Crypto Fast Payment Solutions

Disclaimer: the author is not affiliated with any of the businesses quoted and this is not investment advice.

Problem

Existing banking payment networks are slow and expensive. They are also controlled by a small number of incumbents. Bitcoin has emerged as a proof of concept for a decentralised, trustless, secure, peer to peer payment network. However, for practical use, it is slow (confirmation times of 30 minutes at least for secure payments), and can be expensive (transaction fees depend on miners, and sometimes reach double digits).

Solution

Several alternative blockchain projects have emerged offering fast payment solutions (Dash, Nano, Ripple to name a few). Stellar has many qualities that make it a good candidate for a general purpose, fast payment solution.
What is Stellar
Stellar is an open-source protocol for exchanging money using blockchain technology. The Stellar network can quickly exchange government-based (fiat) currencies with 2 to 5 second processing times. The platform is a distributed ledger maintained by a consensus algorithm, which allows for decentralized control, flexible trust, low latency, and asymptotic security.

Servers run a software implementation of the protocol, and use the Internet to connect to and communicate with other Stellar servers, forming a global value exchange network. Each server stores a record of all “accounts” on the network. These records are stored in a database called the “ledger”. Servers propose changes to the ledger by proposing “transactions”, which move accounts from one state to another by spending the account’s balance or changing a property of the account. All of the servers come to agreement on which set of transactions to apply to the current ledger through a process called “consensus”. The consensus process happens at a regular interval, typically every 2 to 4 seconds. This keeps each server’s copy of the ledger in sync and identical

Solution with Stellar

Stellar is open source and an open protocol. Anyone can join the network by running a node (a server). Also what Stellar offers is the transfer of fiat currency (GBP, USD, EUR). Any payment solution will involve the deployment of a stellar core server and an API server called Horizon. Then a business application will connect to the API server.

credit: Stellar.org

Use cases:

POS payment solution

Currently, POS payments are either done in cash or with bank cards, using VISA infrastructure or a few alternatives. A new crypto payment startup, Pundi X (https://pundix.com/) offers to replace VISA by providing hardware payment terminals. A similar approach can be envisaged to build upon Stellar network and provide POS systems. However it will be impractical for merchants and customers to deal with multiple devices. So realistically, the ideal solution is an alliance of multiple service providers sharing same devices (POS terminal, Mobile)

Peer to peer international remittances and foreign exchange

This is essentially the same idea as Transferwise, but rather than implementing a proprietary infrastructure, to use Stellar or similar networks. Stellar network offers FX services as well.