaming tokens, we’re going to give a crypto token so can they can go outside the gaming platform.” Once that starts to happen, and people start to just get cryptocurrencies that they never even understood previously existed, I think that’s when it takes off. That’s when it suddenly changes. I don’t believe it’s going to be any individual blockchain platform, or anything like that.
BLOCK TRIBUNE: Let me hear your ICO details.
AUSTIN KIMM:The ICO is pretty much finished. We launched on the 31st of October. We did it differently then pretty much any other ICO, I think has ever done it before. We went straight to a crowd-approached sale process. We didn’t go to big institutionals to start off with. Normally, what happens is you’ve got your product, whereas the ICOs go to big institutionals, get some pre-ICO money, and then once they’ve got pre-ICO money, they feel confident to go to the market and then raise a small amount, or potentially a big amount, but usually it’s institutionals, at least 50%, and then the rest is, let’s say the token market.
We didn’t do that. We went straight to the market, because as I mentioned, we need a user base, and our user base is our token buyers or our token holders. As I say, we’ve got over 250,000 registered users of this process. As of today, or probably by the end of tonight, we’ll be at close to $40 million worth of token sales, and we close on the 13th of January, or when we hit $47 million, whichever is the sooner. It looks quite likely that we will hit the $47 million before the 13th of January.
BLOCK TRIBUNE: How much are you retaining of that?
AUSTIN KIMM: Well, the tokens were split into three parts. We have 70% were available for, let’s say the general public to purchase. We have 15% which has been retained for future, let’s say sale or distribution, if we need to raise additional funds in the future, and we have 15% which was being split between the founders, the advisors, the marketing and those types of things. The founders and other key staff were taking 9%, and then as I say, there was 3% for advisors, and we’re the consultants, and then 3% related to bounty and marketing, etc.
BLOCK TRIBUNE: Now, are you based in Scotland, or do you just happen to be there for this call?
AUSTIN KIMM: I personally am based in Scotland, yes. The way the company is structured, just a very brief background. I used to run an insurance company in Russia, quite a large insurance company in Russia called Renaissance, and when I was in Russia, of course I got to meet a lot of people. I did that from 2005 to 2013. One of the other founders, Steve Polyak, he is also based in Moscow, running an investment fund, and he’s an investment banker by trade. We got together with a couple of others who are also based in Moscow, and are Russians, Vladimir and Gleb, we’re the four founders of the company, who had already built, let’s say a fiat-to-fiat payment platform called PayQR. It was the four of us that said, “Maybe we can do something exciting here. Instead of fiat-to-fiat, maybe we can do something exciting.”
The way we are structured at the moment, our technology team is Moscow-based, and it’s going to stay Moscow-based. Or maybe not Moscow-based, but it’s going to stay Russia based, because effectively, very good programmers are very cheap relative to say, Silicon Valley, London or somewhere. Then the head office will almost certainly be located in London, currently based in Scotland, but we are moving, let’s say the headquarters to London. With the technology team being here in Moscow, we wanted to stay Europe-focused, so they will be based in London, and we are opening up regional offices in Singapore. We haven’t yet decided where our regional office will be in the United States, but we will also open up a regional office in the United States.
As I say, for us, we’re not making this play for the five million token buyers that are out there, or the token holders that are out there today. We honestly believe that with all the crypto community, the way it’s being created, with all of the ICOs out there, some of the more fantastic. I mean one of them, for example, looks at school kids in the US getting rewarded for good school behavior, etc., etc. Once that thing starts to happen, that’s when our platforms will really start to come into their own. We’ll start with a good base, but really the future happens when all these ICOs really start to deliver what they promise.