Why TenX Will Change the Way You PAY for Everything

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@ daniel-jeffries Daniel Jeffries I am an author, futurist, systems architect, public speaker and pro blogger.

Cryptocurrencies have a real world spending problem.

If I want to take my Bitcoin or Ethereum to Starbucks, I can’t do it.

While more and more online stores accept crypto, from Overstock to Newegg, pretty much nobody in the real world takes the stuff. It’s a lot easier to upgrade an online e-commerce solution than a real world one.

Even megacorporations like Walmart that have the scale and financial reach to accept it at brick and mortar stores, don’t do it currently. The next five years may change that but for now, forget about it. Not happening.

And if the big guys can’t do it, you’ll be waiting until doomsday for your local bodega to accept Bitcoin, if you can even find one that knows what the hell it is in the first place.

Accelerating the adoption of a new technology is an age old problem. If you remember the early days of the Internet, ISPs came up with a number of different ways to get fast connections to your home, from leased lines to fiber optic cables. All of them involved running new wires to your house or business. But the technologies that won out, dial-up, DSL and cable, all shared one thing in common:

They used the connections that were already there.

If you can use what’s already in place you have a massive advantage. It means you can blow past the early adopters phase on the curve and rocket into mass adoption.

On the other hand, if you have to wait for companies to lay new wires, you’ll be waiting forever. Even a colossal company like Google runs into a nasty snarl of overlapping and conflicting jurisdictions and regulations trying to run fiber. Not to mention it’s insanely cost prohibitive.

I’m in a major city and I’m still waiting. I’ll probably grow old waiting.

TenX takes the “use what’s there” approach to solving the real world cryptocurrency adoption problem.

They leverage the Point of Sale (POS) systems that exist in almost every megastore, mall and swap meet in the world. They’re using the same Visa card terminals that takes dollars, euros and yen today. That means retailers don’t have to know jack about crypto to take your money.

You can go down to Starbucks and get a sugary, overpriced, quadruple sized monster coffee with your Bitcoin stash.

Real world adoption problem?

Solved.

So how does it work?

Debits and Credits, Oh My!

TenX issues you a debit card. You download an app on your phone, load it up with some of your crypto assets and start swiping away. Simple as that. That let’s you bridge the gap between the old world and the new one right now.

Eventually they will even allow touchless checkout, so no plastic credit slab necessary.

Your crypto is never stored on their systems. There’s no need to trust TenX to hold your money. You are your own bank. The system uses the magic of smart contracts to automate the process of transferring cryptocoins to your card. In essence, the contract self-escrows the money and releases it to the network as needed. The conversion to old world money, like dollars and cents, happens on the fly as you pay.

Check out the video to the left. That’s pretty much all you need to know in two minutes. In a space dominated by mega-ambitious solutions that try to boil the ocean, TenX is refreshingly simple. They use the Unix philosophy of “Do one thing and do it well.”

The app even gives you complete control over the card.

You can lock the card from the phone so it can’t be used, which provides some excellent fraud protection. With a traditional debit card if it gets stolen I have to call the bank’s clueless customer service, listen to a half hour of Muzak interspersed with the occasional “Your call is important to us, please hold.”

Just imagine what kind of service you’d get if your call wasn’t important to them!

But with the TenX card I can load the app, disable the card and it’s now worthless to the scumbag who stole it.

There are other advantages too. How many moms and dads gave their kid a debit card and said “Now only buy school supplies with this and bring it right back”? At which point the kid runs off and buys lunch for his friends, a bunch of music from the app store, some video games and maybe, if the parents are lucky, a few of the books he needed for school. Now a mom or dad can put the exact money the kid needs for his books on the card and hand it over.

Sorry, kids. Now you’ll just have to learn something instead.

The System that Pays You

The system already has some other major advantages.

If you use a traditional debit card, you pay the company that gave it to you for the privilege of using it. In the old days, before the Interwebs (aka the dark ages), banks had to pay tellers to give you your money so you could spend it in stores. Now they fired all the tellers and you pay them to use their card! Not awesome.

The TenX system flips that dynamic on its head. It pays you to use it. Every time you swipe the card, they pay you a small reward.

How the heck can they do that? Pretty simple. Disruptive technology is disruptive because it cuts out costs. If you save a bunch of companies money, you can do other things with that money.

Think of Uber versus a taxi.

Taxis have no GPS, no app, no automatic matching system. Instead taxis have to hire someone who has to radio out to all the cabs to find you someone close by. It’s a pretty good system but costly. Most of the infrastructure costs fall on the business and that limits the number of drivers they can hire, which limits their scale.

Uber changed all that by automating the order matching and routing of cars and making it peer to peer. It’s faster, cheaper and delivers better service.

TenX proposes to do the same thing by cutting out the costs of processing transactions for big banks and payment processors. By reducing Visa’s costs dramatically TenX can take advantage of Visa’s tremendous presence in nearly every store on Earth, charge smaller fees or no fees at all, and deliver a better experience. Visa can still potentially get their fees from the merchants and they add a new solution on the back of one they already deployed for practically no additional cost because the blockchain does the work for them.

Make a Commitment

Today, Visa and Paypal are as big as they are because they have to clear and check every single transaction on their network, stop cheaters and thieves, and hire massive customer service teams to deal with angry customers. But cryptocurrencies eliminate the need for centralized fraud prevention and transaction processing.

In contrast, the blockchain distributes the transaction processing to miners or stake holders on the network, who span the globe in every country on Earth. That eliminates the need for a lot of backend infrastructure. If a company doesn’t need to worry about building all the systems to clear money themselves they can save a lot of money on electricity and data centers and server farms and anti-angry customer support teams.

So far so good but there is still a problem.

Today, blockchains are pretty damn slow.

Bitcoin can do about 3 transactions per second (TPS), though a bit more now potentially with SegWit active. Ethereum and new cryptos can go as high as 25 transactions per second. That’s a far cry from the 2000 TPS that Visa rams through every second of every day.

There’s a second problem too.

Confirmation times.

Bitcoin takes at least ten minutes to confirm your transaction. On days when the network is backed up, I’ve waited three or four hours for my coins to move. That won’t work for Point of Sale systems. They need instant confirmations. You’re not hanging around the grocery store waiting for a half hour while your Bitcoin clears so you can take your chips and salsa back for the big game.

That’s where the TenX COMIT network comes into play. The company bills it as the Internet of Transactions, a universal protocol for uniting the transactions across different blockchain ecosystems. They compare it to the early days of the Internet, where a bunch of siloed, incompatible networks ruled the world. Before the World Wide Web, they couldn’t talk to each other.

TCP/IP changed all that. It created a simple way for any network to talk to any other network and ushered in the modern information economy and the massive ecosystem it now supports.

Today we have a similar problem in the cryptocurrency space: Lots and lots of different blockchains and very few of them can talk to each other. With a new ICO every other day, it seems like that trend will only continue.

But even as many of these projects race to become the ultimate platform that does everything for everyone, the chances of that happening are pretty slim. In all likelihood we’ll end up with a cluster of specialized blockchains. Some will process IDs, others will decentralized DNS, while still others will handle voting or distributed storage.

To consume value and talk to the different networks you’ll need a standard way to convert coins between the various networks, so you can consume their value.

The COMIT network looks to standardize how transactions work across disparate blockchains. COMIT stands for “Cryptographically-secure Off-chain

Multi-asset Instant Transaction network.” You’ll notice TenX has a flair for marketing and naming conventions. Their symbol on the exchanges is PAY.

Behind the scenes they mash up two ideas. The first is the Lightning Network (although they don’t call it that). The Lightning Network proposes to settle most transactions off the main chains of various cryptocurrencies such as Bitcoin. It uses Hashed Time Locked Contracts (HTLC) to make that a reality. I won’t go into all the details here, because other folks have already done it better, but basically it connects users peer to peer through “payment channels” and uses a smart contract that lets them send moolah. It can send thousands and thousands of transactions through each channel. It then bundles all the transactions (as a single transaction) and pushes them to the main network after a period of time or in the event of a dispute.

The second idea is using Liquidity Providers (LP). The Lightning Network needs liquidity to work properly. That means that payment channels need enough cash on hand if something goes wrong and someone tries to cheat everyone else.

If you trade on any of the standard stock exchanges or crypto exchanges you might know that there are giant super rich whales on those networks who provide liquidity to those systems. That means they have a lot of money and can fill orders when transaction volume is light. When there aren’t enough buyers or sellers an LP can step in and the exchange rewards him or her with discounts and tiny fees for keeping the wealth flowing.

TenX uses the banks and payment processors to provide liquidity to the COMIT network. That lets them deploy their massive amounts of cash in a fresh new way. Instead of getting locked out of the new crypto-ecosystem, they can easily participate, with less risk and less capital expenditure, using assets they already have, their giant war chests.

That’s why the big networks like Visa have jumped on board. It’s a win-win for them. Less cost, while leveraging their existing infrastructure and providing new streams of revenue.

Crypto Purism Versus the Brave New World

If you’re an early believer in cryptocurrency’s power to disrupt the old financial system and usher in a new era of personalized money, some of this may seem disturbing. One of the main reasons the SegWit upgrade got held up for so long is that many in the community saw it as a violation of the decentralized principals of the original Satoshi vision. They see Lightning Networks as inevitably heavily centralized.

They’re probably not wrong.

But the fact is, it was always inevitable that the powers of today would find a way to use the new financial innovations that blockchain brings to the table. The more I survey new projects, like Neo, the more I see them opting for a mashup of old world tech and new tech.

The advantages are manifold. It leverages the scalability and power of the centralized systems of the past, with the distributed, decentralized, cost saving systems of today.

Think of it as hybrid technology. It blends the old system and the new. Electric cars will dominate the road of tomorrow but for now gas-electric crossovers rule the roads for efficiency and range.

In the next few years, I see that as the winning strategy.

TenX has some competitors, in TokenCard and Monaco, but it looks like they’re beating their competition to market.

They picked up a million dollar seed investment in 2017 and Paypal pulled them into their incubator program. Vitalik Buterin, wonder kid founder of Ethereum, and other crypto luminaries sit on their board of advisors.

They recently released a closed door beta. Now they look poised to release an open beta. In an ICO era where actual working code is in short supply, a downloadable app is a big deal.

If the software works, TenX has a future so bright they might just need shades.

But don’t worry crypto purists. Eventually a revolutionary system will come along that completely upends the old way of doings things forever.

Until then, I still need to buy my coffee from Starbucks.

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A bit about me: I’m an author, engineer and serial entrepreneur. During the last two decades, I’ve covered a broad range of tech from Linux to virtualization and containers.

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