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Because you can not have an Internet age without cryptocurrency

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Cryptocurrency allows you to safely move the monetary value on the internet infrastructure. And this is a big problem.

Alexander Vasylchenko touched bitcoins for the first time in 2011. "I remember the price was € 7.5 per bitcoin," he said.

He continued to be part of Mycelium as a technical manager and in the coming years Mycelium would release some of the most popular bitcoin products. At its peak the Mycelium portfolio managed about 10-15% of all bitcoin transactions. It was one of the most popular crypto applications in China, which was already a bitcoin mining industry leader. And with Vasylchenko's extensive engineering experience, including a stint at the Swiss Center for Electronics and Microtechnology, Mycelium's main development team would grow from 4 to 13 engineers, while Vasylchenko's total team was a group of 35 people, # 39; vanguard of digital currency technology.

And then Vasylchenko came across a problem …

The problem

The problem was that Vasylchenko had to make a bank transfer.

"I had to transfer several thousand euros to my mother," he explained. "I am originally from Ukraine, and my mother still lives there, I have asked my banker two questions: how long will it take and how much will it cost? The banker, who had been serving me for several years, can not answer this question."

"It could take 3 days, it could take a week, I do not know the exchange rate." Vasylchenko remembers the banker. Vasylchenko offered the current exchange rates to Google if it helped, before the banker worked out and said he did not know what rates the bank would actually use.

On his phone, Vasylchenko could check any exchange rate at any time, but he was not allowed to know what rates they would use for the transfer right in front of him. He could immediately contact his mother and talk in real time in a dozen different ways, but he had no way of knowing when the money would come, and no way to speed up his arrival.

All this while Vasylchenko was the technical head of one of the most important global bitcoin companies in the world, capable of launching a pure and genuine digital monetary value in any part of the world at will.

"We have created this beautiful stuff, we have had this great reputation all over the world … Now I am facing a problem in the transfer of 4,000 euros in Ukraine".

He briefly considered the possibility of sending some bitcoins to his mother, but quickly abandoned the idea. Because even once you overcome the obstacle of walking someone through setup and transfer, there is still the whole new problem of converting that bitcoin into a spendable form.

"I would say" here mother, install Mycelium portfolio, send public key, backup private key ", and then she would bitcoin … [but] the only thing he wants is to get some money and then buy something … I realized that my mother can not benefit from cryptography technology. "

With all the technology and skills at his disposal, Vasylchenko would still have to throw money into the mysterious black hole of the bank, and hope that enough of that would have come to his mother on the other side.

Clearly something was still missing.

That something special

"I came up with the idea that, ok, there's a huge threshold between the digital currency space – [both] back then and now – and the common people, "said Vasylchenko.

Cryptocurrency can allow almost instantaneous and almost free transactions to and from anywhere in the world. It can theoretically send monetary value itself through the Internet, and it would have been perfect for Vasylchenko to make that urgent transfer to his mother.

But all that technological potential was still only potential, rather than something useful.

Cryptocurrency still needed something special. It would need real and meaningful accessibility of the kind, that even the best UX, the simplest portfolio, the clearer block explorer, and so on, can only partially provide.

The use of cryptocurrency today is analogous to trying to put a photo online 15 years ago, said Vasylchenko.

"If it would be like 15 years ago, without Facebook, I would need to be a geek to publish [a] photos on the web, "he said.

You should digitize your photo, order your file and hosting file and then have the real know-how to upload that photo and present it in a functional and visible form. And even then, only a small part of the world's population would be able to access it. Perspective, 15 years ago, in 2003, only about 50% of Australian homes had access to the Internet, while less than a third of people over the age of 60 had used a computer for the whole of the previous year. Many had never even touched one.

"The barrier to publishing everything online was very high," said Vasylchenko. "Facebook has reduced these barriers".

With the right infrastructure, everyone could suddenly put a picture online without necessarily having something that resembled technical expertise, and everyone could go and see it. And the rest, as they say, is history. Facebook has not had billions of users being easier to use than alternatives. It has billions of users being easy enough to be used by anyone without any kind of experience, except the most basic computer literacy.

The most pressing question for cryptocurrencies is not necessarily how to make the use of more people easier or to explain things better. It's like making it so easy that anyone can use it and you do not have to explain anything.

"When I buy a t-shirt at the department store, I do not care who is responsible for the payment, the buyer or how the transaction goes," says Vasylchenko. "What interests me is that I get my shirt: what we want is this immediate satisfaction, to meet these needs.We do not need to go into details about euro, AUD or cryptocurrency".

This mission requires taking a step back and radically rethinking the best way to actually use cryptocurrency.

Do magic

To this end, Vasylchenko left Mycelium in 2014, starting work on this new problem in 2015, co-founder of Sofitto in 2016, and is now unrolling a fundamental part of its planned solution. It's called Sugi, and looks like this:

Does it look familiar? Probably it should, because it is a rather ordinary card in the exterior. "A portfolio of blockchain inside a normal bank card", explained Vasylchenko. Incidentally, the design of the trunk of the tasteful tree on the paper comes from a Sugi tree, formally known as Cryptomeria, which literally means "hidden parts". It's quite apt.

Just as Facebook means that anyone with remote knowledge of a computer or phone can use uploaded photos, Sugi indicates that anyone familiar with the concept of a credit or debit card can use cryptocurrency.

That simplicity outside, and all the "hidden parts" inside and behind the scenes, means that it could be the only type of cryptocurrency portfolio ever made that could meet Vasylchenko's key specifications – that would have could use it to send money to his mother.

"I would say, okay mom, just take your card and pass me your card number, and if it did, simply enter the card number in my wallet, indicating only the amount I want to send and the second after can go to the ATM more close and withdraw money in local currency in Ukraine, "said Vasylchenko.

"I will have my mission fulfilled when I know that a person like my mother can execute blockchain transactions flawlessly, and gets this magic, gets her money, can pay money, and she does not know or should know which rails are there. "

As you can probably see, Sugi is a near field communication card (NFC), of the type that allows you to make payments simply by touching the card on an NFC reader. This means that it is compatible with the existing payment infrastructure, including most ATMs, payment terminals and everything else. In this way it is possible to divide the cryptocurrency much more directly into the existing financial system and allow it to be used in a way that is familiar.

To a certain extent, this way the Sugi portfolio could make ATM bitcoins obsolete.

This is a PIN card, so you do not need to worry that someone will touch your BTC by robbing it with a card reader and functions in tandem with the Sugi app, which is used to indicate transaction values, destinations and so on. The merged app lets you check your card balance, transfer funds, check on previous transactions and generally offers the functionality you'd expect from a full cryptographic portfolio or a fiat bank account, if you're feeling traditional.

So in the physical world you can use the Sugi card on the terminals of the stores and then "sign" on the transactions through the app, and in the digital world you can make online payments via QR code or via a link, and then "sign" on these card transactions.

So, in both cases, it still has that security of the hardware portfolio and requires to physically verify the transactions with the presence of the card, PIN number and access to the app. In short, it makes cryptocurrency compatible with existing payment systems and, for the first time, makes cryptography easy enough for anyone to use.

The private keys are kept in a secure element of the card and are always offline. So far, Sugi may hold token bitcoins (BTC), Ethereum (ETH), Bitcoin Cash (BCH), Litecoin (LTC), XRP and ERC20.

Designing for the inevitability of lost cards and forgotten PIN numbers is one of the most difficult elements to overcome without completely falling into the centralized banking system, but Sofitto offers its new version of this, with "a rather secret sharing system elaborated "key sharing and reconstruction scheme", in the words of Vasylchenko.

The goal is to ensure that funds can still be recovered where needed, without the need to entrust everything to a central entity that requires payment for their efforts. Secret sharing schemes could provide an appropriate balance.

Ingredients: Stupid piece of plastic (x 1), magic (x infinite)

Outside of a handful of use cases, you must still be a certain type of madness to actually want to use cryptocurrency.

"Imagine wanting to invest in a cryptocurrency," says Vasylchenko. "You want to buy a Ripple or Ethereum or any other token you want, now the question is: how do I do it? What do I install? Is it safe? How do I use it?"

"But the cards, the stupid piece of plastic … you'll know exactly what to do when I give you a piece of plastic."

A lot of design magic made that stupid plastic piece a functional and safe hardware portfolio.

And perhaps the effort has been made to build the kind of link that will make it useful and its spendable content, which means making arrangements with existing financial services and finding ways to effectively integrate this card into the existing financial infrastructure.

However, Sugi does not come to the table empty-handed. As Vasylchenko notes, Sugi offers a way to extend the duration of the existing financial infrastructure and this is a very tempting offer.

"Not only do we deal with these well-known usability scenarios for almost everyone, but we also have potential with these cards and we have demonstrated this with the integration of POS terminals." Recycle all the infrastructure of the banking terminal that is already They have ATM machines installed, they want to increase the life of the machines, so they bring in. We are bringing new use cases, new services to the implemented infrastructure, so we can actually have this smooth transition from today's world in currency digital benefits. "

Being able to provide these benefits can help facilitate cryptocurrency in traditional adoption, and even bring some of the benefits of existing systems to cryptography, all in line with the goal of making it as familiar as possible.

The best of both worlds

Vasylchenko does not see people who use Sugi completely as a hardware portfolio of cryptocurrency, although this is essentially what it is. He sees people who use it as a bank card, because it is also essentially what it is.

The goal is to get the best from both worlds in a package that no one has to think twice. It is planning a user experience similar to a bank card based on the design because it is one of the few ways to meet the accessibility objectives at the base.

The "best" of the traditional banking side includes general familiarity and ease of use, as well as recovery procedures.

"You already know that when you have a bank card, you know that by losing the card or forgetting the PIN, you already know that your funds are not stolen," he says. "Whatever happens to your bank card does not necessarily mean that something can happen to your funds."

"We as card makers or card issuers do not actually have access to our users' funds … [but] we enable the procedure to recover funds if something happens. "

On the cryptographic side, however, there are also benefits to be maintained.

"The value is actually stored on paper," emphasizes Vasylchenko. "We have some security measures and identification measures, but we ourselves, if we decide to block their accounts, we will not be able to do that … If Visa wants to cut the payments of their particular user, they can do it."

In addition to the security of knowing that your funds are beyond the reach of anyone except you, the storage of decentralized funds is also a safety advantage, spreading around the effective position of the funds. Without a central custodian there is not a place where a thief can strike to steal a lot of funds from that different people all at once. In this way, there are some certain advantages for the cryptic way of thinking "be your bank".

Certain types of attacks can theoretically hit all the individual encrypted portfolios of a certain type all at once, draining an incalculable amount of money all at once. But actually extracting funds from a Sugi wallet means physically placing your hands on the card itself, and then finding ways to get the PIN number from the owner. There is no way to get a big hit on a decentralized bank.

The major benefits of cryptography, however, could all return to the experience that led Vasylchenko on the road to creating Sugi. Traditional money simply did not keep up with all the other wonders of the Internet age.

When the quickest way to move the value internationally is with crypto, and the second fastest is to read the serial numbers of gift cards on the phone, you know that there is room for improvement.

Value Internet

Money, as we know it most today, is difficult to move according to the standards of what is possible in the digital age.

juicy words crypto

A mess of currency exchange and currency spreads, an intricate network of banking intermediaries and other frictions are putting a huge burden on trade, essentially stealing money from useful, productive, and value-creating businesses to frankly far less useful and less important intermediaries.

"If it's 1,000 euros, it's probably not a big deal, but if it's a 5 million euros business transfer it's a big difference," says Vasylchenko. "A couple of points more or less is a big difference: about 10% of all the money that is spent, all the wealth, is basically spent by friction … We have to have insurance, we have to meet financial services .. in fact, from 7 to 10% of the money is lost to overcome this financial resistance ".

These costs land on everyone, but they are not applied uniformly. When you pay a much higher commission for an international transfer, which subsidizes a reduced or no fee service, a bank extends somewhere else and supports banking operations elsewhere. That the activity of transferring money has become a separate revenue stream, linked to a much wider world of financial services, could be one of the elements contributing to all resistance in financial services.

What makes cryptocurrency exactly cheaper?

In simpler terms, cryptocurrency is an inexpensive way to transfer money because it can be sent over the Internet, just like Voice over Internet Protocol (VOIP) is much cheaper than making a long distance call. All the blockchain principles, the cryptography behind it and so on are mainly aimed at ensuring the value of this digital currency in the hostile and open Internet environment.

So instead of asking why VOIP calls are so cheap, one might wonder why long distance phone calls are so expensive. And the answer is because the telephone companies have to keep a huge mess of copper cables and decaying physical infrastructures around the world, which is not cheap. It is an entire physical network that must be maintained at the expense of users.

It's the same with the money. It's not that internet money transfers are cheap, especially as non-internet money transfers are expensive. SWIFT and the global banking network are a colossus that must be protected and maintained at a high price. These costs are passed along the line until they reach the customers of the banks (eg You).

The internet infrastructure can bring all the information we need and now includes the monetary value. Avoiding that expensive legacy network, and simply letting it fall, you can cut costs dramatically. Cryptocurrency is for the SWIFT network what VOIP is for telephone lines. Yet, the world is still pouring huge amounts of money into maintaining this obsolete network infrastructure, to the advantage of anyone.

You can not have an Internet era without a crypto

"SWIFT is the parallel internet, from my point of view it is a telecommunications company that allows banks to access their systems that enable secure messaging systems," explains Vasylchenko.

It has the (theoretically) advantage of being safe and free from bad actors, but it is still a whole private network that has to be kept and kept safe at high cost. And in a sense, it was on the path of obsolescence with new developments in cryptography technology even before they were applied to cryptocurrency. This made it possible to communicate data securely, even through the "infected" and dangerous environment of the Internet. With this, it is not really necessary to maintain a completely separate vanity network at the expense of bank customers (for example, you).

This principle, of digital currencies communicating via the Internet that replace existing systems, is just as inevitable as VOIP (Voice over Internet protocol) which replaces long distance copper telephone lines, suggests Vasylchenko.

"Before we spoke we would essentially have to connect a cable from Brussels to Sydney," he said (on VOIP). "We would pay € 4.10 per minute for poor quality, now I can have full connectivity almost for free and we receive other services through this channel, these tracks are very safe to communicate, using video, ensuring only you and me connected. basically from these copper wires, connected by telephone companies.

"The same with SWIFT, which is basically the same reality as copper wires, and independent from the Internet.We can do all the same tasks using the same Internet connections already out there, reconciling not only the messages, but doing the synchronized messaging system using the blockchain protocol. "

"That's where we can save money, that's where we can save on costs, it's amazing what we can do with that money, we're on this mission to empower my mother, and when people like my mother can do it, then we can release these resources into something more productive than simply maintaining this obsolete infrastructure, they are trying to maintain the status quo, but the business is out there. "

Where Sugi and Sofitto fit

Sugi is one of the first steps towards greater adoption, says Vasylchenko, as it makes "money on the internet" and its exceptionally tangible cost-cutting benefits accessible to everyone, in a familiar way. Only with mass adoption can the world move away from the waste of maintaining a separate network for money rather than just using the Internet.

The medium-term objective could essentially be to use the fiat as the "last mile" payment method, in which the currency is actually an exchange of goods where necessary. To bring this complete currency conversion functionality to paper, Sofitto naturally needs to become a sort of bank. He has found reasonable support among the most forward-looking banks in Europe, and is well underway.

The technology itself is all there and ready to be launched, and most of the remaining obstacles are normative in nature, as Sofitto intends to become an exclusively digital neobank.

"This is phase 2," says Vasylchenko. "That's why, obviously, you have to do a lot of homework on legal compliance, but the technology is available, we're ready to launch it, it's basically the Sugi card we sell today."

And Sugi is almost ready to leave, with the expedition set to start from one day to the next. It would have been sooner, but for a small inconvenience in production, says Vasylchenko.

It could be somewhat appropriate that the physical elements of the digital world would be the hard part.

This information should not be interpreted as an approval of a cryptocurrency or a specific supplier,
service or offer. It is not a recommendation for trade. Cryptocurrencies are speculative, complex and
involve significant risks: they are highly volatile and sensitive to secondary activities. Performance
it is unpredictable and past performance is no guarantee of future performance. Consider yours
circumstances, and get their advice, before relying on this information. You should also check
the nature of any product or service (including legal status and relevant regulatory requirements)
and consult the relevant regulators' websites before making any decision. Finder, or the author, can
have participations in the cryptocurrencies discussed.

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