Social networking platform, Facebook, has unveiled a brand new update that brings Facebook and Instagram closer together using Messenger. The latest update comes with…
We’re living in a world where everything’s being labeled as smart. From our phones to watches and even our cars. But something that’s really being taken for granted is our utility grids — including gas, water and electricity. And while the majority of the world might be migrating onto the so-called smart grids, they are still filled with a lot of dumb problems. The biggest being payments.
South African bitcoin startup Bankymoon is boldly taking on this industry. That’s besides having a killer name for a bitcoin startup.
Presenting its application for the first time recently at the Bitcoin Conference Africa, the startup is enabling people to pay their utility metres in the digital currency. This means more efficiency — very low fees and near instant transfers from anywhere in the world, among other things.
“A grid is something we all interact with everyday of our lives. We don’t even give a second thought to them, but without them civilisation as we know it wouldn’t exist,” explained the founder and CEO of Bankymoon, Lorien Gamaroff.
“You’d think that with all the smartness happening in our grid, that the problems are solved. But in fact this brings us to the most difficult and biggest problem of all, which is payments. Your grid could be as smart as you like but if all customers aren’t paying, it’s worthless and it becomes unsustainable and will collapse.”
Gamaroff, who’ll be presenting at the Bitcoin Conference in Prague next month, reckons that by 2023, 80% of the grids in the US will be smart. Sixty percent in Europe and 45% in the Asia Pacific.
But as smart as these systems are, most of them rely on intermediaries like a municipality which channels utility to its commercial, industrial or residential customers. And more middlemen means higher fees.
As it stands today, some of us rely on cash payments to settle our electricity bills. It’s as cumbersome as it’s unsafe. It means that the customer has to go to a physical location and lunge around physical cash. If not cash, well then many of us take advantage of the array of online banking services. Gamaroff says that while these banking solutions can be convenient as punch, they end up charging high transaction fees. Up to as much as 17%.
Bankymoon’s bitcoin payment solution promises a cheap, secure and convenient payment method. It’s also implementing features that would enable people to pay in alt currencies such as Lightcoin, Dogecoin and so on.
While working for a smart energy company, the software engineer stumbled onto an article on Gawker in 2011 about something called bitcoin. He was immediately intrigued.
Not only did he come across an innovative technology that’s the “most frictionless, efficient payment method that’s ever existed,” it’s also incredibly easy for people to get bitcoin wallets, compared to, say, a bank account.
Targeting the unbanked
“I looked into the pseudonymous currency because I could see that it was an open protocol, it was something that I could look at and work with without any restrictions,” the startup founder shared. “It was a payment method where I didn’t need to have an agreement with the bank.”
This means that people who don’t have access to banking services can now pay their utility bills using bitcoin. It’s as simple as sending a tweet.
“Banking might be convenient but not a lot of people have access to it,” Gamaroff pointed out. According to the World Bank’s 2013 data, about half of the world is unbanked. Eighty percent of those are in Africa, 65% in Latin America and nearly 60% in Central Asia Pacific.
Furthermore, Bankymoon’s solution means that you can send electricity, water and gas to anybody else in the world, from anywhere. Gamaroff explained:
Imagine a student abroad who need to have their meter topped up. They’d phone their parent and ask them to send money. The parent now doesn’t have to remit anything. They can just go and top up the meter using bitcoin.
Another interesting use case for this is when it comes to foreign aid. Gamaroff paints the example of a school in Central Africa in need. Donors can now focus their aid and directly contribute to the energy of that school. Somebody from anywhere in the world can now go and top up that school’s electricity for a week. It’s direct foreign aid.
What Bankymoon’s business model offers is a transaction fee that’s able to undercut that of any bank because bitcoin transaction fees are so low. The startup receives bitcoin, calculates the tariff and then loads the metre. Every one of Bankymoon’s meters have assigned bitcoin addresses.
The founder explained that while the Bankymoon is still experimenting with the transaction fee amount, it will depend on what its user traction looks like. The more users, the potentially lower the fees become.
He explained that the fact that Bankymoon has a proven revenue model is a major advantage to other bitcoin startups which are banking on future industries. “The business model is our payment gateway.”
Bankymoon is currently on the prowl for investment. It hinted that a cash injection of US$1.5-million would help the company build a strong team of developers and easily sustain itself for two years.
“This [solution] is potentially game changing for driving bitcoin adoption,” the engineer explained. “Now people who don’t have access or who feel that it’s too expensive to use cash and go to vending machines have an option to pay in bitcoin. They now have an incentive to buy bitcoin.”
The application for bitcoin to smart metering really shows how deeply digital currencies can pervade in society and make improvements on the status quo. Bankymoon is also working with other interesting technologies such as Ethereum so that a company or middleman won’t have to own the tariff process — the whole process would be autonomous.
Banking on future industries
The solution Bankymoon presents doesn’t come without its share of hiccups however. For one thing, in order for its system to work, people need bitcoin. And as a attendee pointed out, how would someone get bitcoin in the first place if they don’t have a bank account — which is the bulk of Bankymoon’s target market, namely the unbanked.
Besides earning bitcoin directly from selling goods and services or just relying on the kindness of the web, the most common way for people to fill their bitcoin wallets is by trading fiat currency like Rands or Dollars for cryptocurrency via exchanges like BitX or Coinbase.
“We’re thinking a step ahead,” the startup’s founder argued. “I’m envisioning a world where we all have bitcoin. Just like in the early days of the internet when a service like YouTube would have been insane on a 14 kilobytes per second modem, we can see that those problems will eventually be solved.” Like most bitcoin startups today, Gamaroff says “We’re looking ahead of that.”