Looking Forward: Building a New Payments Network

Jon Lister, President and co-Founder, BlockEQ

Feb 20, 2019 • 2:27 min

Given the pace of technical innovation we’ve seen in the past few decades it’s surprising that payment networks have seen little change in the past 50 years. The traditional network of trust between financial institutions representing buyers and sellers – the reason a merchant trusts they’ll get paid if your credit card transaction is authorized – is also an expensive service that consumers ultimately bear (typically around 2-3% of the transaction).

For startup founders like Jon Lister this lack of innovation is a huge opportunity. BlockEQ is a Toronto company with plans to build nothing less than a new global payment network. Barely a year old, the potential of BlockEQ’s platform caught the eye of Canada’s largest crypto exchange Coinsquare and led to a $12M acquisition late last year.

BlockEQ is focused on cryptocurrency’s original promise of frictionless, global and cost-efficient transfers of value. To do this they are building on the Stellar network, which like Bitcoin, Ethereum and Ripple networks is a blockchain-based method for issuing tokens and securely transferring those tokens between customer accounts. Stellar addresses two key limiting factors of these popular cryptocurrencies – transaction speed and cost.

“Block EQ is what’s known as an ‘anchor’ on the Stellar network, explains Lister. “Anchors essentially take deposits, whether they’re Bitcoin, Ethereum or other fiat currencies and issue a token that represents that deposit. Once these assets are tokenized, they can be traded on top of Stellar’s ledger. The settlement times are significantly faster than Ethereum [typically 2 or 3 seconds] and the fees are very stable at less than 1/10,000th of a penny.”

BlockEQ can lay claim to being the first Stellar wallet available in Apple’s notoriously fastidious App Store, a testament to the mobile app backgrounds of co-founders Megha and Satraj Bambra. And BlockEQ has plans to expand their mobile offerings this year to support trading additional cryptocurrencies, and eventually fiat currencies as well. “So currently, Block EQ has a digital wallet that’s available on desktop or mobile, it’s available on the App Store and [Google Play], and those wallets allow any Stellar tokens to be sent, received and traded on top of Stellar’s decentralized exchange. We’ll soon be releasing a service that allow users to deposit their Bitcoin and convert it into Bitcoin tokens on the Stellar network, [and] we’ll support a wide range of cryptocurrencies which will allow them to be usable and tradable in a much faster and cheaper format.”

So does Lister think every crypto company should drop what they’re doing and start building on top of Stellar? “I think there’s one misconception that everything will be built on top of one protocol. I think we’ll see a need for multiple protocols to handle different use cases. For example, I don’t see a need to build like everything on top of Ethereum, when the Stellar protocol can handle the concept of value being transferred and traded at a much faster and cheaper rate. Ethereum is great for building decentralized applications that require higher level of complexity. Where Stellar can help is with the idea of just simply trading and transacting digital value.”