September 19, 2017

Plutus bridging tap & pay's digital currency divides

Source submitted by jeriaska on 2016-10-15
While both Steam and the Humble Store have begun accepting Bitcoin payments, the integration of blockchain-based digital currency transactions at brick and mortar stores has seen slower growth.

Based in the UK, the development team at Plutus is attempting a solution for tap and pay payments. Using their PlutusDEX escrow service, Plutus aims at offering Bitcoin integration to any checkout counter with near field communications (NFC) operability.

Bitcoin has proven advantageous over traditional bank account and credit card services for those who travel frequently between countries. Bitcoin researcher Andreas Antonopoulos finds that while overseas his bank will oftentimes block his debit cards.

"You know, I travel all around the world to do these talks and conferences," he told podcast host Joe Rogan. "They want me 24 hours before I leave to call them and give a specific list of places where I am going to be. And when I don't do that, and when I try to use my card, it gets blocked."

Similar bottlenecks exist for fiat-based online payments systems like PayPal, where the freezing of accounts arbitrarily for indefinite periods is commonplace. Owning Bitcoin private keys offers the advantage of requiring no trusted third party to authorize a purchase. No intermediary is capable of seizing or freezing private keys, a property analogous to cash. While there are Bitcoin vaults like Coinbase and Xapo that can hold the cryptographically secured tokens for safekeeping, just as there are brick and mortar banks for storing cash, such institutions are not required for transacting on Bitcoin's decentralized ledger, called the blockchain.

To facilitate Bitcoin purchases at physical locations, Plutus has developed an escrow service to bridge the gap between cryptocurrency and fiat. The concept will be familiar to anyone who has used to make Bitcoin purchases on Amazon. When the Plutus Decentralized Exchange Network (PlutusDEX) launches, the Plutus app will connect users holding Bitcoin with verified traders who want to purchase the digital currency. The exchange rate is arrived upon similar to an online auction, ensuring a competitive rate. This process will allow Plutus users to credit a virtual debit card with local fiat currency for use at checkout counters.

As an added incentive to using the app, Plutus has issued a custom digital token on the Ethereum blockchain, called Plutons. These cryptographic coupons are earned with every transaction, similar to frequent flier miles or loyalty points. Users receive up to a 3% rebate in Plutons. A recent crowdsale raised $1 million by distributing 4.25% of all Plutons, with token issuance capped at 20 million, according to the Plutus whitepaper. The ICO (Initial Coin Offering) was conducted on the blockchain without the use of a trusted third party like Kickstarter or IndieGogo. (Disclosure: the author participated and purchased some Plutons.)

The Plutus tokens will allow users to pay for items instantly, in place of connecting with peers on PlutusDEX. Unlike frequent flier miles, the tokens can also be sold on online exchanges, an innovation really only feasible using current day blockchain technology.

There are several existing precursors to Plutons (PLU) that were also crowdfunded using the Ethereum blockchain, including Digix’s digital gold tokens (DGX) and Augur’s prediction market tokens (REP). These various Ethereum services are bridging real life locations, such as brick and mortar shops and gold storage vaults, with internet commerce.

If we look to the past, the innovations emerging out of today's blockchain startups are very reminiscent of the dot com boom of the 1990s, a time of unprecedented economic growth. An attempt to bring digital payments to approximately 32 million real life locations marks an ambitious effort to impact global finance, benefiting an economy of peer-to-peer transacting.