Plutus, a new start-up based in London, allows any merchant with contactless card terminals to accept bitcoin and ethereum payments regardless of whether the merchant has in fact adopted bitcoin or ethereum.
Utilizing the new NFC technology, Plutus aims to make physical Bitcoin and Ethereum payments as easy as tap and go, with merchants not being aware the payment was a digital currency based transaction, ensuring almost universal acceptance of Bitcoin and Ethereum.
The Plutus app, showcased in a video, converts Ethereum or Bitcoin on the fly, with the actual payment made in fiat. Showcasing the prototype, after depositing ethereum, a Tesco’s customer, one of the largest supermarkets in UK, simply taps the phone on the contactless terminal and in seconds finishes his payment.
Exchange Out by Autumn, App by Winter 2016
The app is not yet ready to launch. Filip Martinka, CCO of Plutus, speaking to CCN stated that plutus’ showcase video was using a “centralized exchange for the prototype.” They aim to use a decentralized exchange for the actual product, called PlutusDEX, “which will be a smart contract, and liquidity will be provided by the users themselves.”
The exchange is in the “very, very early stages of testing” and a “one way exchange process.” Buyers deposit fiat to an “escrow”, which is a bank account controlled by Plutus, with sellers sending their instant orders as they deposit their btc or eth to the app.
The exchange is expected to launch sometime during Autumn 2016, after a “formal security audit” combined with bounties for the prototype. The app, however, is ready to go, but won’t launch until winter 2016.
Once the app is operational, users will have to go through a registration and KYC process to comply with current regulations:
“This is enforced on us at this point in time, but it is a small price to pay for the convenience. Only one authentication will be required to use Plutus worldwide.”
Once users are registered they can deposit bitcoin or ethereum, which is an on-chain transaction, requiring a waiting time for transaction confirmation. “We cannot [accept 0-confirmation] due to the structure of the system,” says Martinka. For bitcoin, three confirmations will be necessary which usually takes 30 minutes. For ethereum it is almost instant as 1-3 confirmations are required which is only 40 seconds.
Once the transaction is confirmed, the digital currency is instantly exchanged into USD, GBP, EUR or soon CNY on PlutusDEX, allowing for the payment to be made at any merchant that accepts contactless cards. The payment itself is sent by an “FCA-approved Virtual Debit Card provider by VISA.” Exact details of their banking relationships were not provided as “the partnership can only be signed once we have determined… market size, estimated volume, audience and other criteria.”
Plutus is in contact with UK’s Financial Conduct Authority, but:
“We are not the card issuers nor do we exchange funds internally, so no MSB or similar licenses are required. But we have to perform KYC with an FDA authorized VDC issuer.”
Considering that buyers would need to deposit fiat to Plutus’ bank account, that may not be the case, but UK is renown as the friendliest jurisdiction for Fintech. Their compliance with KYC should make it easy to acquire a license if necessary.
Plutus has Plutons, an Ethereum Token
Plutus is currently undergoing a crowdsale which began on the 21st of June and is to end on the 30th of June. They have already raised more than half a million, according to Martinka, and, learning from the DAO, have implemented a maximum cap of 15,000 bitcoins, currently valued at approximately $10 million.
The new Ethereum based token, Pluton, has two main functions. Funds raised from the sale of 850,000 plutons will mainly go towards development. While a far bigger amount of more than 19 million plutons will be used for rebate, based on a “longevity calculator.”
As the contactless payment app uses the current financial infrastructure, there will be fees of 1-4 percent of bitcoin or ethereum deposits. In return, users are given a rebate in pluton tokens decided by the “longevity calculator” which currently suggests 3%.
Pluton token holders pay no deposit fee or any fee at all, while being able to use the app as if they deposited eth or btc, as well as need not in any way wait for a confirmation as 0-confirmations of pluton payments are accepted. Furthermore, exchange trading of any digital currency or fiat is fully free.
Promising App if it can Deliver
The merging of digital currency with contactless payments has the potential to turn bitcoin or ethereum into an almost universally accepted currency as most merchants now employ NFC technology. This will allow individuals currently paid in digital currency to spend their funds at the local corner shop, say, when for some reason your card does not work or if you forgot your wallet or if you simply want to spend your digital currency.
“Our philosophy is that bitcoin/ethereum entrepreneurs, miners, holders, traders, freelancers, remitttance recipients and others shouldn’t have to wait for merchants to create new infrastructure.” Says Matinka with Plutus’ CEO, Danial Daychopan adding:
“Our goal from the beginning was to create a practical use-case for the Bitcoin and Ethereum ecosystems that is easy to use.”
Plutus’ team, which has a “combined experience of over forty years in payments, financial trade and software development” according to their website, may be able to develop what seems to be a very promising application, allowing anyone who has ethereum or bitcoin to spend them as if fiat, making digital currencies almost universally accepted in an instant.
However, although the team seems experienced and professional based on their profiles, readers are of course advised that this is a bleeding edge frontier. The app has complex arrangements with smart contract based exchanges on ethereum’s blockchain which itself is a barely months old technology. Risk is plentiful and can be devastating leading to complete losses of funds.
On the other hand, if Plutus successfully and competently delivers one of the holy grails in this space, almost universal merchant acceptance of bitcoin and ethereum payments, the whole ecosystem may up a gear as ethereum and bitcoin gain their full quality of actual money.
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