Fintech innovation is enabling NFC-enabled payments without the need for fiat currencies or physical cards at merchant stores. The trend is one to catch on, with big technology companies and manufacturers such as Apple & Samsung introducing their own proprietary payment methods for fiat transactions.

Bitcoin-centric Plutus, a London-based startup, is intent on making life easier for the adopter of the cryptocurrency in a world geared to transact with fiat currencies. The company recently announced its application, due to be released this year that will enable Bitcoin adopters to use the cryptocurrency at every NFC-enabled merchant, anywhere in the world.

Powered with the Ethereum blockchain and smart contracts, the application converts the user’s bitcoin to fiat currency that will be stored in a virtual debit card, or ‘token’, within the application. This token will then be used to make payments at any NFC-enabled merchant.

Plutus shared a video with CCN to show a recent demonstration of its application (still in development), put to use at an Apple store.

CCN spoke to Danial Daychopan, CEO and co-founder of Plutus. He states that Plutus is “first and foremost, intended for Bitcoin users,” in a period in time when bitcoin-based startups are markedly switching to holding the ‘private blockchain’ banner while discarding most references to Bitcoin.

danial
Danial Daychopan

Hello Danial, how long has Plutus been in the works?

The concept was first developed in 2014 when mobile payments became mainstream and the infrastructure required to build a blockchain based payment system was widely available.

What is or were the biggest hurdle(s) faced by Plutus in the lead-up to launching the app in 2016?

Red tape is always the most substantial hurdle when launching any financial tool in the bitcoin space, especially one that plugs directly into the fiat network. While this is a complex task, it is still manageable. However, our primary challenge was to build a frontier digital currency app without having the responsibility of holding any users’ funds, and to rely on the blockchain instead.

Currently, we have achieved a proof of concept by testing the app through a third party service for conversion, but this is not intended for public use. The app will only be available once we have completed milestones set for the development of the DEX (Plutus’ decentralized exchange) network.

Did you always set out to use the Ethereum platform? Why isn’t Plutus using the blockchain?

At first, we had the option to plug into a third party service for exchange, however this was quickly scrapped. We wanted to rely on an automated p2p network instead. While the (bitcoin) blockchain offers a system for running decentralized transactions, Ethereum supports smart-contracts and Dapps to run as well. These advanced features enable us to build a trusted network that natively supports the app, without opting for a centralized system.

Going through Plutus’ website, there is no lack of prominence and reverence for Bitcoin. Have you noticed Fintech and even bitcoin-based startups starting to forego the word ‘Bitcoin’? What’s your take on that?

Bitcoin enthusiasts and the driven community are due a lot of credit behind the industry’s recognition of the blockchain. Major financial institutions now say that it can’t be ignored anymore… Although they do prefer the underlying technology. On the other hand, Plutus uses Bitcoin and is first and foremost intended for Bitcoin users.

Do you intend to market Plutus as a solution that will further help Bitcoin adoption?

Bitcoin itself is the most convenient application for cross-border payments. The number of people who are earn bitcoin through mining, trading and entrepreneurship is rapidly increasing, the adoption can especially be seen with the growing number of remote employees around the world.

We believe that with a convenient tool such as the Plutus app in hand is the most practical app for those who earn bitcoin and this could drive adoption through referrals. But this was not intentional, merely a positive side effect.

How does Plutus’ proprietary decentralized exchange work?

(It is at this point that Gyan Chawdhary, chief technology officer at Plutus, weighed in.)

Gyan: The PlutusDEX lets users register to purchase your bitcoin deposit with their local fiat currency. Once you deposit bitcoin to the app, it is immediately converted to a virtual debit card balance through the exchange network, while your bitcoin is sent directly to the trader’s address. All fiat deposits are held in bank escrow, this means we cannot be affected by malicious activity, and do not hold any user funds in a wallet.

The decentralized exchange consists mostly of smart contracts on the Ethereum blockchain, which automatically manage the transfers of Plutons, bitcoin deposits, and the release of trader funds from escrow onto your virtual debit account that is used for merchant payments. Our intent was to externalize as much of our internal processes onto Ethereum, as this reduces both risks and expenditures for all parties involved.

This is a greatly simplified description of how it works, and we hope that our infographic will provide you with a better idea of the system. More comprehensive and technical documentation will be available in the near future.

Plutus Payment Network

Could you explain the process of creating and developing smart contracts with Ethereum? How long does such a development cycle take?

Gyan: Similar to creating any software. Best if developed in short iterations, which takes a substantial amount of man hours. A smart contract, on ethereum, is a slow backend-application, having no frontend. For the PlutusDEX, the concept-application is initially developed by a minimal use of the contract code. After that we move the necessary elements on the Ethereum-blockchain.

How much does Plutus charge for every transaction between buyer and the merchant, each specifically?

Danial: The only fee charged by Plutus is for the initial conversion (btc to fiat), which can range between 1-4%. The merchant pays the standard fee associated with debit card payments to their payment processor.

Are Pluton rebates usable immediately via the virtual debit card?

Danial: Plutons are immediately converted and transferred onto a virtual debit card balance.

Is the rate of rebate fixed? How do the rebate figures differ for buyers, if at all?

Danial: It will be set at the rate of 3% and reduce as the network grows. This incentivizes our users, resulting in more referrals to use the Plutus app.

What other applications do you see for DEX, beyond a payment solution?

Danial: We are dedicated to create an effortless and effective payments system. Our team won’t be drafting anything brand new, because at this point the development  of the platform and the stability of the Plutus app takes precedence over theory and experimentation. But users will always be able to use our api to expand on functionality where they need it.

Danial added that the company is looking at a public launch of Plutus in early 2016. 

Images from Plutus. Featured image from Shutterstock.