National currencies such as Euros or US dollars are payment methods whose value is guaranteed by state institutions and central banks. They are therefore country-specific, depend on state bankruptcy and bank failures, and are directly affected by inflation.
Cryptocurrencies are detached and independent from many of these factors. Instead, their value is currently still determined more or less exclusively by supply and demand.
The enormously energy-guzzling and expensive blockchain computing power has a negative impact on value performance, especially with the ongoing trend of the increasing search for sustainable alternatives. As the demand for blockchain-based digital “payment methods” grows, so do the costs. The rally of Bitcoin, Ether and Co. this year already shows how volatile cryptocurrencies currently are.
In the case of decentral stored crypto assets, some providers and retailers offer to pay with bitcoins, but this is very rarely used in practice. Transactions are associated with a high level of effort, especially in the area of computing power.
Due to the complexity of the transaction, the accounting background is significantly more complex than with classic payments. And the execution time is a lot slower than with immediate payment processes, which are completed in milliseconds.
In their current use, cryptocurrencies are therefore to be understood more as assets than as real payment alternatives.
Centralized crypto tokens through Custodian
However, the potential of digital money is way bigger. In addition to value storage through decentralised storage by blockchain, there are now more and more examples that show that crypto-tokens can also be secured through centralised storage and in open up further possibilities for usage. The centrally stored digital currencies are currently mainly used in closed ecosystems and can act as real payment alternatives there.
Custodian banks serve as depositories of the assets. The crypto-tokens are stored there and are distributed directly to the transaction partners as soon as a payment transaction is ordered.
The biggest differences between these two almost unequal worlds of crypto assets are particularly in the way they are stored, the complexity of transactions and the amount of computing power required.
In a centralised closed system, digital currencies can be transferred in miliseconds without consuming a lot of energy. Due to these very differentiated advantages of both methods, the first cryptocurrencies are gradually opening up to the use of the 2-world principle.
While more and more new cryptocurrencies and tokens are coming onto the market in general, very few have yet come across a concept that offers a real alternative payment method.
In a closed ecosystem to a digital currency
The fact that there are bigger projects on the market for real crypto-based payment methods, which are already much more than just experiments, is shown by the “Digital Euro”, which the ECB wants to develop in the next five years. However, there are already far more advanced projects for the implementation of digital values as usable payment alternatives.
On the market, for example, is the SAC token, called SANUSCOIN. This payment utility token was developed by the Bolzano-based company SANUSLIFE and is kind of a digital voucher that makes use of the 2-world principle. Founder Ewald Rieder’s company developed its own token back in 2018.
This coin runs on the Bitcoin blockchain and was stored there exactly 777,777,777 times in March three years ago. Since then, the family-owned company, which specialises in water filtration, natural wellness and well-being products, has distributed one seventh of these coins every year in exchange for the company’s own cashback credits at the beginning of the year.
Simultaneously a network of companies, shops and customers around the world has been built up over the years, who are now to experience the benefits of the central storage of the payment utility token.
The closed ecosystem that has been built will get connected through an app, and at the same time the SAC tokens will be stored centrally at a custodian bank and offered as a voucher, that is, an alternative payment method, within the system. In their further development to become an international crypto-token provider, the South Tyroleans have always maintained a close connection to the topic of nature and environmental protection.
For every transaction with the payment utility token, whether stored decentrally or centrally, a certain amount goes to the pool of the specially established Sanusplanet Foundation, which supports environmental protection and social projects around the world. According to CEO Ewald Rieder, this versatility of the coin is intended to create a bridge between the crypto and the classic economic world.
A variety of chances
Such innovative approaches like companies exploring their own crypto assets and testing out the multiple possibilities of these will continue to encourage the crypto market as one of the industries of the future in the coming years. The opportunities that this market has are shown by the extremely value-increasing rallies of some still unknown tokens and the enormous values of Bitcoin and Ether.
The fact that large companies and institutions like the ECB are involved with cryptocurrency-based large-scale projects underpins the future potential.
How and which values could be market leaders in the future, who will establish themselves as a real digital payment alternative and which approaches will be promising, remains to be seen. However, it is clear that innovative activities by companies that open up to the market and the industry are a great catalyst for the success and influence of the crypto world.