An Introduction to OmiseGo
OmiseGo is yet another cryptocurrency aimed at displacing the current financial system, but it has a unique angle and its mantra is to “unbank the banked”. This is as opposed to other projects which aim to “bank the unbanked”, such as NEO (New Economy Movement).
It is not really an alternative coin but more of a cryptocurrency network like Ripple and Bancor. It aims to replace traditional financial transactions with its network.
Along with helping people already stuck in the existing banking system, OmiseGo also helps people in developing countries gain access to finance. They are also making merchants more amenable to cryptocurrency transactions through their services.
The project is supported by Ethereum founder Vitalik Buterin and was created by Jun Hasegawa and Donnie Harinsut. Its token is the OMG and it was the first project built on the Ethereum network to reach a valuation of $1 billion. There are over 140 million tokens in total.
The ICO for OmiseGo was held in 2017 and raised over $25 million initially. The Omise company was started in Thailand in 2013. Omise created OmiseGo but the company does not own it.
The OmiseGo project has the backing of the Bank of Thailand and the Thai prime minister and is also supported by McDonalds, Alipay and Minor International.
OMG is available for purchase at all major exchanges and you can store the tokens in the OmiseGo universal wallet or on a typical wallet such as Exodus. Make sure you only download an official client from an official website when selecting your wallet, as there are numerous scams out there.
What Is OmiseGo?
OmiseGo is a platform for cryptocurrency exchange. At present, if you need to exchange cryptocurrency you have to buy it from an exchange. All your data and your funds are held on the servers of the particular exchange where you are completing the transaction.
The world of cryptocurrency is rife with stories of people who lost all of the funds they had stored on an exchange. Exchanges are known to be unsafe because all of their information is centralized on their servers.
Unlike a regular exchange, OmiseGo keeps their information on the blockchain, which means it is decentralized. There is nothing for hackers to hack into. The hacker would need to hack all of the nodes simultaneously in order to make it a success, which is virtually impossible.
Additionally, these exchanges can charge more than they should because consumers have no other options. What is brilliant about OmiseGo is that they are currency agnostic.
With most exchanges, you need to purchase either Bitcoin or Ethereum and then exchange it for your cryptocurrency of choice on the exchange. OmiseGo has one tiny fee for all conversions, regardless of what cryptocurrency you are transferring to.
OmiseGo are not only focused on replacing exchanges. They plan to replace banks and payment processors too, among other things. OmiseGo have their own free wallet for download and they are focusing on interoperability with Visa, ACH, SEPA and MasterCard.
The main focus of OmiseGo is towards payment processors, while Ripple are more focused on banks and large corporations. Most likely they will both be most successful in their target areas.
How Does OMG Work?
OMG is currently a proof-of-work cryptocurrency. What this means is that the blockchain is secured by miners who validate and secure the integrity of the blockchain in return for a reward.
The disadvantage of this is that the mining networks can become centralized and greedy, which often results in high electricity costs, high fees and slow times.
Bitcoin is a case study in mining centralization, where large corporations and even companies are entering the race and buying specialized and expensive hardware.
OMG is moving to a proof-of-stake method to validate its blockchain. One of the advantages of this is that people get rewarded for holding tokens.
The theory is that users are less likely to violate the system if they have more tokens, or more of a stake in the ecosystem. This is much like shareholders voting in a company, as they will have no wish to reduce the prices of their own shares.
There are advantages to building the platform on Ethereum. It creates what is known as a unity of experience among developers and users, as well as an existing code base to draw from. Ethereum is well established, and having the infrastructure in place will help facilitate the growth of OmiseGo.
This is because OMG is founded on ERC-20 network tokens that recognize smart contract code functions across the Ethereum ecosystem. And shareholders get rewarded for keeping their tokens, which is an added bonus that will incentivize further investments.
Aside from cost and security, the next question as to the validity of a cryptocurrency is its scalability, which is essentially how many transactions it can handle per second.
OmiseGo promises that it can deliver 1 million transfers per second, which can be compared to Visa which handles between 25-50 thousand transactions per second. This network release will be known as Plasma Network, in contrast to the Lightning Network on Bitcoin and Litecoin.
In truth, all cryptocurrencies are claiming that they will be able to deliver these numbers at some stage. It is more than likely that they will in future, just not right away. From this viewpoint OmiseGo does not really have an advantage, but they do have a significant edge in many other ways.
The OmiseGo Edge
Some contend that it is hard to see if OmiseGo really offers something different and superior to what other cryptocurrencies are doing. The New Economy Movement (NEM) aims specifically to help those in the third world gain access to finance.
Bancor and Ripple have networks to trade currency/commodities of all kinds and offer these to banks and corporations. Bitcoin and many other cryptocurrencies are gearing up to replace the credit card networks.
Technically speaking, they offer nothing new, though they do combine a bunch of services into one all-encompassing platform. And it is not as if Venmo, Visa and MasterCard are sitting around waiting to be destroyed by cryptocurrency.
They are adopting blockchain technology right now in order to retain a customer base. They key issue is still that these companies are centralized, though most individuals/businesses are more concerned with speed and transaction fees than having their data with one company.
Omise does have an edge though. Omise is a financial company and is opening up its established base of financial services to OMG users and developers.
Omise is already a payment processor for merchants including giants such as Alipay, which gives them access to 450 million Chinese users. This is a gigantic advantage. Think about how difficult it would be for a cryptocurrency to gain access to such a market.
In cryptocurrency, like in many other industries, the first to market wins. And like many cryptocurrencies aiming at banking the unbanked, they could be creating their own market by gaining new users.
As a result of the capabilities of their parent company, OMG can give its customer base access to standard financial services on a decentralized open source application which is safer and cheaper. It is the best of both worlds.
The standard financial services include credit cards, real-time settlement of transactions, payment gateways and direct debits. Developers can work on integration while other cryptocurrencies have to acquire these connections and then start coding in the interoperability.
OmiseGo are lucky to have the backing of influential Thai organizations and the Ethereum foundation. The advisory board consists of Vitalik Buterin, Gavin Wood and Joseph Poon, the creator of Lightning system.
But they are in a very tough industry right now. There are no small number of cryptocurrencies fighting to “bank the unbanked”/”unbank the banked” and disrupt the financial system.
OMG: All the Right Ingredients
OmiseGo is certainly a cryptocurrency network to watch out for. They offer an interesting mix of financial services and crypto-to-crypto transfers. Because of their preexisting financial services network they will certainly gain a lot of market traction.
And the backing of key members of the Ethereum foundation as well as key Thai officials mean that it will probably be a success. It has all the correct ingredients and has everything needed to move forward.
It will probably do very well in Asia where it operates, particularly in China, Japan, Indonesia, Thailand and Singapore.
This is not to put down the other cryptocurrency payment networks, the main ones being Ripple and Bancor. There is a huge market pie to be sliced up as the banking, credit card and financial industry in general is worth trillions and is up for grabs.
Every network will have its place. Furthermore, OmiseGo is primarily geared towards merchants accepting cryptocurrency as a form of payment, while Ripple is focused on banks and business-to-business transactions.
Out of all of them OMG, seems perfectly poised. It has its own exchange, prior connections with the business world, its own eWallet which allows users to tokenize any coin, has interoperability between Blockchains, the support of key figures, financial backing and will be enabled with Plasma Network.
It is a young product but if it delivers what it says it can, then it is odds on to take the world by storm from 2018 and beyond. It should certainly be in every cryptocurrency investor’s portfolio due to its unique position.