Dash’s inroads highlight the widening
acceptance of cryptocurrencies for fiat across the globe.
By
Ceecee Wong
It
is no exaggeration to say that digital transformation has touched almost every
industry. In the world of finance, the most revolutionary idea has been that of
blockchain-based, peer-to-peer digital currencies that require no central
authority for monitoring supply and authenticity. Instead, transactions are
verified by network nodes through cryptography and recorded in a public
distributed ledger (blockchain).
While
Bitcoin is undeniably the most well-known
digital currency, shortfalls in the open-source currency have led to multiple
forks that produced altcoins (alternative cryptocurrencies). These altcoins
generally project themselves as better substitutes to Bitcoin with competitive
advantages.
According
to Investopedia, notable examples of
altcoins include Litecoin, Ethereum, Ripple and Dash amongst others.
Digital Cash
At Bloconomic 2019, co-founder of DashNEXT and Dash
Thailand, Felix Mago, presented an interesting and exciting case study in how
Dash, which is a portmanteau of
‘digital cash’, offered improved payments solutions that seemed ripe for mass
adoption. As of this writing, the market capitalization of Dash is USD
817,475,645.
The
focus of Dash Thailand is essentially to create an ecosystem of connected
merchants where cryptocurrencies can be used to pay for “everyday items, for
example a restaurant meal, hotel stay or any tourist activities in Thailand.”
It targets the Thai tourist industry where tourists coming into Thailand want
to use crypto-currencies to pay for their holidays, digital nomads as well as
the Thai crypto community where “more than 10% of the Thai people hold
crypto-assets”.
Recently
launched, DashNEXT focuses on forming large-scale partnerships and the local
networks within Asia. For example, as many companies registered in Singapore
operate abroad or globally, Dash sees itself as “the team on the ground
connecting these people, creating networks and trying to build up crypto
payment systems on all verticals.”
A New Value Proposition for
Businesses
Mago
pointed out that Dash was essentially a free peer-to-peer payments tech
solution. Although depending on how many players are involved, very small fees
might be incurred. But when compared to traditional payment systems, there is a
massive reduction.
“It
largely depends on the verticals we have to plug into, but we can, of course,
make a credit card payment happen in Dash, or a payment gateway which may
charge a fee. Sometimes, we might need to go back to fiat currency, incurring a
conversion fee. These are fees charged by third-party providers and not by us.
In essence, we are still cutting down fees from an average of 3-7% to 0.5-1%.
That’s the average, but you have to look at the processes and specifics to be
sure.”
As a
cryptocurrency, Dash is feeless because its value lies in the user base.
Increasing the number of users results in increasing the value of the
underlying coin.
“My
other value proposition to the businesses we connect to is that we are able to
bring them a new group of customers, crypto-using customers. When you look at
the growth of crypto users, it is massively growing – doubling year-by-year
(about 30 million new wallets every year). These people tend to be rather
young, 18 to 35 year-olds, mostly males who are educated enough to understand
these new technologies, a nice target group for most companies to attract. They
also tend to be very motivated to be in this new crypto world. Thus, you have a
real value proposition for someone you might not attract if you don’t offer
this solution.”
Designing Crypto Payments Systems
Pointing
out that each company structure varies greatly, Mago said the important lesson
when building these payments systems was to understand the business processes
that lay behind as they affected the tech that one would choose to implement
the solution.
With
the different partners and different processes within different verticals, one
would have to work out what to put in place to make a specific solution work.
Mago
cited the partnership with Korean company Blucon which has implemented Dash Debit Cards as well as a public
transport card that could be used with Dash shortly.
Working
with a top crypto exchange DigiFinex, users of that trading platform are
able to send crypto to the Dash Debit Card and use it globally. Elaborating
more on the ecosystem designed for this particular payments system, Mago said:
“In
the case of the crypto debit cards, we need the exchange to facilitate people
uploading crypto, conduct KYC and AML and confirm solutions for the customer;
we also need an issuing company for the credit and debit cards, a bank, and a
company which has the tech to make it all work. Finally, you need a working
crypto payments solution such as Dash.”
Mago
also cited marketing examples from the partnership with travel booking
platform, Travela, explaining how booking
discounts and other promotions could help to attract users to try out a crypto
payments solution. Another partnership with Hotelier Mart also went live recently.
Challenges and Partner Strategies
But
what about the volatility risks of keeping cryptocurrency?
“This
is why we offer solutions where businesses never have to hold crypto longer
than a couple of minutes and conversion is done almost immediately.”
Another
factor to consider was at the regulatory level which is different in all the
different territories. Taking the example of the travel platform, the company
would have to be registered somewhere in the world, forcing it to comply with
the regulations. However, its customers would be able to book from everywhere
online, even in a non-friendly crypto country like India. Physical businesses
like a restaurant would face different challenges such as fiat conversion and
also need to be registered in territories that were pro-crypto.
“My strategy is to partner to success as there are so many companies for whom such a solution is interesting. In saturated markets like banking and credit card issuing, we can come in and create new markets. Corporations and companies with a traditional business background are welcome to start approaching us for partnerships on all verticals. We are happy to figure out solutions and spin ideas as there are millions of use cases [for] POS systems and banks. The options are essentially endless.”
Blockchain: 0x1cd8cac4c89381bf7e0f8ca59436ce4020cd1a58b040ff4bdcf56ad0b3edee57
